| Wed 4 Apr 2001, 0:00 | | Mb Technologies - Interim Results |
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MB TECHNOLOGIES LIMITED
Registration number 1998/008964/06
INTERIM RESULTS
For the six months ended 28 February 2001
TURNOVER UP 31%
OPERATING PROFIT BEFORE AMORTISATION AND DEPRECIATION UP 57%
NET PROFIT UP 38%
HEADLINE EARNINGS PER SHARE UP 40%
Income Statements
For the six months ended 28 February 2001
Reviewed Reviewed Audited
28 February 29 February 31 August
2001 Change 2000 2000
R'000 % R'000 R'000
Revenue 915 922 31 699 219 1 524 641
Cost of sales 790 360 611 552 1 329 818
Gross profit 125 562 43 87 667 194 823
Operating costs 72 092 53 509 127 976
Operating profit before
amortisation and depreciation 53 470 57 34 158 66 847
Amortisation and depreciation 4 259 2 056 5 348
Operating profit 49 211 53 32 102 61 499
Loss on discontinued operation 3 359 - -
Profit from ordinary activities
before income from investments 45 852 43 32 102 61 499
Income from investments 1 731 - 776
Operating profit before
net interest paid 47 583 48 32 102 62 275
Net interest paid 2 961 3 026 5 255
- Interest paid 12 715 12 756 25 298
- Interest received (9 754) (9 730) (20 043)
Profit before taxation 44 622 54 29 076 57 020
Taxation 8 987 6 305 8 784
Net profit after taxation 35 635 56 22 771 48 236
Share of associates'
retained (losses)/profits (4 081) (266) 1 249
Net profit before
outside shareholders 31 554 22 505 49 485
Attributable to
outside shareholders 1 442 746 2 748
Net profit for period 30 112 38 21 759 46 737
Basic earnings per share (cents) 7,5 32 5,7 12,1
Fully diluted earnings
per share (cents) 7,4 30 5,7 12,0
Headline earnings
per share (cents) 8,0 40 5,7 11,7
Fully diluted headline earnings
per share (cents) 7,9 39 5,7 11,7
Number of shares in issue ('000):
At end of period 405 734 379 936 400 936
Weighted average number of shares 401 748 378 875 387 698
Fully diluted number of shares 406 739 381 511 390 934
Net asset value per share (cents) 67,0 35,3 59,2
Balance Sheets
At 28 February 2001
Reviewed Reviewed Audited
28 February 29 February 31 August
2001 2000 2000
R'000 R'000 R'000
Assets
Non-current assets 227 742 101 144 152 155
Property, plant and equipment 20 237 17 911 16 180
Deferred taxation 5 503 1 992 4 082
Trademarks and goodwill 34 564 13 510 380
Investments and associates 167 438 67 731 131 513
Current assets 438 357 357 534 394 134
Inventory 115 935 93 945 100 769
Trade and other receivables 303 236 258 373 256 196
Bank balances and cash 19 186 5 216 37 169
Total assets 666 099 458 678 546 289
Equity and liabilities
Shareholders' equity 271 864 134 136 235 960
Outside shareholders' interest 6 125 9 908 1 564
Total shareholders' equity 277 989 144 044 237 524
Non-current liabilities
Long-term liabilities 17 325 38 706 22 682
Current liabilities 370 785 275 928 286 083
Trade and other payables 295 514 187 981 229 407
Provisions 1 410 987 1 898
Current portion of
long-term liabilities 7 995 9 054 19 518
Amounts due to vendors of
businesses acquired 17 883 17 950 17 883
Taxation 21 913 6 815 12 790
Bank overdrafts 26 070 53 141 4 587
Total equity and liabilities 666 099 458 678 546 289
Cash Flow Statements
For the six months ended 28 February 2001
Reviewed Reviewed Audited
28 February 29 February 31 August
2001 2000 2000
R'000 R'000 R'000
Net cash inflow/(outflow) from
operating activities (see Note A) 50 978 (44 995) 26 288
Net cash outflow from investing
activities (69 696) (65 856) (128 689)
Net cash (outflow)/inflow from
financing activities (20 748) 5 676 77 733
Net decrease in cash and
cash equivalents (39 466) (105 175) (24 668)
Cash and cash equivalents at
beginning of period 32 582 57 250 57 250
Cash and cash equivalents
at end of period (6 884) (47 925) 32 582
Note A: Net cash inflow/(outflow)
from operating activities
Profit before taxation 44 622 29 076 57 020
Adjustments for:
Interest received (9 754) (9 730) (20 043)
Interest paid 12 715 12 756 25 298
Amortisation and depreciation 4 259 2 056 5 348
Profit on disposal of investments (1 731) - (776)
Other non-cash items (2 536) 894 (1 381)
Operating profit before working
capital changes 47 575 35 052 65 466
Working capital changes 10 493 (70 388) (27 270)
(Increase)/Decrease in inventory (3 368) 5 095 1 636
(Increase)/Decrease in receivables (23 407) (54 250) (45 010)
