Unaudited condensed consolidated interim results for the six months ended 30 June 2013 MICROmega Holdings Limited (Incorporated in the Republic of South Africa) (Registration number 1998/003821/06) JSE share code MMG ISIN: ZAE000034435 (“MICROmega” or “the Company” or “the Group”) UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME Unaudited Unaudited Audited six months six months year ended ended ended 30 June 30 June 31 December 2013 2012 2012 R(‘000) R(‘000) R(‘000) Revenue 372 264 385 241 746 030 Revenue from continuing operations 372 264 385 241 694 907 Revenue from discontinued operations - - 51 123 Cost of sales (232 950) (243 212) (473 937) Gross profit 139 314 142 029 272 093 Gross profit from continuing operations 139 314 142 029 264 497 Gross profit from discontinued operations - - 7 596 Other income 16 750 9 471 9 694 Distribution expenses (2 167) (2 009) (4 481) Administrative expenses (119 800) (107 999) (263 619) Results from operations 34 097 41 492 13 687 Results from continuing operations 27 018 41 492 5 410 Results from discontinued operations 7 079 - 8 277 Finance income 2 199 2 445 6 754 Finance cost (3 073) (3 681) (6 074) Net finance (cost) / income (874) (1 236) 680 Share of profit / (loss) in equity accounted associates 123 (201) 2 060 Profit before tax 33 346 40 055 16 427 Profit before tax from continuing operations 26 269 40 055 10 694 Profit before tax from discontinued operations 7 077 - 5 733 Taxation expense (7 693) (10 560) (7 753) Profit for the period 25 653 29 495 8 674 Profit from continuing operations 18 550 29 495 3 757 Profit from discontinued operations 7 103 - 4 917 Other comprehensive income: Foreign currency translation differences 718 3 99 Revaluation of property, plant and equipment - - (2 320) Income tax on other comprehensive income - - 432 Other comprehensive income for the period 718 3 (1 789) Total comprehensive income for the period 26 371 29 498 6 885 Profit attributable to: Owners of the company 24 062 28 483 11 603 Non-controlling interests 1 591 1 012 (2 929) Profit for the period 25 653 29 495 8 674 Total comprehensive income attributable to: Owners of the company 24 780 28 486 10 758 Non-controlling interests 1 591 1 012 (3 873) Total comprehensive income for the period 26 371 29 498 6 885 Reconciliation of headline earnings: Profit attributable to owners of the company 24 062 28 483 11 603 Profit on disposal of property, plant and equipment (30) (257) (235) Impairment of property plant and equipment - - 271 Impairment of intangible assets - 3 300 18 684 Profit on disposal of business - (7 289) - Profit on disposal of investments in subsidiaries - - (6 893) Impairment of other investment - - 1 080 Impairment of loan receivable - - 5 778 Impairment of investment in associates - - 230 Headline earnings 24 032 24 237 30 518 Earnings per share: Headline earnings per share (cents) 26.02 25.72 32.58 Basic earnings per share (cents) 26.05 30.23 12.39 Diluted earnings per share (cents) 25.73 29.64 12.24 Continuing operations Basic earnings per share (cents) 18.36 30.23 7.14 Diluted earnings per share (cents) 18.13 29.64 7.06 Weighted average number of shares (000) 92 351 94 217 93 660 Diluted weighted average shares in issue (000) 93 525 96 094 94 835 Total number of shares in issue (000) 90 850 94 006 92 765 CONDENSED GROUP STATEMENT OF FINANCIAL POSITION Unaudited Unaudited Audited six months six months year ended ended ended 30 June 30 June 31 December 2013 2012 2012 R(‘000) R(‘000) R(‘000) ASSETS Non-current assets 231 102 270 515 237 998 Property, plant and equipment 124 049 145 188 143 910 Intangible assets 52 241 70 979 48 471 Investments in associates 161 1 777 27 Other investments 163 1 582 163 Loans receivable 4 339 16 174 2 188 Deferred tax assets 50 149 34 815 43 239 Current assets 257 399 245 532 240 493 Inventories 3 218 6 863 2 542 Retirement benefit surplus - 21 381 1 881 Trade and other receivables 119 915 166 710 109 725 Current portion of loans receivable 14 399 14 734 18 618 Cash and cash equivalents 119 867 35 764 107 727 Non-current assets classified as held for sale - 80 - Total assets 488 501 516 047 478 491 EQUITY AND LIABILITIES EQUITY 319 301 339 708 308 049 Share capital and premium 174 265 186 321 179 169 Non-distributable