Unaudited Interim Results for the six months ended 30 Jun 2012 MICROmega Holdings Limited (incorporated in the Republic of South Africa) Registration number 1998/003821/06 Share code MMG ISIN ZAE000034435 ("MICROmega" or "the Company" or "the Group") UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012 Increase In Headline Earnings Per Share 87% Increase In Attributable Earnings Per Share 106% Increase In Revenue 7% Increase In Net Asset Value Per Share 9% Increase In Net Tangible Asset Value Per Share 8% CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME Unaudited Unaudited Audited six months six months year ended ended ended 30 June 30 June 31 December 2012 2011 2011 R(000) R(000) R(000) Revenue 385 241 359 809 775 483 Revenue from continuing operations 385 241 359 809 690 985 Revenue from discontinued operations - - 84 498 Cost of sales (243 212) (228 288) (520 318) Gross profit 142 029 131 521 255 165 Gross profit from continuing operations 142 029 131 521 241 295 Gross profit from discontinued operations - - 13 870 Other income 9 471 1 678 7 940 Distribution expenses (2 009) (3 264) (6 429) Administrative expenses (107 999) (111 347) (246 279) Results from operations 41 492 18 588 10 397 Results from continuing operations 41 492 18 588 49 516 Results from discontinued operations - - (39 119) Finance income 2 445 3 619 5 731 Finance cost (3 681) (1 905) (7 076) Net finance (cost) / income (1 236) 1 714 (1 345) Share of loss in equity accounted associates (201) (630) (628) Profit before tax 40 055 19 672 8 424 Profit before tax from continuing operations 40 055 19 672 47 823 Loss before tax from discontinued operations - - (39 399) Taxation (expense) / income (10 560) (4 927) 3 413 Profit for the period 29 495 14 745 11 837 Profit from continuing operations 29 495 14 745 40 975 Loss from discontinued operations - - (29 138) Other comprehensive income: Foreign currency translation differences 3 - (4) Revaluation of property, plant and equipment - 1 064 8 214 Realisation of revaluation reserve - - 90 Income tax on other comprehensive income - (298) (1 299) Other comprehensive income for the period 3 766 7 001 Total comprehensive income for the period 29 498 15 511 18 838 Profit attributable to: Owners of the company 28 483 14 125 7 386 Non-controlling interests 1 012 620 4 451 Profit for the period 29 495 14 745 11 837 Total comprehensive income attributable to: Owners of the company 28 486 14 891 10 527 Non-controlling interests 1 012 620 8 311 Total comprehensive income for the period 29 498 15 511 18 838 Reconciliation of headline earnings: Profit attributable to owners of the company 28 483 14 125 7 386 (Profit) / loss on disposal of property, plant and equipment (257) 157 872 Profit on disposal of intangible assets - (1 073) (1 073) Impairment of intangible assets 3 3 300 - 15 291 Impairments of assets classified as held for sale - - 1 251 Profit on disposal of business 3 (7 289) - - Profit on disposal of investments in subsidiaries - - (6 361) Impairment of other investment - - 2 679 Headline earnings 24 237 13 209 20 045 Earnings per share: Headline earnings per share (cents) 25.72 13.72 20.94 Basic earnings per share (cents) 30.23 14.67 7.71 Diluted earnings per share (cents) 29.64 14.58 7.64 Continuing operations Basic earnings per share (cents) 30.23 14.67 38.15 Diluted earnings per share (cents) 29.64 14.58 37.78 Weighted average number of shares (000) 94 217 96 274 95 736 Diluted weighted average shares in issue (000) 96 094 96 889 96 674 Total number of shares in issue (000) 94 006 96 061 94 294 CONDENSED GROUP STATEMENT OF FINANCIAL POSITION Unaudited Unaudited Audited six months six months year ended ended ended 30 June 30 June 31 December 2012 2011 2011 R(000) R(000) R(000) ASSETS Non-current assets 273 412 275 014 275 202 Property, plant and equipment 145 188 144 767 147 033 Intangible assets 73 876 66 770 70 318 Investments in associates 1 777 1 085 2 038 Other investments 1 582 6 650 1 573 Loans receivable 16 174 24 959 23 606 Deferred tax assets 34 815 30 783 30 634 Current assets 245 532 254 432 244 156 Inventories 6 863 58 741 43 793 Retirement benefit surplus 21 381 26 797 21 381 Trade and other receivables 166 710 122 835 134 467 Current portion of loans receivable 14 734 5 776 13 539 Cash and cash equivalents 35 764 16 551 23 742 Income tax receivable - - 642 Non-current assets classified as held for sale 80 23 732 6 592 Total assets 518 944 529 446 519 358 EQUITY AND LIABILITIES EQUITY 