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MICROmega - Audited Group Results for The Year Ended 31 December 2004
MICROmega Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/003821/06
Share code MMG ISIN ZAE000034435
(`Micromega` or `the Company`)
AUDITED GROUP RESULTSFOR THE YEAR ENDED 31 DECEMBER 2004
ABRIDGED INCOME STATEMENT Audited Audited
Year ended Year ended
31 December 31 December
2004 2003
R (`000) R (`000)
Note
Gross revenue 85 324 92 495
Operating profit/(loss) 7 348 (24 666)
Net finance income 3 811 3 609
Equity accounted profit/(loss) 39 (124)
Profit/(loss) before taxation 11 198 (21 181)
Taxation (2 330) 4 528
Profit/(loss) after taxation 8 868 (16 653)
Minority interest (12) -
Net profit/(loss) for the year 8 856 (16 653)
Exceptional items 2 6 021 4 270
Earnings/(loss) attributable to 14 877 (12 383)
shareholders
Reconciliation of headline earnings
Exceptional items (6 021) (4 270)
Restructuring provision 2 464 -
Amortisation of goodwill - 50 415
Capital profit on disposal of subsidiaries - (13 858)
Deferred tax - (7 328)
Headline earnings 11 320 12 576
Headline earnings per share (cents) 12.88 14.76
Earnings/(loss) per share (cents) 16.93 (14.53)
Fully diluted earnings/(loss) per share 16.15 (14.06)
(cents)
(`000) (`000)
Weighted average number of shares 87 876 85 210
Diluted weighted average shares in issue 92 109 88 084
Total number of shares in issue 88 745 85 433
ABRIDGED BALANCE SHEET Audited Audited
Year ended Year ended
31 December 31 December
2004 2003
Note Note R (`000) R (`000)
ASSETS
Non-current assets
Fixed assets 3 5 569 3 905
lntangible assets 25 397 -
Deferred taxation 10 671 10 682
Loans receivable 5 483 8 569
Investment in associates 116 77
Investments 706 353
Current assets
Bank and cash 45 922 49 850
Taxation 407
Loans receivable 6 906 3 117
Accounts receivable 16 834 7 427
Other current assets 4 559 1 574
Total assets 122 163 85 961
EQUITY AND LIABILITIES
Capital and reserves
Shareholders` equity 79 600 62 275
Minorities interest 109 -
Non-current liabilities
Vendors loans4 4 9 294 400
Borrowings 302 -
Current liabilities
Taxation 398 -
Vendors loans 4 10 866 468
Accounts payable 14 554 12 834
Provisions 7 040 9 984
Total equity and liabilities 122 163 85 961
Net asset value per share (cents) 89.82 72.89
Net tangible asset value per share (cents) 61.20 72.89
ABRIDGED CASH FLOW STATEMENT Audited Audited
Year ended Year ended
31 December 31 December
2004 2003
R (`000) R (`000)
Cash generated by operations 3 874 10 850
Net investment income 3 811 3 485
Taxation paid (2 413) (4 292)
Net cash from operating activities 5 272 10 043
Expenditure incurred to maintain operations (1 690) 2 195
Proceeds on disposal of subsidiaries - 14 011
Proceeds on disposal of investments 372 127
Subsidiaries acquired (27 617) -
Net cash outflow/inflow from investing activities (28 935) 16 333
Capital raised 2 444 5 721
Loans raised/(repaid) 17 291 (21 116)
Net cash inflow/(outflow) from finance activities 19 735 (15 395)
Net (decrease)/increase in bank and cash (3 928) 10 981
Represented as follows:
Bank and cash at beginning of the year 49 850 38 869
Bank and cash at end of the year 45 922 49 850
Net (decrease)/increase in bank and cash (3 928) 10 981
ABRIDGED STATEMENT OF Share Share Non- Accumulated Total
CHANGES Distributable
Reserves
IN EQUITY capital premium loss
R (` 000) R (` 000) R (` 000) R (` 000) R (` 000)
Balance at 1 January 764 133 521 (2 392) (62 157) 69 736
2003
Net loss for the period (24 239) (24 239)
as previously reported
Dividends 11 237 (16 583) (5 317)
29
Revaluation of foreign 1 983 (1 983) -
entity`s opening
reserves
Foreign currency (1 070) (1 070)
translation reserve
Issue of shares 66 22 934 23 000
Share issue expenses (92) (92)
Balance at 1 January 859 167 600 (1 479) (104 962) 62 018
2003
Fundamental error 5 440 5 440
Restated balance at 1 859 167 600 (1 479) (99 522) 67 458
January 2003
Net loss for the year (12 383) (12 383)
Foreign currency 1 479 1 479
translation reserve
Issue of shares 2 8 559 8 561
Reduction in share (7) (2 833) (2 840)
capital
Balance at 31 December 854 173 326 - (111 905) 62 275
2003
Net profit for the year 14 877 14 877
Issue of shares 33 2 415 2 448
Balance at 31 December 887 175 741 - (97 028) 79 600
2004
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.
