Sharenet Sites 
Sharenet Sites
Unaudited Interim Results for the six months ended 30 Jun 2012
MICROmega Holdings Limited
(incorporated in the Republic of South Africa)
Registration number 1998/003821/06
Share code MMG
ISIN ZAE000034435
("MICROmega" or "the Company" or "the Group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012
Increase In Headline Earnings Per Share 87%
Increase In Attributable Earnings Per Share 106%
Increase In Revenue 7%
Increase In Net Asset Value Per Share 9%
Increase In Net Tangible Asset Value Per Share 8%
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
R(000) R(000) R(000)
Revenue 385 241 359 809 775 483
Revenue from continuing operations 385 241 359 809 690 985
Revenue from discontinued operations - - 84 498
Cost of sales (243 212) (228 288) (520 318)
Gross profit 142 029 131 521 255 165
Gross profit from continuing operations 142 029 131 521 241 295
Gross profit from discontinued operations - - 13 870
Other income 9 471 1 678 7 940
Distribution expenses (2 009) (3 264) (6 429)
Administrative expenses (107 999) (111 347) (246 279)
Results from operations 41 492 18 588 10 397
Results from continuing operations 41 492 18 588 49 516
Results from discontinued operations - - (39 119)
Finance income 2 445 3 619 5 731
Finance cost (3 681) (1 905) (7 076)
Net finance (cost) / income (1 236) 1 714 (1 345)
Share of loss in equity
accounted associates (201) (630) (628)
Profit before tax 40 055 19 672 8 424
Profit before tax from continuing
operations 40 055 19 672 47 823
Loss before tax from discontinued
operations - - (39 399)
Taxation (expense) / income (10 560) (4 927) 3 413
Profit for the period 29 495 14 745 11 837
Profit from continuing operations 29 495 14 745 40 975
Loss from discontinued operations - - (29 138)
Other comprehensive income:
Foreign currency translation differences 3 - (4)
Revaluation of property, plant and
equipment - 1 064 8 214
Realisation of revaluation reserve - - 90
Income tax on other comprehensive income - (298) (1 299)
Other comprehensive income for the period 3 766 7 001
Total comprehensive income for the period 29 498 15 511 18 838
Profit attributable to:
Owners of the company 28 483 14 125 7 386
Non-controlling interests 1 012 620 4 451
Profit for the period 29 495 14 745 11 837
Total comprehensive income attributable
to:
Owners of the company 28 486 14 891 10 527
Non-controlling interests 1 012 620 8 311
Total comprehensive income for the period 29 498 15 511 18 838
Reconciliation of headline earnings:
Profit attributable to owners of the
company 28 483 14 125 7 386
(Profit) / loss on disposal of property,
plant and equipment (257) 157 872
Profit on disposal of intangible assets - (1 073) (1 073)
Impairment of intangible assets 3 3 300 - 15 291
Impairments of assets classified as
held for sale - - 1 251
Profit on disposal of business 3 (7 289) - -
Profit on disposal of investments in
subsidiaries - - (6 361)
Impairment of other investment - - 2 679
Headline earnings 24 237 13 209 20 045
Earnings per share:
Headline earnings per share (cents) 25.72 13.72 20.94
Basic earnings per share (cents) 30.23 14.67 7.71
Diluted earnings per share (cents) 29.64 14.58 7.64
Continuing operations
Basic earnings per share (cents) 30.23 14.67 38.15
Diluted earnings per share (cents) 29.64 14.58 37.78
Weighted average number of shares (000) 94 217 96 274 95 736
Diluted weighted average shares in
issue (000) 96 094 96 889 96 674
Total number of shares in issue (000) 94 006 96 061 94 294
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
R(000) R(000) R(000)
ASSETS
Non-current assets 273 412 275 014 275 202
Property, plant and equipment 145 188 144 767 147 033
Intangible assets 73 876 66 770 70 318
Investments in associates 1 777 1 085 2 038
Other investments 1 582 6 650 1 573
Loans receivable 16 174 24 959 23 606
Deferred tax assets 34 815 30 783 30 634
Current assets 245 532 254 432 244 156
Inventories 6 863 58 741 43 793
Retirement benefit surplus 21 381 26 797 21 381
Trade and other receivables 166 710 122 835 134 467
Current portion of loans receivable 14 734 5 776 13 539
