| Tue 5 Mar 2002, 0:00 | | Micromega Holdings Limited - Audited Abridged Fina |
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FOR THE YEAR ENDED 31 DECEMBER 2001
MICROmega HOLDINGS LIMITED
AND ITS SUBSIDIARY COMPANIES
(Registration number 1998/003821/06)
AUDITED ABRIDGED FINANCIAL STATEMENTS
for the year ended 31 December 2001
FINANCIAL HIGHLIGHTS
Increase in gross revenue 99 %
Increase in headline earnings 84 %
Increase in headline earnings per share 68 %
Increase in cash generated from operating activities 85 %
ABRIDGED INCOME STATEMENT
Dec 2001 Dec 2000
R'000 R'000
Gross revenue 100,284 50,353
Operating profit 37,719 20,601
Net finance income 3,332 3,077
Profit before taxation 41,051 23,678
Taxation (7,092) (5,269)
Heading earnings 33,959 18,409
Write off of associate company (5,104) -
Amortisation of goodwill (24,724) (20,154)
Profit/(loss) attributable to
shareholders 4,131 (1,745)
Number of ordinary shares in issue
(000) 76,377 72,500
Weighted average number of ordinary
shares (000) 75,237 68,641
Headline earnings per share 45.1 c 26,8 c
Cash headline earnings per share 49.2 c 29.2 c
Attributable earnings per share 5.5 c (2.5) c
Dividends per share 20 c 20 c
Diluted weighted average number of
Ordinary shares (000) 83,833 71,010
Fully diluted headline earnings per
share 40.5 c 25,9 c
ABRIDGED BALANCE SHEET
Dec 2001 Dec 2000
R'000 R'000
Assets
Non-current assets
Fixed assets 6,121 5,453
Net goodwill 48,715 35,099
Deferred taxation 6,345 3,513
Investment in associate - 5,087
Investments 3,331 3,414
Other loans receivable 140 -
Current assets
Accounts receivable 8,942 5,156
Bank and cash 41,333 29,283
Total assets 114,927 87,005
Equity and liabilities
Shareholders equity 69,273 65,197
Non-current liabilities 8,426 8,426
Current liabilities 37,228 13,382
Total equity and liabilities 114,927 87,005
Number of ordinary shares in issue (000) 76,377 72,500
Net asset value per share 90.7 c 89.9 c
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Share Share Foreign Accumulated Total
Capital Premium Currency loss
Translation
Reserve
Balance at 1
January 2000 241 70,823 - (38,145) 32,919
Change in
accounting basis - - - (14,568) (14,568)
Restated balance at
January 2000 241 70,823 - (52,713) 18,351
Net loss for the
year - - - (1,745) (1,745)
Issue of share
capital 484 49,261 - - 49,745
Share issue expenses - (1,154) - - (1,154)
Restated balance at
1 January 2001 725 118,930 - (54,458) 65,197
Net profit for the
period - - - 4,131 4,131
Movement on Foreign
Currency Translation
Reserve - - (185) - (185)
Scrip dividend 36 14,464 - (14,500) -
Issue of shares
capital 3 250 - - 253
Share issue expenses - (123) - - (123)
Balance at 31 December
2001 764 133,521 (185) (64,827) 69,273
ABRIDGED CASH FLOW STATEMENT
Dec 2001 Dec 2000
R'000 R'000
Net cash from operating activities 37,058 20,053
Net cash flows from investing (19,161) (56,330)
Net cash flows from financing activities (5,847) 53,482
Net increase in bank and cash 12,050 17,205
Represented as follows:
Cash and cash equivalents at
beginning of the period 29,283 12,078
Cash and cash equivalents at
end of the period 41,333 29,283
Net increase in bank and cash 12,050 17,205
Notes to the financial statements
at 31 December 2001.
Amortisation of goodwill
Goodwill was previously amortised over 20 years on a straight-line basis.
The Board has considered the merits of this and agreed that it is
inappropriate for goodwill to be amortised over such an extended period in
an intellectual capital business operating in the fast changing financial
services industry. We have consequently decided to amortise goodwill on an
accelerated basis to coincide with the lesser of the profit warranty period
associated with a specific acquisition or 5 years. Where there is no profit
warranty goodwill will be amortised over 5 years.
