| Wed 29 May 2002, 0:00 | | MB TECHNOLOGIES: INTERIM RESULTS |
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MB TECHNOLOGIES
Registration number: 1998/008964/06
Share code: MBT ISIN: ZAE 000015996
INTERIM RESULTS
for the six months ended 28 February 2002
^ Turnover up 46%
^ Operating profit up 64%
^ Headline earnings per share up 91%
Income Statements
for the six months ended 28 February 2002
Group
Reviewed Reviewed Audited
28 February 28 February 31 August
2002 Change 2001 2001
R`000 % R`000 R`000
Revenue 1 335 386 46 915 922 1 990 578
Cost of sales 1 115 419 790 360 1 683 418
Gross profit 219 967 75 125 562 307 160
Operating costs 148 720 82 166 217 990
Operating profit before net
foreign exchange gains and
amortisation and depreciation 71 247 64 43 396 89 170
Amortisation and depreciation 15 483 4 259 13 307
Operating profit 55 764 42 39 137 75 863
Loss on discontinued operations - 3 359 11 650
Profit from ordinary activities
before income from investments 55 764 56 35 778 64 213
Income from investments - 1 731 945
Operating profit before
net interest paid 55 764 49 37 509 65 158
Net interest paid 4 332 2 961 7 306
- Interest paid 14 705 12 715 26 120
- Interest received (10 373) (9 754) (18 814)
Profit before
foreign exchange gains 51 432 49 34 548 57 852
Net foreign exchange gains 28 051 10 074 19 236
Profit before taxation 79 483 78 44 622 77 088
Taxation 21 133 8 987 16 959
Profit after taxation 58 350 64 35 635 60 129
Share of associates`
profits/(losses) 1 241 (4 081) (5 660)
Profit before
outside shareholders 59 591 89 31 554 54 469
Attributable to
outside shareholders 6 769 1 442 3 444
Profit for the period 52 822 75 30 112 51 025
Earnings per share
Basic earnings
per share (cents) 12,8 71 7,5 12,6
Fully diluted earnings
per share (cents) 12,7 72 7,4 12,5
Basic earnings per share
excluding foreign exchange
profits (cents) 8,1 42 5,7 9,3
Headline earnings
per share (cents) 15,3 91 8,0 16,3
Fully diluted headline earnings
per share (cents) 15,2 92 7,9 16,1
Headline earnings per share
excluding foreign exchange
profits (cents) 10,6 68 6,3 13,0
Headline earnings computed
as follows:
Profit for the period 52 822 30 112 51 025
Loss on discontinued operations 3 359 11 650
Goodwill amortisation 10 334 521 4 051
Leasehold improvements
written-off 206
Capital profit
on sale of investment (1 731) (1 000)
Headline earnings 63 156 96 32 261 65 932
Balance Sheets
at 28 February 2002
Group
Reviewed Reviewed Audited
28 February 28 February 31 August
2002 2001 2001
R`000 R`000 R`000
ASSETS
Non-current assets 394 894 227 807 317 893
Plant and equipment 33 735 20 237 30 872
Deferred taxation 5 292 5 568 7 004
Trademarks and goodwill 150 079 34 564 114 315
Investments and associates 205 788 167 438 165 702
Current assets 647 196 438 357 404 818
Inventory 169 198 115 935 110 891
Trade and other receivables 421 506 303 236 274 042
Bank balances and cash 56 492 19 186 19 885
TOTAL ASSETS 1 042 090 666 164 722 711
EQUITY AND LIABILITIES
Ordinary shareholders` equity 374 007 271 864 293 051
Outside shareholders` interest 15 173 6 125 8 757
Total shareholders` equity 389 180 277 989 301 808
Non-current liabilities
Long-term liabilities 6 925 17 325 13 150
Deferred taxation 7 898 65 4 701
Current liabilities 638 087 370 785 403 052
Trade and other payables 469 718 296 924 307 960
Current portion of
long-term liabilities 18 556 7 995 19 820
Amounts due to vendors for
businesses acquired - 17 883 -
Taxation payable 19 828 21 913 12 646
Bank overdrafts 129 985 26 070 62 626
TOTAL EQUITY AND LIABILITIES 1 042 090 666 164 722 711
Number of shares in issue
at end of period (`000) 438 962 405 734 406 457
Weighted average
number of shares (`000) 412 019 401 748 403 873
Fully diluted number of shares (`000) 415 597 406 739 409 472
Net asset value per share (cents) 85,2 67,0 72,1
Cash Flow Statements
for the six months ended 28 February 2002
Group
Reviewed Reviewed Audited
28 February 28 February 31 August
2002 2001 2001
R`000 R`000 R`000
Cash generated from operations (Note A) 15 271 47 994 126 665
Net interest paid (4 332) (2 961) (7 306)
Taxation paid (8 765) (4 129) (17 765)
Net cash flow from investing activities (56 845) (59 622) (144 756)
Net cash flow from financing activities 23 919 (20 748) (32 161)
Net decrease in cash
and cash equivalents (30 752) (39 466) (75 323)
Cash and cash equivalents
at beginning of period (42 741) 32 582 32 582
Cash and cash equivalents
at end of period (73 493) 6 884 (42 741)
(Note A):
Cash generated from operations
Profit before taxation 79 483 44 622 77 088
Adjustments for:
Interest received (10 373) (9 754) (18 814)
Interest paid 14 705 12 715 26 120
Amortisation and depreciation 15 483 4 259 13 307
(Profit)/Loss on disposal of property,
