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MICROmega - Unaudited Interim Results MICROmega Holdings Limited Registration Number 1998/003821/06 Incorporated in the Republic of South Africa ISIN Code: ZAE000034435 Share Code: MMG ("MICROmega" or "the company") UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2004 ABRIDGED INCOME STATEMENT Unaudited Unaudited Audited Six months Six months Year ended ended ended 30 June 30 June 31 December
2004 2003 2003 Note R ("000) R ("000) R ("000) Gross revenue 39 620 46 880 92 495 Operating profit 4 637 5 931 11 891 Net finance income 1 875 2 075 3 609 Income from associates - - (124) Profit before taxation 6 512 8 006 15 376 Taxation (1 868) (2 329) (2 800) Headline earnings 4 644 5 677 12 576 Reconciliation of attributable profit/(loss) Amortisation of goodwill 2 (1 601) (25 710) (50 415) Capital profit on disposal of - - 13 858 subsidiaries Deferred tax credit - - 7 328 Exceptional item - - 4 270 Profit/(loss) attributable to 3 043 (20 033) (12 383) shareholders Headline earnings per share (cents) 5.39 6.61 14.76 Earnings/(loss) per share (cents) 3.53 (23.32) (14.53) Fully diluted earnings/(loss) per share 3.39 (23.32) (14.06) (cents) Weighted average number of shares 86 215 85 905 85 210 Diluted weighted average shares in issue 89 683 85 905 88 084 Total number of shares in issue 88 394 85 905 85 433 ABRIDGED BALANCE SHEET Unaudited Unaudited Audited Six months Six months Year ended ended ended
30 June 30 June 31 December 2004 2003 2003 Note R ("000) R ("000) R ("000) ASSETS Non-current assets Property, plant and equipment 4 330 4 573 3 905 Goodwill 2 7 623 24 973 - Deferred taxation 10 865 4 499 10 682 Investment in associates 77 904 77 Long-term investments 252 1 703 353 Loans receivable 8 543 2 840 8 569 Current assets Short-term investments - - 1 574 Accounts receivable 12 955 10 958 7 427 Current portion of loans receivable 3 117 - 3 117 Taxation 187 - 407 Bank and cash 44 624 36 493 49 850 Total assets 92 573 86 943 85 961 EQUITY AND LIABILITIES Capital and reserves Shareholders" equity 67 498 41 985 62 275 Non-current liabilities Borrowings 3 7 420 10 536 400 Current liabilities Taxation - 188 - Accounts payable 7 526 14 465 12 834 Current portion of borrowings 267 - 468 Income received in advance - 1 454 Provisions 9 862 18 315 9 984 Total equity and liabilities 92 573 86 943 85 961 Net asset value per share (cents) 76.36 48.87 72.89 Net tangible asset value per share 67.74 19.80 72.89 (cents) ABRIDGED STATEMENT Share Share NDR Accumulated Total OF CHANGES IN EQUITY capital premium loss R (" 000) R (" 000) R (" 000) R (" 000) R (" 000) Balance at 1 859 167 600 (1 479) (99 522) 67 458 January 2003 Net loss for the (12 383) (12 383) year Foreign currency 1 479 1 479 translation reserve Issue of shares 2 8 559 8 561 Reduction in share (7) (2 833) (2 840) capital Balance at 31 854 173 326 - (111 905) 62 275 December 2003 Net profit for the 3 043 3 043 period Issue of shares 30 2 183 2 213 Share issue - (33) (33) expenses Balance at 30 June 884 175 476 - (108 862) 67 498 2004 ABRIDGED CASH FLOW STATEMENT Unaudited Unaudited Audited Six months Six months Year ended ended ended 30 June 30 June 31 December
2004 2003 2003 Cash generated by operations 4 879 3 777 11 126 Movement in working capital (9 306) 4 156 (276) Net investment income 1 875 2 075 3 485 Taxation paid (1 812) (3 742) (4 292) Cash utilised in operating (4 364) 6 266 10 043 activities Net cash used in investing (9 931) (380) 16 333 activities Capital raised 2 180 - 5 721 Loans raised 7 089 - 727 Loans repaid (200) (8 262) (21 843) Net cash used in finance 9 069 (8 262) (15 395) activities Net (decrease)/increase in bank (5 226) (2 376) 10 981 and cash Represented as follows: Bank and cash at beginning of 49 850 38 869 38 869 the year Bank and cash at end of the 44 624 36 493 49 850 period Net (decrease)/increase in bank (5 226) (2 376) 10 981 and cash 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. Goodwill Carrying value Additions/ Amortisation Carrying value 1 January Disposals 30 June
2004 2004 R"(000) R"(000) R"(000) Goodwill arising from - 9 224 (1 601) 7 623 acquisitions Goodwill represents the excess of the cost of acquisition over the fair value of net assets acquired. Goodwill is amortised over the lessor of the profit warranty period associated with the specific acquisition of five years. In an event of a permanent impairment in the value of the subsidiary, the relevant unamortised balance is written off. 3. Borrowings Borrowings represents amount due to vendors in respect of acquisitions. The vendors loans are settled through the issue of shares and cash resources over the profit warranty periods. Commentary on results The results for the period under review reflect the impact of a slow down in income generated by MICROmega Securities from broking activities. We are pleased to report that the group enjoyed strong growth in both the revenue management and technology solutions businesses however this growth was insufficient to support the material decline in brokerage that was a direct result of the stability and consequent decline in volatility in both the interest rate and currency markets. The board has adopted an aggressive growth strategy which has initially resulted in an acquisition in July 2004 and the restructuring of the revenue management business to address growth in the changing market conditions under which this business operates. The board intends to continue to pursue acquisitions that add both strategic and economic value to the group. By order of the Board Directors: I G Morris (Chairman) W E Rosenberg (CEO) R Lewin (Executive) F J Pretorius (Executive) A Vercueil (Executive) S Mpanza (Non- Executive) H Seabi (Non-Executive) Company Secretary: C J Holroyd Transfer Secretaries: Computershare Investor Services 2004 (Pty) Ltd Sponsor: LPC Manhattan Sponsors (Pty) Ltd (Incorporated in the Republic of South Africa) (Registration number 1998/003821/06) Share code MMG ISIN ZAE000034435 Date: 17/09/2004 05:34:08 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
