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MMG - MMG Micromega - Audited Abridged Group Results For The Year Ended 31

Release Date: 06/03/2007 17:09
Code(s): MMG
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MMG - MMG Micromega - Audited Abridged Group Results For The Year Ended 31 December 2006 MICROmega Holdings Limited (Incorporated in the Republic of South Africa) (Registration number 1998/003821/06 Share code MMG ISIN ZAE000034435 ("Micromega" or "the Company") AUDITED ABRIDGED GROUP RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006 - Increase In Revenue 100% - Increase In Attributable Profits 94% - Increase In Headline Earnings Per Share 77% ABRIDGED INCOME STATEMENT Audited Audited year year ended ended 31 December 31 December
2006 2005 R(`000) R(`000) Revenue 318 417 159 339 Operating Profit 41 448 18 334 Net investment income 1 3 553 3 391 Share of profits of associates 140 48 Profit before taxation 45 141 21 773 Taxation (14 158) (6 440) Profit after taxation 30 983 15 333 Attributable to: Ordinary shareholders 29 902 15 442 Minority shareholders 1 081 (109) Reconciliation of headline earnings Net profit attributable to ordinary shareholders 29 902 15 442 Impairment of goodwill - 561 Loss on disposal of property, plant and equipment 65 - Profit on sale of subsidiary 2 - (24 910) Impairment of loan 3 1 797 26 120 Headline earnings 31 764 17 213 Headline earnings per share (cents) 33.45 18.86 Attributable earnings per share (cents) 31.49 16.92 Fully diluted earnings per share (cents) 30.89 16.40 Weighted average number of shares (000`s) 94 971 91 253 Fully diluted weighted average number of 96 786 94 154 shares (000`s) Total number of shares in issue (000`s) 96 326 92 905 ABRIDGED BALANCE SHEET Audited Audited
year year ended ended 31 December 31 December 2006 2005
R(`000) R(`000) ASSETS Non-current assets Property, plant and equipment 24 252 17 965 Goodwill 32 787 30 079 Intangible assets 18 913 17 664 Deferred tax asset 7 510 10 585 Investments 6 642 3 297 Loans receivable 3 698 4 223 Current assets Accounts receivable 48 276 38 595 Inventories 18 298 11 635 Current portion of loans receivable 31 1 991 Cash and cash equivalents 55 661 46 254 TOTAL ASSETS 216 068 182 288 EQUITY AND LIABILITIES Equity Equity holders` interest 139 343 104 180 Non-distributable reserves 7 826 6 444 Minorities interest 3 073 - Non-current liabilities Borrowings 4 984 3 876 Deferred vendor payments 4 5 905 11 211 Current liabilities Accounts payable 35 481 27 419 Derivative financial instruments 108 - Provisions 1 625 1 325 Current portion of borrowings 3 888 2 329 Current portion of deferred vendor payments 4 7 441 19 003 Taxation 6 394 6 501 TOTAL EQUITY AND LIABILITIES 216 068 182 288 Net asset value per share (cents) 155.97 119.07 Net tangible asset value per share (cents) 102.30 67.68 ABRIDGED CASH FLOW STATEMENT Audited Audited year year
ended ended 31 December 31 December 2006 2005 R(`000) R(`000)
Cash generated by operations 47 444 22 157 Movement in working capital (6 292) (8 555) Net investment income 1 3 553 3 391 Share of profits of associates 140 48 Taxation paid (11 265) (1 632) Net cash from operating activities 33 580 15 409 Net cash used in investing activities (13 625) (6 479) Treasury shares repurchased (5 931) - Loans granted (1 608) (25 085) Loans raised / (repaid) (3 009) 17 207 Net cash used in financing activities (10 548) (8 598) Net increase in bank and cash 9 407 332 Represented as follows: Bank and cash at beginning of year 46 254 45 922 Bank and cash at end of period 55 661 46 254 Net increase in bank and cash 9 407 332 ABRIDGED STATEMENT OF CHANGES IN EQUITY Share Share Share- Revalu- Minor- Accumu- Total capital premium based ation ity lated payment reserve interest loss
reserve R(`000) R(`000) R(`000) R(`000) R(`000) R(`000) R(`000) Balance at 1 887 175 737 2 654 714 109(101 027) 79 074 January 2005 as previously disclosed Correction of 5 - - - - - 6 961 6 961 error Restated balance 887 175 737 2 654 714 109 (94 066) 86 035 At 1 January 2005 Net profit for (109) 15 442 15 333 the year Employee share 2 407 2 407 options - value of services provided Revaluation of 669 669 property, plant and equipment Change in 152 152 estimate Issue of shares 42 6 004 6 046 Share issue (18) (18) expenses Balance at 31 929 181 723 5 061 1 383 - (85 433)103 663 December 2005 as previously disclosed Correction of 5 - - - - - 6 961 6 961 error Restated balance 929 181 723 5 061 1 383 - (78 472)110 624 At 1 January 2006 Net profit for 1 081 29 902 30 983 the period Movements in 1 992 1 992 minority interests after restructuring Employee share 972 972 options - value of services provided Revaluation of 452 452 property, plant and equipment Realisation of (42) (42) non-distributable reserve Issue of shares 50 11 188 11 238 Share issue (46) (46) expenses Treasury shares (16) (5 915) (5 931) repurchased Balance at 31 963 186 950 6 033 1 793 3 073 (48 570)150 242 December 2006 NOTES TO THE FINANCIAL