| Tue 9 Oct 2001, 0:00 | | Mb Technologies - Audited Results |
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AUDITED RESULTS
Year ended 31 August 2001
Turnover up 31%
Operating profit up 62%
Cash generated from operations up 285%
Headline earnings per share up 39%
Income Statement
for the year ended 31 August 2001
Group
31 August 31 August
2001 Change 2000
R'000 % R'000
Revenue 1 990 578 31 1 524 641
Cost of sales 1 683 418 1 329 818
Gross profit 307 160 58 194 823
Operating costs 198 754 127 976
Operating profit before amortisation
and depreciation 108 406 62 66 847
Amortisation and depreciation 13 307 5 348
Operating profit 95 099 55 61 499
Loss on discontinued operations 11 650 -
Profit from ordinary activities before
income from investments 83 449 36 61 499
Income from investments 945 776
Operating profit before net interest paid 84 394 36 62 275
Net interest paid 7 306 5 255
- Interest paid 26 120 25 298
- Interest received (18 814) (20 043)
Profit before taxation 77 088 35 57 020
Taxation 16 959 8 784
Net profit after taxation 60 129 25 48 236
Share of associates' retained
(losses)/profits (5 660) 1 249
Net profit 54 469 10 49 485
Attributable to outside shareholders 3 444 2 748
Net profit for the year 51 025 9 46 737
Basic earnings per share (cents) 12,6 4 12,1
Fully diluted earnings per share (cents) 12,5 4 12,0
Headline earnings per share (cents) 16,3 39 11,7
Fully diluted headline earnings
per share (cents) 16,1 38 11,7
Headline earnings computed as follows:
Net profit for the year 51 025 46 737
Loss on discontinued operations 11 650 -
Goodwill amortisation 4 051 -
Leasehold improvements written off 206 -
Capital profit on sale of investment (1 000) (1 400)
Headline earnings 65 932 45 45 337
Balance Sheet
at 31 August 2001
Group
31 August 31 August
2001 2000
R'000 R'000
ASSETS
Non-current assets 308 973 152 155
Property, plant and equipment 30 872 16 180
Deferred taxation 2 303 4 082
Trademarks and goodwill 114 315 380
Investments and associates 161 483 131 513
Current assets 404 818 394 134
Inventory 110 891 100 769
Trade and other receivables 274 042 256 196
Bank balances and cash 19 885 37 169
TOTAL ASSETS 713 791 546 289
EQUITY AND LIABILITIES
Share capital and reserves 293 051 235 960
Minority interests 8 757 1 564
Total shareholders' equity 301 808 237 524
Non-current liabilities
Long-term liabilities 8 931 22 682
Current liabilities 403 052 286 083
Trade and other payables 307 960 231 305
Current portion of long-term liabilities 19 820 19 518
Amounts due to vendors for
businesses acquired - 17 883
Taxation 12 646 12 790
Bank overdrafts 62 626 4 587
TOTAL EQUITY AND LIABILITIES 713 791 546 289
Number of shares in issue ('000):
At end of period 406 457 400 936
Weighted average number of shares 403 873 387 698
Fully diluted number of shares 409 472 413 819
Net asset value per share (cents) 72,1 58,9
Cash Flow Statement
for the year ended 31 August 2001
Group
31 August 31 August
2001 2000
R'000 R'000
Net cash inflow from
operating activities 101 180 26 288
Net cash outflow from
investing activities (146 350) (128 689)
Net cash (outflow)/inflow from
financing activities (30 153) 77 733
Net decrease in cash and cash equivalents (75 323) (24 668)
Cash and cash equivalents at
beginning of year 32 582 57 250
Cash and cash equivalents at end of year (42 741) 32 582
Statement of Changes in Equity
for the year ended 31 August 2001
Non-
distri-
Share Share butable Retained
capital premium reserves income Total
R'000 R'000 R'000 R'000 R'000
Group
Balance at 31 August 2000 4 009 148 366 4 300 79 285 235 960
Foreign currency
translation reserve (1 065) (1 065)
Share issues net
of expenses 56 7 075 7 131
Net profit for
the year 51 025 51 025
Balance at 31 August 2001 4 065 155 441 3 235 130 310 293 051
GROUP OVERVIEW
MB Technologies is a global technology group operating in five sectors of
the IT industry. These divisions comprise Point of Sale Solutions, Internet,
Value-Add Distribution, Storage and e-Business.
INCOME STATEMENT
MB Technologies enjoyed another successful year despite tough trading
conditions. The group has achieved a compound growth in headline earnings
per share of 37% since listing in 1998 with headline earnings per share of
16,3 cents for the year under review reflecting an increase of 39% over the
prior year.
Turnover increased by 31% to R1,99 billion with operating profit before
amortisation and depreciation improving by 62% to R108,4 million. The
changing mix of the group's businesses has resulted in the operating margin
before amortisation and depreciation increasing to 5,5% compared with 4,4%
in the prior year. Continued margin improvement is expected as the higher
margin solutions and services companies increase their overall contribution
to the group's earnings.
