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MICROmega Holdings Limited - Unaudited Interim Results For The Six Months Ended 30 June 2005 MICROmega Holdings Limited (Incorporated in the Republic of South Africa) (Registration number 1998/003821/06 Share code: MMG ISIN Code: ZAE000034435 ("Micromega" or "the Company") UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 INCREASE IN REVENUE 55% INCREASE IN ATTRIBUTABLE 46% PROFITS INCREASE IN HEADLINE EARNINGS 30% PER SHARE INCREASE IN NET ASSET VALUE 27% PER SHARE ABRIDGED INCOME STATEMENT Unaudited Unaudited Audited six months six months year ended ended 30 ended 30 31 December June 2005 June 2004 2004
(Restated (Restated For IPRS) for IPRS) (R"000) (R"000) (R"000) Revenue 61 244 39 620 85 324 Operating profit 4 216 2 404 351 Net finance income 1 308 1 875 3 811 Share of profits of associates - - 39
Profit before taxation 5 524 4 279 10 201 Taxation ( 2 028) ( 1 881) ( 2 376) Profit after taxation 3 496 2 398 7 825 Exceptional item - - 6 021 Profit for the period 3 496 2 398 13 846 Attributable to: Ordinary shareholders 3 496 2 398 13 834 Minorities - 12 Reconciliation of headline earnings Net profit attributable to 3 496 2 398 13 834 ordinary shareholders Impairment of investment 1 868 Impairment of goodwill 1 601 - -
Exceptional item (6 021) - - Restructuring provision 2 464 - -
Headline earnings 5 364 3 999 10 277 Headline earnings per share (cents) 6.01 4.64 11.69 Earnings per share (cents) 3.92 2.78 15.74 Diluted earnings per share (cents) 3.78 2.67 15.02 Weighted average number of 89 280 86 215 87 876 shares Diluted weighted average 92 552 89 683 92 109 shares in issue Total number of shares in 92 355 88 394 88 745 issue ABRIDGED INCOME STATEMENT Unaudited six Unaudited six Audited year months ended 30 months ended 30 ended 31 June 2005 June 2004 December 2004
(Restated For (Restated for IPRS) IPRS) (R"000) (R"000) (R"000) ASSETS Non-current assets Property, plant and equipment 9 829 5 336 6 621 Goodwill 28 014 7 623 22 443 Intangible assets 3 454 2 954 - Deferred tax asset 10 687 10 573 10 366 Investments 384 329 822
Loans receivable 2 509 8 543 5 483 Current assets Inventories 4 948 4 559 -
Accounts receivable 23 045 13 142 16 834 Current portion of loans 4 675 3 117 6 906 receivable Foreign exchange contracts 48 Cash and cash equivalents 37 198 44 624 45 922 Total assets 124 791 93 287 122 910 EQUITY AND LIABILITIES Equity Equity holders" interest 86 717 66 700 77 689 Minorities interest 109 - 109
Share-based payment reserve 3 950 1 512 2 654 Non-current liabilities Borrowings 6 745 7 420 9 596 Current liabilities Taxation 2 270 - 398 Accounts payable 16 269 7 526 14 543 Current portion of borrowings 3 600 10 881 267 Provisions 5 131 9 862 7 040 Total equity and liabilities 124 791 93 287 122 910 Net asset value per share 77.17 (cents) 98.29 90.66 Net tangible asset value per 68.54 share (cents) 64.22 62.04 ABRIDGED CASH FLOW Unaudited Unaudited Audited STATEMENT Six months Six months Year ended ended ended 30 June 30 June 31 December
2005 2004 2005 Cash generated by 6 842 4 879 11 278 operations Movement in working (4 945) (9 306) (7 403) capital Net investment income 1 308 1 875 3 811 Taxation paid (677) (1 812) (2 412) Net cash from operating 2 528 (4 364) 5 274 activities Net cash used in investing (11 180) (9 931) (28 937) activities Capital raised 4 781 2 180 2 444 Loans raised 6 476 7 089 19 657 Loans repaid (11 329) (200) (2 366) Net cash used in finance (72) 9 069 19 735 activities Net (decrease) in bank and (8 724) (5 226) (3 928) cash Represented as follows: Bank and cash at beginning 45 922 49 850 49 850 of the year Bank and cash at end of 37 198 44 624 45 922 the period Net (decrease) in bank and (8 724) (5 226) (3 928) cash ABRIDGED STATEMENT Share Share Share- Revalu- Accum- Tot OF CHANGES based ation ulated IN EQUITY capital premium Payment Reserve loss Reserve R (" 000) R (" 000) R (" 000) R (" 000) R (" 000) R ( Balance at 1 854 173 326 (112 672) 63 January 2004 1 512 - SA GAAP reported 854 173 326 (111 905) 62 balance at 1 - - January 2004 Cumulative effects - (767) of IFRS adoption - 1 512 - Net profit for the - 13 846 13 year - - Employee share 1 1 options - value of 1 142 services provided Issue of shares 33 2 433 2 4 - -
