Wrap Text
Reviewed Condensed Consolidated Interim Results for the 12 Months Ended 31 December 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 Group”)
Reviewed Interim Condensed Consolidated Group Statements For The 12 Month
Period Ended 31 December 2013
CONDENSED GROUP STATEMENT OF PROFIT AND LOSS
Reviewed Audited
12 months year
ended ended
31 December 31 December
2013 2012
R(‘000) R(‘000)
Revenue 731 716 746 030
Revenue from continuing operations 731 716 694 907
Revenue from discontinued operations - 51 123
Cost of sales (457 987) (473 937)
Gross profit 273 729 272 093
Gross profit from continuing operations 273 729 264 497
Gross profit from discontinued operations - 7 596
Other income 36 058 9 694
Distribution expenses (4 280) (4 481)
Administration expenses (230 299) (263 619)
Results from operations 75 208 13 687
Results from continuing operations 75 208 5 410
Results from discontinued operations - 8 277
Finance income 4 993 6 754
Finance cost (4 187) (6 074)
Net finance income 806 680
Share of profit of equity accounted associates 1 336 2 060
Profit before taxation 77 350 16 427
Profit before taxation from continuing operations 77 350 10 694
Profit before taxation from discontinued operations - 5 733
Taxation expense (22 495) (7 753)
Profit for the period 54 855 8 674
Profit from continuing operations 54 855 3 757
Profit from discontinued operations - 4 917
Profit attributable to:
Owners of the parent 51 190 11 603
Non-controlling interests 3 665 (2 929)
Profit for the period 54 855 8 674
Attributable earnings per share (cents)
Basic 48.88 10.77
Diluted 48.07 10.65
CONDENSED GROUP STATEMENT OF OTHER COMPREHENSIVE INCOME
Reviewed Audited
12 months year
ended ended
31 December 31 December
2013 2012
R(‘000) R(‘000)
Profit for the period 54 855 8 674
Other comprehensive income
Foreign currency translation differences 592 99
Revaluation of property - (2 320)
Income tax on other comprehensive income - 432
Other comprehensive income for the period 592 (1 789)
Total comprehensive income for the period 55 447 6 885
Total comprehensive income attributable to:
Owners of the parent 51 782 10 758
Non-controlling interests 3 665 (3 873)
Total comprehensive income for the period 55 447 6 885
Reconciliation of headline earnings:
Profit attributable to ordinary shareholders 51 190 11 603
Profit on disposal of property, plant and equipment (228) (235)
Impairment of intangible assets - 18 684
Loss/(Profit) on disposal of investments in subsidiaries 653 (6 893)
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
Headline earnings 51 615 30 518
Headline earnings per share (cents) 49.29 28.32
Weighted average number of shares (000’s) 104 727 107 772
Diluted weighted average number of shares (000’s) 106 492 108 947
Total number of shares in issue (000’s) 100 817 92 765
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Reviewed Audited
as at as at
31 December 31 December
2013 2012
R(‘000) R(‘000)
ASSETS
Non-current assets 208 523 237 998
Property, plant and equipment 47 231 143 910
Intangible assets 103 141 48 471
Investments in associates 10 000 27
Other investments 192 163
Loans receivable - 2 188
Deferred tax assets 47 959 43 239
Current assets 252 339 240 493
Inventories 2 607 2 542
Retirement benefit surplus - 1 881
Trade and other receivables 110 428 109 725
Loans receivable 12 619 18 618
Cash and cash equivalents 126 685 107 727
TOTAL ASSETS 460 862 478 491
EQUITY AND LIABILITIES
EQUITY
Share capital and share premium 167 578 179 169
Non-distributable reserves 6 319 14 834
Retained earnings 155 930 95 392
Total equity attributable to owners of the group 329 827 289 395
Non-controlling interests (29) 18 654
Total equity 329 798 308 049
LIABILITIES
Non-current liabilities 18 154 69 835
Borrowings 10 898 55 960
Deferred vendor payments 3 484 -
Deferred tax liabilities 3 772 13 875
Current liabilities 112 909 100 607
Borrowings 4 610 12 901
Trade and other payables 64 315 80 369
