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TISEC LIMITED
(Registration number 1997/010036/06)
("Tisec")
Profit Warning, Notice of Management Buyout of Belgian Stockbroking Business
and Further Cautionary Announcement
1. PROFIT WARNING
Shareholders are advised that earnings for the year ending 31 March 2001 are
expected to be significantly lower than those achieved in the previous
financial year. Losses have been incurred in the second half of the year ending
31 March 2001.
The principal reasons for the decline in earnings relative to the previous year
are:
* Deterioration in the value of strategic investments;
* Losses in the stockbroking divisions; and
* Reduced activities in corporate services due to the deterioration in market
conditions.
2. MANAGEMENT BUYOUT OF BELGIAN STOCKBROKING BUSINESS TRUSTINVEST
BEURSVENNOOTSCHAP NV ("TINV")
2.1 Introduction
TINV is a Belgian domiciled stockbroking company, which is the wholly owned
subsidiary of TrustInvest Holdings NV ("THNV"). THNV is the Belgian subsidiary
of JSE Securities Exchange South Africa listed Tisec Limited.
2.2 Transaction and Rationale
A loss amounting to US$ 300,000 has been incurred by the management of TINV.
This loss represents the capital reserves held with the clearing custodians as
required by the Belgian Banking Commission and the custodians, Bear Stearns
Securities Corporation USA, and requires the recapitalisation of TINV to ensure
its continued survival.
Consequently, an agreement in principle has been reached between, inter alia, a
director of TINV, Urbain Van Den Steen ("the purchaser") and THNV to repurchase
the shares in and claims against TINV ("the transaction"). Tisec and THNV
constitute the seller in this transaction.
2.3 Salient terms and conditions of the transaction
2.3.1 Purchase consideration and settlement thereof
The sale price of the shares in and claims against TINV is in the cash sum of
US$ 1 million, which sum has been deposited by the purchasers into an escrow
account on behalf of TrustInvest Holdings NV.
In addition, the sale consideration includes a notional credit consisting of 3
million ordinary Tisec shares which were originally issued to TINV management
and which are to be returned to THNV at a value of ZAR 25 cents per share for
cancellation or buy back in due course subject to the necessary shareholders
resolutions being approved in general meeting.
2.3.2 Other salient terms of the transaction
* In terms of the JSE Securities Exchange South Africa ("JSE") Listings
Requirements Section 10.1(b)ii, Urbain Van Den Steen (the purchaser), a
director of TINV, is deemed a related party to the transaction and as such an
independent opinion relating to the purchase consideration and other salient
details will be provided in due course.
* THNV will change the name "TrustInvest Holding NV" within a period of 30 days
from the signing of the agreement;
* The purchaser shall introduce Tisec or its nominee to Bear Stearns Securities
Corporation and utilise their best endeavours and efforts to enable Tisec or
its nominee to become a correspondent of Bear Stearns Securities Corporation
and to continue to provide the international services formerly offered by TINV
to Tisec's South African clients.
3. SUSPENSIVE MATTERS
The transaction is subject to:
* the conclusion of a final agreement relating to the transaction;
* the relevant regulatory approvals that apply in both South Africa and Belgium
* the approval of the transaction by the shareholders of Tisec in terms of the
applicable Listings Requirements of the JSE; and
* certain other suspensive matters currently under negotiation, consisting of:
* the TrustInvest.com address;
* the international use of the TrustInvest name; and
* discussions on the ongoing commercial relationship between the parties;
4. FINANCIAL EFFECTS
Should this agreement become unconditional, the financial effects would be as
follows and have been calculated based on the following assumptions:
* For the purposes of calculating the effect on Earnings Per Share ("EPS"),
Tisec's EPS as contained in its unaudited interim results for the six months
ended 30 September 2000 was adjusted by excluding the results of TINV and
including notional interest on the US$ 1 million cash consideration at an after
tax interest rate of 6,5% per annum with effect from 1 April 2000;
* For the purposes of calculating the effect on Net Asset Value ("NAV"), it has
been assumed that the transaction was effected on 30 September 2000 and the
purchase consideration was settled in full on this date;
* For the purposes of calculating the respective effects on EPS and NAV, it has
been assumed that the 3 million ordinary Tisec shares have been cancelled.
Before After Effect
(cents) (cents) (cents)
Headline earnings per share 4.2 4.6 0.4
Earnings per share 5.0 5.5 0.5
Net asset value 21.0 27.9 6.9
5. FURTHER DOCUMENTATION FOR SHAREHOLDERS
In compliance with the JSE Listings Requirements, a circular containing details
of the transaction and incorporating a notice of general meeting of Tisec
shareholders will be submitted within 28 days of the publication of this
announcement.
6. FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are advised that the transaction is still conditional upon the
conclusion of a final agreement and as such are advised to exercise caution
when dealing in Tisec securities pending an announcement confirming such
conclusion.
10 April 2001
Rivonia
SPONSOR
ABN AMRO Securities (South Africa) (Pty) Ltd.
Registration number 1995/001231/07
Member of the JSE Securities Exchange South Africa
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