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AST GROUP LIMITED - AST UPDATE AND FURTHER CAUTIONARY ANNOUNCEMENT
AST GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/021790/06)
("AST")
Share code: AAA
ISIN: ZAE000049441
AST UPDATE AND FURTHER CAUTIONARY ANNOUNCEMENT
AST Update
In May 2003 we announced our Business Improvement Programme and associated
recapitalisation. We continue to make good progress and wish to update
shareholders.
Cost Reductions
* We are on track to achieve our estimate of a sustainable annualised cost
saving exceeding R200m per year, on full implementation of the Business
Improvement Programme. A cost reduction of R9m per month is already
evident.
* We identified the non-core businesses in AST at the beginning of the year.
Of the 11 non-core businesses identified, we have completed seven sales and
negotiations for the disposal of the remaining four are close to
completion. We envisage that all four will be finalised before end December
2003. The sale of these businesses results in either elimination of cash
burn, or cash being received, which is applied to reduce debt.
* We will continue to review all businesses and divisions for strategic fit
and will continue to optimise activities.
* The once-off costs associated with the Business Improvement Programme are
well within budget.
Capital Management
* As a result of the recapitalisation and efficiencies delivered from the
Business Improvement Programme, debt levels are in the order of R90m less
than at year-end, June 2003. We are on track with our plans to rebuild the
balance sheet.
* The rescheduled payment of long-term liabilities, negotiated during the
first quarter of the 2004 financial year, was announced.
* The improved focus on our cash management policies and procedures is paying
off. Although we"ve made progress, cash management continues to be an
essential priority.
* The majority of the vendor liabilities for the 2004 financial year have
been settled by issuing new shares. The amounts remaining for this
financial year are insignificant.
Sales organisation
* Our customer centric culture has been further enhanced with the appointment
of four highly rated sales managers, who have strengthened our sales
organisation. This focus has assured that we maintain and strengthen our
key customer relationships.
* Our historic investment in selected industry focus areas continues to be a
competitive advantage and is enhancing sales in these strategic areas. We
have strengthened our offering to the financial services sector with recent
distribution agreements finalised with Wincor Nixdorf and Advanced
Financial Solutions (AFS), two of the leading suppliers of banking
solutions. These have already shown encouraging results.
Challenges
* The industry continues to be under pressure and all large opportunities and
tenders in the market are highly contested.
* We have made progress with rebuilding our product business. We have
integrated the disparate product areas within the Group into one focused
business unit.
* Although the staff morale has been affected during this period, we are
experiencing their commitment and support. This is evident in all aspects
of the business, but particularly so in the implementation of the projects
identified as part of the Business Improvement Programme.
Conclusion
The Business Improvement Programme is meeting expectations and we are fully
committed to its successful implementation. The idea generation and planning
part of the programme will be completed by March 2004 with full implementation
by December 2004. However the full annualised financial benefits will only
become evident in the 2005 financial year, as previously advised.
We have tangible evidence that the Business Improvement Programme is starting to
have a positive impact. The results for the first quarter of the 2004 financial
year are in line with expectations.
With the successful completion of the rights issue / recapitalisation, the focus
on rebuilding the business has resumed.
Our relationships with our existing customers are strong and they continue to
award us new business. In addition, we are confident that our industry focus and
the enhanced profile of our sales team will deliver new business. There are a
number of significant opportunities in the pipeline.
We thank our shareholders, customers and employees for their ongoing commitment
and support.
Cautionary Announcement
Further to the cautionary announcement published on 1 October 2003, regarding
the proposed offer by Ariviakom (Proprietary) Limited ("arivia.kom") to AST
shareholders to acquire their AST shares ("the proposal"), AST shareholders are
advised that arivia.kom"s internal process has not yet been completed.
Accordingly, AST shareholders are advised to continue to exercise caution in
dealing in their AST securities until such time as a further announcement in
respect of the proposal is published.
Midrand
17 November 2003
Sponsor
Cazenove
Attorney
Moss Morris
Merchant bank in respect of the proposal
Rand Merchant Bank Corporate Finance, a division of FirstRand Bank Limited
Date: 17/11/2003 01:56:38 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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