Deferred vendor payments 25 060 534
Provisions - 5 904
Income tax payable 18 925 899
TOTAL EQUITY AND LIABILITIES 460 862 478 491
Net asset value per share (cents) 327.15 311.97
Net tangible asset value per share (cents) 224.85 259.71
CONDENSED GROUP STATEMENT OF CASH FLOWS
Reviewed Audited
12 months year
ended ended
31 December 31 December
2013 2012
R(‘000) R(‘000)
Cash flows from operating activities 69 794 70 621
Movement in working capital (41 795) 9 725
Finance income 4 992 6 754
Finance costs (4 183) (6 074)
Taxation paid (6 040) (15 798)
Net cash generated from operating activities 22 768 65 228
Cash flows from investing activities
Expenditure to maintain operating capacity
Property, plant and equipment acquired (14 106) (14 230)
Intangible assets acquired - (446)
Proceeds on disposals of property, plant and
equipment 23 596 3 996
Proceeds on disposals of non-current assets
held for sale - 6 592
Acquisition of non-controlling interest without a
change in control (628) -
Expenditure for expansion
Acquisition of subsidiaries (15 795) 1
Disposal of subsidiaries 3 063 46 442
Internally generated intangible assets (17 367) (7 376)
Acquisition of investments (500) (90)
Loans receivable repaid 10 068 12 066
Net cash (used)/generated in investing activities (11 669) 46 955
Cash flows from financing activities
Treasury shares repurchased (12 162) (8 466)
Dividends paid to non-controlling interests (9 729) (1 406)
Borrowings raised/(repaid) 1 200 (9 261)
Deferred vendor payments raised 28 180 -
Share options exercised 370 -
Net cash generated/(used) in financing activities 7 859 (19 133)
Increase in cash and cash equivalents 18 958 93 050
Cash and cash equivalents at the beginning of
the period 107 727 14 677
Cash and cash equivalents at the end of the period 126 685 107 727
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Share Share Revalu- Foreign Deal Share Retained
capital premium ation currency diffe- based earnings
reserve transla- rences payment
tion reserve reserve
reserve
R(‘000) R(‘000) R(‘000) R(‘000) R(‘000) R(‘000) R(‘000)
Balance at 1 943 186 079 11 099 29 1 000 4 525 83 014
January 2012
Total comprehens-
ive income for
the period
Profit for the - - - - - - 11 603
period
Other comprehens- - - (1 129) 99 - - 185
ive income
Foreign currency - - - 99 - - -
translation diff-
erences
Revaluation - - (944) - - - -
of property
Realisation of - - (185) - - - 185
revaluation reserve
through depreciation
Total comprehens- - - (1 129) 3 - - 11 788
ive income for
the period
Transactions with (15) (7 838) - - - (789) 361
owners recorded
directly in equity
Treasury shares (15) (8 451) - - - - -
purchased
Share-based - 613 - - - (789) 361
payment transactions
Dividends paid 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 1 000 3 736 95 392
Balance at 1 928 178 241 9 970 128 1 000 3 736 95 392
January 2013
Total comprehens-
ive income for
the period
Profit for the - - - - - - 51 190
period
Other comprehens- - - (75) 592 - - 75
ive income
Foreign currency - - - 592 - - -
translation diff-
erences
Realisation of - - (75) - - - 75
revaluation reserve
through depreciation
Total comprehens- - - (75) 592 - - 51 265
ive income for
the period
Transactions with 62 (11 653) (9 406) - - 374 9 553
owners, recorded
directly in equity
Capitalisation issue 141 (141) - - - - -
Treasury shares (80) (12 082) - - - - -
purchased
Share-based 1 570 - - - 374 147
payment transactions
IFRS 3 Business - - - - - - -
Combinations
Dividends paid - - - - - - -
to non-controlling
interests
Derecognition of - - (9 406) - - - 9 406
subsidiary
Changes in owner- - - - - - - -
ship interests in
subsidiaries
Acquisitions on - - - - - - (280)
non-controlling
interests without
a change in control
Total transact- 62 (11 653) (9 406) - - 374 9 273
ions with owners
Balance at 31
December 2013 990 166 588 489 720 1000 4 110 155 930
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Total Non-con- Total
