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MICROMEGA HOLDINGS LIMITED - Audited Condensed Consolidated Results for the year ended 31 December 2012

Release Date: 28/03/2013 17:30
Code(s): MMG     PDF:  
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Audited Condensed Consolidated Results for the year ended 31 December 2012

MMG MICROmega - Audited Financial Statements For The Year Ended 31 December 2012
MICROmega Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/003821/06)
Share code MMG ISIN ZAE000034435
("MICROmega" or "the Group")

AUDITED CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2012
Decrease In Revenue                                       -4%
Increase In Basic earnings Per Share                      70%
Increase In Headline earnings Per Share                   59%
Increase In Net Asset Value Per Share                      2%

SUMMARISED GROUP STATEMENT OF COMPREHENSIVE INCOME
                                                      Audited     Audited
                                                         year        year
                                                        ended       ended
                                                  31 December 31 December
                                 .                        2012        2011
													Restated
                                                       R(?000)     R(?000)
Revenue                                               746 030ÿ    775 483
Revenue from continuing operations                    694 907     561 477
Revenue from discontinued operations                   51 123     214 036
Cost of sales                                        (473 937)   (520 318)
Gross profit                                          272 093     255 165
Gross profit from continuing operations               264 497     208 905
Gross profit from discontinued operations               7 596      46 260
Other income                                            9 694       7 940
Distribution expenses                                  (4 481)     (6 429)
Administration expenses                              (263 619)   (246 701)
Results from operations                                13 687       9 975
Results from continuing operations                      5 410      36 757
Results from discontinued operations                    8 277     (26 782)
Finance income                                          6 754       5 731
Finance cost                                           (6 074)     (7 076)
Net finance cost                                          680      (1 345)
Share of loss of equity accounted associates            2 060        (628)
Profit before taxation                                 16 427       8 002
Profit before taxation from continuing operations      10 694      35 830
Profit / (loss) before taxation from discontinued      
operations                                              5 733     (27 828)
Taxation expense                                       (7 753)      3ÿ413
Profit for the year                                     8 674      11 415
Profit from continuing operations                       3 757      31 901
Loss from discontinued operations                       4 917     (20 486)
Other comprehensive income:
Foreign currency translation differences                   99          (4)
Revaluation of property                                (2 320)      8 214
Realisation of revaluation reserve                          -          90   
Income tax on other comprehensive income                  432      (1 299)
Other comprehensive income for the year                (1 789)      7 001                                                            
Total comprehensive income for the year                 6 885      18 416
Profit attributable to:
Owners of the company                                  11 603       6 964
Non-controlling interests                              (2 929)      4 451
Profit for the year                                     8 674      11 415
Total comprehensive income attributable to:
Owners of the company                                  10 758      10 105
Non-controlling interests                              (3 873)      8 311
Total comprehensive income for the year                 6 885      18 416

Reconciliation of headline earnings:
Profit attributable to ordinary shareholders           11 603       6 964
Profit on disposal of property,
plant and equipment                                      (235)        872
Profit on disposal of intangible assets                     -      (1ÿ073)
Impairment of intangible assets                        18 684       15ÿ291
Impairment of assets classified as held for sale            -       1 251
Profit on disposal of investments in subsidiaries      (6 893)     (6ÿ361)    
Impairment of loans receivable                          5 778           -
Impairment of investments in associates                   230           - 
Impairment of property, plant and equipment               271           - 
Impairment of other investments		                1 080       2 679 
Headline earnings                                      30 518      19 623
Earnings per share
Headline earnings per share (cents)                     32.58       20.50
Basic earnings per share (cents)                        12.39        7.27
Diluted earnings per share (cents)                      12.24        7.20
Continuing operations
Basic earnings per share (cents)                        7.14       28.66
Diluted earnings per share (cents)                       7.06        28.39
Weighted average number of shares (000?s)              93 660      95 736
Diluted weighted average number of shares (000?s)      94 835      96 674
Total number of shares in issue (000?s)                92 765      94 294