reserves 15 408 16 575 14 834 Retained earnings 119 902 111 775 95 392 Total equity attributable to owners of the company 309 575 314 671 289 395 Non-controlling interests 9 726 25 037 18 654 LIABILITIES Non-current liabilities 68 061 72 072 69 835 Borrowings 59 272 60 328 55 960 Deferred tax liabilities 8 789 11 744 13 875 Current liabilities 101 139 104 267 100 607 Bank overdraft 23 821 - - Current portion of borrowings 2 679 14 910 12 901 Trade and other payables 63 977 76 152 80 369 Deferred vendor payments 366 534 534 Provisions - 5 906 5 904 Taxation payable 10 296 6 765 899 TOTAL EQUITIES AND LIABILITIES 488 501 516 047 478 491 Net asset value per share (cents) 340.75 334.74 311.97 Net tangible asset value per share (cents) 283.25 259.23 259.71 CONDENSED GROUP STATEMENT OF CASH FLOWS Unaudited Unaudited Audited six months six months year ended ended ended 30 June 30 June 31 December 2013 2012 2012 R(‘000) R(‘000) R(‘000) Cash flows from operating activities Cash generated by operating activities 32 923 41 582 70 621 Movement in working capital (26 540) (14 254) 9 725 Finance income 2 199 2 445 6 754 Finance cost (3 073) (3 681) (6 074) Tax paid (10 067) (6 877) (15 798) Net cash inflows from operating Activities (4 558) 19 215 65 228 Cash flows from investing activities Expenditure to maintain operating capacity Property, plant and equipment acquired (8 323) (6 275) (14 230) Intangible assets acquired - - (446) Proceeds on disposals of property, plant and equipment 23 939 1 961 3 996 Proceeds on disposals of assets classified as held for sale - 6 512 6 592 Acquisition of non-controlling interest without a change in control (228) - - Expenditure for expansion Acquisition of subsidiaries - - 1 Disposal of business / subsidiaries - 4 942 46 442 Internally generated intangible assets (4 187) (7 693) (7 376) Acquisition of investments - (9) (90) Loans receivable repaid 3 949 6 297 12 066 Net cash inflows from investing activities 15 150 5 735 46 955 Cash flows from financing activities Treasury shares repurchased (4 904) (701) (8 466) Dividends paid to non-controlling interests (10 291) (278) (1 406) Borrowings repaid (7 078) (2 884) (9 261) Net cash outflows from financing activities (22 273) (3 863) (19 133) Increase in cash and cash equivalents (11 681) 21 087 93 050 Cash and cash equivalents at beginning of the period 107 727 14 677 14 677 Cash and cash equivalents at end of the period 96 046 35 764 107 727 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 2012 943 186 079 4 525 11 099 29 1000 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) - - - Total transactions with owners (3) (698) (19) - - - Balance as at 30 June 2012 940 185 381 4 506 11 037 32 1 000 Total comprehensive income for the period Loss for the period - - - - - - Other comprehensive income - - - (1 067) 96 - Foreign currency translation differences - - - - 96 - Realisation of revaluation Reserve - - - (123) - - Total comprehensive income for the period - - - (1 067) 96 - Transactions with owners recorded directly in equity (12) (7 140) (770) - - - Treasury shares purchased (12) (7 753) - - - - Share-based payment transactions - 613 (770) - - - Dividends paid to non- controlling interests - - - - - - Changes in ownership interests in subsidiaries that do not result in a loss of control Total transactions with owners (12) (7 140) (770) - - - Balance as at 31 December 2012 928 178 241 3 736 9 970 128 1 000 Total comprehensive income for the period Profit for the period - - - - - - Other comprehensive income - - - (73) 718 - Foreign currency translation differences - - - - 718 - Realisation of revaluation reserve - - - (73) - - Total comprehensive income for the period - - - (73) 718 - Transactions with owners recorded directly in equity (19) (4 885) (71) - - - Treasury shares purchased (19) (4 885) - - - - Share-based payment transactions - - (71) - - - Dividends paid to non- controlling interests - - - - - - Total transactions with owners (19) (4 885) (71) - - - Balance as at 30 June 2013 909 173 356 3 665 9 897 846 1 000 Non- Retained earnings Total controlling Total interests equity R(‘000) R(‘000) R(‘000) R(‘000) Balance as at 1 January 2012 83 014 286 689 24 303 310 992 Total comprehensive income for the period