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Micromega Holdings Limited - Unaudited Interim Results For The Six Months Ended
Release Date: 22/09/2003 17:30:01 Code(s): MMG
MICROmega Holdings Limited - UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED
30 JUNE 2003
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 2003
ABRIDGED INCOME STATEMENT
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
Note R("000) R("000) R("000)
Gross revenue 46 880 49 404 97 209
Operating profit 5 931 15 345 19 139
Net finance income 2 075 1 840 3 111
Equity accounted profits - - 285
Profit before taxation 8 006 17 185 22 535
Taxation (2 329) (4 795) (7 107)
Headline earnings 5 677 12 390 15 428
Exceptional item - - (4 270)
Amortisation of goodwill 2 (25 710) (19 293) (35 397)
Loss attributable to
shareholders (20 033) (6 903) (24 239)
Headline earnings per
share (cents) 6.61 15.73 18.46
Loss per share (cents) (23.32) (8.76) (29.00)
Fully diluted loss per
share (cents) (23.32) (8.67) (28.67)
Weighted average number of shares 85 905 78 778 83 577
Diluted weighted average
shares in issue 85 905 79 658 84 540
Total number of shares in issue 85 905 85 878 85 905
ABRIDGED BALANCE SHEET
Unaudited Unaudited Audited
At At At
30 June 30 June 31 December
2003 2002 2002
Note R("000) R("000) R("000)
ASSETS
Non-current assets
Fixed assets 4 573 5 603 4 692
Goodwill 2 24 973 72 608 51 483
Deferred taxation 4 499 5 065 4 584
Loans receivable 2 840 - 3 875
Investment in associates 904 - 1 089
Investments 1 703 3 389 1 573
Current assets
Bank and cash 36 493 30 926 38 869
Accounts receivable 10 958 9 363 8 694
Total assets 86 943 126 954 114 859
EQUITY AND LIABILITIES
Capital and reserves
Shareholders" equity 41 985 79 961 62 018
Non-current liabilities
Borrowings 10 536 26 060 18 694
Current liabilities
Taxation 188 58 1 896
Accounts payable 14 465 8 223 11 189
Income received in advance 1 454 1 846 2 252
Provisions 18 315 10 806 18 810
Total equity and liabilities 86 943 126 954 114 859
Net tangible asset value per share (cents) 19.80 8.56 12.26
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Accu-
Share Share mulated
capital premium NDR loss Total
R("000) R("000) R("000) R("000) R("000)
Balance at 1 January 2002 764 133 521 (2 392)(62 157) 69 736
Net profit for the period - (24 239) (24 239)
Revaluation of foreign
entities" opening reserves 1 983 (1 983) -
Foreign currency translation reserve - (1 070) (1 070)
Dividends 29 11 236 - (16 582) (5 317)
Issue of shares 66 22 934 - - 23 000
Share issue expenses - (92) - - (92)
Balance at 31 December 2002 859 167 599 (1 479)(104 961) 62 018
Net loss for the period - - - (20 033)(20 033)
Balance at 30 June 2003 859 167 599 (1 479)(124 994) 41 985
ABRIDGED CASH FLOW STATEMENT
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
R("000) R("000) R("000)
Cash generated by operations 7 933 12 563 22 026
Net investment income 2 075 1 840 3 111
Taxation paid (3 742) (8 489) (7 706)
Dividends paid - (5 317) (5 317)
Secondary tax on companies - - (664)
Net cash generated from
operating activities 6 266 597 11 450
Net cash used in investing activities (380) (22 706) (18 419)
Capital raised - 22 907 22 907
Loans repaid (8 262) (11 205) (18 402)
Net cash (used in)/generated
by finance activities (8 262) 11 702 4 505
Net decrease in bank and cash (2 376) (10 407) (2 464)
Represented as follows:
Bank and cash at beginning
of the period 38 869 41 333 41 333
Bank and cash at end of the period 36 493 30 926 38 869
Net decrease in bank and cash (2 376) (10 407) (2 464)
NOTES TO THE FINANCIAL sTATEMENTS
1. Accounting policy
The financial statements are prepared in accordance with South African
Statements of Generally Accepted Accounting Practice. The accounting policies
are consistent with those of the previous year, except as otherwise indicated.
2. Goodwill
Carrying value Amortisation Impairment Carrying value
1 January 30 June
2003 2003
R"(000) R"(000)
Goodwill
arising from
acquisition 51 483 (25 710) (800) 24 973
Goodwill represents the excess of the cost of acquisition over the fair value of
net assets of the subsidiaries on acquisition. Goodwill is amortised using the
straight line method over the lesser of the profit warranty period associated
with the specific acquisition or five years. Goodwill will be amortised in full
as the profit warranty periods associated with the acquisitions will lapse in
the current year.
COMMENTARY ON RESULTS
By all accounts this has been a tough period for the group. We have been
affected by the resignation of executive board members, auditors, non-executive
directors and our sponsor. Our share price has consequently been negatively
affected, staff morale has been low and we have missed out on business
opportunities that would otherwise be made available to the group. In spite of
the aforementioned, all group companies have generated cash based profits and we
believe that we are through the worst.
The results may be sharply down compared to the same period last year,
however they are proportionately only marginally down when compared to the full
year.
In comparison to the same period last year, turnover is down by 5%. Costs are
up by 20% and consequently headline earnings are down by 54%.
Turnover has been materially affected by the slow-down in brokerage experienced
in MICROmega Securities. This slow down is a direct consequence of external
factors that have effected world financial markets.
Operating costs increased against last year. This increase can mainly be
attributed to an abnormally high increase in the payroll overhead of MICROmega
Securities arising from re-negotiated employment contracts.
It is anticipated that by the end of this financial year all goodwill will be
written off in the group. Consequently, our investments in subsidiary operations
will be written down to book value.
PROSPECTS
The period under review can be viewed as a period of consolidation whereby
the group was weathering the impact of external factors on the businesses.
Although the results were not inspiring, we are confident that we are through
the worst and are optimistic that we will be able to maintain our current
earnings into the second half of the year. Our balance sheet continues to
strengthen as a direct consequence of cash based earnings and we anticipate this
to continue into the second half of this year.
TRADING STATEMENT AND CAUTIONARY ANNOUNCEMENT
In terms of the new Listings Requirements of the JSE Securities Exchange
South Africa ("JSE"), listed companies are required to publish a trading
statement as soon as they become aware that the financial results for the next
period to be reported on will be materially different from those of the previous
corresponding period.
MICROmega"s headline earnings and loss for the year ended 31 December 2003
are expected to be materially down (as defined in the JSE Listings Requirements)
than that of the comparative 12 months.
The forecast financial information has not been reviewed or reported on by
the group"s auditors. In light of the above, shareholders are advised to
exercise caution in trading in the company"s shares until release of the
results, expected around March 2004.
By order of the Board
Directors:
R Gibbs A W Browne G M Kelly F J Pretorius
Company Secretary: A W Browne
Transfer Secretaries: Computershare Limited
Sponsor: LPC Manhattan Sponsors (Pty) Limited
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