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MMG - Micromega - Preliminary Audited Financial Statements for the Year Ended
31 December 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")
PRELIMINARY AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2009
Decrease In Revenue -11%
Decrease in Headline earnings Per Share -48%
Increase In Net Asset Value Per Share 8%
Decrease In Net Cash from Operating Activities -26%
SUMMARISED GROUP STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
year year
ended ended
31 December 31 December
2009 2008
R(`000) R(`000)
Revenue 747 307 843 772
Revenue from continuing operations 721 900 703 045
Revenue from discontinued operations 25 407 140 727
Cost of sales (517 175) (573 043)
Gross profit 230 132 270 729
Gross profit from continuing operations 227 428 213 985
Gross profit from discontinued operations 2 704 56 744
Other income 9 109 31 406
Distribution expenses (5 578) (7 213)
Administration expenses (196 616) (223 805)
Results from operations 37 047 71 117
Results from continuing operations 43 947 62 848
Results from discontinued operations (6 900) 8 269
Finance income 9 479 10 847
Finance cost (16 995) (6 567)
Net finance (cost) / income (7 516) 4 280
Share of (loss) / profit of equity accounted associates (768) 99
Profit before taxation 28 763 75 496
Profit before taxation from continuing operations 36 346 71 775
(Loss) / profit before taxation from discontinued
operations (7 673) 3 721
Taxation expense (11 084) (13 570)
Profit for the year 17 679 61 926
Profit from continuing operations 23 768 57 519
(Loss) / profit from discontinued operations (6 089) 4 407
Other comprehensive income:
Foreign currency translation differences 42 (23)
Revaluation of property, plant and equipment 2 230 -
Income tax on other comprehensive income (634) (102)
Other comprehensive income for the year 1 638 (125)
Total comprehensive income for the year 19 317 61 801
Profit attributable to:
Owners of the company 16 362 60 241
Non-controlling interests 1 317 1 685
Profit for the year 17 679 61 926
Total comprehensive income attributable to:
Owners of the company 18 000 60 116
Non-controlling interests 1 317 1 685
Total comprehensive income for the year 19 317 61 801
Reconciliation of headline earnings:
Profit attributable to ordinary shareholders 16 362 60 241
Profit on disposal of property,
plant and equipment (1 786) (101)
Profit on disposal of other investments 2 (1 995) -
Reversal of impairment of - (88)
property, plant and equipment
Impairment of goodwill 7 540 -
Negative goodwill - (20 820)
Headline earnings 20 121 39 232
Earnings per share
Headline earnings per share (cents) 20.75 40.26
Earnings per share
Basic earnings per share (cents) 16.88 61.82
Diluted earnings per share (cents) 16.77 61.35
Continuing operations
Basic earnings per share (cents) 23.16 57.30
Diluted earnings per share (cents) 23.01 56.86
Weighted average number of shares (000`s) 96 958 97 438
Diluted weighted average number of shares (000`s) 97 561 98 198
Total number of shares in issue (000`s) 96 966 97 110
SUMMARISED STATEMENT OF FINANCIAL POSITION
Audited Audited
as at as at
31 December 31 December
2009 2008
R(`000) R(`000)
ASSETS
Non-current assets 168 880 144 654
Property, plant and equipment 58 871 55 181
Intangible assets 61 434 64 468
Investments in associates 3 747 5 527
Other investments 6 698 6 737
Loans receivable 21 891 349
Deferred tax assets 16 239 12 392
Current assets 251 906 295 347
Inventories 45 200 91 059
Retirement benefits 18 877 17 971
Trade and other receivables 123 976 124 564
Current portion of loans receivable 5 497 689
Cash and cash equivalents 29 936 30 365
Non-current assets classified as held for sale 28 420 30 699
TOTAL ASSETS 420 786 440 001
EQUITY AND LIABILITIES