342 605 314 960 313 889 Share capital and premium 186 321 190 325 187 022 Non-distributable reserves 16 575 15 363 16 653 Retained earnings 114 672 92 463 85 911 Total equity attributable to owners of the company 317 568 298 151 289 586 Non-controlling interests 25 037 16 809 24 303 LIABILITIES Non-current liabilities 72 072 75 487 76 480 Borrowings 60 328 60 898 65 192 Deferred tax liabilities 11 744 14 589 11 288 Current liabilities 104 267 138 999 128 989 Bank overdraft - 6 061 9 065 Current portion of borrowings 14 910 30 679 14 418 Trade and other payables 76 152 94 094 99 066 Deferred vendor payments 534 789 534 Provisions 5 906 6 391 5 906 Taxation payable 6 765 985 - TOTAL EQUITIES AND LIABILITIES 518 944 529 446 519 358 Net asset value per share (cents) 337.82 310.38 307.11 Net tangible asset value per share (cents) 259.23 240.87 232.54 CONDENSED GROUP STATEMENT OF CASH FLOWS Unaudited Unaudited Audited six months six months year ended ended ended 30 June 30 June 31 December 2012 2011 2011 R(000) R(000) R(000) Cash flows from operating activities Cash generated by operating activities 41 582 23 378 45 848 Movement in working capital (14 254) (4 805) (14 559) Finance income 2 445 3 619 5 731 Finance cost (3 681) (1 905) (7 076) Tax paid (6 877) (7 946) (13 759) Net cash inflows from operating Activities 19 215 12 341 16 185 Cash flows from investing activities Expenditure to maintain operating capacity Property, plant and equipment acquired (6 275) (8 294) (17 485) Proceeds on disposals of property, plant and equipment 1 961 736 5 364 Proceeds on disposals of intangible assets - - 1 247 Proceeds on disposals of assets classified as held for sale 6 512 - 16 356 Expenditure for expansion Acquisition of subsidiaries - - (2 957) Disposal of business / subsidiaries 4 942 - 16 095 Internally generated intangible assets (7 693) (4 307) (20 885) (Acquisition) / disposal of investments (9) 45 6 524 Loans receivable repaid / (granted) 6 297 (1 758) (5 119) Net cash inflows /(outflows) from investing activities 5 735 (13 578) (860) Cash flows from financing activities Treasury shares repurchased (701) (507) (3 810) Dividends paid to non-controlling interests (278) - (1 298) Borrowings (repaid) /raised (2 884) 3 115 (4 404) Deferred vendor payments repaid - - (255) Net cash (outflows) / inflows from financing activities (3 863) 2 608 (9 767) Increase in cash and cash equivalents 21 087 1 371 5 558 Cash and cash equivalents at beginning of the period 14 677 9 119 9 119 Cash and cash equivalents at end of the period 35 764 10 490 14 677 CONDENSED 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 2011 965 189 832 4 017 9 360 33 1 000 Total comprehensive income for the period Profit for the period - - - - - - Other comprehensive income - - - 708 - - Revaluation of property - - - 766 - - Realisation of revaluation reserve - - - (58) - - Total comprehensive income for the period - - - 708 - - Transactions with owners recorded directly in equity (4) (468) 245 - - - Treasury shares purchased (4) (503) - - - - Share-based payment transactions - 35 245 - - - Total transactions with owners (4) (468) 245 - - - Balance as at 30 June 2011 961 189 364 4 262 10 068 33 1 000 Total comprehensive income for the period Loss for the period - - - - - - Other comprehensive income - - - 1 031 (4) - Foreign currency translation differences - - - - (4) - Revaluation of property - - - 2 289 - - Realisation of revaluation Reserve - - - (1 258) - - Total comprehensive income for the period - - - 1 031 (4) - Transactions with owners recorded directly in equity (18) (3 285) 263 - - - Treasury shares purchased (18) (3 285) - - - - Share-based payment transactions - - 263 - - - Dividends paid to non- controlling interests - - - - - - Changes in ownership interests in subsidiaries that do not result in a loss of control Business combinations - - - - - - Total transactions with owners (18) (3 285) 263 - - - Balance as at 31 December 2011 943 186 079 4 525 11 099 29 1 000 Total comprehensive income for the period Profit for the period - - - - - - Other comprehensive income - - - (62) 3 - Foreign currency translation differences - - - - 3 - Realisation of revaluation reserve - - - (62) - - Total comprehensive income for the period - - - (62) 3 - Transactions with owners recorded directly in equity (3) (698) (19) - - - Treasury shares purchased (3) (698) - - - - Share-based payment transactions - - (19) - - - Dividends paid to non- controlling interests - - - - - - Total transactions with owners (3) (698) (19) - - - Balance as at 30 June 2012 940 185 381 4 506 11 037 32 1 000 Non- Retained earnings Total controlling Total interests equity R(000) R(000) R(000) R(000) Balance as at 1 January 2011 78 280 283 487 16 189 299 676 Total comprehensive income for the period Profit for the period 14 125 14 125 620 14 745 Other comprehensive income 58 766 - 766 Revaluation of property - 766 - 766 Realisation of revaluation reserve 58 - - - Total comprehensive income for the period 14 183 14 891 620 15 511 Transactions with owners recorded directly in equity - (227) - (227) Treasury shares purchased - (507) - (507) Share-based payment transactions - 280 - 280 Total transactions with owners - (227) - (227) Balance as at 30 June 2011 92 463 298 151 16 809 314 960 Total comprehensive income for the period Loss for the period (6 739) (6 739) 3 831 (2 908) Other comprehensive income 1 348 2 375 3 860 6 235 Foreign currency translation differences - (4) - (4) Revaluation of property - 2 289 3 860 6 149 Realisation of revaluation reserve 1 348 90 - 90 Total comprehensive income for the period (5 391) (4 364) 7 691 3 327 Transactions with owners recorded directly in equity - (3 040) (1 298) (4 338) Treasury shares purchased - (3 303) - (3 303) Share-based payment transactions - 263 - 263 Dividends paid to non- controlling interests - - (1 298) (1 298) Changes in ownership interests in subsidiaries that do not result in a loss of control Business combinations (1 161) (1 161) 1 101 (60) Total transactions with owners (1 161) (4 201) (197) (4 398) Balance as at 31 December 2011 85 911 289 586 24 303 313 889 Total comprehensive income for the period Profit for the period 28 483 28 483 1 012 29 495 Other comprehensive income 62 3 - 3 Foreign currency translation differences - 3 - 3 Realisation of revaluation reserve 62 - - - Total comprehensive income for the period 28 545 28 486 1 012 29 498 Transactions with owners recorded directly in equity 216 (504) (278) (782) Treasury shares purchased - (701) - (701) Share-based payment transactions 216 197 - 197 Dividends paid to non- controlling interests - - (278) (278) Total transactions with owners 216 (504) (278) (782) Balance as at 30 June 2012 114 672 317 568 25 037 342 605 NOTES TO THE FINANCIAL STATEMENTS 1. Basis of preparation These unaudited condensed consolidated interim financial statements are prepared in accordance with the framework concepts and the recognition and measurement criteria of International Financial Reporting Standards (IFRS), its interpretations adopted by the International Accounting Standards Board (IASB), the presentation and the disclosure requirements of IAS 34 Interim Financial Reporting, the AC 500 standards as issued by the Accounting Practices Board, the Listing Requirements of the JSE Limited and the requirements of the South African Companies Act 71 of 2008. The condensed consolidated financial results are prepared in accordance with the going concern principle under the historical cost basis as modified by the fair value accounting of certain assets and liabilities where required or permitted by IFRS. 2. Significant accounting policies These unaudited condensed consolidated interim financial statements have been prepared using accounting policies that comply with 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 2011. 3. Disposal of business The Company disposed of the business and assets of Deltec Power Distributors (Proprietary) Limited during the interim period under review. The profit on disposal represents the excess of the disposal price when compared to the fair value of the assets and liabilities disposed of. Goodwill relating to the Deltec Power Distributors business was impaired during the period. 4.Segment information SEGMENT REVENUE Unaudited Unaudited Audited six months six months year ended ended ended 30 June 30 June 31 December 2012 2011 2011 R(000) R(000) R(000) NOSA -external sales 103 771 70 188 155 756 MECS Africa -external sales 153 050 101 205 255 929 Deltec Power Distributors -external sales 47 732 61 117 129 538 Sebata Municipal Solutions -external sales 47 262 47 699 100 440 Turrito Networks -external sales 8 725 3 579 9 746 MICROmega Securities -external sales 19 908 20 166 40 423 Automotive Disposal -external sales 870 58 841 84 498 Holding company and consolidation elimination -external sales 2 932 1 188 4 747 -internal sales 991 (4 174) (5 594) Total revenue 385 241 359 809 775 483 