SUMMARISED STATEMENT OF FINANCIAL POSITION
                                          Audited     Audited     Audited
                                            as at       as at       as at
                                      31 December 31 December   1 January
                                             2012        2011        2011
Restated	Restated
                                           R(000)     R(000)     R(000)
ASSETS
Non-current assets                        237 998     272 305     262 828
Property, plant and equipment             143 910     147 033     141 332
Intangible assets                          48 471      67 421      62 902
Investments in associates                      27ÿ      2 038       2 476
Other investments                             163       1 573       6 695
Loans receivable                            2 188      23 606      24 677   
Deferred tax assets                        43 239      30 634      24 746
Current assets                            240 493     244 156     242 036
Inventories                                 2 542      43 793      51 631
Retirement benefit surplus                  1 881      21 381      26 844
Trade and other receivables               109 725     134 467     113 330
Current portion of loans receivable        18 618      13 539       3 539
Cash and other investments                107 727      23 742      20 963
Income tax receivable                           -         642       1 043
Non-current assets classified as 
held for sale                                   -       6 592      24 686
TOTAL ASSETS                              478 491ÿ    516 461     504 864 
EQUITY AND LIABILITIES
EQUITY
Share capital and share premium           179 169     187 022     190 797
Non-distributable reserves                 14 834      16 653      15 888
Retained earnings                          95 392      83 014      76 802
Total equity attributable to owners 
of the company                            289 395     286 689     283 487
Non-controlling interests                  18 654      24 303      16 189
Total equity                              308 049     310 992     299 676
LIABILITIES
Non-current liabilities                    69 835      76 480      69 877
Borrowings                                 55 960      65 192      56 576
Deferred tax liabilities                   13 875      11 288      13 301
Current liabilities                       100 607     128 989     135 311
Bank overdraft                                  -       9 065      11 844
Current portion of borrowings              12 901      14 418      31 886
Trade and other payables                   80 369      99 066      82 286
Current portion of deferred vendor 
payments                                      534         534         789
Provisions                                  5 904       5 906       8 506
Income tax payable                            899           -           -
Total liabilities                         170 442     205 469     205 188
TOTAL EQUITY AND LIABILITIES              478 491     516 461     504 864
Net asset value per share (cents)          311.97      304.04      293.88
Net tangible asset value per share (cents) 259.71      232.54      228.68

SUMMARISED GROUP STATEMENT OF CASH FLOWS
                                                      Audited     Audited
                                                         year        year
                                                        ended       ended
                                                  31 December 31 December
                                                         2012        2011
													Restated
                                                       R(000)     R(000)                                                                                             

Cash generated by operating activities                 70 621      45 848
Movement in working capital                             9 725     (14 559)
Finance income                                          6 754       5 731
Finance costs                                          (6 074)     (7 076)
Taxation paid                                         (15 798)    (13 759)
Net cash inflows from operating activities             65 228      16 185
Cash outflow from investing activities
Expenditure to maintain operating capacity
Property, plant and equipment acquired                (14 230)    (17 485)
Intangible assets acquired                               (446)          -
Proceeds on disposals of property, plant and equipment  3 996       5 364
Proceeds on disposals of intangible assets                  -       1 247
Proceeds on disposals of non-current assets held        6 592      16ÿ356
For sale                                                 
Expenditure for expansion
Acquisition of subsidiaries                                 1           -
Disposal of subsidiaries                               46 442       16095
Acquisition of non-controlling interests                    -      (2 957)
Internally generated intangible assets                 (7 376)    (20 885) 
Proceeds on disposal of investments                       (90)      6 524
Loans receivable granted                                    -       (8003)
Loans receivable repaid                                12 066       2 884
Net cash used in investing activities                  46 955        (860)
Cash flows from financing activities
Treasury shares repurchased                            (8 466)     (3 810)
Dividends paid to non-controlling interests            (1 406)     (1 298)
Borrowings (repaid)/raised                             (9 261)     (4ÿ404)
Deferred vendor payments repaid                             -        (255)
Net cash generated by financing activities            (19 133)     (9 767)
Increase / (decrease) in cash and cash equivalents     93 050       5ÿ558
Cash and other investments at the beginning of 
the year                                               14 677       9 119
Cash and other investments at the end of the year     107 727      14 677
      
