| Fri 24 Aug 2007, 15:38 | | MMG - Micromega - Unaudited Interim Results: Six M |
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MMG
MMG
MMG - Micromega - Unaudited Interim Results: Six Months Ended 30 June 2007
MICROmega Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/003821/06
Share code MMG & ISIN ZAE000034435
("Micromega" or "the Company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
Increase In Revenue 48%
Increase In Attributable Profits 48%
Increase In Headline Earnings Per Share 31%
Increase In Net Asset Value Per Share 36%
Increase In Net Tangible Asset Value Per Share 46%
ABRIDGED INCOME STATEMENT
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2007 2006 2006
R(`000) R(`000) R(`000)
Revenue 229 320 154 582 318 417
Operating Profit 25 700 19 182 41 448
Net finance income 3 836 2 319 3 553
Share of profits of associates 123 - 140
Profit before taxation 29 659 21 501 45 141
Taxation (8 217) (6 606) (14 158)
Profit after taxation 21 442 14 895 30 983
Attributable to:
Ordinary shareholders 19 907 13 485 29 902
Minorities 1 535 1 410 1 081
Reconciliation of headline earnings
Net profit attributable to ordinary 19 907 13 485 29 902
shareholders
(Profit)/loss on disposal of (52) - 65
property, plant and equipment
Profit on sale of investment (2 565) - -
Impairment of loan 1 047 - 1 797
Headline earnings 18 337 13 485 31 764
Headline earnings per share (cents) 18.81 14.37 33.45
Earnings per share (cents) 20.42 14.37 31.49
Diluted earnings per share (cents) 20.13 13.89 30.89
Weighted average number of shares 97 499 93 847 94 971
Diluted weighted average number of 98 904 97 062 96 786
shares
Total number of shares in issue 97 801 96 316 96 326
ABRIDGED BALANCE SHEET
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2007 2006 2006
R(`000) R(`000) R(`000)
ASSETS
Non-current assets
Property, plant and equipment 27 458 19 941 24 252
Goodwill 33 238 30 012 32 787
Intangible assets 24 357 17 848 18 913
Deferred tax asset 8 073 3 941 7 510
Investments 8 661 3 425 6 642
Loans receivable 6 974 5 718 3 698
Current assets
Inventories 41 810 11 873 18 298
Accounts receivable 86 244 56 543 48 412
Cash and cash equivalents 32 872 40 655 55 661
TOTAL ASSETS 269 687 189 956 216 173
EQUITY AND LIABILITIES
Equity
Equity holders` interest 164 777 120 258 139 343
Minorities interest 4 608 1 410 3 073
Non-distributable reserves 8 309 7 224 7 826
Non-current liabilities
Borrowings 22 539 15 345 10 994
Current liabilities
Taxation 5 427 5 583 6 394
Accounts payable 61 567 27 429 35 490
Current portion of borrowings 910 7 076 11 320
Derivative financial instruments - - 108
Provisions 1 550 5 631 1 625
TOTAL EQUITY AND LIABILITIES 269 687 189 956 216 173
Net asset value per share (cents) 181.69 133.82 155.97
Net tangible asset value per share 122.80 84.13 102.30
(cents)
ABRIDGED CASH FLOW STATEMENT
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2007 2006 2006
R(`000) R(`000) R(`000)
Cash generated by operations 27 260 22 275 47 452
Movement in working capital (18 904) (12 895) (6 844)
Net investment income 3 959 2 319 3 693
Taxation paid (8 697) (7 840) (11 265)
Net cash from operating activities 3 618 3 859 33 036
Net cash used in investing activities (21 099) (3 936) (13 625)
Capital raised - 9 555 -
Loans raised - - 2 000
Loans repaid (10 835) (15 077) (6 073)
Treasury shares issued/(repurchased) 5 527 - (5 931)
Net cash used in financing activities (5 308) (5 522) (10 004)
Net increase/(decrease) in bank and (22 789) (5 599) 9 407
cash
Represented as follows:
Bank and cash at beginning of year 55 661 46 254 46 254
Bank and cash at end of period 32 872 40 655 55 661
Net increase/(decrease) in bank and (22 789) (5 599) 9 407
cash
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Share Share Share- Revalu- Minor- Accumu- Total
capital premium based ation ity lated
payment reserve int. loss
reserve
R(`000) R(`000) R(`000) R(`000) R(`000) R(`000) R(`000)
Balance at 1 929 181 723 5 061 1 383 - (78 472)110 624
January 2006
Net profit for 1 081 29 902 30 983
the year
Movement in 992 1 992
minority interests
on restructuring
Employee share 972 972
options - value
of services
provided
Revaluation of 452 452
property,
plant and
equipment
Realisation of (42) (42)
non-distributable
reserve
Issue of shares 51 11 188 11 239
Share issue (46) (46)
expenses
Treasury shares (17) (5 915) (5 932)
repurchased
Balance at 31 963 186 950 6 033 1 793 3 073 (48 570)150 242
December 2006
Net profit for 1 535 19 907 21 442
the period
Employee share 483 483
options - value
of services
provided
Issue of 15 5 512 5 527
treasury shares
Balance at 30 978 192 462 6 516 1 793 4 608 (28 663)177 694
June 2007
NOTES
1 Basis of Preparation
The unaudited results for the six months ended 30 June 2007 have been
prepared in accordance with IAS 34, Interim Financial Reporting.
