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MMG - MICROmega - Unaudited Interim Results For the Six Months Ended 30 June 2009 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 2009 - Increase In Revenue 2% - Decrease In Attributable Earnings Per Share -70% - Decrease In Headline Earnings Per Share -52% - Increase In Net Asset Value Per Share 16% - Increase In Net Tangible Asset Value Per Share 22% CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME Unaudited Unaudited Audited six months six months year
ended ended ended 30 June 30 June 31 December 2009 2008 2008 R(`000) R(`000) R(`000)
Revenue 394 532 386 314 843 772 Revenue from continuing operations 375 236 327 448 703 045 Revenue from discontinued operations 19 296 58 866 140 727 Cost of Sales (282 972) (273 166) (573 043) Gross Profit 111 560 113 148 270 729 Gross profit from continuing operations 116 719 103 141 213 985 Gross (loss)/ profit from discontinued operations (5 159) 10 007 56 744 Other income 4 001 18 058 31 011 Other expenses (93 530) (85 864) (230 623) Operating profit 22 031 45 342 71 117 Net finance (expense)/income (3 352) 1 083 4 280 Shares of profits in associates 586 587 99 Profit before tax 19 265 47 012 75 496 Profit before tax from continuing operations 27 017 30 444 53 108 (Loss) / profit before tax from discontinued operations (7 752) 16 568 22 388 Taxation expense (5 397) (9 292) (13 570) Profit for the period 13 868 37 720 61 926 Profit from continuing operations 19 450 22 151 38 852 (Loss) / profit from discontinued operations (5 582) 15 569 23 074 Other comprehensive income Foreign currency translation differences for foreign operations 61 (2) (23) Total comprehensive income for the period 13 929 37 718 61 903 Profit attributable to: Owners of MICROmega Holdings Limited 10 991 36 141 60 241 Non-controlling interest in subsidiaries 2 877 1 579 1 685 Total comprehensive income attributable to: Owners of MICROmega Holdings Limited 11 052 36 139 60 218 Non-controlling interest in subsidiaries 2 877 1 579 1 685 Reconciliation of headline earnings Net profit attributable to ordinary shareholders 10 991 36 141 60 241 Profit on disposal of property, plant and equipment (117) (69) (101) Impairment of property, plant and equipment 297 - - Reversal of impairment of property, plant and equipment - - (88) Negative goodwill 3 - (13 001) (20 820) Headline earnings 11 171 23 071 39 232 Headline earnings per share (cents) 11.52 23.99 40.26 Earnings per share (cents) 11.34 37.57 61.82 Diluted earnings per share (cents) 11.26 37.18 61.35 Weighted average number of shares 96 930 96 184 97 438 Diluted weighted average shares in issue 97 579 97 211 98 198 Total number of shares in issue 96 845 96 759 97 110 CONDENSED GROUP STATEMENT OF FINANCIAL POSITION Unaudited Unaudited Audited six months six months year ended ended ended 30 June 30 June 31 December
2009 2008 2008 R(`000) R(`000) R(`000) ASSETS Non-current assets 174 612 165 632 144 654 Property, plant and equipment 54 822 74 637 55 181 Intangible assets 66 494 64 666 64 468 Investments in associates 5 321 4 959 5 527 Other investments 6 742 7 440 6 737 Loans receivable 23 374 1 114 349 Deferred tax asset 17 859 12 816 12 392 Current assets 252 954 257 938 295 347 Inventories 62 069 102 491 91 059 Retirement benefits 17 971 - 17 971 Trade and other receivables 112 603 122 801 124 564 Current portion of loans receivable 5 716 637 689 Cash and cash equivalents 26 508 32 009 30 365 Non-current assets held for sale 28 087 - 30 699 Total assets 427 566 423 570 440 001 EQUITY AND LIABILITIES Equity 274 107 228 876 260 248 Share capital and premium 191 229 190 686 191 649 Non-distributable reserves 6 075 5 286 5 664 Retained earnings 61 588 26 497 50 597 Total equity attributable to equity holders of the company 258 892 222 469 247 910 Minorities interests 15 215 6 407 12 338 Non-current liabilities 26 508 39 398 16 280 Loans and