EQUITY
Share capital and share premium 191 440 191 649
Non-distributable reserves 8 196 5 664
Retained earnings 66 959 50 597
Total equity attributable to equity holders of
the company 266 595 247 910
Non-controlling interests 13 455 12 338
Total equity 280 050 260 248
LIABILITIES
Non-current liabilities 27 530 16 280
Borrowings 19 467 8 789
Deferred tax liabilities 8 063 7 491
Current liabilities 113 206 163 473
Bank overdraft 3 930 13 025
Current portion of borrowings 21 372 19 193
Trade and other payables 86 055 117 773
Derivatives - 282
Current portion of deferred vendor payments 871 4 598
Provisions 36 64
Taxation payable 942 8 538
TOTAL EQUITY AND LIABILITIES 420 786 440 001
Net asset value per share (cents) 274.94 255.29
Net tangible asset value per share (cents) 211.58 188.91
SUMMARISED GROUP STATEMENT OF CASH FLOWS
Audited Audited
year year
ended ended
31 December 31 December
2009 2008
R(`000) R(`000)
Cash generated by operating activities 50 157 64 768
Movement in working capital 14 771 (8 172)
Finance income 9 479 10 847
Finance costs (16 995) (6 567)
Taxation paid (22 589) (13 644)
Net cash inflows from operating activities 34 823 47 232
Cash outflow from investing activities
Expenditure to maintain operating capacity
Property, plant and equipment acquired (12 212) (19 855)
Intangible assets acquired (213) (1 195)
Proceeds on disposals of property, plant and equipment 5 656 1 149
Proceeds on disposals of intangible assets 19 -
Expenditure for expansion
Acquisition of subsidiaries (1 578) (18 142)
Proceeds on disposal of investments 2 359 -
Loans receivable granted (26 350) (5 050)
Internally generated intangible assets (4 956) -
Loans receivable repaid 1 012 553
Net cash used in investing activities (36 263) (42 540)
Cash flows from financing activities
Treasury shares repurchased (224) (6 113)
Dividends paid to non-controlling interests (200) -
Borrowings raised / (repaid) 12 857 (29 099)
Deferred vendor payments raised - 2 800
Deferred vendor payments repaid (2 327) (6 235)
Net cash generated / (used) by financing activities 10 106 (38 647)
Increase / (decrease) in cash and cash equivalents 8 666 (33 955)
Cash and cash equivalents at the beginning of the year
17 340 51 295
Cash and cash equivalents at the end of the year 26 006 17 340
SUMMARISED GROUP STATEMENT OF CHANGES IN EQUITY
Share Share Revalu- Foreign Deal Share Retained
capital premium ation currency diffe- based earnings
reserve transla- rences payme- / (Accum
tion reserve nt re -ulated
reserve serve loss)
R(`000) R(`000) R(`000) R(`000) R(`000) R(`000) R(`000)
Balance at 1 982 193 138 2 490 2 1 000 1 453 (9 644)
January 2008
Total comprehens-
ive income for
The year
Profit for the - - - - - - 60 241
year
Other comprehens- - - (102) (23) - - -
ive income
Foreign currency - - - (23) - - -
translation diff-
erences
Deferred tax eff- - - (102) - - - -
ect on revaluation
of property, plant
and equipment
Total comprehens- - - (102) (23) - - 60 241
ive income for
the year
Contributions by (11) (2 460) - - - 844 -
and distributions
to owners
Issue of share 16 3 543 - - - - -
capital
Share issue - (12) - - - - -
costs
Treasury shares (27) (6 086) - - - - -
purchase
Share-based - 95 - - - 844 -
transactions
Changes in own- - - - - - - -
ership interests
In subsidiaries
that do not res-
ult in a loss
Of control
Business combi- - - - - - - -
nations
Total transact- (11) (2 460) - - - 844 -
ions with owners
Balance at 31 971 190 678 2 388 (21) 1 000 2 297 50 597
December 2008
Balance at 1 971 190 678 2 388 (21) 1 000 2 297 50 597
January 2009
Total comprehens-
ive income for
The year
Profit for the - - - - - - 16 362
year
Other comprehens- - - 1 596 42 - - -
ive income
Foreign currency - - - 42 - - -
translation diff-
