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MICROmega - Preliminary Reviewed Results For The Year Ended 31 December 2003 MICROmega MICROmega Holdings Limited (Incorporated in the Republic of South Africa) (Registration number 1998/003821/06 Share code MMG ISIN ZAE000034435 ("Micromega" or "the Company") PRELIMINARY REVIEWED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2003 ABRIDGED INCOME STATEMENT Reviewed Audited Year ended Year ended
31 December 31 December 2003 2002 Note R ("000) R ("000) Gross revenue 92 495 97 209 Operating profit 11 887 20 408 Net finance income 3 610 3 111 Equity accounted loss ( 120) 285 Profit before taxation 15 377 23 804 Taxation ( 2 801) ( 7 087) Profit after taxation 12 576 16 717 Minority interest 320 Headline earnings 12 576 17 037 Reconciliation of attributable loss Exceptional item 4 270 ( 4 270) 3 Amortisation of goodwill ( 50 415) ( 35 397) Capital profit on disposal of 13 858 3 833 subsidiaries Deferred tax 7 328 - 4 Loss attributable to shareholders ( 12 383) ( 18 797) Headline earnings per share (cents) 14.76 20.38 Loss per share (cents) ( 14.53) ( 22.49) Fully diluted loss per share (14.06) (22.23) (cents) Weighted average number of shares 85 210 83 577 Diluted weighted average shares in 88 084 84 540 issue Total number of shares in issue 85 433 85 905 ABRIDGED BALANCE SHEET Reviewed Audited Year ended Year ended 31 December 31 December
2003 2002 R ("000) R (" 000) Note ASSETS Non-current assets Fixed assets 3 905 4 692 Goodwill - 51 483 5 Deferred taxation 10 682 4 584 Loans receivable 8 569 9 296 Investment in associates 77 1 089 Investments 352 1 573 Current assets Bank and cash 49 850 38 869 Taxation 407 Current portion of loans receivable 3 117 - Accounts receivable 7 347 8 292 Other current assets 1 654 144 Total assets 85 960 120 022 EQUITY AND LIABILITIES Capital and reserves Shareholders" equity 62 278 67 460 Non-current liabilities Borrowings 400 18 694 Current liabilities Taxation - 1 617 Current portion of borrowings 466 900 Accounts payable 12 832 10 289 Income received in advance - 2 252 Provisions 9 984 18 810 Total equity and liabilities 85 960 120 022 Net asset value per share (cents) 72.90 78.53 Net tangible asset value per share 72.90 18.60 (cents) ABRIDGED STATEMENT OF Share Share NDR Accumulated Total CHANGES IN EQUITY capital premium loss R (" 000) R (" 000) R (" 000) R (" 000) R (" Balance at 1 January 2002 764 133 521 (2 392) (62 157) 69 73 Net loss for the period (24 239) (24 2 as previously reported Dividends 29 11 236 (16 582) (5 31 Revaluation of foreign 1 983 (1 983) - entity"s opening reserves Foreign currency (1 070) (1 07 translation reserve Issue of shares 66 22 934 23 00 Share issue expenses (92) (92) Balance at 31 December 859 167 599 (1 479) (104 961) 62 01 2002 Fundamental error 5 442 5 442 Restated balance at 31 859 167 599 (1 479) (99 519) 67 46 December 2002 Net loss for the period (12 383) (12 3 Foreign currency 1 479 1 479 translation reserve Issue of shares 3 8 559 8 562 Reduction in share (7) (2 833) (2 84 capital Balance at 31 December 855 173 325 - (111 902) 62 27 2003 ABRIDGED CASH FLOW STATEMENT Reviewed Audited Year ended Year ended 31 December 31 December
2003 2002 R ("000) R (" 000) Cash generated by operations 10 051 21 986 Net investment income 3 610 3 111 Taxation paid (4 293) (7 666) Dividends - cash portion - (5 317) Secondary tax on companies - (664) Net cash from operating activities 9 368 11 450 Net cash from investing activities 17 009 (12 998) Capital raised 5 722 22 907 Loans repaid (21 118) (23 823) Net cash from finance activities (15 396) (916) Net increase/(decrease) in bank and cash 10 981 (2 464) Represented as follows: Bank and cash at beginning of the year 38 869 41 333 Bank and cash at end of the period year 49 850 38 869 Net increase/(decrease) in bank and cash 10 981 (2 464) NOTES TO THE FINANCIAL STATEMENTS 1. Accounting policy The financial statements have been 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. Fundamental error On the 1st January 2002, 50% of MICROmega Revenue Management Services was sold to an empowerment company. This sale was conditional on the