trolling Equity
interests
R(‘000) R(‘000) R(‘000)
Balance at 1 286 689 24 303 310 992
January 2012
Total comprehens-
ive income for
the period
Profit for the 11 603 (2 929) 8 674
period
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
through depreciation
Total comprehens- 10 758 (3 873) 6 885
ive income for
the period
Transactions with (8 281) (1 406) (9 687)
owners, directly
in equity
Treasury shares (8 466) - (8 466)
purchased
Share-based 185 - 185
payment transactions-
Dividends paid - (1 406) (1 406)
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
Balance at 1 289 395 18 654 308 049
January 2013
Total comprehens-
ive income for
the period
Profit for the 51 190 3 665 54 855
period
Other comprehens- 592 - 592
ive income
Foreign currency 592 - 592
translation diff-
erences
Total comprehens- 51 782 3 665 55 447
ive income for
the period
Transactions with (11 070) (21 720) (32 790)
Owners, directly
In equity
Treasury shares (12 162) - (12 162)
purchased
Share-based 1 092 - 1 092
payment transact-
Dividends paid to - (9 729) (9 729)
non-controlling
interests
Acquisition of - 906 906
Subsidiaries
Derecognition of - (12 897) (12 897)
Subsidiary
Changes in owner-
ship interests in
subsidiaries
Acquisitions on (280) (628) (908)
non-controlling
interests without
a change in control
Total transact- (11 350) (22 348) (33 698)
ions with owners
Balance at 31 329 827 (29) 329 798
December 2013
NOTES TO THE GROUP FINANCIAL INFORMATION
1. Basis of preparation
These reviewed condensed consolidated interim financial statements for the
12 months ended 31 December 2013 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 Companies Act, 2008 (Act 71
of 2008), as amended. The reviewed condensed consolidated interim
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.
All financial information presented in South African Rand has been rounded
to the nearest thousand.
2. Significant accounting policies
These reviewed 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 audited annual financial statements for
the year ended 31 December 2012.
3. Review opinion
These condensed consolidated interim financial results for the 12 month
period ended 31 December 2013 have been reviewed by the companies’
external auditors, Nexia SAB&T, who expressed an unmodified review
conclusion. A copy of the auditors’ review conclusion is available for
inspection at the company’s registered offices.
4. Segment information
SEGMENT REVIEW
Reviewed Audited
12 months year
ended ended
31 December 31 December
2013 2012
R(‘000) R(‘000)
NOSA
External sales 274 807 228 689
MECS Africa
External sales 279 645 296 056
Deltec Power Distributors
External sales - 47 732
Sebata Municipal Solutions
External sales 144 863 106 690
MICROmega Securities
External sales 28 152 38 453
Holdings Company and consolidation eliminations
External sale 6 051 30 815
Internal sales (1 802) (2 405)
Total revenue 731 716 746 030
SEGMENT PROFIT/(LOSS)
Reviewed Audited
12 months year
ended ended
31 December 31 December
2013 2012
R(‘000) R(‘000)
NOSA 45 042 28 486
MECS Africa 10 035 188
Deltec Power Distributors - 9 251
Sebata Municipal Solutions 17 547 5 760
MICROmega Securities 2 960 9 225
Holdings Company and consolidation eliminations (24 394) (41 307)
Total profit 51 190 11 603
SEGMENT ASSETS
Reviewed Audited
as at as at
31 December 31 December
2013 2012
R(‘000) R(‘000)
NOSA 186 100 95 561
MECS Africa 59 440 39 240
Deltec Power Distributors - 39 837
Sebata Municipal Solutions 123 776 65 517
MICROmega Securities 59 495 56 636
Holdings Company and consolidation eliminations 32 051 181 700
Total assets 460 862 478 491
5. Business combinations
Amanzi Meters Pty Ltd
On 1 September 2013, the Group acquired a 51% interest in Amanzi Meters
Pty Ltd. Goodwill to the value of R0.7 million was accounted for. The
amount of net liabilities acquired amounted to R1.4 million and non-
controlling interest of R0.7 million was recognised.