Increase/(Decrease) in payables 37 268 (21 233) 16 104
Cash generated from/
(utilised in) operations 58 068 (35 336) 38 196
Net interest paid 2 961 3 026 5 255
Taxation paid 4 129 6 633 6 653
50 978 (44 995) 26 288
Statement of Changes in Equity
For the six months ended 28 February 2001
Reviewed
Non-dis
tribu-
Share Share table Retained
capital premium reserves income Total
R'000 R'000 R'000 R'000 R'000
Balance at 31 August 2000 4 009 148 366 4 300 79 285 235 960
Net profit for period - - - 30 112 30 112
Foreign currency translation
reserve - - (579) - (579)
Share issues net of expenses 48 6 323 - - 6 371
Balance at 28 February 2001 4 057 154 689 3 721 109 397 271 864
Segmental Reports: Graphics, see press for detail
COMMENTS
GROUP OVERVIEW
MB Technologies is a global technology group operating in five sectors of the
IT industry. These divisions comprise Point-of-Sale Solutions (e-PoS),
Internet, Value-add distribution, Storage and e-Business.
The strategic objective of the group is to maintain strong earnings growth in
core businesses, whilst investing in new global initiatives.
INCOME STATEMENT
MB Technologies enjoyed another successful trading period. Turnover increased
by 31%, while operating income before income from investments increased by 43%
to R45,9 million after taking into account a loss on discontinuance in lan
Design of R3,4 million. Operating profit margins increased from 4,6% to 5,4% as
a result of a move toward higher margin opportunities as well as new start-ups
becoming profitable.
Income from investments of R1,7 million primarily represents a capital profit
on the disposal of the group's interest in e-MD, an Internet medical community
company.
The retained losses of associates of R4,1 million comprise the group's share of
locally based operating costs incurred by the Internet associates as well as
the start-up losses incurred by the jointly owned memory manufacturing
operation.
Net profit for the period of R30,1 million has increased by 38,4% with headline
earnings per share increasing 40% from 5,7 cents to 8,0 cents. The computation
of headline earnings per share has taken into account the loss of discontinued
operations of R3,4 million, amortisation of goodwill of R0,5 million and the
capital profit on sale of investments of R1,7 million.
Balance sheet
Permanent capital
On 23 March 2000 the group's permanent capital base was strengthened through
the issue of 21 000 000 ordinary shares for cash, raising R115,5 million. The
capital base has been further augmented by continued strong profitability in
both the second half of the financial year ended 31 August 2000 and the current
period under review.
Acquisitions
During the period under review the group's international presence in the
point-of-sale solutions market was further strengthened with the acquisition of
IS Retail, a software company in the United Kingdom. PC PoS Germany also
acquired Kassen Deitrich, a German regional point-of-sale company.
Disposals
In line with the group's strategy to increase its focus, LAN Design and e-MD
were sold during the period under review.
Investments
The increase in investments and associates reflect the group's investments in
its Internet operations, various offshore investments in retail solutions and
the group's investment in Smart Storage Technologies.
Capital expenditure and contingencies
Capital expenditure incurred during the period amounted to R6,3 million.
Operating lease commitments for premises and equipment amounted to R30,8
million. Except for guarantees issued in the normal course of business, the
group has no other material contingent liabilities.
DIVISIONAL PERFORMANCE AND PROSPECTS
International
e-PoS
PC-PoS, an internationally recognised technology group operating in the
point-of-sale solutions sector, advanced its positions in Europe and Asia after
making a number of acquisitions in the prior period. The sales of the PC
PoS-developed DigiPos products continued to grow and this, coupled with the
regular release of new products, has enabled the group to win significant
market share in Europe.
The UK, French, German and South African subsidiaries produced positive
results. The Middle East, Danish and Australian subsidiaries did not achieve
their first half budgets but are nevertheless expected to do so in the second
half.