Net goodwill
2001 2000
R'000 R'000
Goodwill 77,399 68,016
Contingent long term liability 28,684 32,917
48,715 35,099
The company acquired the entire issued share capital and contingent claims
of subsidiary companies during the financial years ended December 2000 and
December 2001. Payment of these claims is dependant upon profit warranties
being met. In the event that the profit warranties are not met or are
partially met, the claims will be reduced proportionately and will
consequently result in a reduction of goodwill. In the event that the profit
warranties are met the payment of the contingent long-term liability will be
met out of future profits. The directors are of the opinion that due to the
contingent nature of the long-term liability, this amount should be set-off
against goodwill arising from acquisition.
Diluted weighted average number of ordinary shares
During the financial year the company acquired the entire issued share
capital of Global Credit Ratings (Pty) Ltd, Consolidated African
Technologies (Pty) Ltd and Man & Mun Services (Pty) Ltd. The effect of these
acquisitions on the issued share capital of the company is reflected in the
diluted weighted average number of shares. The number of shares giving rise
to the diluted weighted average number of shares is dependent on the vendors
of these businesses meeting their profit warranties.
Commentary on results
These results reaffirm our commitment to grow earnings at a level
significantly above the average for our sector. Our unique independent
intermediary status together with the dominant position we hold in our niche
markets proved a successful business strategy and is reflected in the growth
in earnings we enjoyed in all businesses despite the adverse market
condition experienced in 2001.
Individual contributions to headline earnings per share are:
MICROmega Securities 32 %
Global Credit Rating Co. 11 %
MICROmega Revenue Management Services 49 %
Investment income 8 %
Prospects
Our approach to earnings generation has remained consistent - to identify
new markets, introduce sustainable annuity income earning services into
those markets and ensure sustainable growth by dominating those markets. The
success of our businesses remains dependant on the application of
intellectual capital, in this regard we are pleased to report that our
ability to continuously attract staff to sustain service delivery has been
successful.
The introduction of our revenue management service business, MICROmega
Revenue Management Services, has proved not only to have introduced
contractual annuity income to the Group but also afforded us access to our
target market through the provision of a service demand driven by Local
Authorities and Public Utilities in South Africa. The Group currently
employs 460 people of which 360 are directly involved in the provision of
revenue management services. This market of which we currently service more
than 50 clients and are responsible for more than R9 billion of public
sector revenue, gives us the ideal opportunity to introduce finance and
treasury risk management services in 2002. These services whilst well
entrenched in our business model were not aggressively introduced into our
clients in 2001 however we believe with the revival in public sector capital
expenditure and the ongoing desire by our clients to reduce their cost of
capital we are well positioned to introduce these high margin services in
the short term.
The internationalisation of our credit ratings business, Global Credit
Ratings, has commenced. We enter 2002 as the dominant and preferred
international rating agency in South Africa, further, our effort to expand
our services into Africa during 2001 proved successful and we are currently
responsible for the publication of more than 55% of the ratings issued on
this continent. Further benefits from this process will be enjoyed in 2002.
The inter-dealer brokering business, MICROmega Securities, has endured the
introduction of automated trading systems in the year 2000 and 2001. This
business has remained abreast of the demands from their market and has
ensured that they are an integral component and contributor to liquidity in
the domestic market. We expect to remain the largest and most dominant
service provider in this sector and will enjoy solid growth from this
business in 2002.
We are further pleased to report that our black economic empowerment
credentials comply with the affirmative procurement specifications of both
the public and private sector. Our efforts in this regard have not only
ensured sustainable access to our target market but will also ensure the
development and retention of skills within the Group.
Scrip dividend
A dividend of 20 cents per share has been declared by the Board and is
payable to all shareholders recorded in the register of the company at the
close of business on 28 March 2002. The salient dates for the scrip dividend
are as follows:
Last day to trade ("LDT") ordinary shares
"CUM" dividend Wednesday, 27 March 2002
Ordinary shares trade "EX" dividend Thursday, 28 March 2002
Record date Friday, 5 April 2002
Payment date Monday, 8 April 2002
The shareholders will have the option to elect between a cash or scrip
dividend. No dematerialisation or rematerialisation of share certificates
may take place between Wednesday, 20 March 2002 and Friday, 5 April 2002. A
further terms announcement of the scrip dividend will be made in due course.
By order of the Board
Directors: J.E. Newbury (Non-Executive Chairman), I.G. Morris (Managing
Director),
A.G. Fletcher, D.C. King (U.K.), M.M. Ngoasheng, F.R. Proudfoot