NOSA Global Holdings
On 1 October 2013, the Group acquired 100% interest in NOSA Global
Holdings for a consideration of R35 million, which constitutes a small
related party transaction, and has been dealt with in terms of the JSE
regulations. Net assets acquired amounted to R7.9 million and intangible
assets to the value of R27.1 million was recognised.
Freshmark Systems Pty Ltd
On 1 December 2013, the Group acquired a 55% interest in Freshmark Systems
Pty Ltd for a consideration of R10.4 million. The fair value of net
assets acquired amounted to R3.5 million, which resulted in goodwill of
R8.5 million and non-controlling interest of R1.6 million being
recognised.
The fair value of assets acquired and liabilities assumed relating to the
above business combinations is subject to change should additional
information become available within the 12 month re-measurement period
from date of acquisition.
At period end the Group had not yet issued shares to the vendors of NOSA
Global Holdings Ltd and Freshmark Systems Pty Ltd and accordingly whilst
the Group is required to recognise the new issue of shares on date of
ownership for purposes of calculating the weighted average number of
shares in issue, the actual issued share capital at year end had not
increased.
6. Disposal of interest in Kyostax Pty Ltd
On 18 July 2013 the group disposed of 20% of the interest in Kyostax Pty
Ltd for a consideration of R4.1 million, which resulted in a loss of
control and Kyostax Pty Ltd being accounted for as an associate. This
event resulted in a loss of R0.6 million recorded in profit and loss and
the re-cycling of R9.4 million relating to the revaluation reserve
accumulated in equity.
7. Corporate governance
MICROmega has embraced the recommendations of the King Report on
Governance and strives to provide reports to shareholders that are timely,
accurate, consistent and informative.
8. Capitalisation Issue
A capitalisation issue on 1 November 2013 was done in the ratio of 14
shares per 100 shares held. In terms of the appropriate accounting
treatment it was necessary to retrospectively adjust the weighted average
number of shares in issue.
9. Changes to the board of directors of MICROmega (“the Board”)
The following appointments were made to the Board during the period under
review:
- Grant Earl Jacobs (Independent Non-executive)
- Deborah Alicia Di Siena (Independent Non-executive)
- Tracey Wardle King (Non-executive)
10. Subsequent events
The acquisition of an 83.33% stake in USC Metering Pty Ltd was concluded
on 13 January 2014.
No other significant events have occurred, other than those highlighted in
Corporate activity in the period between the reporting date and the date
of this report.
11. Commentary on results
The Board is pleased with the growth in headline earnings per share of 74%
and basic earnings per share of 354%. We are now well positioned to
continue to grow in 2014. In prior years we exercised extreme prudence in
the valuation of our intangible assets by writing them off on an
accelerated basis. We are now adopting a conservative, but more realistic,
valuation of our development in new technology and this has caused the
disparity between the growth in headline and basic earnings per share.
The Group has finally emerged from the decade long negativity that had
dogged us as a result of the well-publicised tax dispute between our
chairman and SARS. There is a clearly defined and strong growth focus
throughout the group and executive management is committed to a long-term
investment plan with a balance between strong acquisitive growth and
organic growth. As part of our chairman’s settlement he was obliged to
transfer foreign operations previously owned by him to the Group. The
published results do not include any material contribution from these
operations but they are very scalable and strategically important
operations that will contribute materially to the Groups performance in
future periods.
By order of the Board
4 March 2014
Directors: DC King (Executive Chairman); IG Morris (Chief Executive
Officer); RB Dick (Financial Director); DSE Carlisle (Executive Director);
AW Swann (Lead Independent Non-Executive Director); RC Lewin (Independent
Non-Executive Director); PH Duvenhage (Independent Non-Executive
Director); GE Jacobs (Independent Non-Executive Director); DA Di Siena
(Independent Non-executive Director); TW King (Non-Executive Director)
Company Secretary: Acorim Proprietary Limited
Auditors: Nexia SAB&T
Transfer Secretaries: Computershare Investor Services Proprietary Limited
Sponsor: Merchantec Capital
Attorneys: Di Siena Inc
Date: 05/03/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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