Cash and cash equivalents 35 764 16 551 23 742
Income tax receivable - - 642
Non-current assets classified as held
for sale 80 23 732 6 592
Total assets 518 944 529 446 519 358
EQUITY AND LIABILITIES
EQUITY 342 605 314 960 313 889
Share capital and premium 186 321 190 325 187 022
Non-distributable reserves 16 575 15 363 16 653
Retained earnings 114 672 92 463 85 911
Total equity attributable to owners
of the company 317 568 298 151 289 586
Non-controlling interests 25 037 16 809 24 303
LIABILITIES
Non-current liabilities 72 072 75 487 76 480
Borrowings 60 328 60 898 65 192
Deferred tax liabilities 11 744 14 589 11 288
Current liabilities 104 267 138 999 128 989
Bank overdraft - 6 061 9 065
Current portion of borrowings 14 910 30 679 14 418
Trade and other payables 76 152 94 094 99 066
Deferred vendor payments 534 789 534
Provisions 5 906 6 391 5 906
Taxation payable 6 765 985 -
TOTAL EQUITIES AND LIABILITIES 518 944 529 446 519 358
Net asset value per share (cents) 337.82 310.38 307.11
Net tangible asset value per share
(cents) 259.23 240.87 232.54
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
R(000) R(000) R(000)
Cash flows from operating activities
Cash generated by operating activities 41 582 23 378 45 848
Movement in working capital (14 254) (4 805) (14 559)
Finance income 2 445 3 619 5 731
Finance cost (3 681) (1 905) (7 076)
Tax paid (6 877) (7 946) (13 759)
Net cash inflows from operating
Activities 19 215 12 341 16 185
Cash flows from investing activities
Expenditure to maintain operating capacity
Property, plant and equipment acquired (6 275) (8 294) (17 485)
Proceeds on disposals of property, plant
and equipment 1 961 736 5 364
Proceeds on disposals of intangible
assets - - 1 247
Proceeds on disposals of assets
classified as held for sale 6 512 - 16 356
Expenditure for expansion
Acquisition of subsidiaries - - (2 957)
Disposal of business / subsidiaries 4 942 - 16 095
Internally generated intangible assets (7 693) (4 307) (20 885)
(Acquisition) / disposal of investments (9) 45 6 524
Loans receivable repaid / (granted) 6 297 (1 758) (5 119)
Net cash inflows /(outflows) from
investing activities 5 735 (13 578) (860)
Cash flows from financing activities
Treasury shares repurchased (701) (507) (3 810)
Dividends paid to non-controlling
interests (278) - (1 298)
Borrowings (repaid) /raised (2 884) 3 115 (4 404)
Deferred vendor payments repaid - - (255)
Net cash (outflows) / inflows from
financing activities (3 863) 2 608 (9 767)
Increase in cash and cash equivalents 21 087 1 371 5 558
Cash and cash equivalents at beginning
of the period 14 677 9 119 9 119
Cash and cash equivalents at end of
the period 35 764 10 490 14 677
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Share Share Share Revalu- Foreign Deal
capital premium based ation currency differ-
payment reserve transla- ence
reserve tion reserve
reserve
R(000) R(000) R(000) R(000) R(000) R(000)
Balance as at 1 January
2011 965 189 832 4 017 9 360 33 1 000
Total comprehensive
income for the period
Profit for the period - - - - - -
Other comprehensive income - - - 708 - -
Revaluation of property - - - 766 - -
Realisation of revaluation
reserve - - - (58) - -
Total comprehensive income
for the period - - - 708 - -
Transactions with owners
recorded directly in equity (4) (468) 245 - - -
Treasury shares purchased (4) (503) - - - -
Share-based payment
transactions - 35 245 - - -
Total transactions with
owners (4) (468) 245 - - -
Balance as at 30 June
2011 961 189 364 4 262 10 068 33 1 000
Total comprehensive
income for the period
Loss for the period - - - - - -
Other comprehensive income - - - 1 031 (4) -
Foreign currency translation
differences - - - - (4) -
Revaluation of property - - - 2 289 - -
Realisation of revaluation
Reserve - - - (1 258) - -
Total comprehensive income
for the period - - - 1 031 (4) -
Transactions with owners
recorded directly in equity (18) (3 285) 263 - - -
Treasury shares purchased (18) (3 285) - - - -
Share-based payment
transactions - - 263 - - -
Dividends paid to non-
controlling interests - - - - - -