The group`s auditors, R W Irish-Alliott Inc. have audited the financial
statements for the year ended 31 December 2004. Accounting policies are
consistant with the previous reporting period and conform to SA Statements of
Generally Accepted Accounting Practice. An unqualified audit report is available
for inspection at the registered office of the company
2. Exceptional Items
The provision raised in the prior year of R6 021 000 is no longer required as
the dispute with the previous vendors has been resolved. Consequently the
company has no obligation to make payment in this regard.
3. Intangible assets
Carrying Additions/ Impairment Carrying
value value
1 January Disposals 31 December
2003 2004
R`(000) R`(000) R`(000) R`(000)
Goodwill arising from 22 443 22 443
acquisitions
Software applications 2 954 2 954
- 25 397 - 25 397
Goodwill arising from acquisitions represents the excess of the cost of
acquisition over the fair value of net assets acquired.
If there is an indication that the value of goodwill is impaired at balance
sheet date, the goodwill is written off to its recoverable amount.
4. Vendors loans
2004 2003
R`000 R`000
Vendors loans arising from acquisitions 20 160 868
Less: Current portion (10 866) ( 468)
9 294 400
The amounts due to vendors represent the balance of the purchase consideration
owing in respect of acquisitions.
The loans are settled through the issue of shares and cash resources over the
profit warranty periods.
COMMENTARY ON RESULTS
The results for the period under review reflect a year in which MICROmega
adopted a program of restructuring its businesses to access higher earnings and
a broader market share, pursued a number of acquisitions and attended to the
implementation of a broad based black economic empowerment and transformation
program.
The decline in headline earnings of 10% reflects the impact of the continued
slow down in income generated by MICROmega Securities from broking activities.
The group enjoyed strong earnings growth from both the revenue management and
information technology businesses. The demand for these services and consequent
growth in these businesses, together with the acquisitions concluded during this
period, have ensured that shareholders are in future not materially affected by
a fluctuation in earnings from MICROmega Securities that would be as a result of
a continuous volatility in both the interest rate and currency markets.
PROSPECTS
We are pleased to report that all the businesses are well positioned for
earnings growth in 2005. The investment in broad based black economic
empowerment and an active program of transformation has ensured that the
operating entities continue to increase their market share.
We have adopted an aggressive acquisition strategy over the past eight months.
As a consequence of these transactions and the increase in market share we
experienced in 2004 we anticipate a doubling of turnover in 2005 and a strong
growth in earnings during this period.
The following companies were acquired during the period reported on ending 31
December 2004. We believe these acquisitions and their strategic fit within
MICROmega ensures sustainable earnings growth in future periods.
Deltec Power Distributors (`Deltec`)
MICROmega acquired 100% of the issued share capital of Deltec on the 1st October
2004. The business has been in operation for some 22 years providing batteries
to the UPS and automotive markets. This business compliments MICROmega`s agency-
based businesses and has introduced a market sector previously unavailable to
the group. Deltec`s contribution to earnings is anticipated to exceed forecasted
expectations for 2005.
Unitech Computer Services (`Unitech`)
MICROmega acquired 100% of the issued share capital of Unitech on the 1st
December 2004. This business has been in operation for some 15 years and
provides financial management systems to more than 70 local authorities in South
Africa and dominates financial system delivery to local authorities in Namibia.
The business has a strategic fit with both MICROmega`s revenue management and
information technology businesses. The business earnings are annuity based
through long-term service support agreements with its clients.
ADD-X
MICROmega acquired 100% of the issued share capital of ADD-X on the 1st July
2004. This business provides meter reading and related revenue management
services to the local public sector in South Africa. ADD-X complimented the
restructuring and transformation program which was adopted by our revenue
management business during 2004.
We are focused at ensuring that we retain our dominant position as market
leaders in the provision of risk management and revenue management solutions,
and are committed to the delivery of strong earnings growth in 2005.
By order of the Board
Directors: I G Morris (Chairman) W E Rosenberg (CEO) R Lewin (Executive) J
Storom (Executive) A Vercueil (Executive) S Mpanza (Non-Executive) H Seabi (Non-
Executive)
Company Secretary: C J Holroyd
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Limited
Sponsor: LPC Manhattan Moela Sponsors (Proprietary) Limited
Date: 05/04/2005 05:00:07 PM S
Produced by the JSE SENS Department
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