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MICROmega Holdings Limited - UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003 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 2003 ABRIDGED INCOME STATEMENT Unaudited Unaudited Audited Six months Six months Year ended ended ended
30 June 30 June 31 December 2003 2002 2002 Note R("000) R("000) R("000) Gross revenue 46 880 49 404 97 209 Operating profit 5 931 15 345 19 139 Net finance income 2 075 1 840 3 111 Equity accounted profits - - 285 Profit before taxation 8 006 17 185 22 535 Taxation (2 329) (4 795) (7 107) Headline earnings 5 677 12 390 15 428 Exceptional item - - (4 270) Amortisation of goodwill 2 (25 710) (19 293) (35 397) Loss attributable to shareholders (20 033) (6 903) (24 239) Headline earnings per share (cents) 6.61 15.73 18.46 Loss per share (cents) (23.32) (8.76) (29.00) Fully diluted loss per share (cents) (23.32) (8.67) (28.67) Weighted average number of shares 85 905 78 778 83 577 Diluted weighted average shares in issue 85 905 79 658 84 540 Total number of shares in issue 85 905 85 878 85 905 ABRIDGED BALANCE SHEET Unaudited Unaudited Audited At At At 30 June 30 June 31 December 2003 2002 2002
Note R("000) R("000) R("000) ASSETS Non-current assets Fixed assets 4 573 5 603 4 692 Goodwill 2 24 973 72 608 51 483 Deferred taxation 4 499 5 065 4 584 Loans receivable 2 840 - 3 875 Investment in associates 904 - 1 089 Investments 1 703 3 389 1 573 Current assets Bank and cash 36 493 30 926 38 869 Accounts receivable 10 958 9 363 8 694 Total assets 86 943 126 954 114 859 EQUITY AND LIABILITIES Capital and reserves Shareholders" equity 41 985 79 961 62 018 Non-current liabilities Borrowings 10 536 26 060 18 694 Current liabilities Taxation 188 58 1 896 Accounts payable 14 465 8 223 11 189 Income received in advance 1 454 1 846 2 252 Provisions 18 315 10 806 18 810 Total equity and liabilities 86 943 126 954 114 859 Net tangible asset value per share (cents) 19.80 8.56 12.26 ABRIDGED STATEMENT OF CHANGES IN EQUITY Accu- Share Share mulated
capital premium NDR loss Total R("000) R("000) R("000) R("000) R("000) Balance at 1 January 2002 764 133 521 (2 392)(62 157) 69 736 Net profit for the period - (24 239) (24 239) Revaluation of foreign entities" opening reserves 1 983 (1 983) - Foreign currency translation reserve - (1 070) (1 070) Dividends 29 11 236 - (16 582) (5 317) Issue of shares 66 22 934 - - 23 000 Share issue expenses - (92) - - (92) Balance at 31 December 2002 859 167 599 (1 479)(104 961) 62 018 Net loss for the period - - - (20 033)(20 033) Balance at 30 June 2003 859 167 599 (1 479)(124 994) 41 985 ABRIDGED CASH FLOW STATEMENT Unaudited Unaudited Audited Six months Six months Year
ended ended ended 30 June 30 June 31 December 2003 2002 2002 R("000) R("000) R("000)
Cash generated by operations 7 933 12 563 22 026 Net investment income 2 075 1 840 3 111 Taxation paid (3 742) (8 489) (7 706) Dividends paid - (5 317) (5 317) Secondary tax on companies - - (664) Net cash generated from operating activities 6 266 597 11 450 Net cash used in investing activities (380) (22 706) (18 419) Capital raised - 22 907 22 907 Loans repaid (8 262) (11 205) (18 402) Net cash (used in)/generated by finance activities (8 262) 11 702 4 505 Net decrease in bank and cash (2 376) (10 407) (2 464) Represented as follows: Bank and cash at beginning of the period 38 869 41 333 41 333 Bank and cash at end of the period 36 493 30 926 38 869 Net decrease in bank and cash (2 376) (10 407) (2 464) NOTES TO THE FINANCIAL sTATEMENTS 1. Accounting policy The financial statements are 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. 2. Goodwill Carrying value Amortisation Impairment Carrying value 1 January 30 June 2003 2003 R"(000) R"(000)
Goodwill arising from acquisition 51 483 (25 710) (800) 24 973 Goodwill represents the excess of the cost of acquisition over the fair value of net assets of the subsidiaries on acquisition. Goodwill is amortised using the straight line method over the lesser of the profit warranty period associated with the specific acquisition or five years. Goodwill will be amortised in full as the profit warranty periods associated with the acquisitions will lapse in the current year. COMMENTARY ON RESULTS By all accounts this has been a tough period for the group. We have been affected by the resignation of executive board members, auditors, non-executive directors and our sponsor. Our share price has consequently been negatively affected, staff morale has been low and we have missed out on business opportunities that would otherwise be made available to the group. In spite of the aforementioned, all group companies have generated cash based profits and we believe that we are through the worst. The results may be sharply down compared to the same period last year, however they are proportionately only marginally down when compared to the full year. In comparison to the same period last year, turnover is down by 5%. Costs are up by 20% and consequently headline earnings are down by 54%. Turnover has been materially affected by the slow-down in brokerage experienced in MICROmega Securities. This slow down is a direct consequence of external factors that have effected world financial markets. Operating costs increased against last year. This increase can mainly be attributed to an abnormally high increase in the payroll overhead of MICROmega Securities arising from re-negotiated employment contracts. It is anticipated that by the end of this financial year all goodwill will be written off in the group. Consequently, our investments in subsidiary operations will be written down to book value. PROSPECTS The period under review can be viewed as a period of consolidation whereby the group was weathering the impact of external factors on the businesses. Although the results were not inspiring, we are confident that we are through the worst and are optimistic that we will be able to maintain our current earnings into the second half of the year. Our balance sheet continues to strengthen as a direct consequence of cash based earnings and we anticipate this to continue into the second half of this year. TRADING STATEMENT AND CAUTIONARY ANNOUNCEMENT In terms of the new Listings Requirements of the JSE Securities Exchange South Africa ("JSE"), listed companies are required to publish a trading statement as soon as they become aware that the financial results for the next period to be reported on will be materially different from those of the previous corresponding period. MICROmega"s headline earnings and loss for the year ended 31 December 2003 are expected to be materially down (as defined in the JSE Listings Requirements) than that of the comparative 12 months. The forecast financial information has not been reviewed or reported on by the group"s auditors. In light of the above, shareholders are advised to exercise caution in trading in the company"s shares until release of the results, expected around March 2004. By order of the Board Directors: R Gibbs A W Browne G M Kelly F J Pretorius Company Secretary: A W Browne Transfer Secretaries: Computershare Limited Sponsor: LPC Manhattan Sponsors (Pty) Limited Date: 22/09/2003 05:30:11 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
