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MICROmega - Preliminary Reviewed Results For The Year Ended 31 December
2003
MICROmega
MICROmega Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/003821/06
Share code MMG ISIN ZAE000034435
("Micromega" or "the Company")
PRELIMINARY REVIEWED RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2003
ABRIDGED INCOME STATEMENT Reviewed Audited
Year ended Year ended
31 December 31 December
2003 2002
Note R ("000) R ("000)
Gross revenue 92 495 97 209
Operating profit 11 887 20 408
Net finance income 3 610 3 111
Equity accounted loss ( 120) 285
Profit before taxation 15 377 23 804
Taxation ( 2 801) ( 7 087)
Profit after taxation 12 576 16 717
Minority interest 320
Headline earnings 12 576 17 037
Reconciliation of attributable loss
Exceptional item 4 270 ( 4 270)
3
Amortisation of goodwill ( 50 415) ( 35 397)
Capital profit on disposal of 13 858 3 833
subsidiaries
Deferred tax 7 328 -
4
Loss attributable to shareholders ( 12 383) ( 18 797)
Headline earnings per share (cents) 14.76 20.38
Loss per share (cents) ( 14.53) ( 22.49)
Fully diluted loss per share (14.06) (22.23)
(cents)
Weighted average number of shares 85 210 83 577
Diluted weighted average shares in 88 084 84 540
issue
Total number of shares in issue 85 433 85 905
ABRIDGED BALANCE SHEET Reviewed Audited
Year ended Year ended
31 December 31 December
2003 2002
R ("000) R (" 000)
Note
ASSETS
Non-current assets
Fixed assets 3 905 4 692
Goodwill - 51 483
5
Deferred taxation 10 682 4 584
Loans receivable 8 569 9 296
Investment in associates 77 1 089
Investments 352 1 573
Current assets
Bank and cash 49 850 38 869
Taxation 407
Current portion of loans receivable 3 117 -
Accounts receivable 7 347 8 292
Other current assets 1 654 144
Total assets 85 960 120 022
EQUITY AND LIABILITIES
Capital and reserves
Shareholders" equity 62 278 67 460
Non-current liabilities
Borrowings 400 18 694
Current liabilities
Taxation - 1 617
Current portion of borrowings 466 900
Accounts payable 12 832 10 289
Income received in advance - 2 252
Provisions 9 984 18 810
Total equity and liabilities 85 960 120 022
Net asset value per share (cents) 72.90 78.53
Net tangible asset value per share 72.90 18.60
(cents)
ABRIDGED STATEMENT OF Share Share NDR Accumulated Total
CHANGES
IN EQUITY capital premium loss
R (" 000) R (" 000) R (" 000) R (" 000) R ("
Balance at 1 January 2002 764 133 521 (2 392) (62 157) 69 73
Net loss for the period (24 239) (24 2
as previously reported
Dividends 29 11 236 (16 582) (5 31
Revaluation of foreign 1 983 (1 983) -
entity"s opening reserves
Foreign currency (1 070) (1 07
translation reserve
Issue of shares 66 22 934 23 00
Share issue expenses (92) (92)
Balance at 31 December 859 167 599 (1 479) (104 961) 62 01
2002
Fundamental error 5 442 5 442
Restated balance at 31 859 167 599 (1 479) (99 519) 67 46
December 2002
Net loss for the period (12 383) (12 3
Foreign currency 1 479 1 479
translation reserve
Issue of shares 3 8 559 8 562
Reduction in share (7) (2 833) (2 84
capital
Balance at 31 December 855 173 325 - (111 902) 62 27
2003
ABRIDGED CASH FLOW STATEMENT Reviewed Audited
Year ended Year ended
31 December 31 December
2003 2002
R ("000) R (" 000)
Cash generated by operations 10 051 21 986
Net investment income 3 610 3 111
Taxation paid (4 293) (7 666)
Dividends - cash portion - (5 317)
Secondary tax on companies - (664)
Net cash from operating activities 9 368 11 450
Net cash from investing activities 17 009 (12 998)
Capital raised 5 722 22 907
Loans repaid (21 118) (23 823)
Net cash from finance activities (15 396) (916)
Net increase/(decrease) in bank and cash 10 981 (2 464)
Represented as follows:
Bank and cash at beginning of the year 38 869 41 333
Bank and cash at end of the period year 49 850 38 869
Net increase/(decrease) in bank and cash 10 981 (2 464)
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policy
The financial statements have been 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. Fundamental error
On the 1st January 2002, 50% of MICROmega Revenue Management Services was
sold to an empowerment company. This sale was conditional on the
achievement of certain benchmarks by the empowerment partner.