Changes in ownership interests
in subsidiaries that do not
result in a loss of control
Business combinations - - - - - -
Total transactions with
owners (18) (3 285) 263 - - -
Balance as at 31 December
2011 943 186 079 4 525 11 099 29 1 000
Total comprehensive
income for the period
Profit for the period - - - - - -
Other comprehensive income - - - (62) 3 -
Foreign currency translation
differences - - - - 3 -
Realisation of revaluation
reserve - - - (62) - -
Total comprehensive income
for the period - - - (62) 3 -
Transactions with owners
recorded directly in equity (3) (698) (19) - - -
Treasury shares purchased (3) (698) - - - -
Share-based payment
transactions - - (19) - - -
Dividends paid to non-
controlling interests - - - - - -
Total transactions
with owners (3) (698) (19) - - -
Balance as at 30 June 2012 940 185 381 4 506 11 037 32 1 000
Non-
Retained earnings Total controlling Total
interests equity
R(000) R(000) R(000) R(000)
Balance as at 1 January
2011 78 280 283 487 16 189 299 676
Total comprehensive
income for the period
Profit for the period 14 125 14 125 620 14 745
Other comprehensive income 58 766 - 766
Revaluation of property - 766 - 766
Realisation of revaluation
reserve 58 - - -
Total comprehensive income
for the period 14 183 14 891 620 15 511
Transactions with owners
recorded directly in equity - (227) - (227)
Treasury shares purchased - (507) - (507)
Share-based payment
transactions - 280 - 280
Total transactions with owners - (227) - (227)
Balance as at 30 June
2011 92 463 298 151 16 809 314 960
Total comprehensive
income for the period
Loss for the period (6 739) (6 739) 3 831 (2 908)
Other comprehensive income 1 348 2 375 3 860 6 235
Foreign currency translation
differences - (4) - (4)
Revaluation of property - 2 289 3 860 6 149
Realisation of revaluation
reserve 1 348 90 - 90
Total comprehensive income
for the period (5 391) (4 364) 7 691 3 327
Transactions with owners
recorded directly in equity - (3 040) (1 298) (4 338)
Treasury shares purchased - (3 303) - (3 303)
Share-based payment
transactions - 263 - 263
Dividends paid to non-
controlling interests - - (1 298) (1 298)
Changes in ownership interests
in subsidiaries that do not
result in a loss of control
Business combinations (1 161) (1 161) 1 101 (60)
Total transactions
with owners (1 161) (4 201) (197) (4 398)
Balance as at 31 December
2011 85 911 289 586 24 303 313 889
Total comprehensive
income for the period
Profit for the period 28 483 28 483 1 012 29 495
Other comprehensive income 62 3 - 3
Foreign currency translation
differences - 3 - 3
Realisation of revaluation
reserve 62 - - -
Total comprehensive income
for the period 28 545 28 486 1 012 29 498
Transactions with owners
recorded directly in equity 216 (504) (278) (782)
Treasury shares purchased - (701) - (701)
Share-based payment
transactions 216 197 - 197
Dividends paid to non-
controlling interests - - (278) (278)
Total transactions with
owners 216 (504) (278) (782)
Balance as at 30 June
2012 114 672 317 568 25 037 342 605
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
These unaudited condensed consolidated interim 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 disclosure requirements of IAS 34 Interim
Financial Reporting, the AC 500 standards as issued by the Accounting
Practices Board, the Listing Requirements of the JSE Limited and the
requirements of the South African Companies Act 71 of 2008. 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.
2. Significant accounting policies
These unaudited condensed consolidated interim financial statements have been
prepared using accounting policies that comply 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
2011.
3. Disposal of business
The Company disposed of the business and assets of Deltec Power Distributors
(Proprietary) Limited during the interim period under review. The profit on
disposal represents the excess of the disposal price when compared to the
fair value of the assets and liabilities disposed of. Goodwill relating to
the Deltec Power Distributors business was impaired during the period.