INFORMATION 2006 2005 R(`000) R(`000) 1. Net investment income Interest received 4 382 3 889 Dividends received 8 5 Investment income 4 390 3 894 Less: Finance charges (837) (503) Net investment income 3 553 3 391 2. Profit on sale of subsidiary In accordance with the group`s objective of putting - 24 910 effective empowerment structures together the company sold a 26% holding in G2 Properties (Proprietary) Limited and purchased a further 25% holding in Sebata Municipal Solutions (Proprietary) Limited In 2005 50% of MICROmega Revenue Management Solutions (Proprietary) Limited was disposed of to Mzimkhulu Investments (Proprietary) Limited resulting in a capital profit 3. Impairment of loan Loan Mzimkhulu Investments (Proprietary) Limited 35 793 33 691 Impairment of loan (32 652) (30 550) Loan balance 3 141 3 141 Opening balance impairment 30 550 - Closing balance impairment 32 652 30 550 Movement for the year 2 102 30 550 Taxation effect (305) (4 430) Impairment in income statement 1 797 26 120 The loan has been impaired until such time as the revenue generated by the underlying investment is available to service the repayment of capital. The impairment is reviewed on an annual basis. 4. Deferred vendor payments To be settled: With the distribution of cash resources 2 500 8 530 Through the issue of shares 10 846 21 684 13 346 30 214 Deferred vendor payments are in respect of acquisitions made. These payments are subject to profit warranties. 5. Correction of error During the current financial year MICROmega 6 961 6 961 Holdings Limited received final tax assessments for prior periods. These assessments resulted in a difference from the carried forward assessed loss which resulted in a change to the deferred tax asset. COMMENTARY ON RESULTS We are pleased to report a 77% growth in headline earnings per share, a 100% increase in revenue and a resultant 94% growth in attributable profit. The group`s balance sheet continues to strengthen with an increase of 31% in net asset value and an increase of 51% in net tangible asset value. During the year MICROmega moved sectors from the financial to the support services sector. This move was motivated by the entrenched strategy to focus on earnings growth from a broader base of income generators, with less reliance on any specific sector. Our diversification strategy has strengthened our organic growth whilst shielding our earnings against a material event risk in any specific sector. We continue to extract strategic and economic value from the synergies which exist between our businesses and this has ensured that we have not only retained our current market share but gained access to larger markets at a quicker rate than originally anticipated. We have maintained our policy of ensuring that all our businesses focus on the provision of quality products and services. Innovation, product development and delivery remain at the forefront of our success in retaining and growing our market share. Our client base has grown considerably over the past twelve months and we are pleased to report that we are now delivering services across all continents. The following sector contribution to headline earnings per share demonstrates the successful implementation of our diversification strategy: Financial services sector The two companies in this sector namely, MICROmega Securities and MICROmega Revenue Management Solutions, collectively, contributed 33% to total headline earnings. Support services sector The three companies in this sector namely, NOSA, NQA Africa and MECS Africa, collectively, contributed 24% to total headline earnings. Information technology sector The two companies in this sector namely, Intermap and Sebata Municipal Solutions, collectively, contributed 16% to total headline earnings. Automotive components sector The two companies in this sector namely, Deltec Power Distributors and BTM Manufacturing, collectively, contributed 27% to total headline earnings. Prospects We are confident that we can continue to deliver strong earnings growth from our current operations. We do however believe that there are opportunities to acquire businesses that are complementary to our current operations and that will make a significant contribution to our growth in earnings per share. REPORT OF THE AUDITORS R W Irish-Alliott Inc`s unmodified audit report on 31 December 2006 summarised financial statements contained herein is available for inspection at the company`s registered office. BY ORDER OF THE BOARD Directors: IG Morris (Chairman) RC Lewin (Non-executive) ES Mpanza (Non-executive) DM Carson (Non-executive) Company secretary: DJ Case AUDITORS: RW Irish - Alliott Inc. Registered Auditors TRANSFER SECRETARIES: Computershare Investor Services 2004 (Proprietary) Limited SPONSOR: Vunani Corporate Finance (Proprietary) Limited 6 March 2007 Date: 06/03/2007 17:09:22 Supplied by www.sharenet.co.za Produced by the JSE SENS Department.

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