Nasdaq-listed Peregrine Systems has invested R140 million in MGX Holdings in the form of a convertible promissory note, the proceeds of which will replace short-term borrowings.
Announcing MGX`s results for the six months to 31 December 2002, CEO Chris Hills said that as a result of the close working relationship between MGX and Peregrine, Peregrine had indicated that it wished to acquire a meaningful equity stake in MGX.
<B>Salient figures</B>
MGX Holdings results for the six months to 31 December 2001
Figures for the year-earlier period in parentheses:
Revenue: R750.75m (R325.23m)
Operating income before depreciation and amortisation: R108.89m (R57.13m)
Net operating income: R63.06m (R47.42m)
Attributable earnings: R25.87m (R37.56m)
HEPS: 80.5c (80.1c)
Current liabilities: R784.09m (R234.2m)
Current assets: R624.85m (R228.67m)
The two groups reached an agreement in terms of which Peregrine has invested R140 million in the form of a convertible promissory note bearing interest at 10% a year.
The note is convertible into MGX shares in the event that the share price on the JSE trades above R22.50 for more than 30 consecutive days, at which time Peregrine will have the right to convert all or part of the note into MGX shares at R22.50 each.
Hills says the MGX business units met the overall targets for the group during the six months.
The results include the operations of CCH and EC-Hold as subsidiaries for the full period.
He adds that the results show the impact of difficult trading conditions and the longer than anticipated restructuring and rationalisation of CCH`s operations.
This, as well as the depreciation of the rand, resulted in a drop in the operating margin from 14.6% to 12.1%.
Hills says the 31% drop in attributable earnings is as a result of goodwill amortisation of R27.6 million.
He says the terms of the recent dispute settlement with black empowerment partner Motswedi Technology Group are confidential. However, the settlement, brokered by the State IT Agency (Sita), will not have a material financial effect on MGX.
<B>Salient figures</B>
EC-Hold results for the 12 months to 31 December 2001
Figures for the 16 months to 31 December 2000 in parentheses:
Revenue: R145.73m (R72.44m)
Operating income before depreciation: R7.59m (-R3.08m)
Operating income: R6.41m (-R4.82m)
Attributable earnings: R5.21m (-R1.21m)
HEPS: 5c (-1.2c)
Current liabilities: R21.99m (R22.65m)
Current assets: R46.34m (R52.35m)
NTAV per share: 19.4c (14.9c)
"MGX remains confident about its existing and developing black economic empowerment credentials, which were presented to Sita.
"On this basis, and as a result of MGX`s positive contribution in resolving the dispute with Motswedi, the group remains well placed to be considered for state tenders in the future."
Hills says the group has intensified its focus to develop an empowerment profile at all levels.
EC-Hold CEO Amir Lubashevsky says EC-Hold achieved a satisfactory level of profitability for the 12 months to end-December.
The company experienced an improved trading environment following a restructuring.
"EC-Hold is expected to continue to operate profitably and will benefit further from the synergies arising from MGX`s increased shareholding."
Hills says the group is awaiting the findings of the full panel of the Securities Regulatory Panel on the EC-Hold acquisition.
Share
