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MMG - MICROmega - Acquisition of Ocneblok Properties (Proprietary) Limited

Release Date: 23/12/2008 10:25
Code(s): MMG
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MMG - MICROmega - Acquisition of Ocneblok Properties (Proprietary) Limited 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 OCNEBLOK PROPERTIES (PROPRIETARY) LIMITED ("Ocneblok") 1. INTRODUCTION MICROmega shareholders are advised that MICROmega has entered into an agreement with John Newbury Investments (Proprietary) Limited ("Vendor") to acquire 50% of the issued share capital of Ocneblok, with effect from 1 November 2008, for a total consideration of R3 673 567 as detailed in paragraph 4 ("the Acquisition") below. 2. NATURE OF BUSINESS OF OCNEBLOK Ocneblok is a property investment company with an investment property consisting of an administration building and various factory buildings situated on Erf 1599 Alrode, Alberton. The property comprises a total of 1 240 square metres office space and 12 322 square metres of factory space. The total property size is just over 2 hectares. The current tenant is Kolbenco (Pty) Ltd, an entity acquired by MICROmega effective 1 February 2008. 3. RATIONALE FOR THE ACQUISITION The current tenant is a MICROmega subsidiary and during the negotiations for the acquisition of Kolbenco (Pty) Ltd it was agreed that a potential deal could be done around Ocneblok, the property holding company as much of the security for the investment in the property was provided by Kolbenco (Pty) Ltd. 4. TERMS OF THE ACQUISITION 4.1 Acquisition, consideration and settlement terms The acquisition consideration of R3 673 567 million will be settled as follows: 4.1.1 First payment - R868 000 in cash will be paid to the Vendor of Ocneblok on the closing date of the agreement. 4.1.2 Second payment - R1 000 000 in cash will be paid to the Vendor of Ocneblok on 1 February 2009. 4.1.3 Cession of loan - Kolbenco (Pty) Ltd will cede and assign 50% of the value of the loan account as at the 1 November 2008, due by Ocneblok to Kolbenco, to the Vendor. The value of this loan at 31 October was R3 611 134. 5. CONDITIONS PRECEDENT The implementation of the acquisition is subject to approval by the board of MICROmega and the JSE Limited. We confirm that all conditions precedent have been fulfilled. 6. FINANCIAL EFFECTS OF THE ACQUISITION The table below shows the per share effect of the acquisition of Ocneblok for the six months ended 30 June 2008. 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 30 June 2008, or the effect of future earnings. The financial effects are determined in accordance with the Listing Requirements of the JSE. Notes Unaudited Pro forma Change (%) At At
30 June 2008 30 June 2008 After Ocneblok Acquisition
Earnings per share (cents) 3 37.57 40.57 7.99 Headline earnings per share 4 23.99 23.95 -0.17 (cents) Net asset value per share (cents) 5 236.54 239.55 1.27 Net tangible asset value per 6 169.71 172.72 1.77 share (cents) Weighted average number of shares 7 96 184 96 184 Total number of shares in issue 7 96 759 96 759 Notes: 1.The figures in the "Audited" column are extracted from the published unaudited abridged results of MICROmega for the six months ended 30 June 2008. 2.The figures in the "After acquisition" column are adjusted for the inclusion of the financial results as reflected in the management accounts of Ocneblok for the period commencing 1 January 2008 and ending 31 October 2008. 3.Earnings per share calculations in the "After acquisition" column are based on the following assumptions: -The acquisition was effective 1 January 2008. -The net loss after tax of Ocneblok for the six months ended 30 June 2008 was (R32 296). -All fair value adjustments to the property would be done directly through equity as the property is owner occupied at a group level. -The excess of the fair value of the assets of Ocneblok over the acquisition price would be accounted for as negative goodwill with immediate effect. 4.Headline earnings per share calculations in the "After acquisition" column have been based on the following assumptions: -All fair value adjustments to the property would be done directly through equity as the property is owner occupied at a group level. -None of the earnings of Ocneblok are to be excluded for Headline Earnings calculations except for negative goodwill taken into account on Business Combinations. 5.The increase in net asset value is calculated on the assumption that Ocneblok had a total net asset value of R13 173 725 on 30 June 2008 with a minority interest raised of R6 586 862. A R1 000 000 liability has been raised for future Vendor payments together with a R868 000 cash reduction on the settlement date and a reduction in a loan receivable of R1 805 567. 6.The increase in tangible net asset value is calculated on the assumption that Ocneblok had a total tangible net asset value of R13 173 725 on 30 June 2008 with a minority interest raised of R6 586 862. A R1 000 000 liability has been raised for future Vendor payments together with a R868 000 cash reduction on the settlement date and a reduction in a loan receivable of R1 805 567. 7.The weighted average number of shares and the actual number of shares in issue have not been changed as securities of the company do not form part of the purchase consideration. 7. OTHER MATTERS The articles of Ocneblok will be amended to comply with the JSE`s Listing Requirements. 8. RELATED PARTY TRANSACTION Shareholders are advised that John Newbury Investments is wholly owned by John Newbury, a non-executive director of MICROmega, and as such this is a related party transaction in terms of the JSE Limited Listing Requirements. This transaction is classified as a small related party transaction and thus the provisions of 10.4 do not apply. Paragraph 10.7 (b) has been complied with, the transaction has been declared to be fair, and the fairness opinion will lie for inspection at MICROmega`s registered office for a period of 28 days from the date of announcement. Sandton, South Africa 23 December 2008 Sponsor: Investec Bank Limited Date: 23/12/2008 10:25:26 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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