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         965   189 832  9 360      33   1 000   4 017   78 280
January 2011 
previously stated 
Impact of              -         -      -       -       -   1 478  (1 478)  
Correction of prior
Period error 
Balance at 1         965ÿ  189 832  9 360      33   1 000   5 495   76 802
January 2011
restated
Total comprehens-
ive income for 
The year
Profit for the         -       -       -       -       -       -     6 964
year                   
Other comprehens-      -       -    1 739     (4)      -       -     1 406
ive income             
Foreign currency       -       -       -      (4)      -       -        -
translation diff-     
erences
Revaluation            -       -    3 055      -       -       -        -                             
of property
Realisation of         -       -   (1 316)     -       -       -     1 406
Revaluation reserve         
Total comprehens-      -       -    1 739     (4)      -       -     8 370
ive income for
the year
Contributions by     (22) (3 753)      -       -        -     930        -
and distributions
to owners
Treasury shares      (22) (3 788)      -       -       -       -        -
purchased
Share-based            -      35       -       -       -      930       -  
payment transact-           
IFRS 3 Business        -       -       -       -       -       -        -
combinations
Dividends paid by      -       -       -       -       -       -        -
subsidiary company
to non-controlling
interests
Changes in owner-      -       -       -       -       -   (1 900) (2 158)
ship interests in
subsidiaries           
Acquisitions on        -       -       -       -       -    (970)  (2 158)
non-controlling
interests without
a change in control
Total transact-      (22) (3 753)      -       -      -     (970)  (2 158)
ions with owners
Balance at 31        
December 2011        943   186 079 11 099     29   1 000    4 525   83 014

Balance at 1         943   186 079 11 099     29   1 000    4 525   83 014 
January 2012
Total comprehens-
ive income for 
The year
Profit for the         -       -       -       -       -       -    11 603  
year                   
Other comprehens-      -       -   (1 129)     99      -       -      185  
ive income             
Foreign currency       -       -       -       99      -       -        -
translation diff-     
erences
Revaluation            -       -     (944)     -       -       -        -                             
of property
Realisation of         -       -     (185)     -       -       -     (185)     
Revaluation reserve         
Total comprehens-      -       -   (1 129)     99      -       -    11 788            
ive income for
the year
Contributions by     (15)   (7 838)     -       -      -     (789)     361
and distributions
to owners
Treasury shares      (15)   (8 451)     -       -      -        -        -
purchased
Share-based            -       613      -       -       -    (789)     361   
payment transact-           
IFRS 3 Business        -       -       -       -       -       -         -
combinations
Dividends paid by      -       -       -       -       -       -         -
subsidiary company
to non-controlling
interests
Changes in owner-      -       -       -       -       -       -       229   
ship interests in
subsidiaries           
Acquisitions on        -       -       -       -       -       -       229
non-controlling
interests without
a change in control
Total transact-       (15)  (7 838)    -       -       -    (789)      590   
ions with owners
Balance at 31        
December 2012         928  178 241  9 970    128    1000   3 736    95 392	


SUMMARISED GROUP STATEMENT OF CHANGES IN EQUITY CONTINUED
                      Total  Non-con-    Total 
                             trolling    Equity   
                             interests                   
                                                    
