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MMG
MMG
MMG - MICROmega Holdings Limited - Unaudited interim results for the six months
ended 30 June 2010
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 2010
Decrease In Revenue -17%
Decrease In Attributable Earnings Per Share -29%
Decrease In Headline Earnings Per Share -34%
Increase In Net Asset Value Per Share 8%
Increase In Net Tangible Asset Value Per Share 11%
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2010 2009 2009
R(`000) R(`000) R(`000)
Revenue 326 993 394 532 747 307
Revenue from continuing operations 326 922 375 236 721 900
Revenue from discontinued operations 71 19 296 25 407
Cost of sales (219 836) (282 972) (517 175)
Gross profit 107 157 111 560 230 132
Gross profit from continuing operations 107 229 116 719 227 428
Gross (loss)/ profit from discontinued
operations (72) (5 159) 2 704
Other income 1 310 4 001 9 109
Distribution expenses (2 876) (3 549) (5 578)
Administration expenses (95 096) (89 981) (196 616)
Results from operations 10 495 22 031 37 047
Results from continuing operations 11 808 28 907 43 947
Results from discontinued operations (1 313) (6 876) (6 900)
Finance income 7 793 1 169 9 479
Finance cost (5 269) (4 521) (16 995)
Net finance income / (cost) 2 524 (3 352) (7 516)
Share of (loss) / profits in equity
accounted associates (287) 586 (768)
Profit before tax 12 732 19 265 28 763
Profit before tax from continuing
operations 14 598 27 017 36 346
Loss before tax from discontinued
operations (1 866) (7 752) (7 673)
Taxation expense (3 748) (5 397) (11 084)
Profit for the period 8 984 13 868 17 679
Profit from continuing operations 10 576 19 450 23 768
Loss from discontinued operations (1 592) (5 582) (6 089)
Other comprehensive income
Foreign currency translation differences 12 61 42
Revaluation of property, plant and
equipment - - 2 230
Realisation of revaluation on disposal of
property, plant and equipment (378) - -
Income tax on other comprehensive income 53 - (634)
Other comprehensive income for the period (313) 61 1 638
Total comprehensive income for the period 8 671 13 929 19 317
Profit attributable to:
Owners of the company 7 858 10 991 16 362
Non-controlling interest 1 126 2 877 1 317
Profit for the period 8 984 13 868 17 679
Total comprehensive income attributable
to:
Owners of the company 7 545 11 052 18 000
Non-controlling interest 1 126 2 877 1 317
Total comprehensive income for the period 8 671 13 929 19 317
Reconciliation of headline earnings
Profit attributable to owners of the
company 7 858 10 991 16 362
Profit on disposal of property,
plant and equipment (429) (117) (1 786)
Impairment of property, plant and
equipment - 297 -
Profit on disposal of other investments - - (1 995)
Impairment of goodwill - - 7 540
Headline earnings 7 429 11 171 20 121
Headline earnings per share (cents) 7.66 11.52 20.75
Basic earnings per share (cents) 8.10 11.34 16.88
Diluted earnings per share (cents) 8.06 11.26 16.77
Continuing operations
Basic earnings per share (cents) 9.75 17.10 23.16
Diluted earnings per share (cents) 9.69 16.98 23.01
Weighted average number of shares (000) 96 953 96 930 96 958
Diluted weighted average shares in
issue (000) 97 495 97 579 97 561
Total number of shares in issue (000) 96 948 96 845 96 966
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2010 2009 2009
R(`000) R(`000) R(`000)
ASSETS
Non-current assets 174 604 174 612 168 880
Property, plant and equipment 55 915 54 822 58 871
Intangible assets 66 468 66 494 61 434
Investments in associates 3 584 5 321 3 747
Other investments 6 693 6 742 6 698
Loans receivable 20 557 23 374 21 891
Deferred tax assets 21 387 17 859 16 239
Current assets 253 017 252 954 251 906
Inventories 55 559 62 069 45 200
Retirement benefits 18 797 17 971 18 877
Trade and other receivables 124 563 112 603 123 976
Current portion of loans receivable 6 732 5 716 5 497
Cash and cash equivalents 18 946 26 508 29 936
Non-current assets classified as held
for sale 28 420 28 087 28 420
Total assets 427 621 427 566 420 786
EQUITY AND LIABILITIES
Equity 287 924 274 107 280 050
Share capital and premium 191 409 191 229 191 440
Non-distributable reserves 8 008 6 075 8 196
Retained earnings 80 198 61 588 66 959
Total equity attributable to equity
holders of the company 279 615 258 892 266 595
Non-controlling interests 8 309 15 215 13 455
Liabilities
Non-current liabilities 25 799 26 508 27 530
Loans and borrowings 17 919 19 115 19 467
Deferred tax liabilities 7 880 7 393 8 063
Current liabilities 113 898 126 951 113 206
Bank overdraft 5 978 16 572 3 930
Current portion of loans and borrowings 20 077 21 167 21 372
Trade and other payables 85 908 80 961 86 055
Deferred vendor payments 703 1 539 871
Provisions 312 - 36
Taxation payable 920 6 712 942
Total equity and liabilities 427 621 427 566 420 786