As at 31st December 2002 the predetermined benchmarks were not achieved
and in accordance with the original agreement the transaction collapsed
and therefore MICROmega Revenue Management Services was accounted for as
a 100% subsidiary in 2002 annual financial statements.
Subsequent negotiations with the empowerment partner have resulted in the
original contract being reinstated with effect from the 1st January 2002.
Consequently the financial statements for the year ended 31st December
2002 have been amended to recognise this outcome.
Effect on accumulated loss Year ended Year ended
31 December 31 December
2003 2002
R ("000) R (" 000)
Accumulated loss as previous - (104 961)
reported
Gross - 5 422
Tax - 20
Net - 5 442
Restated accumulated loss - (99 519)
Loss per share as previously ( 29.00)
reported
Fundamental error 6.51
Restated loss per share (22.49)
3. Exceptional Item
The exceptional item raised in the prior year to protect the company from
the impact of negative publicity surrounding
two of the previous directors, has been reversed.
4. Deferred Taxation
At the balance sheet date the unrecognized deferred tax asset of the
holding company was reviewed.
As it has become probable that the holding company will generate
sufficient taxable income in future to utilize the deferred tax asset, a
deferred tax asset was raised in accordance with AC 102. The deferred tax
asset was
added back for headline earnings.
COMMENTARY ON RESULTS
The results for the year reflect the difficult trading conditions the
group has faced. Overall, headline earnings were impaired primarily as a
consequence of the strengthening rand and increased staff costs.
MICROmega Revenue Management Services" contribution to headline earnings
increased by 92%. The business continues to enjoy a demand driven
environment and remains the dominant service provider in its sector.
MICROmega Securities" contribution in economic terms to headline earnings
growth decreased by 41%. This decline is attributed to a reduction in
brokerage caused by lower domestic trading volumes, and an increase in
staff costs. This business remains an integral component in the local
market as a liquidity provider to both the local and international
trading banks.
Global Credit Rating Company was disposed of, effective 1st November
2003, as a result of its inability to sustain earnings growth in line
with group expectations. The business experienced a decline in headline
earnings from 2002 of 51%.
The loss attributable to shareholders of R12.4 million was primarily as a
result of the write-off of the remaining goodwill of R50.4 million for
the year ended 31st December 2003.
It is noted that whilst headline earnings have declined, this has not
resulted in an erosion of the balance sheet, with the net tangible asset
value per share having increased from 18.60 cents to 72.90 cents. This
increase can be attributed to the efficient management of working
capital, a strong cost culture and optimal extraction of value from
businesses both under growth and ex-growth environments.
PROSPECTS
The board is focused on the delivery of earnings growth for 2004.
Notwithstanding difficult trading conditions over the past two years, the
consolidation of the current businesses in 2004, and the introduction of
new businesses place the group in a position to focus on growing market
share and delivering sound returns for its shareholders going forward.
The board of MICROmega remains committed to the well being of the company
and their responsibility to shareholders.
REVIEW OF RESULTS
The preliminary results of the company as set out above have been
reviewed by the company"s auditors, R W Irish- Alliott Inc., as
required by the JSE Securities Exchange South Africa ("JSE"). The review
report is available for inspection at the company"s registered address.
By order of the Board
Directors: R Gibbs R Lewin F J Pretorius A W Browne
Company Secretary: A W Browne
Transfer Secretaries: Computershare Limited
Sponsor: LPC Manhattan Sponsors (Proprietary) Limited
Date: 15/04/2004 05:06:09 PM Produced by the JSE SENS Department
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