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MICROmega Holdings Limited - Unaudited Interim Results For The Six Months Ended
30 June 2005
MICROmega Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/003821/06
Share code: MMG
ISIN Code: ZAE000034435
("Micromega" or "the Company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005
INCREASE IN REVENUE 55%
INCREASE IN ATTRIBUTABLE 46%
PROFITS
INCREASE IN HEADLINE EARNINGS 30%
PER SHARE
INCREASE IN NET ASSET VALUE 27%
PER SHARE
ABRIDGED INCOME STATEMENT Unaudited Unaudited Audited
six months six months year ended
ended 30 ended 30 31 December
June 2005 June 2004 2004
(Restated (Restated
For IPRS) for IPRS)
(R"000) (R"000) (R"000)
Revenue 61 244 39 620 85 324
Operating profit 4 216 2 404 351
Net finance income 1 308 1 875 3 811
Share of profits of associates
- - 39
Profit before taxation 5 524 4 279 10 201
Taxation ( 2 028) ( 1 881) ( 2 376)
Profit after taxation 3 496 2 398 7 825
Exceptional item - - 6 021
Profit for the period 3 496 2 398 13 846
Attributable to:
Ordinary shareholders 3 496 2 398 13 834
Minorities
- 12
Reconciliation of headline
earnings
Net profit attributable to 3 496 2 398 13 834
ordinary shareholders
Impairment of investment 1 868
Impairment of goodwill 1 601
- -
Exceptional item (6 021)
- -
Restructuring provision 2 464
- -
Headline earnings 5 364 3 999 10 277
Headline earnings per share
(cents) 6.01 4.64 11.69
Earnings per share (cents)
3.92 2.78 15.74
Diluted earnings per share
(cents) 3.78 2.67 15.02
Weighted average number of 89 280 86 215 87 876
shares
Diluted weighted average 92 552 89 683 92 109
shares in issue
Total number of shares in 92 355 88 394 88 745
issue
ABRIDGED INCOME STATEMENT Unaudited six Unaudited six Audited year
months ended 30 months ended 30 ended 31
June 2005 June 2004 December 2004
(Restated For (Restated for
IPRS) IPRS)
(R"000) (R"000) (R"000)
ASSETS
Non-current assets
Property, plant and equipment 9 829 5 336 6 621
Goodwill 28 014 7 623 22 443
Intangible assets 3 454 2 954
-
Deferred tax asset 10 687 10 573 10 366
Investments
384 329 822
Loans receivable 2 509 8 543 5 483
Current assets
Inventories 4 948 4 559
-
Accounts receivable 23 045 13 142 16 834
Current portion of loans 4 675 3 117 6 906
receivable
Foreign exchange contracts
48
Cash and cash equivalents 37 198 44 624 45 922
Total assets 124 791 93 287 122 910
EQUITY AND LIABILITIES
Equity
Equity holders" interest 86 717 66 700 77 689
Minorities interest
109 - 109
Share-based payment reserve 3 950 1 512 2 654
Non-current liabilities
Borrowings 6 745 7 420 9 596
Current liabilities
Taxation 2 270
- 398
Accounts payable 16 269 7 526 14 543
Current portion of borrowings 3 600 10 881
267
Provisions 5 131 9 862 7 040
Total equity and liabilities 124 791 93 287 122 910
Net asset value per share 77.17
(cents) 98.29 90.66
Net tangible asset value per 68.54
share (cents) 64.22 62.04
ABRIDGED CASH FLOW Unaudited Unaudited Audited
STATEMENT
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2005 2004 2005
Cash generated by 6 842 4 879 11 278
operations
Movement in working (4 945) (9 306) (7 403)
capital
Net investment income 1 308 1 875 3 811
Taxation paid (677) (1 812) (2 412)
Net cash from operating 2 528 (4 364) 5 274
activities
Net cash used in investing (11 180) (9 931) (28 937)
activities
Capital raised 4 781 2 180 2 444
Loans raised 6 476 7 089 19 657
Loans repaid (11 329) (200) (2 366)
Net cash used in finance (72) 9 069 19 735
activities
Net (decrease) in bank and (8 724) (5 226) (3 928)
cash
Represented as follows:
Bank and cash at beginning 45 922 49 850 49 850
of the year
Bank and cash at end of 37 198 44 624 45 922
the period
Net (decrease) in bank and (8 724) (5 226) (3 928)
cash
ABRIDGED STATEMENT Share Share Share- Revalu- Accum- Tot
OF CHANGES based ation ulated
IN EQUITY capital premium Payment Reserve loss
Reserve
R (" 000) R (" 000) R (" 000) R (" 000) R (" 000) R (
Balance at 1 854 173 326 (112 672) 63
January 2004 1 512 -
SA GAAP reported 854 173 326 (111 905) 62
balance at 1 - -
January 2004
Cumulative effects - (767)
of IFRS adoption - 1 512 -
Net profit for the - 13 846 13
year - -
Employee share 1 1
options - value of 1 142
services provided
Issue of shares 33 2 433 2 4
- -
Share issue - (22) (22
expenses - - -
Balance at 31 887 175 737 (98 826) 80
December 2004 2 654 -
Net profit for the 3 4
period 3 496
Employee share 1 2
options - value of 1 296
services provided
Revaluation of 724
property, plant 724
and equipment
Issue of shares 36 4 786 4 8
Share issue - (14) (14
expenses
Balance at 30 June 923 180 509 (95 330) 90
2005 3 950 724
NOTES
1. Basis of preparation
The unaudited abridged results for the six months ended 30 June 2005 have been
prepared in accordance with International Financial Reporting Standards
("IFRS"). The company is reporting under IFRS for the first time
for the year ended 31 December 2005. These standards are subject to ongoing
review and may change.