Net asset value per share (cents) 288.42 267.33 274.94
Net tangible asset value per share
(cents) 219.86 198.67 211.58
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2010 2009 2009
R(`000) R(`000) R(`000)
Cash flows from operating activities
Cash generated by operations 15 524 27 575 50 157
Movement in working capital (11 093) 4 096 14 771
Finance income 7 793 1 169 9 479
Finance cost (5 269) (4 510) (16 995)
Tax paid (9 046) (12 744) (22 589)
Net cash inflows from operating
activities (2 091) 15 586 34 823
Cash outflow from investing activities
Expenditure to maintain operating capacity
Property, plant and equipment acquired (2 901) (4 361) (12 212)
Intangible assets acquired (16) (138) (213)
Proceeds of disposals on property, plant
and equipment 1 098 2 342 5 656
Proceeds on disposal of intangible assets - - 19
Expenditure for expansion
Acquisition of subsidiaries (318) (676) (1 578)
Internally generated intangible assets (5 290) (1 419) (4 956)
Investments sold / (acquired) 5 (44) 2 359
Loans receivable repaid / (granted) 99 (27 117) (25 338)
Net cash used in investing activities (7 323) (31 413) (36 263)
Cash flows from financing activities
Treasury shares repurchased (33) (419) (224)
Dividends paid to non-controlling
interests (580) - (200)
Borrowings (repaid) / raised (2 843) 10 901 12 857
Deferred vendor payments repaid (168) (2 059) (2 327)
Net cash (used) / generated by
finance activities (3 624) 8 423 10 106
(Decrease) / increase in cash and
cash equivalents (13 038) (7 404) 8 666
Cash and cash equivalents at beginning
of year 26 006 17 340 17 340
Cash and cash equivalents at end of
the period 12 968 9 936 26 006
GROUP STATEMENT OF CHANGES IN EQUITY
Share Share Share- Revalu- Foreign Deal
capital premium based ation currency differ-
payment reserve transla- ence
reserve tion reserve
reserve
R(`000) R(`000) R(`000) R(`000) R(`000) R(`000)
Balance as at 1 January
2009 971 190 678 2 297 2 388 (21) 1 000
Total comprehensive
income for the period
Profit for the period - - - - - -
Other comprehensive income - - - - 61 -
Foreign currency translation
differences - - - - 61 -
Total comprehensive income
for the period - - - - 61 -
Transactions with owners
recorded directly in equity (3) (417) 350 - - -
Treasury shares purchased (3) (417) - - - -
Share-based payment
transactions - - 350 - - -
Balance as at 30 June
2009 968 190 261 2 647 2 388 40 1 000
Total comprehensive
income for the period
Profit for the period - - - - - -
Other comprehensive income - - - 1 596 (19) -
Foreign currency translation
differences - - - - (19) -
Revaluation of property,
plant and equipment - - - 1 596 - -
Total comprehensive income
for the period - - - 1 596 (19) -
Transactions with owners
recorded directly in equity 2 209 544 - - -
Dividends paid by subsidiary
to non-controlling interests - - - - - -
Treasury shares sold 2 194 - - - -
Share-based payment
transactions - 15 544 - - -
Balance as at 31 December
2009 970 190 470 3 191 3 984 21 1 000
Total comprehensive
income for the period
Profit for the period - - - - - -
Other comprehensive income - - - (325) 12 -
Foreign currency translation
differences - - - - 12 -
Realisation of revaluation
reserve on disposal of
property, plant and equipment - - - (325) - -
Total comprehensive income
for the period - - - (325) 12 -
Transactions with owners
recorded directly in equity - (31) 125 - - -
Dividends paid by subsidiary
to non-controlling interests - - - - - -
Treasury shares purchased - (33) - - - -
Share-based payment
transactions - 2 125 - - -
Changes in ownership interests
in subsidiaries that do not
result in a loss of control
Business combinations - - - - - -
Total transactions with
owners - (31) 125 - - -
Balance as at 30 December
2010 970 190 439 3 316 3 659 33 1 000
Non-
Retained earnings Total controlling Total
interest equity
R(`000) R(`000) R(`000) R(`000)
Balance as at 1 January
2009 50 597 247 910 12 338 260 248
Total comprehensive
income for the period
Profit for the period 10 991 10 991 2 877 13 248
Other comprehensive income - 61 - 61
Foreign currency translation
differences - 61 - 61
Total comprehensive income
for the period 10 991 11 052 2 877 13 929
Transactions with owners
recorded directly in equity - (70) - (70)
Treasury shares purchased - (420) - (420)
Share-based payment
transactions - 350 - 350
Balance as at 30 June
2009 61 588 258 892 15 215 274 107
Total comprehensive
income for the period
Profit for the period 5 371 5 371 (1 560) 3 811
Other comprehensive income - 1 577 - 1 577
Foreign currency translation
differences - (19) - (19)
Revaluation of property,
plant and equipment - - - -
Total comprehensive income
for the period 5 371 6 948 (1 560) 5 388
Transactions with owners
recorded directly in equity - 755 (200) 555
Dividends paid by subsidiary
