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Unaudited condensed consolidated interim results for the six months ended 30 September 2015
MICROmega Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 1998/003821/06)
JSE Share code: MMG ISIN: ZAE000034435
(“MICROmega” or “the company” or “the group”)
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015
CONDENSED GROUP STATEMENT OF PROFIT AND LOSS
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2015 2014 2015
R’000 R’000 R’000
Revenue 564 372 484 165 1 035 683
Cost of sales (288 670) (253 555) (576 068)
Gross profit 275 702 230 610 459 615
Other net income 8 018 8 677 16 590
Distribution expenses (2 634) (1 851) (4 170)
Administration expenses (174 755) (162 000) (306 093)
Results from operations 106 331 75 436 165 942
Finance income 2 050 2 660 5 041
Finance cost (840) (1 179) (1 767)
Share of profit of equity accounted associate 762 649 1 978
Profit before tax 108 303 77 566 171 194
Tax expense (30 595) (20 278) (44 823)
Profit for the period 77 708 57 288 126 371
Profit attributable to:
Owners of the parent 69 067 48 821 110 653
Non-controlling interest 8 641 8 467 15 718
77 708 57 288 126 371
Attributable earnings per share (cents)
Basic 61.86 45.96 101.27
Diluted 60.98 45.06 99.45
Headline 61.81 45.96 101.30
CONDENSED GROUP STATEMENT OF OTHER COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2015 2014 2015
R’000 R’000 R’000
Profit for the period 77 708 57 288 126 371
Other comprehensive income:
Foreign currency translation differences 4 044 4 817 1 461
Revaluation of property - - (2 500)
Reversal of deal difference reserve - - (1 000)
Income tax on other comprehensive income - - 465
Total comprehensive income for the period 81 752 62 105 124 797
Total comprehensive income attributable to:
Owners of the parent 73 111 53 638 109 079
Non-controlling interest 8 641 8 467 15 718
81 752 62 105 124 797
Reconciliation of headline earnings:
Profit attributable to owners of the parent 69 067 48 821 110 653
Profit on disposal of property, plant and equipment (60) (5) (68)
Impairment of intangible assets - - 95
Headline earnings 69 007 48 816 110 680
Weighted average number of shares (000s) 111 646 106 214 109 265
Diluted weighted average number of shares (000s) 113 254 108 342 111 270
Total number of shares in issue (000s) 112 034 110 311 111 504
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
As at As at As at
30 September 30 September 31 March
2015 2014 2015
R’000 R’000 R’000
ASSETS
Non-current assets 606 695 497 463 540 579
Property, plant and equipment 68 091 52 867 58 711
Intangible assets 480 554 369 674 432 242
Investments in associates 12 600 11 528 12 857
Other investments 291 208 283
Other financial assets 704 3 779 -
Deferred tax assets 44 455 59 407 36 486
Current assets 410 989 415 988 439 629
Inventories 47 633 19 506 28 377
Trade and other receivables 257 214 224 512 239 225
Income tax receivable 4 375 7 033 8 251
Other financial assets 9 378 12 656 15 891
Cash and cash equivalents 92 389 152 281 147 885
TOTAL ASSETS 1 017 684 913 451 980 208
EQUITY AND LIABILITIES
EQUITY 685 426 601 920 671 673
Share capital and share premium 270 792 257 349 266 203
Other reserves 11 983 11 327 6 261
Retained earnings 333 103 268 548 330 218
Non-controlling interest 69 548 64 696 68 991
LIABILITIES
Non-current liabilities 73 667 89 504 73 125
Other financial liabilities 13 578 13 245 11 371
Deferred vendor payments 15 153 18 484 13 333
Deferred tax liabilities 44 936 57 775 48 421
Current liabilities 258 591 222 027 235 410
Trade and other payables 167 623 169 915 166 674
Other financial liabilities 4 201 3 204 3 101
Income tax payable 32 473 16 656 9 688
Deferred vendor payments 54 294 32 252 55 947
TOTAL LIABILITIES 332 258 311 531 308 535
TOTAL EQUITY AND LIABILITIES 1 017 684 913 451 980 208
Net asset value per share (cents) 549.72 487.42 540.50
Net tangible asset value per share (cents) 120.79 152.30 152.86
CONDENSED GROUP STATEMENT OF CASH FLOW
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2015 2014 2015
R’000 R’000 R’000
Cash flow from operating activities excluding 105 466 71 133 151 541
working capital changes
Movement in working capital (33 696) 19 641 (47 845)
Cash flow from investing activities (45 558) (74 643) (70 981)
Cash flow from financing activities (81 708) 27 304 6 324
(Decrease) / Increase in cash and cash equivalents (55 496) 43 435 39 039
Cash and cash equivalents at the beginning of the period 147 885 108 846 108 846
Cash and cash equivalents at the end of the period 92 389 152 281 147 885
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2015 2014 2015
R’000 R’000 R’000
Balance at the beginning of the period 671 673 504 269 504 269
Profit for the period 77 708 57 288 126 371
Other comprehensive income 4 044 4 817 (1 574)
Transactions with owners, recorded directly in equity (41 315) 35 546 42 607
Changes in ownership interest in subsidiaries (26 684) - -
Balance at the end of the period 685 426 601 920 671 673
NOTES TO THE GROUP FINANCIAL INFORMATION
1. Basis of preparation
These condensed consolidated financial statements are prepared in accordance with the framework concepts and the
recognition and measurement criteria of International Financial Reporting Standards (IFRS), its interpretations adopted by
the International Accounting Standards Board (IASB), the presentation and the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by Financial Reporting
Standards Council, IAS 34 – Interim Financial Reporting, the Listings Requirements of the JSE Limited and the requirements
of the Companies Act of South Africa (Act 71 of 2008), as amended. The condensed consolidated financial results are
prepared in accordance with the going concern principle under the historical cost basis as modified by the fair value
accounting of certain assets and liabilities where required or permitted by IFRS. The condensed consolidated financial results
have been prepared under the supervision of Russell Dick, CA (SA).
