MORVEST BUSINESS GROUP LIMITED - The disposal by Morvest, through its wholly owned subsidiary, Sab&T Ubuntu Proprietary(Pty) Limited of its 100%

The disposal by Morvest, through its wholly owned subsidiary,  Sab&T Ubuntu Proprietary(Pty) Limited of its 100%

MORVEST BUSINESS GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration No. 2003/012583/06)
Share code: MOR    ISIN code:	ZAE000152567
(Morvest or the Company)

-THE DISPOSAL BY MORVEST, THROUGH ITS WHOLLY OWNED SUBSIDIARY,  SAB&T UBUNTU PROPRIETARY(PTY) LIMITED (SUHL) OF ITS 100% SHARES AND CLAIMS IN SAB&T BUSINESS INNOVATIONS GROUP  (PTY) LIMITED (BIG)EXCLUDING THE OUTSOURCING  DIVISION COMPRISING OF ADULT LITERACY PROGRAM AND THE DAFF COTRACTS (DISPOSAL)

-WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
- FURTHER CAUTIONARY ANNOUNCEMENT

1. Terms of the Disposal

Shareholders are advised that Morvest, through its wholly owned subsidiary SUHL (the Seller) and subject to the conditions precedent set out below, has entered into an agreement with Treda Trading (PTY) Limited (the Purchaser), in terms of which it will dispose of its entire holding of the shares and claims in BIG (sold shares and claims) for a purchase consideration of R20 million (the purchase consideration)(the Disposal).

In terms of the agreement the sold shares and claims shall exclude the following:

the Kha Ri Gude  Mass Literacy Project (KRG Project); and the outsourcing contract between the Company and the Department of Agriculture, Forestry and Fisheries relating to the supervision of quota compliance by fish quota owners and ancillary services and any extension or expansion thereof (DAFF Contract).

The effective date of the Disposal was 1 November 2012.

2. Settlement of the purchase consideration

The purchase consideration of R20 million in cash will be paid in to the Seller as follows:
2.1	the amount of R5 million on  the date of signature of the agreement; 
2.2	the amount of R7 million on the 30th November 2012; and 
2.3	the balance of R8 million within 4 (four) calendar months of the effective date, subject to a minimum monthly payment of R1 million per month as from the effective date, to be paid directly to the Seller.

In the event that any one payment is not made on the due date, then the entire balance owing will become immediately due, owing and payable to the Seller.

3. Conditions precedent

The Disposal is subject to warranties that are considered normal for a transaction of this nature

4.	Description of the BIG business and rationale
	BIGs core business is providing p internal audit and certain consulting services to public and private sector. The business has been negatively affected by the new BEE requirements resulting in a drop in BEE rating and has therefore faced challenges in being competitive due to the level 3 BEE. Based on the groups long term strategy management has proceeded with the sale of the Internal Audit and part of the Consulting division to a BEE company, whilst retaining the strategic outsourcing and consulting divisions which continue to present good growth opportunities.

5. Financial effects  

The unaudited pro forma financial effects of the Disposal, based on the published audited results of Morvest for the period ended 31 May 2012 are set out below. The unaudited pro forma financial effects have been prepared for illustrative purposes only to provide information on how the Disposal may have impacted on the results and financial position of Morvest. Preparation of the unaudited pro forma financial effects is the responsibility of the directors. Because of their nature, the pro forma financial effects may not fairly present Morvests financial position after the Disposal or the effect on future earnings:



Before the Disposal
After the Disposal  pro forma


% change
Earnings (cents per share)
2.33
3.76
61%
Headline earnings (cents per share)
6.81
6.81
-
Net asset value (cents per share)
35.11
36.6
4%
Net tangible asset value (cents per share)
1.47
2.95
100%
Average and weighted average number of shares in issue (In thousands)
522 617
522 617
-
Number of shares in issue (In thousands)
651 371
651 371
-

Notes and assumptions:
1. The Morvest Business Group Limited financial information reflected in the "Before" column has been extracted the audited annual results of Morvest Business Group for the period ended 31 May 2012.
2. The pro forma adjustments to the statement of comprehensive income have been calculated on the assumption that the transaction occurred on 1 June 2011.
3. The pro forma adjustments to the statement of financial position have been calculated on the assumption that the transaction occurred on 31 May 2012.
4. The disposal of the Divisions of Internal audit and Consulting of BIG has been concluded in terms of the sale agreement.
5. The proceeds from the sale of the division is R 20 000 000 per the sale agreement.
6. Capital gains tax at the rate of 66.67% has been considered on the sale of the investment of BIG in the records of SUHL an amount of R 2 240 0000                          
7. The net asset value of the divisions of BIG that are sold has been based on management accounts ad at 31 October 2012. 
8. The allocations of income and expense as well as accounts balances amongst IA Cons and other divisions have been based on managements assumptions. Where transactions and balances can be directly attributed to the divisions these have been allocated accordingly. For other transactions and balances management has used an allocation method based on past experience to correctly allocate transactions and balances to the appropriate divisions.



6. Categorisation of the Disposal

The Disposal is categorised as Category 2 transaction in terms of the JSE Limited Listings Requirements. 




Withdrawal of cautionary announcement
Shareholders are advised that the cautionary announcement relating to the Disposal is hereby withdrawn.

Further cautionary announcement
Shareholders are advised that the company has entered into other discussions which, if successful, could have an impact on the company's share price. In the circumstances, shareholders are advised to exercise caution when trading in their Morvest shares until a further announcement is made.



Johannesburg
13 November 2012

Sponsor: Sasfin Capital
(A division of Sasfin Bank Limited)

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