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MMG
MMG
Micromega - Unaudited interim results for the six months ended 30 June 2006
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 2006
Increase In Revenue 152%
Increase In Attributable Profits 286%
Increase In Headline Earnings Per Share 139%
Increase In Net Asset Value Per Share 36%
Increase In Net Tangible Asset Value Per Share 31%
ABRIDGED INCOME STATEMENT
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2006 2005 2005
R(`000) R(`000) R(`000)
Revenue 154 582 61 244 159 339
Operating Profit 19 182 4 216 18 335
Net finance income 2 319 1 308 3 390
Share of profits of associates - - 48
Profit before taxation 21 501 5 524 21 773
Taxation (6 606) (2 028) (6 440)
Profit after taxation 14 895 3 496 15 333
Attributable to:
Ordinary shareholders 13 485 3 496 15 442
Minorities 1 410 - (109)
Reconciliation of headline earnings
Net profit attributable to ordinary 13 485 3 496 15 442
shareholders
Impairment of investment - 1 868 -
Impairment of goodwill - - 561
Profit on sales of 50% of subsidiary - - (25 101)
Impairment of loan - - 26 120
Initial cost of BEE transaction - - 191
Headline earnings 13 485 5 364 17 213
Headline earnings per share (cents) 14.37 6.01 18.86
Earnings per share (cents) 14.37 3.92 16.92
Diluted earnings per share (cents) 13.89 3.78 16.40
Weighted average number of shares 93 847 89 280 91 253
Diluted weighted average number of 97 062 92 550 94 154
shares
Total number of shares in issue 96 316 92 355 92 905
ABRIDGED BALANCE SHEET
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2006 2005 2005
R(`000) R(`000) R(`000)
ASSETS
Non-current assets
Property, plant and equipment 19 941 9 829 17 965
Goodwill 30 012 28 014 30 079
Intangible assets 17 848 3 454 17 664
Deferred tax asset 3 941 10 687 3 624
Investments 3 425 384 3 297
Loans receivable 5 718 2 509 4 223
Current assets
Inventories 11 873 4 948 11 635
Accounts receivable 56 543 23 045 40 586
Current portion of loans receivable - 4 675 -
Foreign exchange contracts - 48 -
Cash and cash equivalents 40 655 37 198 46 254
TOTAL ASSETS 189 956 124 791 175 327
EQUITY AND LIABILITIES
Equity
Equity holders" interest 120 258 86 717 97 219
Minorities interest 1 410 109 -
Non-distributable reserves 7 224 3 950 6 444
Non-current liabilities
Borrowings 15 345 6 745 15 087
Current liabilities
Taxation 5 583 2 270 6 501
Accounts payable 27 429 16 269 24 130
Current portion of borrowings 7 076 3 600 20 915
Provisions 5 631 5 131 5 031
TOTAL EQUITY AND LIABILITIES 189 956 124 791 175 327
Net asset value per share (cents) 133.82 98.29 111.58
Net tangible asset value per share 84.13 64.22 60.19
(cents)
ABRIDGED CASH FLOW STATEMENT
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2006 2005 2005
R(`000) R(`000) R(`000)
Cash generated by operations 22 275 6 842 22 157
Movement in working capital (12 895) (4 945) (8 555)
Net investment income 2 319 1 308 3 439
Taxation paid (7 840) (677) (1 632)
Net cash from operating activities 3 859 2 528 15 409
Net cash used in investing activities (3 936) (11 180) (6 479)
Capital raised 9 555 4 781 6 028
Loans raised - 6 476 11 179
Loans repaid (15 077) (11 329) (25 085)
Net cash used in financing activities (5 522) (72) (8 598)
Net increase/(decrease) in bank and (5 599) (8 724) 332
cash
Represented as follows:
Bank and cash at beginning of year 46 254 45 922 45 922
Bank and cash at end of period 40 655 37 198 46 254
Net increase/(decrease) in bank and (5 599) (8 724) 332
cash
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Share Share Share- Revalu- Minor- Accumu- Total
capital premium based ation ity lated
payment reserve int. loss
reserve
R(`000) R(`000) R(`000) R(`000) R(`000) R(`000) R(`000)
Balance at 1 887 175 737 2 654 714 109(101 027) 79 074
January 2005
Net profit for (109) 15 442 15 333
the year
Employee share 2 407 2 407
options - value
of services
provided
Revaluation of 669 669
property,
plant and
equipment
Change in 152 152
estimate
Issue of shares 42 6 004 6 046
Share issue (18) (18)
expenses
Balance at 31 929 181 723 5 061 1 383 - (85 422)103 633
December 2005
Net profit for 1 410 13 485 14 895
the period
Employee share 780 780
options - value
of services
provided
Issue of shares 34 9 569 9 603
Share issue (49) (49)
expenses
Balance at 31 963 191 243 5 841 1 383 1 410 (71 948)128 892
December 2006
NOTES
1.Basis of Preparation
The unaudited results for the six months ended 30 June 2006 have been prepared
in accordance with International Financial Reporting Standards ("IFRS").
The accounting policies used are consistent with those used in the annual
financial statements for the year ended 31 December 2006.
COMMENTARY ON RESULTS
We are pleased with the 139% growth in headline earnings per share. The increase
of 152% in turnover is attributed to the impact of acquisitions made in the
fourth quarter last year as well as sound organic growth.
Our business model has deliberately been structured to ensure we place no
dependency on any specific market sector. The contribution to headline earnings
from each of our four sectors reflects the implementation of this strategy.
Contribution to headline earnings:
Financial services sector: 31%
Support services sector: 24%
Information technology sector: 21%
Manufacturing and agency businesses: 24%
The group"s balance sheet continues to strengthen. The growth of 36% in net
asset value and 31% in net tangible asset value is attributed to the growth in
retained earnings and our strategy to use equity as a currency for acquisitions.
This can be attributed to the fundamental principles we employ in identifying,
pricing and structuring our acquisitions.
Our cash flow in the first six months has been impacted by the settlement of
vendor payments. These settlements were in respect of profit warranty agreements
as well as acquisitions made in the last quarter of 2005. The increase in stock
levels from 2005 is one we anticipate to report on annually as we deliberately
accumulate stock in our manufacturing businesses to accommodate the increase in
seasonal sales in the second half of the year.
PROSPECTS
We are confident that we will be able to continue to deliver strong earnings
growth. We indicated last year that we anticipated a doubling in turnover this
year. Our ability to achieve this whilst at the same time preserving our margins
is demonstrated in the first half of this year. We remain confident that we can
maintain these growth levels for the second half of the year.
Consideration is now being given to 2007 and the board is confident that the
organic growth we are experiencing from our current businesses bodes well for
next year. This together with our ongoing strategy to acquire businesses gives
us confidence that our objective to continue to generate sustainable earnings
growth can be achieved.
By order of the board
17 July 2006
Directors:
I G Morris (Chairman)
W E Rosenberg (CEO)
R C Lewin (Executive)
J J L Storom (Executive)
A Vercueil (Executive)
E S Mpanza (Non-executive)
Company Secretary: D J Case
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Ltd
Sponsor: Vunani Corporate Finance (Pty) Ltd
Date: 17/07/2006 05:00:27 PM Produced by the JSE SENS Department
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