PC-PoS continues to design leading and innovative hardware and this, together
with the ongoing global expansion of its subsidiaries, should see the PC PoS
group achieve its targeted Initial Public Offering (IPO) within the next few
years.
During the six months to February, the group acquired IS Retail, a UK-based
point-of-sale software company that also provides consultancy services to
medium-sized and large retailers. This acquisition is part of a global strategy
to address the growing interest from large retailers for the DigiPos discless
point-of-sale products powered by online applications sourced from service
providers.
INTERNET
LiveTechnology, a US-based developer of technology for the Internet and related
markets, is in the process of finalising a technology licence agreement with a
leading Internet traffic and user profiling company and is currently involved
in a number of other technology sale agreements. The company continues to
develop innovative technology and despite the current turmoil in the Internet
market, LiveTechnology and its products are well positioned for profitable,
sustainable growth.
Systemsfusion leads the quest in providing Internet Service Providers (ISPs)
with technology that automates their own processes and allows them to deliver
web-hosted applications to their customers. Accordingly, Systemsfusion is well
placed to provide ISPs with automation technology on a profitable basis. The
company and its ISP customers are also suitably positioned to take advantage of
the Application Service Provider model as and when the market develops.
The recent success of a pilot site with one of the world's leading
telecommunication companies will assist Systemsfusion to move into sustainable
profitability in the near future.
Local
Value-add distribution
Tarsus Technologies, the group's value-add distribution company, maintained its
good performance in the six months to February. The group's policy of tight
working capital management was maintained throughout the period. Selected
turnover growth coupled with a focus on higher margin business and improved
internal efficiencies contributed to the company's success during the period
under review.
In line with the group's strategy of streamlining and focusing its distribution
businesses, LAN Design was disposed of during the period.
Storage
Storgate increased its sales of storage systems and software for the corporate
market, although overall growth was affected by a shortage of entry level disc
drives. The supply problem was solved in January and the company is expected to
achieve its budgeted annual profits.
Memory Performance, a joint venture memory module manufacturing company with
Legend Australia, continued to boost its sales as the market increasingly
appreciated the high quality of the product. A large reduction in memory prices
impacted negatively on the Rand value of revenues and profits and the company
made a loss in the half-year. The company continues to gain market share and
this, together with an expected increase in the price of memory, should see the
company make a profit in the second half.
SmartStor is a new company formed to focus on storage consulting and storage
solutions for the corporate market. This is an exciting global opportunity,
which the group is in the process of developing in conjunction with
international partners.
e-Business
MB Worksoft, which provides e-commerce enablement solutions for the mid- to
large corporate market, experienced a successful first half. The company gained
a number of new customers and is on track to achieve its budgeted objectives.
Accounting policies
During the year ended 31 August 2000, the group changed its deferred tax
accounting policy to comply with the revised AC 102, which resulted in deferred
tax assets being raised in the balance sheet. Previously, the group did not
raise deferred tax assets. Accordingly, the comparative taxation charge and net
profit have been restated to take account of the changed accounting policy.
With this exception, the accounting policies used in the preparation of the
financial statements for the six months ended 28 February 2001 are consistent
with those applied in the prior year.
Review by the independent auditors
The financial information set out in this announcement has been reviewed, but
not audited, by Deloitte & Touche, whose unqualified review report is available
for inspection at the company's registered office.
Dividends
No dividends were declared for the six months ended 28 February 2001. Future
dividends will depend on the need to retain funds for the group's further
expansion.
Prospects
The group is well positioned with its current businesses to maintain its
earnings growth for the foreseeable future. In the medium term, the global
expansion of the group's storage systems business, SmartStor, coupled with the
opportunities arising out of the technology-based Internet companies, both of
which are expected to be profitable in the near future, will ensure further
sustainable growth.
The group's diversified portfolio of strongly growing businesses has limited
its downside exposure in periods of market correction. The group intends to
increase its focus around the high margin, low risk larger opportunities that
it has identified and proven as sustainable. This, coupled with the global
nature of the opportunities identified, will ensure that the group's strong
historical growth will be maintained in the future.
For and on behalf of the Board
M J McGrath L C Baxter
Non-executive Chairman Chief Executive Officer
Directors
L C Baxter (Chief Executive Officer), C T Elphick (Non-executive) G R
Fullerton, M J McGrath (Non-executive Chairman), G B McGregor
Registration number 1998/008964/06
Full results including audio results presentation available at www.mb-tech.com