                    R('000)  R('000)   R('000) 
Balance at 1        283 487   16 189   299 676
January 2011
Total comprehens-
ive income for 
The year
Profit for the        6 964     4 451    11 415          
year                   
Other comprehens-     3 141     3 860     7 001 
ive income             
Foreign currency        (4)         -        (4)
translation diff-     
erences
Revaluation           3 055     3 860     6 915                               
of property
Realisation of           90         -        90
revaluation reserve
Total comprehens-    10 105     8 311    18 416
ive income for
the year
Contributions by    (2 845)    (1 298)   (4ÿ143)
and distributions
to owners
Treasury shares     (3 810)        -     (3 810)
purchased
Share-based            965         -        965
payment transact-           
Dividends paid by        -     (1 298)   (1 298)
subsidiary company
to non-controlling
interests
Changes in owner-   (4 058)     1ÿ101    (2 957)                        
ship interests in
subsidiaries           
Acquisitions on     (4 058)     1ÿ101    (2 957)  
non-controlling
interests without
a change in control
Total transact-     (6 903)      (197)   (7 100)
ions with owners
Balance at 31      286 689     24 303   310 992  
December 2011

Balance at 1       286 689     24 303   310 992
January 2012
Total comprehens-
ive income for 
The year
Profit for the       11 603    (2 929)    8 674          
year                   
Other comprehens-     (845)      (944)   (1 789) 
ive income             
Foreign currency        99          -        99
translation diff-     
erences
Revaluation           (944)      (944)   (1 888)                               
of property
Realisation of            -         -         -
revaluation reserve
Total comprehens-    10 758    (3 873)    6 885
ive income for
the year
Contributions by    (8 281)    (1 406)   (9 687)
and distributions
to owners
Treasury shares     (8 466)        -     (8 466)
purchased
Share-based            185         -        185
payment transact-           
Dividends paid by        -     (1 406)   (1 406)
subsidiary company
to non-controlling
interests
Changes in owner-       229      (370)     (141)                      
ship interests in
subsidiaries           
Acquisitions on         229      (370)     (141)  
non-controlling
interests without
a change in control
Total transact-     (8 052)    (1 776)   (9 828)
ions with owners
Balance at 31      289 395     18 654   308 049  
December 2012


NOTES TO THE GROUP FINANCIAL INFORMATION
                                                         
1. Basis of preparation
These audited condensed consolidated annual financial statements have been prepared under the supervision of DJ Case (CA) SA, 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, as amended.  
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.  

All financial information presented in South African Rand has been rounded 
to the nearest thousand.
 
The annual financial statements were audited by the company?s auditors, Nexia SAB & T, and their unqualified audit report is available for inspection at the company?s registered office.

2. Prior period error 
In the prior years the group had incorrectly accounted for an employee loyalty scheme.  Share options in the equity of a subsidiary were granted to the subsidiary's employees in 2008 and vested over a 3 year period ended August 2011.  Due to various conditions that were present upon final vesting and exercising the company purchased the shares from the employees.  The group incorrectly recognised the eliminating transaction as an addition to goodwill when the company increased it's investment in subsidiary as opposed to an acquisition of non-controlling interests.  Furthermore no amounts had been recognised to profit or loss over the period of vesting of the share options as required by IFRS 2.  This has been rectified with retrospective share based payment expenses being allocated to profit or loss and the correction of the eliminating transaction. .

All share options in terms of the loyalty scheme were exercised in 2011 and there are no further amendments that are required.

The cumulative correction of the error in 2011 and 2010 comparative figures are as follows:

                December      2010  December     2011       2011  December
                    2010  Restate-      2010    Move-   Restate-      2011
              Previously      ment  Restated      ment      ment  Restated
			due to              due to
                                              
                 R('000)   R('000)   R('000)   R('000)    R('000)  R('000)
Statement of 
financial 
position
Intangible 
Assets           62 902         -      62 902    7 416     (2 897)  67 421
Equity
Share capital
And share
Premium          190 797        -     190 797   (3 775)        -   187 022 
Non-distribu-
Table reserves    14 410    1 478      15 888    2 243     (1 478)  16 653
Retained 
earnings          78 280   (1 478)     76 802    7 631     (1 419)  83 014