The accounting policies used are consistent with those used in the annual
financial statements for the year ended 31 December 2006.
2 Sale of subsidiary
The group repurchased the entire share capital of Lwanelerato (Proprietary)
Limited, a company holding a 50% interest in EMPOWERisk (Proprietary)
Limited, from the previous Black Economic Empowerment partner effective 1
January 2007. The group than sold the entire investment in Lwanerato
(Propietary) Limited to a new Black Economic Empowerment consortium, Theca
Trading and Investments Close Corporation, at a total profit of R3 million
on the transaction.
COMMENTARY ON RESULTS
We are pleased to report a 48% increase in revenue, a 48% growth in attributable
profit and a 31% growth in headline earnings per share. The group`s balance
sheet continues to strengthen with an increase of 36% in net asset value and an
increase of 45% in net tangible asset value.
We remain firm in our view that our strategy of diversification and the
resultant growth in our four sectors of activity was the correct decision. The
challenges that we face as a result of diversification have been identified and
effectively managed by the board. We believe we have the technical expertise and
system capacity to ensure optimal extraction of value from our investments. We
plan to continue with this expansion strategy both organically and by way of
acquisition while remaining cogniscant of the associated risks and the need to
deliver a "no surprises" environment to our shareholders.
The following sector contribution to headline earnings per share demonstrates
the successful implementation of our diversification strategy:
Financial services sector
We remain pleased with the growth we are experiencing from this sector. Market
volatility in the first half of this year has played an important factor in
ensuring the ongoing demand for our inter-dealer brokering services. This sector
contributed 22% to total headline earnings.
Support services sector
This sector has continued to perform well and enjoyed a 64% growth in earnings
in comparison with the same period last year. This growth is primarily
attributed to the ongoing demand for occupational health, safety and
environmental services provided by NOSA. We anticipate, based on the current
order book and general market conditions, that NOSA will continue to grow at an
accelerated rate well into the future. This sector contributed 30% to total
headline earnings.
Information technology sector
This sector performed below expectation. The unanticipated delay in the
implementation of certain principle projects to the public sector has caused a
lag in income generation during the period. We anticipate that the second half
of this year will see an effective turnaround on delivery both from within our
client base and our own businesses. This sector contributed 10% to total
headline earnings.
Automotive components sector
During the period under review we acquired a further two businesses in this
sector: Pro Fit and Lubrication Equipment. These businesses have been operating
for 27 and 48 years respectively. They bring with them a stable earnings base
and a well entrenched client base that we intend to, in due course, leverage
into products provided by our other businesses in this sector. The contribution
of the new businesses was not material for the period under review and
consequently shareholders can look forward to a continued increase in earnings
in the second half of this year arising from these businesses. Demand for
product from this sector remains at an all time high and our challenge is to
ensure that we have the capacity to effectively deliver against this demand.
This sector contributed 38% to total headline earnings.
PROSPECTS
We are confident with our ability to improve on our current growth rate in the
second half of this year. Our strategy and focus now is to ensure we have the
base to deliver sound earnings growth in 2008. Whilst we remain confident that
our organic growth rate has reached an acceptable level we will continue to
identify and pursue acquisitions that complement our current operations.
By order of the board
24 August 2007
Directors:
I G Morris (Chairman)
R C Lewin (Non-executive)
E S Mpanza (Non-executive)
D M Carson (Non-executive)
Company Secretary: D J Case
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Ltd
Sponsor: Investec Bank Limited
Date: 24/08/2007 15:38:01 Produced by the JSE SENS Department.
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