to non-controlling interests - - (200) (200)
Treasury shares sold - 196 - 196
Share-based payment
transactions - 559 - 559
Balance as at 31 December
2009 66 959 266 595 13 455 280 050
Total comprehensive
income for the period
Profit for the period 7 858 7 858 1 126 8 984
Other comprehensive income - (313) - (313)
Foreign currency translation
differences - 12 - 12
Realisation of revaluation
reserve on disposal of
property, plant and equipment - (325) - (325)
Total comprehensive income
for the period 7 858 7 545 1 126 8 671
Transactions with owners
recorded directly in equity - 94 (580) (486)
Dividends paid by subsidiary
to non-controlling interests - - (580) (580)
Treasury shares purchased - (33) - (33)
Share-based payment
transactions - 127 - 127
Changes in ownership interests
in subsidiaries that do not
result in a loss of control
Business combinations 5 381 5 381 (5 692) (311)
Total transactions with
owners 5 381 5 475 (6 272) (797)
Balance as at 30 December
2010 80 198 279 615 8 309 287 924
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
This condensed consolidated interim financial statements have been
prepared in compliance with International Accounting Standard 34 - Interim
Financial Report as well as with Schedule 4 of the South African Companies
Act and the disclosure requirements of the JSE Limited`s Listing
Requirements.
2. Significant accounting policies
This condensed consolidated interim financial statements have been
prepared using accounting policies that comply with International
Financial Reporting Standards (IFRS). The accounting policies used are
consistent with those used in the annual financial statements for the year
ended 31 December 2009, except for the adoption of the following new or
revised standards and interpretations which are now effective:
Improvements to IFRS 2009
IAS 27 amendments
3.Segment information
SEGMENT REVENUE
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2010 2009 2009
R(`000) R(`000) R(`000)
Financial services
-External sales 14 752 16 215 36 619
Support services
-External sales 152 490 184 274 365 123
Information technology
-External sales 49 908 87 380 164 931
Automotive components
-External sales 109 843 106 663 218 563
Adjustments and eliminations - - (37 929)
Total revenue 326 993 394 532 747 307
SEGMENT PROFIT/(LOSS)
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2010 2009 2009
R(`000) R(`000) R(`000)
Financial services 2 489 3 343 5 387
Support services 9 444 7 283 6 911
Information technology 619 12 680 14 093
Automotive components (104) (6 664) (8 672)
Adjustments and eliminations (4 590) (5 651) (1 357)
Total profit 7 858 10 991 16 362
SEGMENT ASSETS
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2010 2009 2009
R(`000) R(`000) R(`000)
Financial services 232 990 188 424 243 511
Support services 68 173 62 109 75 644
Information technology 89 884 116 110 148 255
Automotive components 186 582 210 636 199 213
Adjustments and eliminations (150 008) (149 173) (245 837)
Total assets 427 621 427 566 420 786
COMMENTARY ON RESULTS
Whilst the diverse nature of the group`s earnings has provided a level of
protection to the corporate performance for the 6 month period to June
2010, attributable earnings per share were down 29% when compared to the
corresponding period in 2009. Overall the group has not seen a material
improvement in the economic climate, with both the information technology
and automotive sectors reporting disappointing results for the 6 months.
The support services sector`s results were in line with expectations and
we are confident that both NOSA and MECS Africa will continue to grow and
remain key drivers from both an earnings and revenue perspective going
forward. Despite the decline in liquidity in the foreign currency, bond
and derivative markets, Micromega Securities performed relatively well
during the period under review.
The group has been successful at mitigating foreign currency exposure,
particularly given the foreign currency loss incurred in 2009. As has been
the cyclical trend over the past few years, the group`s results for the
second half of the year have historically outperformed the first half and
we anticipate this trend to continue.
Any reference to future financial performance included in this announcement, has
not been reviewed or reported on by the Company`s auditors.
By order of the board
31 August 2010
Directors:
I G Morris (Chairman)
D S E Carlisle (Managing Director)
D J Case (Financial Director)
P V Henwood (Non-executive)
R C Lewin (Non-executive)
Company Secretary: T de Mendonca
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Ltd
Sponsor: Investec Bank Limited
Auditor: KPMG Inc
Date: 31/08/2010 13:42:30 Produced by the JSE SENS Department.
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