Statement of
comprehensive
income
Profit for
the year           7 808     (633)      7 175   11 837       (422)  11 415
Total compre-
hensive income
for the year      19 363     (633)     18 730   18 838       (422)  18 416
Earnings per 
share (cents)       5.86    (0.65)       5.21     7.72      (0.45)    7.27
Diluted earnings
per share (cents)   5.83    (0.65)       5.18     7.64      (0.44)    7.20
Headline earnings
per share (cents)  16.46    (0.66)      15.80    20.94      (0.44)   20.50   


         
3.Discontinued Operations
The group continues to classify Kolbenco Proprietary Limited and Automobile Radio Dealers Association 1989 Proprietary Limited as discontinued operations, as the process to realise assets is still ongoing.   

As at the end of April 2012 the group disposed of the business and trading assets and liabilities of Deltec Power Distributors Proprietary Limited.

The operations of the Deltec segment has been reclassified in the comparative figures from continued operations to discontinued operations due to the sale of the business and its assets and liabilities during the current financial year.

4. Segment information

SEGMENT REVIEW
                                                      Audited     Audited
                                                         year        year
                                                        ended       ended
                                                  31 December 31 December
                                                         2012        2011
                                                       R('000)     R('000)                                                                                             
NOSA 
External sales                                       228 689      155 756
MECS Africa
External sales                                       296 056      255 929
Deltec Power Distributors
External sales                                        47 732      129ÿ538
Sebata Municipal Solutions
External sales                                       106 690      100ÿ440
Turrito
External sales                                        20 640        9 746
MICROmega Securities
External sales                                        38 453       40 423
Automotive Disposal
External sales                                         3 390       84 498
Holdings Company and consolidation eliminations
External sale                                          6 785        4 747
Internal sales                                        (2 405)      (5 594)
Total revenue                                        746 030      775 483


SEGMENT PROFIT / (LOSS)
                                                      Audited     Audited
                                                         year        year
                                                        ended       ended
                                                  31 December 31 December
                                                         2012        2011
                                                       R('000)     R('000)                                                                                             
NOSA                                                  28 486       22 763
MECS Africa                                              188        7 056
Deltec Power Distributors                              9 251        8 652
Sebata Municipal Solutions                             5 760        8 707
Turrito                                               (6 419)      (1 474)
MICROmega Securities                                   9 225        9 593
Automotive Disposal                                   (4 327)     (29 637)
Holdings Company and consolidation eliminations      (30 561)     (18 696)       
Total profit                                          11 603        6 964

   
SEGMENT ASSETS
                                                      Audited     Audited
                                                        as at       as at
                                                  31 December 31 December
                                                         2012        2011
                                                       R('000)     R('000)                                                                                             

NOSA                                                  95 561       72 321
MECS Africa                                           39 240       62 596
Deltec Power Distributors                             39 837       61 230
Sebata Municipal Solutions                            65 517       73 496
Turrito                                                8 335        6 920
MICROmega Securities                                  56 636       60 383
Automotive Disposal                                   21 485       62 433
Holdings Company and consolidation eliminations      151 880      117 082
Total assets                                         478 491      516 461

5. Commentary

Commentary

Shareholders are advised that whilst the year on year growth in earnings 
appears satisfactory, 80% of the headline earnings were earned in the
first half of 2012.

By order of the Board

28 March 2013

Directors: DC King (Executive Chairman); IG Morris (Chief Executive Officer); DSE 
Carlisle (Managing Director); RB Dick (Financial Director); A Swann (Lead
Independent Non-Executive Director); RC Lewin (Independent Non-Executive 
Director); P Duvenhage (Non-Executive Director)
Company Secretary: Acorim Proprietary Limited
Auditors: Nexia SAB & T 
Transfer Secretaries: Computershare Investor Services Proprietary Limited
Sponsor: Java Capital
Attorneys: Routledge Modise Attorneys















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