| Wed 9 Nov 2005, 16:30 | | MICROmega - The related party disposal by MICROmeg |
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MICROmega - The related party disposal by MICROmega
MICROMEGA HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/003821/06)
Share code: MMG & ISIN: ZAE000034435
("MICROmega" or "the Company")
THE RELATED PARTY DISPOSAL BY MICROMEGA OF 50% OF THE ISSUED SHARE CAPITAL OF
MICROMEGA REVENUE MANAGEMENT SOLUTIONS (PTY) LIMITED ("THE DISPOSAL")
THE DISPOSAL
Shareholders are advised that an agreement has been concluded for the disposal
of 50% of the issued share capital of MICROmega Revenue Management Solutions
(Pty) Limited ("MRMS"), to Mzimkhulu Financial Investments (Pty) Limited
("Mzimkhulu"). Negotiations, whilst recently concluded, were initiated in June
2004 and the delay in execution was a result of the internal corporate
restructuring within MRMS, as well as the need to identify and adopt the correct
funding mechanisms for Mzimkhulu. Consequently the effective date of this
transaction is 1 January 2005.
RATIONALE FOR THE DISPOSAL
MRMS is South Africa"s largest revenue management service provider to Local
Government. The business has been in existence for more than thirty years and
boasts a client base that includes three of the six Metropolitans. MRMS
generates approximately 26% of the total revenue of MICROmega.
Over the past eighteen months MICROmega has invested some ten million Rand in
transforming and reorganising the internal operations of MRMS. The net result is
a reduction in fixed operating costs and a material enhancement in operating
margins. MRMS employs 244 people, and the company is pleased to report that it
has concluded its internal transformation programme with the staff complement
now represented by 203 previously disadvantaged individuals.
In an effort to ensure that shareholder value is received through this
transaction, MICROmega sought out investors that had extensive knowledge and
experience in both Local Government and revenue management. This is best
illustrated by the fact that two of the four directors representing Mzimkhulu"s
interests in MRMS are ex municipal revenue managers. Furthermore, MRMS has had
an active working relationship with Mzimkhulu for the past eighteen months and
members of Mzimkhulu have been represented on the main board of MICROmega since
2004.
This transaction represents an ongoing process within MICROmega to ensure
sustainability and sound economic growth in earnings.
THE PURCHASE CONSIDERATION
Mzimkhulu will acquire 50% of the issued share capital of MRMS for a purchase
consideration of R32.5 million.
The consideration shall be funded by the MICROmega Empowerment Fund. The
MICROmega Empowerment Fund was created in 2004 to support empowerment
initiatives and transformation within the MICROmega group of companies. The Fund
is a division of MICROmega.
The funds advanced to Mzimkhulu bear interest at the prime lending rate as
calculated by First National Bank from time to time, and shall be repaid by
Mzimkhulu over a seven year period.
PRO FORMA FINANCIAL EFFECTS
Notes Before After %
change
Headline earnings per share 1& 2 6.01 6.55 8.98%
(cents)
Net asset value per share 3 98.29 125.67 27.85%
(cents)
Net tangible asset value per 3 64.22 91.92 43.13%
share (cents)
Weighted number of shares in 89 280 89 280 -
issue (`000)
Number of shares in issue 92 355 92 355 -
(`000)
Earnings per share before 4 R3 496
disposal(`R 000) 1 232
Net interest accrued (`R 000) R25 101
Net capital profit on 5 (R 751)
disposal (R`000) R29 078
Minorities interest(R"000)
Earnings per share after
disposal(R"000)
Notes
The figures in the "Before" column were extracted from the published
unaudited results of MICROmega for the six months ended 30 June 2005.
The headline earnings per share calculation in the "After column is based
on the following assumptions:
- The disposal was effective 1 January 2005.
- MICROmega had a weighted average number of shares of 89 280 169 in
issue during the period.
Net asset value and net tangible value per share are based on the following
assumptions:
- The net asset value and net tangible value in the "Before" column on
the published unaudited balance sheet at 30 June 2005 was R90.7
million and R59.3 million respectively.
- The net asset value and net tangible value in "After column at 30 June
after the disposal was R116.3 million and R84.8 million respectively.
The earnings per share in the "Before column were extracted from the published
unaudited results of MICROmega for the six months ended 30 June 2005.
Minorities interest in the "After" column represents Mzimkhulu"s 50% interest in
MRMS.
APPLICATION OF PROCEEDS
The proceeds from the disposal will be utilised in a manner that will ensure
sustainable economic growth in earnings.
CONDITIONS PRECEDENT
The purchase is conditional upon the following conditions precedent:
- the approval of the disposal by shareholders of MICROmega in general
meeting by no later than 31 December 2005; and
- the approval of the relevant authorities.
OPINIONS, CONSENTS AND RECOMMENDATIONS
In accordance with the Listings Requirements of the JSE Limited, PKF (JHB) Inc.
have been appointed to consider the terms and conditions of the disposal, and
their opinion will be available in the circular to shareholders.
The directors of MICROmega are of the opinion that the terms and conditions of
the disposal are fair and reasonable to shareholders, and recommend that
shareholders vote in favour of the resolutions to be proposed at the general
meeting. The directors holding shares have all indicated their intention to
vote in favour of all the resolutions at the general meeting in respect of their
own holdings of MICROmega shares.
RELATED PARTY TRANSACTION
The transaction is classified as a related party transaction in terms of the JSE
Listings Requirements, as Messrs Seabi and Mpanza are directors of MICROmega
Holdings Limited, and Messrs Mageza and Makgamatha are directors of MICROmega
Revenue Management Solutions (Pty) Limited. All four of the afore-mentioned are
directors and equal shareholders of Mzimkhulu Financial Investments (Pty)
Limited.
SALIENT DATES AND TIMES
2005
Circular and notice of general meeting posted on Tuesday, 29 November
Last day for lodging form of proxy by 10:00am on Monday, 12 December
General meeting of MICROmega shareholders to be
held at 10:00am on Wednesday, 14 December
Results of general meeting released on SENS Wednesday, 14 December
Results of general meeting published in the press
on Thursday, 15 December
CIRCULAR TO SHAREHOLDERS AND GENERAL MEETING
The general meeting will be convened for 10:00am on Wednesday, 14 December 2005
in the boardroom of MICROmega Holdings Limited, Block C, Chislehurston Office
Park, 19 Impala Road, Chislehurston, Sandton 2196 for the purpose of
considering, and if deemed fit, passing with or without modification, the
resolutions required to approve and implement the disposal.
A circular to shareholders detailing the transaction will be posted to
shareholders on or about 29 November 2005.
SANDTON
8 November 2005
Sponsor
LPC Manhattan Moela (Pty) Limited
Date: 09/11/2005 04:30:05 PM Produced by the JSE SENS Department