plant and equipment (66) - 757
Profit on disposal of subsidiaries,
investments and associates - (1 731) (945)
Net unrealised foreign exchange gains (28 051) (10 074) (16 996)
Translation differences (3 627) (2 536) (4 204)
Cash generated from operations before
working capital changes 67 554 37 501 76 313
Working capital changes (52 283) 10 493 50 352
(Increase)/Decrease in inventory (50 921) (3 368) 267
(Increase)/Decrease in trade and
other receivables (145 143) (23 407) 13 075
Increase in trade and other payables 143 781 37 268 37 010
Cash generated from operations 15 271 47 994 126 665
Statement of Changes in Equity
for the six months ended 28 February 2002
Non-
Share Share distributable Retained
capital premium reserves income Total
R`000 R`000 R`000 R`000 R`000
Balance at
31 August 2001 4 065 155 441 3 235 130 310 293 051
Foreign currency
translation reserve (3 274) (3 274)
Share issues net
of expenses 325 31 083 31 408
Profit for the period 52 822 52 822
Balance at
28 February 2002 4 390 186 524 (39) 183 132 374 007
GROUP OVERVIEW
MB Technologies is a global technology group operating in five sectors of
the IT industry: Retail Point-of-Sale Solutions (ePoS), Internet, Value-add
Distribution, Storage and Software and Services (e-Business).
INCOME STATEMENT
MB Technologies enjoyed another successful trading period despite
difficult trading conditions, with turnover increasing by 46% to R1,3
billion. The group`s initiative to improve margins is yielding positive
results. Improvements over the prior year have been achieved in both the
gross and EBITDA margins, with further improvements expected. Continued
strong demand for the group`s products and services, coupled with improved
operating margins, have resulted in operating profits before foreign
exchange gains and amortisation and depreciation increasing by 64% to R71,3
million from R43,4 million
Given the tough economic climate in the Software and Services industry,
the group has re-assessed the useful life of goodwill arising from the
acquisition of Software and Services-related businesses and has accelerated
the amortisation period of such goodwill from the previous seven years to
five years.
Despite the more aggressive amortisation policy, an increased net
interest charge for the period and a higher tax rate, net profit for the
period increased by 75% to R52,8 million from R30,1 million as a result of
strong turnover growth, improved operating margins, foreign exchange gains
and a positive contribution from associates. As a result of the Rand`s
devaluation, net foreign exchange gains of R28,1 million arose during the
period under review.
Headline earnings improved by 96% to R63,2 million from R32,3 million,
with headline earnings per share of 15,3 cents reflecting an increase of 91%
compared to the prior period. The computation of headline earnings per share
has taken into account amortisation of goodwill of R10,3 million and the
increased number of shares in issue following the shares for cash issue in
December 2001.
BALANCE SHEET
Permanent capital
In December 2001, the group`s permanent capital base was strengthened
through the issue of 30 000 000 shares for cash, raising R30,0 million. The
capital base has been further augmented by continued strong profitability
during the period under review.
Acquisitions
During the period under review, the group increased its shareholdings in
Smart Storage Technology Holdings and Advanced Consumables Technology and
now hold controlling shareholdings in both companies, resulting in goodwill
of R45,5 million in the period. In addition, the Group further strengthened
its position in the Nordic retail point-of-sale solutions market.
Investments
Investments and associates reflects the group`s investments in its
Internet operations and various dollar-based loans made to the Point-of-Sale
Solutions Group. In line with Generally Accepted Accounting Practice, these
dollar-based loans were restated at the ruling spot exchange rate at the
balance sheet date, resulting in the aforementioned foreign exchange gains.
Capital expenditure and contingencies
Capital expenditure incurred during the period amounted to R3,1 million
and operating lease commitments for premises and equipment amounted to
R127,1 million. Except for guarantees issued in the normal course of the
business, the group has no other material contingent liabilities.
CASH FLOW STATEMENT
Despite significant turnover growth achieved during the period, strong
working capital management resulted in an improvement in the Group`s net
working capital days when compared to the prior period. Investing activities
relate primarily to the acquisition of controlling stakes in SmartStor
Holdings and Advanced Consumables Technology.