borrowings 19 115 37 960 8 789 Deferred tax liability 7 393 1 438 7 491 Current liabilities 126 951 155 296 163 473 Bank overdraft 16 572 10 044 13 025 Trade and other payables 80 961 124 687 117 773 Derivative liability - - 282 Provisions - 302 64 Current portion of loans and borrowings 22 706 9 830 23 791 Taxation 6 712 10 433 8 538 Total equity and liabilities 427 566 423 570 440 001 Net asset value per share (cents) 267.33 229.92 255.29 Net tangible asset value per share 198.67 163.09 188.90 (cents) CONDENSED GROUP STATEMENT OF CASH FLOWS Unaudited Unaudited Audited six months six months year ended ended ended
30 June 30 June 31 December 2009 2008 2008 R(`000) R(`000) R(`000) Cash generated by operations 27 575 38 064 64 768 Movement in working capital 4 096 (15 506) (8 172) Net finance (expenses) /income (3 341) 1 174 4 280 Taxation paid (12 744) (7 146) (13 644) Net cash from operating activities 15 586 16 586 47 232 Net cash used in investing activities (31 413) (22 606) (42 540) Loans raised 13 787 - - Loans repaid (4 945) (18 439) (32 534) Treasury shares repurchased (419) (4 871) (6 113) Net cash used in finance activities 8 423 (23 310) (38 647) Net decrease in cash and cash equivalents (7 404) (29 330) (33 955) Represented as follows: Cash and cash equivalents at beginning of year 17 340 51 295 51 295 Cash and cash equivalents at end of the period 9 936 21 965 17 340 Net decrease in cash and cash Equivalents (7 404) (29 330) (33 955) GROUP STATEMENT OF CHANGES IN EQUITY Share Share Share- Revalu- Foreign Deal
capital premium based ation currency differ- payment reserve transla- ence reserve tion reserve reserve
R(`000) R(`000) R(`000) R(`000) R(`000) R(`000) Balance as at 1 January 982 193 138 1 453 2 490 2 1 000 2008 Total comprehensive - - - - (2) - income for the period (net of income tax) Business combinations - - - - - - Issue of share capital 8 1 401 - - - - Share issue costs - (12) - - - - Treasury share purchases (22) (4 848) - - - - Share based payments: IFRS 2 - 39 343 - - - Balance as at 30 June 968 189 718 1 796 2 490 - 1 000 2008 Total comprehensive - - - - (21) - income for the period (net of income tax) Deferred tax effect on - - - (102) - - revaluation of property, plant and equipment Business combinations - - - - - - Issue of share capital 8 2 142 - - - - Treasury share purchase (5) (1 238) - - - - Share based payments: IFRS 2 - 56 501 - - - Balance as at 31 December 971 190 678 2 297 2 388 (21) 1 000 2008 Total comprehensive - - - - 61 - income for the period (net of income tax) Treasury share purchases (3) (417) - - - - Share based payments: IFRS 2 - - 350 - - - Balance as at 30 June 968 190 261 2 647 2 388 40 1 000 2009 Retained earnings Total Minority Total
(accumulated loss) interest equity R(`000) R(`000) R(`000) R(`000) Balance as at 1 January (9 644) 189 421 4 262 193 683 2008 Total comprehensive 36 141 36 139 1 579 37 718 income for the period (net of income tax) Business combinations - - 566 566 Issue of share capital - 1 409 - 1 409 Share issue costs - (12) - (12) Treasury share purchases - (4 870) - (4 870) Share based payments: IFRS 2 - 382 - 382 Balance as at 30 June 26 497 222 469 6 407 228 876 2008 Total comprehensive 24 100 24 079 106 24 185 income for the period (net of income tax) Deferred tax effect on - (102) - (102) revaluation of property, plant and equipment Business combinations - - 5 825 5 825 Issue of share capital - 2 150 - 2 150 Treasury share purchase - (1 243) - (1 243) Share based payments: IFRS 2 - 557 - 557 Balance as at 31 December 50 597 247 910 12 338 260 248 2008 Total comprehensive 10 991 11 052 2 877 13 929 income for the period (net of income tax) Treasury share purchases - (420) - (420) Share based payments: IFRS 2 - 350 - 350 Balance as at 30 June 61 588 258 892 15 215 274 107 2009 NOTES TO THE FINANCIAL STATEMENTS 1. Basis of preparation The condensed consolidated interim financial statements have been prepared in compliance with the Listing Requirements of the JSE Limited, International Accounting Standard (IAS) 34 - Interim Financial Reporting and Schedule 4 of the South African Companies Act, No 60 of 1973, as amended. 