Profit for the period 28 483 28 483 1012 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 1012 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 interest - - (278) (278) Total transactions with owners 216 (504) (278) (782) Balance as at 30 June 2012 111 775 314 671 25 037 339 708 Total comprehensive income for the period Loss for the period (16 880) (16 880) (3 941) (20 821) Other comprehensive income 123 (848) (944) (1 792) Foreign currency translation differences - 96 - 96 Realisation of revaluation reserve 123 - - - Total comprehensive income for the period (16 757) (17 728) (4 885) (22 613) Transactions with owners recorded directly in equity 145 (7 777) (1 128) (8 905) Treasury shares purchased - (7 765) - (7 765) Share-based payment transactions 145 (12) - (12) Dividends paid to non- controlling interests - - (1 128) (1 128) Changes in ownership interests in subsidiaries that do not result in a loss of control Business combinations 229 229 (370) (141) Total transactions with owners 374 (7 548) (1 498) (9 046) Balance as at 31 December 2011 95 392 289 395 18 654 308 049 Total comprehensive income for the period Profit for the period 24 062 24 062 1 591 25 653 Other comprehensive income 73 718 - 718 Foreign currency translation differences - 718 - 718 Realisation of revaluation reserve 73 - - - Total comprehensive income for the period 24 135 24 780 1 591 26 371 Transactions with owners recorded directly in equity 147 (4 828) (10 291) (15 119) Treasury shares purchased - (4 904) - (4 904) Share-based payment transactions 147 76 - 76 Dividends paid to non- controlling interests - - (10 291) (10 291) Changes in ownership interests in subsidiaries: Acquisitions on non-controlling interests without a change in control 228 228 (228) - Total transactions with owners 375 (4 600) (10 519) (15 119) Balance as at 30 June 2013 119 902 309 575 9 726 319 301 NOTES TO THE FINANCIAL STATEMENTS 1. Basis of preparation These 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 SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by Financial Reporting Standards Council, the Listings 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. The financial statements have been prepared under the supervision of Russell Dick, CA(SA), the financial director. 2. Significant accounting policies These financial results have not been audited/reviewed by the company’s auditors, Nexia SAB&T Inc. 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 2012. 3.Segment information SEGMENT REVENUE Unaudited Unaudited Audited six months six months year ended ended ended 30 June 30 June 31 December 2013 2012 2012 R(‘000) R(‘000) R(‘000) NOSA -external sales 120 562 103 771 228 689 MECS Africa -external sales 163 495 153 050 296 056 Deltec Power Distributors -external sales - 47 732 47 732 Sebata Municipal Solutions -external sales 54 015 47 262 106 690 MICROmega Securities -external sales 17 808 19 908 38 453 Holding company and consolidation elimination -external sales 22 907 12 527 30 815 -internal sales (6 523) 991 (2 405) Total revenue 372 264 385 241 746 030 SEGMENT PROFIT/(LOSS) Unaudited Unaudited Audited six months six months year ended ended ended 30 June 30 June 31 December 2013 2012 2012 R(‘000) R(‘000) R(‘000) NOSA 22 719 17 874 28 486 MECS Africa 6 078 5 840 188 Deltec Power Distributors (59) 9 690 9 251 Sebata Municipal Solutions 5 346 5 656 5 760 MICROmega Securities 2 387 4 814 9 225 Holdings company and consolidation (12 409) (15 391) (41 307) Total profit 24 062 28 483 11 603 SEGMENT ASSETS Unaudited Unaudited Audited six months six months year ended ended ended 30 June 30 June 31 December 2013 2012 2012 R(‘000) R(‘000) R(‘000) NOSA 159 898 92 748 95 561 MECS Africa 68 584 72 980 39 240 Deltec Power Distributors 86 41 855 39 837 Sebata Municipal Solutions 71 576 86 448 65 517 MICROmega Securities 64 465 66 551 56 636 Holding company and consolidation 123 892 155 465 181 700 Total assets 488 501 516 047 478 491 4.Commentary This is the last time that the Group will report to shareholders under the negative impact of the now resolved long-standing dispute between SARS and our executive chairman. There is a heightened energy and excitement throughout the Group that augurs well for all stakeholders- and in