achievement of certain benchmarks by the empowerment partner. As at 31st December 2002 the predetermined benchmarks were not achieved and in accordance with the original agreement the transaction collapsed and therefore MICROmega Revenue Management Services was accounted for as a 100% subsidiary in 2002 annual financial statements. Subsequent negotiations with the empowerment partner have resulted in the original contract being reinstated with effect from the 1st January 2002. Consequently the financial statements for the year ended 31st December 2002 have been amended to recognise this outcome. Effect on accumulated loss Year ended Year ended 31 December 31 December 2003 2002 R ("000) R (" 000)
Accumulated loss as previous - (104 961) reported Gross - 5 422 Tax - 20 Net - 5 442 Restated accumulated loss - (99 519) Loss per share as previously ( 29.00) reported Fundamental error 6.51 Restated loss per share (22.49) 3. Exceptional Item The exceptional item raised in the prior year to protect the company from the impact of negative publicity surrounding two of the previous directors, has been reversed. 4. Deferred Taxation At the balance sheet date the unrecognized deferred tax asset of the holding company was reviewed. As it has become probable that the holding company will generate sufficient taxable income in future to utilize the deferred tax asset, a deferred tax asset was raised in accordance with AC 102. The deferred tax asset was added back for headline earnings. COMMENTARY ON RESULTS The results for the year reflect the difficult trading conditions the group has faced. Overall, headline earnings were impaired primarily as a consequence of the strengthening rand and increased staff costs. MICROmega Revenue Management Services" contribution to headline earnings increased by 92%. The business continues to enjoy a demand driven environment and remains the dominant service provider in its sector. MICROmega Securities" contribution in economic terms to headline earnings growth decreased by 41%. This decline is attributed to a reduction in brokerage caused by lower domestic trading volumes, and an increase in staff costs. This business remains an integral component in the local market as a liquidity provider to both the local and international trading banks. Global Credit Rating Company was disposed of, effective 1st November 2003, as a result of its inability to sustain earnings growth in line with group expectations. The business experienced a decline in headline earnings from 2002 of 51%. The loss attributable to shareholders of R12.4 million was primarily as a result of the write-off of the remaining goodwill of R50.4 million for the year ended 31st December 2003. It is noted that whilst headline earnings have declined, this has not resulted in an erosion of the balance sheet, with the net tangible asset value per share having increased from 18.60 cents to 72.90 cents. This increase can be attributed to the efficient management of working capital, a strong cost culture and optimal extraction of value from businesses both under growth and ex-growth environments. PROSPECTS The board is focused on the delivery of earnings growth for 2004. Notwithstanding difficult trading conditions over the past two years, the consolidation of the current businesses in 2004, and the introduction of new businesses place the group in a position to focus on growing market share and delivering sound returns for its shareholders going forward. The board of MICROmega remains committed to the well being of the company and their responsibility to shareholders. REVIEW OF RESULTS The preliminary results of the company as set out above have been reviewed by the company"s auditors, R W Irish- Alliott Inc., as required by the JSE Securities Exchange South Africa ("JSE"). The review report is available for inspection at the company"s registered address. By order of the Board Directors: R Gibbs R Lewin F J Pretorius A W Browne Company Secretary: A W Browne Transfer Secretaries: Computershare Limited Sponsor: LPC Manhattan Sponsors (Proprietary) Limited Date: 15/04/2004 05:06:09 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