Share issue - (22) (22 expenses - - - Balance at 31 887 175 737 (98 826) 80 December 2004 2 654 - Net profit for the 3 4 period 3 496 Employee share 1 2 options - value of 1 296 services provided Revaluation of 724 property, plant 724 and equipment Issue of shares 36 4 786 4 8 Share issue - (14) (14 expenses Balance at 30 June 923 180 509 (95 330) 90 2005 3 950 724 NOTES 1. Basis of preparation The unaudited abridged results for the six months ended 30 June 2005 have been prepared in accordance with International Financial Reporting Standards ("IFRS"). The company is reporting under IFRS for the first time for the year ended 31 December 2005. These standards are subject to ongoing review and may change. Comparative figures have been restated accordingly. The disclosure required by IFRS 1 (First-time Adoption of International Financial Reporting Standards) concerning the transition from South African Statements of Generally Accepted Accounting Practice ("SA GAAP") to IFRS and the required changes in accounting policies are set out in the table below. Reconciliation of SA GAAP to IFRS Unaudited Unaudited IFRS Six months 12 months transitions 30 June 31 December 1 January
2004 2004 2004 R ("000) R ("000) R ("000) Balance sheet Equity as previously reported under 67 498 79 596 62 275 SA GAAP Restatements for IFRS 714 856 745 Property, plant and equipment (1 090) (2 151) (1 052) Employee share options - value of 1 512 2 1 512 services provided 654 Deferred tax 292 353 285
Equity as reported under IFRS 68 212 80 63 020 452 Income statement Net profit as previously reported 3 043 14 under SA GAAP 877 Restatements for IFRS (645) (1 031) Change in depreciation 46 157
Employee share options - value of (678) (1 142) services provided Deferred tax (13) (46)
Restated net profit per IFRS 2 398 13 846 Commentary on results We are pleased to report a 30% increase in headline earning per share to 6.01 cents for the six months to 30 June 2005. Operating profits for this reporting period were reduced by R645 000. This was a direct result of the impact of accounting in accordance with IFRS for share options issued to staff. The adoption of IFRS has resulted in the prior year headline earnings per share of 5.39 cents being restated to 4.64 cents. The increase in earnings for the first six months is a direct result of an increase in the performance of all the operating subsidiaries within the group. We have maintained our position as the dominant provider of revenue management solutions within the Local Government Sector. More than 35 municipalities (representing more than a million commercial and residential consumers) use our services. We are pleased to report that the enhancement in revenue generated by these municipalities, and the efficiencies that we have introduced through our service level agreements, bodes well for the future of this business. Given the strong initiative within Local Government to improve service delivery, and the emphasis on sound financial management within the municipalities, we have committed to an ongoing investment in resources and products to ensure that we can continue to add economic value to this sector of the market. MICROmega has established itself as the largest provider of financial and management information systems to both the District and Local Municipalities in Southern Africa. Our financial systems are currently being used by 90 municipalities in Namibia and South Africa. Given the recent initiative within the Local Government to streamline and enhance financial controls all the aforementioned clients are undergoing system upgrades. To date we have completed fifteen major system conversions and upgrades, the balance of the client base (some seventy five) are scheduled for conversion during 2006 and 2007. Further we are implementing a management information system, namely DIMSTrade Mark, in the District Municipalities in KwaZulu Natal, Eastern Cape, Limpopo and Mpumalanga. MICROmega Securities has enjoyed a stable first six months of inter-dealer brokering. Whilst this business is dependant on market volatility its unique position as the largest provider of liquidity to both the domestic and international banks trading with South Africa, has ensured that it continues to make a sound contribution to group earnings. Prospects We anticipate the current growth rate in headline earnings of 30% to be sustainable in the second half of 2005. Our earnings base which is dominated by both commercial and contractual annuity based income streams ensures that we are now well placed to forecast income and consequently look forward with the assurance we require to grow our market share with confidence. Our growth in earnings will not only be generated organically but also be positively impacted by acquisitions concluded during the current financial year. We will continue to identify and secure further businesses that not only complement MICROmega"s core independent intermediary services but will also contribute to sustainable earnings growth in future years. By order of the Board Directors: I G Morris (Chairman) W E Rosenberg (CEO) R Lewin (Executive) J Storom (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 Moela Sponsors (Pty) Ltd Micromega Holdings Limited (Incorporated in the Republic of South Africa) (Registration number 1998/003821/06) Share code MMG ISIN ZAE000034435 Date: 29/09/2005 05:54:25 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