The loss on discontinued operations of R11,7 million arose from the
discontinuance of LAN Design and the closure of the Dubai and Hong Kong
offices of PC PoS. The business in these areas will in future be covered
from the South African and Taiwan offices respectively.
The retained losses of associates of R5,7 million (interim 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.
CASH FLOW STATEMENT
Strong trading throughout the group resulted in R101,2 million cash being
generated from operating activities, up from R26,3 million in the prior
year. R146,4 million was invested in the expansion of local and
international businesses. Working capital remains under tight control with
24 days stock and 44 days debtors outstanding at year-end, reflecting
improvements of 4 days and 10 days respectively over the prior year.
BALANCE SHEET
Acquisitions
During the period under review PC PoS acquired a UK-based point of sale
services company VISTA, as well as German point-of-sale company Kassen
Dietrich. The group also acquired controlling shareholdings in a number of
software and services companies within the MB Worksoft division. Goodwill
amounting to R113,9 million arose as a result of these expansion
initiatives.
Investments
The increase in investments and associates reflects the group's investments
in its Internet operations, various offshore investments in Point of Sale
Solutions businesses and the group's investment in Smart Storage
Technologies.
Capital expenditure and contingencies
Capital expenditure incurred during the period amounted to R22,6 million
of which R9,1 million relates to leasehold improvements to cater for
expansion.
Operating lease commitments for premises and equipment amounted to R130,2
million. Except for guarantees issued in the normal course of business, the
group has no other material contingent liabilities.
DIVISIONAL PERFORMANCE AND PROSPECTS
International
Point of Sale
PC PoS exceeded its targets in a successful year. New subsidiaries were
acquired in the UK and Germany. The company's Digipos range of point of sale
products is now recognised as being amongst the top four in Europe.
Internet
LiveTechnology concluded an exclusive licensing and reseller agreement with
Nasdaq-listed Jupiter Media Metrix. This agreement, together with further
strategic relationships developed in conjunction with co-shareholder
Omnicom, will assist the company in meeting its growth objectives.
Systemsfusion continued to invest in the development of its software
which includes automation and on-line software provisioning suites. The ISP
market consolidation, coupled with the slower than expected uptake of on-
line software application services, has delayed Systemsfusion's growth and
move into profitability.
Local
Value-add distribution
The division had a good year and continued to show year on year profit
growth. A combination of excellent staff, superior systems, together with
tight control on working capital and the supply of value-add services,
allowed the division to show an increase in its net margin percentage.
Storage
Storgate showed good growth in unit sales during the year. The large
decrease in the cost per megabyte of disc storage resulted in a marginal
decline in revenue which was partly offset by an increase in the sale of
value-add products, resulting in profitability being maintained. The
division's memory plant was negatively affected by a large decrease in the
price of memory over the year.
During the year the group invested in a new company, Smartstor, which is
focused on the provision of high-end storage solutions and services to the
corporate market.
e-Business
With the development phase of this division now completed, the minority
interests in a number of companies were acquired. Overall profitability
improved as the year progressed and the company was successful in growing
its overall revenues by 95% with annuity type income representing some 72%
of total revenue.
GROUP PROSPECTS
INTERNATIONAL
PC PoS has identified exciting international opportunities that will further
accelerate its Digipos product sales. Innovative new products have been
developed which will be released in the year ahead resulting in ongoing
market share gains and increased service annuity income.
LiveTechnology and Systemsfusion both have high growth opportunities. The
agreements which LiveTechnology have concluded and are in the process of
concluding, are expected to result in overall profit for the year.
Systemsfusion is not expected to be profitable in the next financial year,
although a technology joint venture agreement could change this.
Local
The value-add distribution companies are continuing to grow their market
share and have the added opportunity of entering new markets or expanding
their product ranges on a selected basis.
The Storage Division is expected to show good overall growth as a result
of the increase in demand for both storage products and services. The
considerable expertise built up within Smartstor over the last six months
has created the opportunity for this company to be expanded globally in
conjunction with our international partners.
The e-Business Division has entered the new year with significant
business on hand. The divisional growth should exceed the overall group
growth and contribute to a further increase in operating margin.
Conclusion
MB Technologies group companies have good opportunities to grow market
share.
The historical success of MB Technologies can be attributed to the
group's operating philosophy and structure. This involves partnering with
key management in each subsidiary and allowing them to run their businesses
as entrepreneurs. This model will continue to be a cornerstone of the future
growth of the group.
Accounting Policies
The group has complied with AC 131, which resulted in goodwill arising on
acquisition of subsidiaries being capitalised and amortised over a period
not exceeding ten years. Previously, the group wrote off such goodwill
against reserves on acquisition.
The accounting policies used in the preparation of the financial
statements for the year ended 31 August 2001 are consistent with those
applied in the prior year and comply with Generally Accepted Accounting
Practice.
Dividends
No dividend was declared for the year ended 31 August 2001.
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
Full results including audio results presentation available at www.mb-
tech.com