erences
Revaluation - - 1 596 - - - -
of property, plant
and equipment
Total comprehens- - - 1 596 42 - - 16 362
ive income for
the year
Contributions by (1) (208) - - - 894 -
and distributions
to owners
Treasury shares (1) (223) - - - - -
purchased
Dividends paid by - - - - - - -
subsidiary company
to non-controlling
interests
Share-based - 15 - - - 894 -
payment transact-
tions
Total transact- (1) (208) - - - 894 -
ions with owners
Balance at 31 970 190 470 3 984 21 1 000 3 191 66 959
December 2009
SUMMARISED GROUP STATEMENT OF CHANGES IN EQUITY CONTINUED
Total Non-con- Total
trolling Equity
interests
R(`000) R(`000) R(`000)
Balance at 1 189 421 4 262 193 683
January 2008
Total comprehens-
ive income for
the year
Profit for the 60 241 1 685 61 926
year
Other comprehens- (125) - (125)
ive income
Foreign currency (23) - (23)
translation diff-
erences
Deferred tax eff- (102) - (102)
ect on revaluation
of property, plant
and equipment
Total comprehens- 60 116 1 685 61 801
ive income for
the year
Contributions by
and distributions
to owners
Issue of share 3 559 - 3 559
capital
Share issue (12) - (12)
costs
Treasury shares (6 113) - (6 113)
purchased
Share-based 939 - 939
transactions
Changes in own-
ership interests
In subsidiaries
that do not res-
ult in a loss
Of control
Business combi- - 6 391 6 391
nations
Total transact- (1 627) 6 391 4 764
ions with owners
Balance at 31 247 910 12 338 260 248
December 2008
Balance at 1 247 910 12 338 260 248
January 2009
Total comprehens-
ive income for
The year
Profit for the 16 362 1 317 17 679
year
Other comprehens- 1 638 - 1 638
ive income
Foreign currency 42 - 42
translation diff-
erences
Revaluation 1 596 - 1 596
of property, plant
and equipment
Total comprehens- 18 000 1 317 19 317
ive income for
the year
Contributions by 685 (200) 485
and distributions
to owners
Treasury shares (224) - (224)
purchase
Dividends paid by - (200) (200)
subsidiary company
to non-controlling
interests
Share-based 909 - 909
payment transact-
tions
Total transact- 685 (200) 485
ions with owners
Balance at 31 266 595 13 455 280 050
December 2009
NOTES TO THE GROUP FINANCIAL INFORMATION
1. Basis of preparation
The consolidated annual financial statements for the year ended 31 December
2009, have been prepared in accordance with International Financial Reporting
Standards (IFRS), the interpretations adopted by the International Accounting
Standards Board (IASB), and the requirements of the Companies Act of South
Africa. These consolidated annual financial results are presented in
compliance with the International Accounting Standard (IAS) 34 Interim
Financial Reporting.
The accounting policies applied in the presentation of the annual financial
statements are consistent with those for the prior year, except for the
adoption of the following new or revised standards and interpretations which
are now effective:
IAS 1 - Presentation of financial statements
IAS 23 - Borrowings costs
IFRS 8 - Operating segments
These consolidated financial statements have been prepared in accordance with
the historic cost convention, except for certain assets and liabilities which
are carried at amortised cost, and derivative financial instruments, land and
buildings and held for trading investments which are stated at their fair
value.
All financial information presented in rand has been rounded to the nearest
thousand.
2. Profit on disposal of other investments
During the year the group disposed of their investment in the Bond Exchange of
South Africa (Proprietary) Limited to the JSE Limited. This disposal was done
in accordance with the JSE Limited`s takeover of the Bond Exchange of South
Africa (Proprietary) Limited and was as per the terms of their offer to
purchase, as disclosed in the market.