2. Significant account policies The condensed consolidated interim financial statements have been prepared using accounting policies that comply with the International Financial Reporting Standards (IFRS). The accounting policies used are consistent with those used in the annual financial statements for the year ended 31 December 2008. 3. Negative goodwill Negative goodwill in the prior year arose as a result of the acquisition of two subsidiaries, namely Kolbenco (Proprietary) Limited and Ocneblok Properties (Proprietary) Limited. The negative goodwill was recognized in the statement of comprehension income as per IFRS 3 - Business Combinations. The negative goodwill was removed from the calculation of headline earnings as per IAS 33 - Earnings per share. 4. Segment information SEGMENT REVENUE Unaudited Unaudited Audited six months six months year ended ended ended
30 June 30 June 31 December 2009 2008 2008 R(`000) R(`000) R(`000) Financial services External sales 16 215 19 892 33 962 Inter-segment sales - - - Support services External sales 184 274 141 737 350 770 Inter-segment sales - - - Information technology External sales 87 380 44 555 98 964 Inter-segment sales - - - Automotive components External sales 106 663 180 130 360 076 Inter-segment sales - - - Total revenue 394 532 386 314 843 772 SEGMENT PROFIT/(LOSS) Unaudited Unaudited Audited six months six months year ended ended ended
30 June 30 June 31 December 2009 2008 2008 R(`000) R(`000) R(`000) Financial services 3 343 2 748 9 098 Support services 7 283 9 817 15 908 Information technology 12 680 2 160 8 211 Automotive components (6 664) 24 687 29 693 Holding company (5 651) (3 271) (2 669) Total profit 10 991 36 141 60 241 SEGMENT ASSETS Unaudited Unaudited Audited six months six months year
ended ended ended 30 June 30 June 31 December 2009 2008 2008 R(`000) R(`000) R(`000)
Financial services 31 907 46 228 33 153 Support services 62 109 58 004 72 808 Information technology 116 110 73 091 87 386 Automotive components 210 636 239 138 239 798 Holding company 6 804 7 109 6 856 Total profit 427 566 423 570 440 001 COMMENTARY ON RESULTS We are satisfied with the corporate performance for the six month period albeit attributable earnings are down 70%. The decline in earnings of R24 million year- on- year can be attributed to two principle causes. Firstly, there is a reduction in earnings of R21 million arising from the closure of Kolbenco in December 2008, and the need to raise further provisions in the current period to recognise the subsequent impairment of the Kolbenco assets that have not been disposed of as at June 2009. Secondly, the strengthening of the Rand against the Dollar contributed to a R4 million loss on Dollar based receivables. Giving consideration to the aforementioned, and the extended economic slowdown that we have experienced in the automotive sector, we are satisfied that our diverse investment portfolio has shielded us against an excessive erosion in the profitability of our combined businesses. This fact is borne out by the retention of revenue demonstrated in these results, albeit at reduced margins, and our ability to grow our information technology businesses, which we remain confident will continue throughout the remainder of the year. By order of the board 30 September 2009 Directors: I G Morris (Chairman) D S E Carlisle (Financial Director) P V Henwood (Non-executive) R C Lewin (Non-executive) J E Newbury (Non-executive) Company Secretary: G W Schnehage Transfer Secretaries: Computershare Investor Services 2004 (Pty) Ltd Sponsor: Investec Bank Limited Auditor: KPMG Inc Date: 30/09/2009 13:54:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