particular shareholders. The Group has changed its financial year-end to March and will report on a 15 month period to March 2014. The 6 months period from October 2013 to March 2014 will be included in the year-end results and will be the first period to fully benefit from this new beginning for all Group companies. The results for the period under review were achieved under difficult circumstances that have now fallen away. Revenue was slightly below that of the 6 months of the prior year however strict comparison is not appropriate. The Deltec business was disposed of last year but contributed R48 million of revenue to June 2012. Additionally, NOSA benefited from approximately R8 million in once- off revenue in the period to June 2012 due to a major upgrade at one of its clients. Consequently, a truer measure is that the core sustainable operations reflected revenue growth of 13% when compared to the same period last year. Attributable profit is 18% down when compared to the prior period however, after stripping out the abovementioned impact of Deltec and NOSA, the growth in attributable profit would have been 43% compared to the prior period. 5. Capitalisation issue It has not been the Group’s policy to pay dividends during the recent prolonged period of uncertainty. This policy is being reviewed and a further announcement will be made in this regard when we publish our results for the financial year-end. In the interim and to reward our long-standing shareholders for their patience and perseverance, the board has resolved to issue and allot fully paid ordinary shares of 1 cent each (“ordinary shares”) as a capitalisation issue to MICROmega shareholders pro rata to their current shareholding at a ratio of 14 (fourteen) ordinary shares for every 100 (one hundred)ordinary shares held. Where a shareholder’s entitlement to the capitalisation issue gives rise to a fraction of a share, such fraction will be rounded up to the nearest whole number, where the fraction is greater than 0.5 and rounded down to the nearest whole number where the fractions is less than 0.5. The capitalisation issue may have tax implications on shareholders, both South African and non-resident and shareholders are advised to obtain appropriate advice from their professional advisors in this regard. The capitalisation issue will be made from MICROmega’s share premium. The salient dates of the capitalisation issue are as follows: 2013 Last day to trade: Friday 18 October List date: Monday 21 October Record date: Friday 25 October Issue date, being the date on which shareholder accounts with CSDP’s or brokers are credited or the issue of new share certificates is effected: Monday 28 October Share certificates may not be dematerialised or rematerialised between Monday, 21 October 2013 and Friday, 25 October 2013, both dates inclusive. The above dates and times are subject to change. Any changes will be released on SENS. Shareholders are advised of the following additional information: - there are no Secondary Tax on companies credits being utilised; - the issued share capital of MICROmega is 100 802 677 ordinary shares of 1 cent each; and - MICROmega’s tax reference number is 9457323849. - The closing price of MICROmega shares on Friday, 22 September 2013 was R7.74 per share. 6. Prospects The profitability for the 2012 financial year was significantly skewed in favour of the first 6 months to June 2012. We are presently compiling latest forecasts for the balance of the year and, while it is premature to give specific guidance at this time, the board is comfortable with the current performance of the group companies. By order of the board Johannesburg 30 September 2013 Directors: D C King (Executive Chairman) I G Morris (Chief Executive Officer) R D Dick (Financial Director) D S E Carlisle (Executive Director) A B Swan (Lead Independent Non-executive) R C Lewin (Independent Non-executive) P H Duvenhage (Independent Non-executive) There were no changes to the board during the year. Company Secretary: Acorim Auditors: Nexia SAB&T Transfer Secretaries: Computershare Investor Services Sponsor: Java Capital Attorneys: Eversheds Date: 30/09/2013 05:47:00 Produced by the JSE SENS Department. 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