3. Segment information
SEGMENT REVIEW
Audited Audited
year year
ended ended
31 December 31 December
2009 2008
R(`000) R(`000)
Financial Services
External sales 36 619 40 759
Support services
External sales 365 123 359 770
Information technology
External sales 164 931 102 964
Automotive components
External sales 218 563 365 276
Adjustments and eliminations (37 929) (24 997)
Total Revenue 747 307 843 772
SEGMENT PROFIT / (LOSS)
Audited Audited
year year
ended ended
31 December 31 December
2009 2008
R(`000) R(`000)
Financial services 5 387 7 155
Support services 6 911 15 908
Information technology 14 093 8 211
Automotive components (8 672) 9 140
Adjustments and eliminations (1 357) 19 827
Total Profit 16 362 60 241
SEGMENT ASSETS
Audited Audited
as at as at
31 December 31 December
2009 2008
R(`000) R(`000)
Financial services 243 511 235 379
Support services 75 644 59 075
Information technology 148 255 71 180
Automotive components 199 213 204 022
Adjustments and eliminations (245 837) (129 655)
Total Assets 420 786 440 001
4. Commentary on results
Commentary on results
MICROmega Holdings Limited is an investment holding company with a
diversified portfolio of businesses. The group`s investments are focused
in four sectors of the economy namely; financial services, support
services, information technology and automotive components sectors.
MICROmega Holdings Limited reported, for the first time in 6 years, a
decrease in headline earnings per share of 48% to 20.75 cents per share.
This decrease was as a result of a number of event risks that occurred
during the year. In all instances risk reduction strategies were adopted
to address these events and limit their impact on earnings in future
periods.
Events that occurred during 2009:
On 19 December 2008 Kolbenco (Proprietary) Limited closed its
manufacturing activities. This was a direct result of the downturn
experienced in the global automotive sector. Whilst significant write-offs
were taken in the 2008 reported earnings, there was a need to further
impair assets in 2009. In addition, a number of unforeseen expenses
occurred during the financial year as a result of the closure of the
production facility. The net impact in this year`s results was a decrease
in revenue of R115m, whilst earnings before tax were negatively impacted
by R11.4m.
Throughout 2009 the automotive component manufacturers struggled with new
car sales and demand for product well down when compared to prior years.
This had a direct impact on BTM Manufacturing (Proprietary) Limited,
which reported a R6.8m decrease in revenue and a R8.2m decline in earnings
before tax.
The group sustained a loss of R9.9m on foreign currency denominated trade
receivables (2008: profit of R6.1m) due to the strengthening of the Rand
against all major currencies. These trade receivables were not hedged
during the year due to the nature of the trade agreements in place and the
uncertainty surrounding cashflows from other African countries.
During the course of the year, the group was forced to collapse a failed
BEE transaction, which resulted in an impairment of R7.5m to goodwill.
Accordingly, the aforementioned events negatively impacted the net profit
before taxation figure by a sizeable R43.1m.
Notwithstanding this, the remaining three sectors performed relatively
well despite the economic slowdown, with the information technology sector
reflecting the highest growth in revenue and attributable profits. The
services sector continued to perform in line with expectations and the
increased spend in both the mining and petrochemical industries will have
a positive impact on revenue and earnings for this sector in 2010. Whilst
the financial services sector was directly affected by the global economic
downturn, this sector performed relatively well, with earnings in line
with the 2008 results.
The group remains optimistic about its financial performance for the 2010
financial year and believes that the inherent balance sheet strength with
low gearing will afford growth opportunities.
Report of the auditors
KPMG Inc, MICROmega Holding Limited`s independent auditors have audited the
consolidated annual financial statements of this group from which the
summarised consolidated financial results have been derived and have expressed
an unmodified opinion on the consolidated annual financial statements. The
summarised consolidated financial results comprise the consolidated statement
of financial position at 31 December 2009, consolidated statement of
comprehensive income, consolidated statement of changes in equity and
summarised consolidated statement of cash flows for the year then ended and
selected explanatory notes. The audit report is available for inspection at
MICROmega Holding Limited`s registered offices.
By order of the Board
30 March 2010
Directors: IG Morris (Executive Chairman); DSE Carlisle (Financial
Director); PV Henwood (Non-Executive); RC Lewin (Non-Executive)
Company Secretary: GW Schnehage
Auditors: KPMG Inc
Transfer Secretaries: Computershare Investor Services (Proprietary)
Limited
Sponsor Broker: Investec Bank Limited
Attorneys: Moss Cohen & Partners
Date: 30/03/2010 07:05:06 Supplied by www.sharenet.co.za
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