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Masthead’s Takeover Offer For Vertex Opens

15 March 2005

Masthead’s Takeover Offer For Vertex Opens

Masthead Equities Limited’s cash offer of $1.90 a share for 100% of Vertex Group Holdings Limited opens today with a mail out to shareholders.

Masthead director Mark Stewart said the offer represented a very attractive premium over the historical performance of Vertex shares.

“Immediately prior to our bid Vertex shares were trading at $1.60 and this price probably reflected speculation regarding imminent corporate activity,” he said.

“Since issuing its first profit warning in September 2002, the shares have traded at an average price of $1.49.”

Masthead’s offer was also generous in terms of Vertex’s performance since listing in 2002, Mr Stewart said.

“Back then the company was forecasting a half year profit after tax of $2.3 million for the six months to September 2002, but reported $1.7 million. For the financial year to March 2003 the projection was for a net profit after tax of $5.8 million. The reported figure was $1.2 million.

“The projection for the September 2003 half year of $3.7 million also fell short at $2.2 million.

“Since then Vertex has lifted its performance to report a net profit after tax of $5 million for the 2004 financial year, still 16 per cent below the prospectus forecast for the 2003 year.

“The latest guidance from the company indicates that the full year net profit for the 2005 financial year ending this month will be inline with 2004, at close to $5 million clearly indicating a company lacking growth.

“Shareholders expectations on dividends have also been reduced. After the initial 14.2 cents a share paid for the 2003 financial year, interim dividends were suspended. A final dividend of 4 cents a share was declared for the 2004 year. Interim dividends have yet to be resumed.”

Masthead’s cash offer of $1.90 values Vertex at $61 million. The offer is conditional on Masthead Equities obtaining 90 per cent of the ordinary shares in Vertex.

“We believe our offer is a compelling one for shareholders but it requires us achieving a 90% holding. If sufficient shareholders do not accept, our offer will not be successful and all shareholders will miss out on this opportunity. If this happens, the Vertex share price will likely fall back to the low levels it consistently traded at prior to our offer.

“Our offer provides certainty for all shareholders at a time when the future of Vertex is far from certain.”

Masthead is being advised in this transaction by investment bankers Cameron & Company.

ENDS

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