DIVISIONAL PERFORMANCE AND PROSPECTS
International
Point-of-Sale Solutions
PC PoS, the international technology group operating in the point-of-sale
solutions sector, experienced strong growth during the period under review.
Gross margins continued to improve as a result of the focus on systems sold
under PC PoS` own proprietary brand, DigiPos and growth in services revenue.
Prospects for the next six months are good. The service offerings in
place in the UK will be replicated throughout the international customer
base and the move into North American markets is gaining momentum.
Internet
LiveTechnology, the US-based developer of Internet marketing
communication technology, has had a successful trading period. Its sale of
an exclusive license arrangement to Jupiter Media Metrix in relation to it`s
LiveStat technology, accelerated its profitability substantially during the
period. Jupiter Media Metrix has subsequently experienced cash flow
constraints and a proposed merger with fellow market leader, Net Ratings,
has been rejected by competition authorities, resulting in LiveTechnology
cancelling the license and bringing the LiveStat service back in-house.
The core focus of LiveTechnology is the provision of marketing
communication solutions and during the period, the company concluded a joint
venture with strategic investor Omnicom for the provision of these services
into its customer base.
A variety of projects are currently underway with a number of Omnicom
clients. Despite the relatively long sales cycles, the company is
experiencing good traction with these services, albeit in a still unsettled
Internet environment.
Systemsfusion develops proprietary software for Internet Service Provider
(ISP) automation and management as well as Application Service Provider
(ASP) delivery platforms.
In the period under review, the company concluded sales to a number of
new customers.
The provision of broadband services continues to grow at healthy rates,
providing increasing opportunities for Internet-hosted software services.
This, combined with the focus of telco`s and web-hosting facilities to
provide additional value-added services to their customers, augurs well for
the future of the company. Systemsfusion remains the technology leader in
this area and is benefiting further from the on-going ISP/ASP market
consolidation, which is driving demand for scaleable robust ISP
infrastructure management solutions. Systemsfusion will incur a small loss
for the year and is expected to move into profit in the new financial year.
Local
Value-add distribution
Tarsus Technologies, the group`s value-add distributor of the world`s top
PC, printer and peripheral hardware brands has continued to grow strongly.
The company`s historical growth was further enhanced by the demise of one of
its competitors.
Tarsus has accelerated its move into the provision of value-add services
to its channel and has also participated in the provision of local assembly
for one of the leading brands. This has resulted in margin improvements and
enhanced cash generation. The company is expected to continue to grow its
business in a controlled manner and the provision of value-add services will
ensure its margins are maintained in the future.
Storage
Storgate, the supplier of products and support for the world`s premier
storage products, is well on track to achieve its targets for the year.
Although the ongoing reduction in the dollar cost of disc drives at the
entry level makes revenue growth difficult, steady growth was achieved in
the storage-related solutions and services areas.
Memory Performance, a joint venture memory module manufacturing company
with Legend Australia, experienced a good trading period on the back of the
increase in memory prices.
SmartStor, the division`s storage solutions and services operation has,
over the period, made a significant investment in infrastructure and the
securing of highly skilled technical and sales executives. The company has
good prospects and is expected to move into profitability in the second half
of the year.
Software and Services (e-Business)
MB Worksoft (MBW), the group`s software and services business, has
experienced tough market conditions, which are expected to prevail for the
foreseeable future. Resolution continues to be the country`s largest
implementer of Microsoft Great Plains solutions. The Contact Centre division
developed strong international prospects which, together with its local
customer base, will assist this division in maintaining its profit growth.
MBW`s Infrastructure division had a difficult period and did not meet profit
budgets. The division is in the process of rationalising its operations, at
the same time developing new alliances that are expected to enhance
profitability in the short term.
Group prospects
The group expects both local and global conditions to remain difficult
for the rest of the year. The core businesses are trading strongly and are
expected to maintain their historical growth trends. The Internet technology
investments are expected to produce a good return on investment in the
future.
Accounting policies
The accounting policies used in the preparation of the financial
statements for the half-year ended 28 February 2002 are consistent with
those applied in the prior period and comply with Generally Accepted
Accounting Practice.
Post-balance sheet event
Post 28 February 2002, the Rand has strengthened significantly against
the US Dollar. Should the exchange rate at 31 August 2002 remain at the
current improved levels, this will materially reduce the foreign exchange
gains to be reported for the full 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 2002.
Future dividends will depend on the need to retain funds for the group`s
further expansion.
Further cautionary announcement
Further to the announcement dated 16 April 2002, shareholders are advised
that the company is still involved in discussions which may have an effect
on the price of its shares. Shareholders are accordingly advised to continue
to exercise caution when dealing in MB Technologies` shares.
A further announcement will be made as soon as possible.
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 available at www.mb-tech.com
Registration number: 1998/008964/06
Share code: MBT
ISIN: ZAE 000015996
Date: 29/05/2002 07:15:00 AM Produced by the SENS Department
