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AST Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/021790/06)
("AST Group" or "AST")
(Share code: AAA)
(ISIN: ZAE000027397)
Announcement - AST Group and Red Rock Consulting
AST Group (AST) and Red Rock Consulting have come to a mutual agreement to
reverse the acquisition by AST of Red Rock Consulting, which was announced
on 18 September 2001.
- All obligations relating to the original contract have been cancelled.
- No consideration has been paid by AST to the vendors in respect of this
acquisition and no further transactional costs will be incurred as a result
of the cancellation of the agreement.
-The pro forma impact on six-months HEPS to 31 December 2001 is a 2%
reduction in basic HEPS from 12.91c to 12.65c and a 2% increase in fully
diluted HEPS from 11.51c to 11.73c.
Market conditions in Australia have deteriorated since the announcement of
the acquisition, with the global economic slowdown impacting heavily on
demand in the Australian ICT market. As a result, AST and Red Rock
Consulting have mutually agreed that under these conditions, the current
combination will not achieve the envisaged objectives and therefore the
acquisition should be reversed.
AST remains committed to the existing consulting and products subsidiaries
in the region. Both these businesses are profitable and are generating
positive free cash flows. However, they have been negatively impacted by
market conditions and growth has slowed.
Current cash flow from the Australian subsidiaries is insufficient to fund
the progress of the Australian roll out in the time scales initially
envisaged. The Rand has also devalued sharply against the Australian Dollar
from R4.40 in September 2001 to a worst level of R6.50 in December 2001 and
currently to R5.90.
As a result of these two factors, to continue the acquisitive growth in
Australia at the pace planned would place an unacceptable Rand funding
burden on AST. Consequently, while our commitment to Australia remains in
place, the realisation of our objectives will be delayed.
Financial effects
Red Rock Consulting was consolidated from the effective date of acquisition
of 1 July 2001. The unaudited pro forma financial impact on the AST Group
Limited interim results for the six months ended 31 December 2001, had the
Red Rock Consulting transaction not been concluded is,set out below for
illustrative purposes only:
Unaudited pro forma income statement for the six months ended 31 December
2001
Incl. Red Excl. Red
Rock Rock
R`000 R'000
Revenue 1 004 032 975 871
EBITDA 135 953 131 996
Operating profit 110 518 106 561
Profit before tax and amortisation 104 168 101 520
Amortisation of goodwill 44 158 38 207
Profit before tax 60 010 63 313
Profit after tax 31 996 36 486
Net profit for the period 29 352 33 842
Headline earnings 71 313 69 852
Summary of pro forma effects on earnings per share
Six months ended 31 December Incl. Excl. % Change
2001 Red Rock Red
Rock
Headline earnings per ordinary 12.91 12.65 (2%)
share (cents)1
Fully diluted headline earnings 11.51 11.73 2%
per ordinary share (cents)
Earnings per ordinary share 5.31 6.13 15%
(cents) 1
Fully diluted earnings per 4.74 5.68 20%
ordinary share (cents)
Fully diluted number of shares 619 465 595 322 (4%)
(`000)
Based on 552 280 weighted shares in issue
Unaudited pro forma balance sheet as at 31 December 2001
Incl. Excl.
Red Red
Rock Rock
R'000 R'000
Assets
Non-current assets (excl. 309 028 305 149
goodwill)
Goodwill 440 540 391 464
Current assets 535 537 519 763
Total assets 1 285 1 216
105 376
Equity and Liabilities
Capital and reserves1 510 190 452 072
Minority interest 58 458 58 458
Non-current liabilities 175 733 175 120
Current liabilities 540 724 530 726
Total equity and liabilities 1 285 1 216
105 376
1. On 31 December 2001, the amounts due under the acquisition agreement
were accounted for by a potential issue of shares through increasing the
share premium and share capital accounts. This led to an increase in the
fully diluted number of shares which has now been reversed.
Summary of pro forma effects on net asset value per share
31 December 2001 Incl. Excl. % Change
Red Rock Red
Rock
Net asset value per ordinary share 89.35 79.17 (11%)
issued (cents)
Fully diluted net asset value per 82.36 75.94 (8%)
ordinary share (cents)
Centurion
12 April 2002
Sponsor
Cazenove
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