Sharenet Sites 
Sharenet Sites
MMG - MICROmega - Acquisition of Pro-Fit 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 AUTOMOBILE RADIO DEALERS ASSOCIATION (1989) (PROPRIETARY) LIMITED T/A PRO-FIT ("Pro-Fit") AND FURTHER CAUTIONARY ANNOUNCEMENT 1. INTRODUCTION Further to the cautionary announcement published on 12 April 2007, MICROmega shareholders are advised that MICROmega has entered into an agreement dated 15 March 2007 with the Joint Sellers of Pro-Fit ("the Vendors"), represented by Mr D Wright, to acquire the entire issued share capital of Pro-Fit and its related businesses, with effect from 1 January 2007, for a total consideration of R9.74 million as detailed in paragraph 4 ("the Acquisition") below. 2. NATURE OF BUSINESS OF PRO-FIT Pro-Fit is a distributor of automotive air conditioning, car audio systems and automotive security to fitment centres throughout Southern Africa. The business started in 1966 as a platform of information shared amongst ten automotive fitment centres. In 1973 these fitment centres formed the Automobile Radio Dealers Association. The modus operandi of the association was to collate bulk orders from the members and distribute the goods at advantageous prices to them. Due to the success and size of the operations the private company was formed in 1989 and became a fully operational business. 3. RATIONALE FOR THE ACQUISITION The acquisition of Pro-Fit complements the group`s expansion in the automotive components sector, currently comprising Deltec Power Distributors (Proprietary) Limited and BTM Manufacturing Proprietary) Limited. The acquisition further offers the group direct access to the after sales market of fitment centres both for existing and new products. This acquisition should benefit the logistical and administrative requirements of the group`s companies in this sector. 4. TERMS OF THE ACQUISITION 4.1 Acquisition, consideration and settlement terms The acquisition consideration of R9.74 million will be settled as follows: 4.1.1 First payment - R5,55 million in cash will be paid to the Vendors of Pro- Fit 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 - R2.69 million worth of MICROmega shares on 4 February 2008. The formula used to determine the number of shares to be issued to the Vendors will be calculated as follows: R2.69 million divided by the MICROmega closing price as at 1 February 2008 4.1.3 Third payment - On publication of an external audit certificate certifying that the net profit after tax of Pro-Fit for the year ended 31 December 2007 is not less than R1.75 million, then MICROmega will issue the Vendors 166 667 MICROmega shares. 4.1.4 Fourth payment - On publication of an external audit certificate certifying that the net profit after tax of Pro-Fit for the year ended 31 December 2008 is not less than R1.95 million, then MICROmega will issue the Vendors 166 667 MICROmega shares. 4.1.5 Final payment - On publication of an external audit certificate certifying that the net profit after tax of Pro-Fit for the year ended 31 December 2009 is not less than R2.2 million, then MICROmega will issue the Vendors166 666 MICROmega shares. 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 Pro-Fit 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 2005, or the effect of future earnings. The financial effects are determined in accordance with the Listing Requirements of the JSE. Notes Unadjusted Adjusted Chang Pro-forma e (%)
Audited At At 31 31 December December
2006 2006 Earnings per share (cents) 4 31.49 33.08 5.05 Headline earnings per share (cents) 5 33.45 35.02 4.69 Net asset value per share (cents) 6 155.97 159.30 2.14 Net tangible asset value per share 7 102.30 102.51 0.21 (cents) Weighted average number of shares 8 94 971 048 95 759 904 Total number of shares in issue 8 96 325 695 97 114 551 Notes: 1.The figures in the "Unadjusted" column are extracted from the published audited results of MICROmega for the year ended 31 December 2006. 2.In the "Adjusted pro-forma" column the results of Pro-Fit for the period January to December 2006 have been estimated using the audited financial statements for the year ended 28 February 2006 on the assumption that it covers a full seasonal cycle of the business. 3.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 773 636. 4.Earnings per share calculations in the "Adjusted pro-forma" column are based on the following assumptions: -The acquisition was effective 1 January 2006 -The net profit after tax of Pro-Fit for the year ended 28 February 2006 was R1 773 636 5.Headline earnings per share calculations in the "Adjusted pro-forma" column have been based on the following assumptions: -None of the earnings of Pro-Fit are to be excluded for Headline Earnings calculations. 6.Net asset value per share is calculated on a net asset value of R150 242 562 for the "Unadjusted" column and R154 706 198 for the "Adjusted pro-forma" column with the adjustment comprising both a R2 690 000 increase in share capital and premium and the increase in retained earnings of R1 773 636. 7.Net intangible asset value per share is calculated on a tangible asset value of R98 542 087 for the "Unadjusted" column and R101 232 087 for the "Adjusted pro-forma" column with the adjustment comprising R2 690 000 increase in share capital and premium. 8.The weighted average number of shares and the actual number of shares in issue have been adjusted for the assumption that the 2.69 million worth of Ordinary Shares were issued on 1 January 2006 at the current price of R3.41 per share. 7. OTHER MATTERS The articles of Pro-Fit 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 continue to exercise caution when dealing in MICROmega securities, until such time as a full announcement is made. Johannesburg, South Africa 23 April 2007 Sponsor: Vunani Corporate Finance (Pty) Ltd Date: 25/04/2007 16:27:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department.
