Sharenet Sites 
Sharenet Sites
MMG - MICROmega - Acquisition of Lubrequip 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 LUBRICATION EQUIPMENT (PROPRIETARY) LIMITED ("Lubrequip") AND FURTHER CAUTIONARY ANNOUNCEMENT 1. INTRODUCTION Further to the cautionary announcement published on 24 April 2007, MICROmega shareholders are advised that MICROmega has entered into an agreement dated 23 March 2007 with the Bruce Carolin Family Trust ("Vendor") to acquire the entire issued share capital of Lubrequip and its related businesses, with effect from 1 March 2007, for a total consideration of R9.5 million as detailed in paragraph 4 ("the Acquisition") below. 2. NATURE OF BUSINESS OF LUBREQUIP Since its inception in 1962, Lubrequip has built up an enviable reputation for being a quality supplier of equipment associated to the process of lubrication to mines, the automotive industry, the agricultural sector and general industry. Its vast and ever-expanding product range includes anything from grease nipples to sophisticated centralised lubrication systems and workshops. Lubrequip is an industry leader in workshop lubrication installation, special lubrication projects and lubrication product supplies. 3. RATIONALE FOR THE ACQUISITION The acquisition of Lubrequip complements the group`s expansion in the automotive sector comprising Automobile Radio Dealers Association (1989) (Proprietary) Limited T/a Pro-Fit, Deltec Power Distributors (Proprietary) Limited and BTM Manufacturing (Proprietary) Limited. The acquisition further enhances the group`s existing presence in workshops and fitment centres as well as increasing the customer base. 4. TERMS OF THE ACQUISITION 4.1 Acquisition, consideration and settlement terms The acquisition consideration of R9.5 million will be settled as follows: 4.1.1 First payment - R3 million in cash will be paid and 1 000 000 MICROmega shares will be issued to the Vendor of Lubrequip 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 - On publication of an external audit certificate certifying that the net profit after tax of Lubrequip for the year ended 28 February 2008 is not less than R1.75 million, then R1.75 million in cash will be paid to the Vendor and 583 333 MICROmega shares will be issued to the Vendor. - In the event that the net profit after tax is less than R1.75 million then the Vendor will receive a pro rate portion of both cash and MICROmega shares calculated as follows: - Shares: Actual net profits after tax divided by R1 750 000 multiplied by 583 333; and
- Cash: Actual net profits after tax divided by R1 750 000 multiplied by R1 750 000 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 Lubrequip 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 2006, or the effect of future earnings. The financial effects are determined in accordance with the Listing Requirements of the JSE. Notes Audited Pro forma Pro forma Change (%) At After At
31 December Pro-Fit 31 December 2006 acquisition 2006 After Lubrequip
Acquisition Earnings per share 5 31.49 33.08 34.13 3.17 (cents) Headline earnings per share (cents) 6 33.45 35.02 36.06 2.97 Net asset value per share (cents) 7 155.97 159.30 162.11 1.76 Net tangible asset 8 102.30 106.24 value per share (cents) 104.24 1.92 Weighted average 9 94 971 048 96 759 904 number of shares 95 759 904 Total number of 9 96 325 695 98 114 551 shares in issue 97 114 551 Notes: 1.The figures in the "Audited" column are extracted from the published audited results of MICROmega for the year ended 31 December 2006. 2.The figures in the "Previous acquisition" column are extracted from the last SENS announcement regarding the acquisition of Automobile Radio Dealers Association (1989) (Proprietary) Limited T/a Pro-Fit 3.In the "After acquisition" column the results of Lubrequip`s 2006 financial year have been included using the available management accounts which reliance has been placed upon. 4.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 349 743. 5.Earnings per share calculations in the "After acquisition" column are based on the following assumptions: -The acquisition was effective 1 January 2006 -The figures include the effect of the previous acquisition of Automobile Radio Dealers Association (1989)(Proprietary) Limited T/a Pro-Fit -The net profit after tax of Lubrequip for the year ended 31 December 2006 was R1 349 743. 6.Headline earnings per share calculations in the "After acquisition" column have been based on the following assumptions: -None of the earnings of Lubrequip are to be excluded for Headline Earnings calculations. 7.Net asset value per share is calculated on a net asset value of R150 242 562 for the "Audited" column, R154 706 198 for the "Previous acquisition " column and R159 055 941 for the "After acquisition" column with the adjustment comprising both a R3 000 000 increase in share capital and premium and the increase in retained earnings of R1 349 743. 8.Net tangible asset value per share is calculated on a tangible net asset value of R98 542 087 for the "Audited" column, R101 232 087 for the "Previous acquisition " column and R104 232 087 for the "After acquisition" column with the adjustment comprising a R3 000 000 increase in share capital and premium. 9.The weighted average number of shares and the actual number of shares in issue have been adjusted for the assumption that the 1 000 000 shares were issued 1 January 2006 at a price of R3.00. 7. OTHER MATTERS The articles of Lubrequip 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 exercise caution when dealing in MICROmega securities, until such time as a full announcement is made. Johannesburg, South Africa 25 April 2007 Sponsor: Vunani Corporate Finance (Pty) Ltd Date: 25/04/2007 17:00:07 Supplied by www.sharenet.co.za Produced by the JSE SENS Department.