SEGMENT PROFIT/(LOSS) Unaudited Unaudited Audited six months six months year ended ended ended 30 June 30 June 31 December 2012 2011 2011 R(000) R(000) R(000) NOSA 17 874 8 861 22 763 MECS Africa 5 840 3 955 7 056 Deltec Power Distributors 9 690 4 866 8 652 Sebata Municipal Solutions 5 656 4 927 8 707 Turrito Networks (532) (1 166) (1 474) MICROmega Securities 4 814 3 850 10 015 Automotive Disposal (1 569) (3 769) (29 637) Holdings company and consolidation (13 290) (7 399) (18 696) Total profit 28 483 14 125 7 386 SEGMENT ASSETS Unaudited Unaudited Audited six months six months year ended ended ended 30 June 30 June 31 December 2012 2011 2011 R(000) R(000) R(000) NOSA 92 748 60 633 72 321 MECS Africa 72 980 38 133 62 596 Deltec Power Distributors 41 855 58 168 61 230 Sebata Municipal Solutions 86 448 86 585 73 496 Turrito Network 8 889 4 801 6 920 MICROmega Securities 66 551 47 228 60 383 Automotive Disposal 44 266 127 278 62 433 Holding company and consolidation 105 207 106 620 119 979 Total assets 518 944 529 446 519 358 5. Commentary on results We are pleased to report an increase of 87% in headline earnings per share to 25.72 cents compared to the same period last year. Our balance sheet continues to strengthen with the net asset value per share having increased by 9% to 337.82 cents. Operating margins have improved significantly over the period from 5% to 10%. This is primarily attributed to our exit from the automotive sector and our renewed focus on our traditional service based businesses. We have invested significantly in recent years to ensure we have both the capacity and competence to deliver sustained earnings growth. We are now seeing the benefit of this investment strategy. Prospects NOSA remains a demand driven business. Our ability to meet this demand is governed by our access to skills and resources. We have a continuous skills development and recruitment program in place but nevertheless believe that it will take up to five years before we can fully deliver on even the current demand for our services. This is a direct reflection on the importance that the government and corporate South Africa is placing on occupational health and safety in the work place and bodes well for future earnings growth. South Africa is following a global trend towards best practice in this field and we see this as continuing due to the increasingly stringent application and enforcement of legislation both locally and abroad. Our technology businesses are performing in line with our anticipated earnings forecast for this year. Our cloud computing service has received some promising traction in the first half of this year and we are optimistic that it will become an important contributor to earnings in the medium term. Our inter-dealer broking business and our human resource solutions business are both expected to achieve their forecast earnings for 2012. Both businesses have focused on expanding their services into the African continent and this should assist in achieving sustainable growth beyond this year. The restructuring of the group to eliminate unwanted businesses was completed with the sale of Deltec in the first half of this year. We now have a structure that is robust and that incorporates a portfolio of businesses that we can now confidently build upon. Our cash position is strong and was further enhanced by receipt of the proceeds from the sale of Deltec subsequent to the end of this reporting period. The second half of the year has traditionally delivered higher levels of growth than the first half. We expect no difference this year. We are already gaining some visibility into the next financial year and we are cautiously optimistic about our prospects for 2013. These results have not been reviewed or reported on by the Group`s auditors. The condensed financial statements have been prepared under the supervision of DJ Case CA (SA) and were approved by the board of directors on 25 July 2012. By order of the board Johannesburg 26 July 2012 Directors: D C King (Chairman) I G Morris (Chief Executive Officer) D S E Carlisle (Managing Director) D J Case (Financial Director) P V Henwood (Lead Independent Non-executive) R C Lewin (Non-executive) Company Secretary: T de Mendonca Auditors: Nexia SAB&T Transfer Secretaries: Computershare Investor Services Sponsor: Java Capital Attorneys: Eversheds Date: 26/07/2012 08:00:00 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. 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