4Sight disposes of an underperforming subsidiary
4Sight Holdings (4Sight or the group) has entered into an agreement to dispose of one of its subsidiaries, Digitata (Mauritius), to its original owners. The transaction values Digitata at R91.9 million, and will be funded by the return of 290 549 558 4Sight shares by the purchasers to 4Sight. These shares will be cancelled, thus reducing the issued share capital of 4Sight from 791 304 945 to 500 755 387 shares. The full implications of this transaction are detailed in 4Sight’s announcement on SENS of 7 April 2020.
Tertius Zitzke, CEO of 4Sight, says the transaction should be seen as part of the group’s ongoing disposal of subsidiaries that are not profitable and that are not aligned with the group’s growth strategy. Digitata forms part of 4Sight’s Telco Cluster of companies, which posted a 45% decline in revenue in the 2019 financial year, with an after-tax loss of USD10.8 million. This decline contributed to 4Sight’s 3.4% decline in revenue as disclosed in its SENS announcement and press release of 1 April 2020.
“Digitata was acquired on 1 July 2017 just before 4Sight was listed on the JSE’s AltX board at a cost based on its anticipated financial performance. This performance has not materialised and, at the same time, Digitata’s business does not align with 4Sight’s new growth strategy,” he says. “By disposing of Digitata, our new board and management team continue to implement our revised growth strategy focused on the convergence of operational technologies, information technologies and business environment solutions. This strategy, coupled with strong cash flow and profit growth, will allow 4Sight to further entrench itself as a leading technology solution provider in a burgeoning market sector.”