| Wed 25 Apr 2007, 17:00 | | MMG - MICROmega - Acquisition of Lubrequip and Fur |
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MMG
MMG
MMG - MICROmega - Acquisition of Lubrequip and Further Cautionary Announcement
MICROmega HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/003821/06)
(Share code: MMG & ISIN: ZAE000034435)
("MICROmega" or "the group")
ACQUISITION OF LUBRICATION EQUIPMENT (PROPRIETARY) LIMITED ("Lubrequip") AND
FURTHER CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the cautionary announcement published on 24 April 2007, MICROmega
shareholders are advised that MICROmega has entered into an agreement dated 23
March 2007 with the Bruce Carolin Family Trust ("Vendor") to acquire the entire
issued share capital of Lubrequip and its related businesses, with effect from 1
March 2007, for a total consideration of R9.5 million as detailed in paragraph 4
("the Acquisition") below.
2. NATURE OF BUSINESS OF LUBREQUIP
Since its inception in 1962, Lubrequip has built up an enviable reputation for
being a quality supplier of equipment associated to the process of lubrication
to mines, the automotive industry, the agricultural sector and general industry.
Its vast and ever-expanding product range includes anything from grease nipples
to sophisticated centralised lubrication systems and workshops.
Lubrequip is an industry leader in workshop lubrication installation, special
lubrication projects and lubrication product supplies.
3. RATIONALE FOR THE ACQUISITION
The acquisition of Lubrequip complements the group`s expansion in the automotive
sector comprising Automobile Radio Dealers Association (1989) (Proprietary)
Limited T/a Pro-Fit, Deltec Power Distributors (Proprietary) Limited and BTM
Manufacturing (Proprietary) Limited. The acquisition further enhances the
group`s existing presence in workshops and fitment centres as well as increasing
the customer base.
4. TERMS OF THE ACQUISITION
4.1 Acquisition, consideration and settlement terms
The acquisition consideration of R9.5 million will be settled
as follows:
4.1.1 First payment
- R3 million in cash will be paid and 1 000 000 MICROmega
shares will be issued to the Vendor of Lubrequip on the
closing date, which date shall be 3 (three) business days
after fulfilment of the conditions precedent referred to in
paragraph 5 below.
4.1.2 Second payment
- On publication of an external audit certificate certifying
that the net profit after tax of Lubrequip for the year
ended 28 February 2008 is not less than R1.75 million, then
R1.75 million in cash will be paid to the Vendor and
583 333 MICROmega shares will be issued to the Vendor.
- In the event that the net profit after tax is less than
R1.75 million then the Vendor will receive a pro rate
portion of both cash and MICROmega shares calculated as
follows:
- Shares: Actual net profits after tax divided by
R1 750 000 multiplied by 583 333; and
- Cash: Actual net profits after tax divided by
R1 750 000 multiplied by R1 750 000
5. CONDITIONS PRECEDENT
The implementation of the acquisition is subject to approval by the JSE, the
board of MICROmega and shareholders of MICROmega if necessary.
6. FINANCIAL EFFECTS OF THE ACQUISITION
The table below shows the per share effect of the acquisition of Lubrequip for
the year ended 31 December 2006. The pro forma financial effects, which are the
responsibility of the directors of MICROmega, have been prepared for
illustrative purposes only and, because of their nature, may not fairly present
MICROmega`s financial position as at 31 December 2006, or the effect of future
earnings. The financial effects are determined in accordance with the Listing
Requirements of the JSE.
Notes Audited Pro forma Pro forma Change
(%)
At After At
31 December Pro-Fit 31 December
2006 acquisition 2006
After
Lubrequip
Acquisition
Earnings per share 5 31.49 33.08 34.13 3.17
(cents)
Headline earnings
per share (cents) 6 33.45 35.02 36.06 2.97
Net asset value
per share (cents) 7 155.97 159.30 162.11 1.76
Net tangible asset 8 102.30 106.24
value per share
(cents) 104.24 1.92
Weighted average 9 94 971 048 96 759 904
number of shares 95 759 904
Total number of 9 96 325 695 98 114 551
shares in issue 97 114 551
Notes:
1.The figures in the "Audited" column are extracted from the
published audited results of MICROmega for the year ended 31
December 2006.
2.The figures in the "Previous acquisition" column are
extracted from the last SENS announcement regarding the
acquisition of Automobile Radio Dealers Association (1989)
(Proprietary) Limited T/a Pro-Fit
3.In the "After acquisition" column the results of Lubrequip`s
2006 financial year have been included using the available
management accounts which reliance has been placed upon.
4.If the acquisition was performed at 1 January 2006 it has
been assumed that the purchase price would not have changed
and there would have been additional goodwill of R1 349 743.
5.Earnings per share calculations in the "After acquisition"
column are based on the following assumptions:
-The acquisition was effective 1 January 2006
-The figures include the effect of the previous acquisition
of Automobile Radio Dealers Association (1989)(Proprietary)
Limited T/a Pro-Fit
-The net profit after tax of Lubrequip for the year ended 31
December 2006 was R1 349 743.
6.Headline earnings per share calculations in the "After
acquisition" column have been based on the following
assumptions:
-None of the earnings of Lubrequip are to be excluded for
Headline Earnings calculations.
7.Net asset value per share is calculated on a net asset value
of R150 242 562 for the "Audited" column, R154 706 198 for
the "Previous acquisition " column and R159 055 941 for the
"After acquisition" column with the adjustment comprising
both a R3 000 000 increase in share capital and premium and
the increase in retained earnings of R1 349 743.
8.Net tangible asset value per share is calculated on a
tangible net asset value of R98 542 087 for the "Audited"
column, R101 232 087 for the "Previous acquisition " column
and R104 232 087 for the "After acquisition" column with the
adjustment comprising a R3 000 000 increase in share capital
and premium.
9.The weighted average number of shares and the actual number
of shares in issue have been adjusted for the assumption that
the 1 000 000 shares were issued 1 January 2006 at a price of
R3.00.
7. OTHER MATTERS
The articles of Lubrequip will be amended to comply with the JSE`s Listing
Requirements.
8. CAUTIONARY ANNOUNCEMENT
Shareholders are advised that MICROmega is in negotiations, which if
successfully concluded, may have an effect on the price at which the company`s
securities trade on the JSE Limited.
Accordingly, shareholders are advised to exercise caution when dealing in
MICROmega securities, until such time as a full announcement is made.
Johannesburg, South Africa
25 April 2007
Sponsor: Vunani Corporate Finance (Pty) Ltd
Date: 25/04/2007 17:00:07 Produced by the JSE SENS Department.