All financial information presented in South African Rand has been rounded to the nearest thousand.
2. Significant accounting policies
These condensed consolidated financial statements have been prepared using accounting policies that comply with IFRS.
The accounting policies used are consistent with those used in the audited annual consolidated financial statements for the
period ended 31 March 2015.
3. Business combinations
Profit Reform Proprietary Limited (trading as “COID Support”)
On 1 August 2015, the group acquired a 51% interest in COID Support for a consideration of R5 million. Goodwill to the value
of R4.6 million was accounted for. The net assets acquired amounted to R0.7 million and a non-controlling interest of R0.3
million was recognised.
Nerdworks Proprietary Limited
On 1 September 2015, the group acquired a 51% interest in Nerdworks Proprietary Limited for a consideration of R7.9
million. Goodwill to the value of R6.9 million was accounted for. The net assets acquired amounted to R2.3 million and a non-
controlling interest of R1.1 million was recognised.
Yonke Education and Training Solutions Proprietary Limited
On 1 September 2015, the group acquired a 50% interest in Yonke Education and Training Solutions Proprietary Limited for
a consideration of R3.4 million. Goodwill to the value of R0.7 million was accounted for. The net assets acquired amounted to
R2.6 million.
The fair value of assets acquired and liabilities assumed relating to the above business combinations are subject to change
should additional information become available within the 12 month re-measurement period from date of acquisition.
4. Segment information
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2015 2014 2015
R’000 R’000 R’000
SEGMENT REVENUE
Occupational health and safety 223 554 158 816 333 253
Labour supply 99 197 124 477 264 071
Information technology 220 344 184 394 399 605
Financial services 20 739 16 840 38 378
Holdings and consolidated 538 (362) 376
Total revenue 564 372 484 165 1 035 683
SEGMENT PROFIT / (LOSS)
Occupational health and safety 40 998 32 600 65 545
Labour supply 578 766 2 125
Information technology 34 588 32 877 59 123
Financial services 3 350 1 410 5 672
Holdings and consolidated (10 447) (18 832) (21 812)
Total profit 69 067 48 821 110 653
SEGMENT ASSETS
Occupational health and safety 377 349 405 181 409 512
Labour supply 45 459 73 125 60 566
Information technology 333 673 272 923 283 969
Financial services 56 107 75 231 71 914
Holdings and consolidated 205 096 86 991 154 247
Total assets 1 017 684 913 451 980 208
5. Corporate Governance and changes to the board of directors of MICROmega (“board”)
MICROmega has embraced the recommendations of the King III Report on governance and strives to provide reports to
shareholders that are timely, accurate, consistent and informative.
Alan Barrington Swan resigned as Lead Independent Non-Executive Director with effect from 9 September 2015.
6. Subsequent events
Subsequent to the reporting period, the group acquired a 100% interest in The Training Room Online Proprietary Limited for
a consideration of R40 million.
Shareholders are referred to the announcement released on SENS on 30 October 2015, wherein shareholders were advised
of the disposal of GIM Holdings Proprietary Limited, a wholly-owned subsidiary of MECS Africa Proprietary Limited, which is
in turn a wholly owned subsidiary of MICROmega, to Kamberg Investment Holdings Proprietary Limited (“Kamberg”). The
entire issued share capital of Kamberg is held by the Greg Morris Family Trust, of which Mr Greg Morris, the Chief Executive
Officer of MICROmega, is the sole beneficiary (“the Transaction”).
A circular containing full details of the Transaction and a notice to convene a general meeting of MICROmega shareholders
will be sent to MICROmega shareholders in due course.
No other significant events have occurred in the period between the reporting date and the date of this report.
7. Commentary on results
The period under review presented the group with the poorest general trading environment that we have witnessed in the last
decade. In particular, we experienced substantial reductions and deferrals of business from our large multi-national clients in
South Africa and from large SOEs in China. This is in accordance with global cost cutting exercises by those clients that we
expect to remain in place for the foreseeable future.
We were also negatively impacted by a substantial public sector project that has become embroiled in a larger dispute
between the main contracting parties that has raised doubts about our ability to receive payment for services already
provided. We deemed it prudent not to recognise the amounts due but have fully recognised the cost of sales. We will
continue to pursue recovery of amounts due to us.
Despite the above, we continue to find new opportunities in our targeted markets and it is a tribute to the quality of our
products, services and entrepreneurial capacity that we were able to grow headline earnings per share (“HEPS”) by 34% in
such a challenging environment.
We anticipate that the second half of the year will produce HEPS in excess of the first half. We also reaffirm that we remain
confident about our ability to continue to generate growth in HEPS at well above the JSE average for this year and for the
following financial year. There are a number of strong opportunities for us to extend our existing range of products and
services - both organically and through acquisition.
By order of the board
5 November 2015
Directors: DC King (Executive Chairman); IG Morris (Chief Executive Officer); RB Dick (Financial Director); DSE Carlisle
(Executive Director); DA Di Siena (Independent Non–Executive Director); PH Duvenhage (Non-Executive Director); TW
Hamill (Non–Executive Director); GE Jacobs (Independent Non–Executive Director); RC Lewin (Non–Executive Director).
Company Secretary: RJ Viljoen
Auditors: Nexia SAB&T
Transfer Secretaries: Singular Systems Proprietary Limited
Sponsor: Merchantec Capital
Attorneys: Di Siena Inc.
Note: No forward looking statements in this announcement have been reviewed or reported on by MICROmega’s auditors.
Date: 05/11/2015 02:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