4.Segment information
SEGMENT REVENUE
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
R(000) R(000) R(000)
NOSA
-external sales 103 771 70 188 155 756
MECS Africa
-external sales 153 050 101 205 255 929
Deltec Power Distributors
-external sales 47 732 61 117 129 538
Sebata Municipal Solutions
-external sales 47 262 47 699 100 440
Turrito Networks
-external sales 8 725 3 579 9 746
MICROmega Securities
-external sales 19 908 20 166 40 423
Automotive Disposal
-external sales 870 58 841 84 498
Holding company and consolidation
elimination
-external sales 2 932 1 188 4 747
-internal sales 991 (4 174) (5 594)
Total revenue 385 241 359 809 775 483
SEGMENT PROFIT/(LOSS)
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
R(000) R(000) R(000)
NOSA 17 874 8 861 22 763
MECS Africa 5 840 3 955 7 056
Deltec Power Distributors 9 690 4 866 8 652
Sebata Municipal Solutions 5 656 4 927 8 707
Turrito Networks (532) (1 166) (1 474)
MICROmega Securities 4 814 3 850 10 015
Automotive Disposal (1 569) (3 769) (29 637)
Holdings company and consolidation (13 290) (7 399) (18 696)
Total profit 28 483 14 125 7 386
SEGMENT ASSETS
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
R(000) R(000) R(000)
NOSA 92 748 60 633 72 321
MECS Africa 72 980 38 133 62 596
Deltec Power Distributors 41 855 58 168 61 230
Sebata Municipal Solutions 86 448 86 585 73 496
Turrito Network 8 889 4 801 6 920
MICROmega Securities 66 551 47 228 60 383
Automotive Disposal 44 266 127 278 62 433
Holding company and consolidation 105 207 106 620 119 979
Total assets 518 944 529 446 519 358
5. Commentary on results
We are pleased to report an increase of 87% in headline earnings per share to
25.72 cents compared to the same period last year. Our balance sheet
continues to strengthen with the net asset value per share having increased
by 9% to 337.82 cents. Operating margins have improved significantly over the
period from 5% to 10%. This is primarily attributed to our exit from the
automotive sector and our renewed focus on our traditional service based
businesses. We have invested significantly in recent years to ensure we have
both the capacity and competence to deliver sustained earnings growth. We are
now seeing the benefit of this investment strategy.
Prospects
NOSA remains a demand driven business. Our ability to meet this demand is
governed by our access to skills and resources. We have a continuous skills
development and recruitment program in place but nevertheless believe that it
will take up to five years before we can fully deliver on even the current
demand for our services. This is a direct reflection on the importance that
the government and corporate South Africa is placing on occupational health
and safety in the work place and bodes well for future earnings growth.
South Africa is following a global trend towards best practice in this field
and we see this as continuing due to the increasingly stringent application
and enforcement of legislation both locally and abroad.
Our technology businesses are performing in line with our anticipated
earnings forecast for this year. Our cloud computing service has received
some promising traction in the first half of this year and we are optimistic
that it will become an important contributor to earnings in the medium term.
Our inter-dealer broking business and our human resource solutions business
are both expected to achieve their forecast earnings for 2012. Both
businesses have focused on expanding their services into the African
continent and this should assist in achieving sustainable growth beyond this
year.
The restructuring of the group to eliminate unwanted businesses was completed
with the sale of Deltec in the first half of this year. We now have a
structure that is robust and that incorporates a portfolio of businesses that
we can now confidently build upon. Our cash position is strong and was
further enhanced by receipt of the proceeds from the sale of Deltec
subsequent to the end of this reporting period.
The second half of the year has traditionally delivered higher levels of
growth than the first half. We expect no difference this year. We are already
gaining some visibility into the next financial year and we are cautiously
optimistic about our prospects for 2013.
These results have not been reviewed or reported on by the Group`s auditors.
The condensed financial statements have been prepared under the supervision
of DJ Case CA (SA) and were approved by the board of directors on 25 July
2012.
By order of the board
Johannesburg
26 July 2012
Directors:
D C King (Chairman)
I G Morris (Chief Executive Officer)
D S E Carlisle (Managing Director)
D J Case (Financial Director)
P V Henwood (Lead Independent Non-executive)
R C Lewin (Non-executive)
Company Secretary: T de Mendonca
Auditors: Nexia SAB&T
Transfer Secretaries: Computershare Investor Services
Sponsor: Java Capital
Attorneys: Eversheds
Date: 26/07/2012 08:00:00 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.