Comparative figures have been restated accordingly.
The disclosure required by IFRS 1 (First-time Adoption of International
Financial Reporting Standards) concerning the transition from South African
Statements of Generally Accepted Accounting Practice ("SA GAAP") to IFRS
and the required changes in accounting policies are set out in the table below.
Reconciliation of SA GAAP to IFRS Unaudited Unaudited IFRS
Six months 12 months transitions
30 June 31 December 1 January
2004 2004 2004
R ("000) R ("000) R ("000)
Balance sheet
Equity as previously reported under 67 498 79 596 62 275
SA GAAP
Restatements for IFRS
714 856 745
Property, plant and equipment (1 090) (2 151) (1 052)
Employee share options - value of 1 512 2 1 512
services provided 654
Deferred tax
292 353 285
Equity as reported under IFRS 68 212 80 63 020
452
Income statement
Net profit as previously reported 3 043 14
under SA GAAP 877
Restatements for IFRS (645) (1 031)
Change in depreciation
46 157
Employee share options - value of (678) (1 142)
services provided
Deferred tax (13)
(46)
Restated net profit per IFRS 2 398 13
846
Commentary on results
We are pleased to report a 30% increase in headline earning per share to 6.01
cents for the six months to 30 June 2005. Operating profits for this reporting
period were reduced by R645 000. This was a direct result of the impact of
accounting in accordance with IFRS for share options issued to staff. The
adoption of IFRS has resulted in the prior year headline earnings per share of
5.39 cents being restated to 4.64 cents. The increase in earnings for the first
six months is a direct result of an increase in the performance of all the
operating subsidiaries within the group.
We have maintained our position as the dominant provider of revenue management
solutions within the Local Government Sector. More than 35 municipalities
(representing more than a million commercial and residential consumers) use our
services. We are pleased to report that the enhancement in revenue generated by
these municipalities, and the efficiencies that we have introduced through our
service level agreements, bodes well for the future of this business. Given the
strong initiative within Local Government to improve service delivery, and the
emphasis on sound financial management within the municipalities, we have
committed to an ongoing investment in resources and products to ensure that we
can continue to add economic value to this sector of the market.
MICROmega has established itself as the largest provider of financial and
management information systems to both the District and Local Municipalities in
Southern Africa. Our financial systems are currently being used by 90
municipalities in Namibia and South Africa. Given the recent initiative within
the Local Government to streamline and enhance financial controls all the
aforementioned clients are undergoing system upgrades. To date we have completed
fifteen major system conversions and upgrades, the balance of the client base
(some seventy five) are scheduled for conversion during 2006 and 2007. Further
we are implementing a management information system, namely DIMSTrade Mark, in
the District Municipalities in KwaZulu Natal, Eastern Cape, Limpopo and
Mpumalanga.
MICROmega Securities has enjoyed a stable first six months of inter-dealer
brokering. Whilst this business is dependant on market volatility its unique
position as the largest provider of liquidity to both the domestic and
international banks trading with South Africa, has ensured that it continues to
make a sound contribution to group earnings.
Prospects
We anticipate the current growth rate in headline earnings of 30% to be
sustainable in the second half of 2005. Our earnings base which is dominated by
both commercial and contractual annuity based income streams ensures that we are
now well placed to forecast income and consequently look forward with the
assurance we require to grow our market share with confidence.
Our growth in earnings will not only be generated organically but also be
positively impacted by acquisitions concluded during the current financial year.
We will continue to identify and secure further businesses that not only
complement MICROmega"s core independent intermediary services but will also
contribute to sustainable earnings growth in future years.
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) Ltd
Sponsor: LPC Manhattan Moela Sponsors (Pty) Ltd
Micromega Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/003821/06)
Share code MMG ISIN ZAE000034435
Date: 29/09/2005 05:54:25 PM Produced by the JSE SENS Department
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