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Audited Provisional Condensed Annual Financial Statements For The Fifteen Month Period Ended 31 March 2014
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”)
Audited Provisional Condensed Consolidated Financial Statements For The
Fifteen Month Period Ended 31 March 2014
CONDENSED GROUP STATEMENT OF PROFIT AND LOSS
Audited Audited
15 months 12 months
Ended Ended
31 March 31 December
2014 2012
R’000 R’000
Revenue 907 532 746 030
Revenue from continuing operations 907 532 694 907
Revenue from discontinuing operations - 51 123
Cost of sales (549 241) (473 937)
Gross profit 358 291 272 093
Gross profit from continuing operations 358 291 264 497
Gross profit from discontinuing operations - 7 596
Other income 119 237 9 694
Distribution expenses (5 692) (4 481)
Admin expenses (304 337) (263 619)
Results from operations 167 499 13 687
Results from continuing operations 167 499 5 410
Results from discontinuing operations - 8 277
Finance income 6 450 6 754
Finance cost (5 026) (6 074)
Share of profit of equity accounted associate 1 392 2 060
Profit before tax 170 315 16 427
Profit before tax from continuing operations 170 315 10 694
Profit from discontinuing operations - 5 733
Tax expense (33 051) (7 753)
Profit for the period 137 264 8 674
Profit from continuing operations 137 264 3 757
Profit from discontinuing operations - 4 917
Profit attributable to:
Owners of the parent 134 135 11 603
Non-controlling interest 3 129 (2 929)
Attributable earnings per share (cents)
Basic 130.44 10.77
Diluted 128.37 10.65
CONDENSED GROUP STATEMENT OF OTHER COMPREHENSIVE INCOME
Audited Audited
15 months 12 months
Ended Ended
31 March 31 December
2014 2012
R’000 R’000
Profit for the period 137 264 8 674
Other comprehensive income
Foreign currency translation differences 1 175 99
Revaluation of property - (2 320)
Income tax on other comprehensive income - 432
Other comprehensive income for the period 1 175 (1 789)
Total comprehensive income for the period 138 439 6 885
Total comprehensive income attributable to:
Owners of the parent 135 310 10 758
Non-controlling interests 3 129 (3 873)
Total comprehensive income for the period 138 439 6 885
Reconciliation of headline earnings:
Profit attributable to ordinary shareholders 134 135 11 603
Loss/(Profit) on disposal of property, plant
and equipment 24 (235)
Impairment of intangible assets - 18 684
Loss/(Profit) on disposal of investments in
subsidiaries 653 (6 893)
Impairment of loans receivable 1 405 5 778
Impairment of investments in associates - 230
Impairment of property, plant and equipment - 271
Impairment of other investments - 1 080
Reversal of impairment of loans receivable (3 504) -
Bargain purchase on acquisition (68 023) -
Headline earnings 64 690 30 518
Headline earnings per share (cents) 62.91 28.32
Weighted average number of shares (000’s) 102 830 107 772
Diluted weighted average number of shares
(000’s) 104 493 108 947
Total number of shares in issue (000’s) 105 184 92 765
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Audited Audited
As at As at
31 March 31 December
2014 2012
R’000 R’000
ASSETS
Non-current assets 414 081 237 998
Property, plant and equipment 47 718 143 910
Intangible assets 305 760 48 471
Investments in associates 10 879 27
Other investments 208 163
Loans receivable 9 167 2 188
Deferred tax assets 40 349 43 239
Current assets 279 842 240 493
Inventories 13 292 2 542
Retirement benefit surplus - 1 881
Trade and other receivables 142 581 109 725
Tax receivable 7 455 -
Loans receivable 7 668 18 618
Cash and cash equivalents 108 846 107 727
TOTAL ASSETS 693 923 478 491
EQUITY AND LIABILITIES
EQUITY
Share capital and share premium 207 666 179 169
Non-distributable reserves 5 590 14 834
Retained earnings 240 863 95 392
Total equity attributable to owners of the
group 454 119 289 395
Non-controlling interests 50 150 18 654
Total equity
LIABILITIES 504 269 308 049
Non-current liabilities 57 227 69 835
Borrowings 11 491 55 960
Deferred vendor payments 3 484 -
Deferred tax liabilities 42 252 13 875
Current liabilities 132 427 100 607
Borrowings 4 351 12 901
Deferred vendor payments 3 849 534
Trade and other payables 117 364 80 369
Provisions - 5 904
Income tax payable 6 863 899
TOTAL EQUITY AND LIABILITIES 693 923 478 491
Net asset value per share (cents) 431.74 311.97
Net tangible asset value per share (cents) 141.05 259.71
CONDENSED GROUP STATEMENT OF CASH FLOWS
Audited Audited
15 months 12 months
Ended Ended
31 March 31 December
2014 2012
R’000 R’000
Cash flows from operating activities 74 129 55 503
Movement in working capital (7 249) 9 725
Cash flows from investing activities (46 837) 46 955
Net cash generated/(used) in financing (18 924) (19 133)
activities
Increase in cash and cash equivalents 1 119 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 108 846 107 727
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Share Share Revaluat Foreign Deal Share Retained Total Non- Total
capital premium ion currency difference based earnings controlling equity
reserve translation reserve payment interest
reserve reserve
R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
Balance at 1 January 2012 943 186 079 11 099 29 1 000 4 525 83 014 286 689 24 303 310 992
Total comprehensive income for
the period
Profit for the period - - - - - - 11 603 11 603 (29 29) 8 674
Other comprehensive income - - (1 129) 99 - - 185 (845) (944) ( 1 789)
Foreign currency translation
differences - - - 99 - - - 99 - 99
Revaluation of property - - (944) - - - - (944) (944) (1 888)
Realisation of revaluation
reserve through depreciation - - (185) - - - 185 - - -
Total comprehensive income for
the period - - (1 129) 99 - - 11 788 10 758 (3 873) 6 885
Transactions with owners
recorded directly in equity (15) (7 838) - - - (789) 361 (8 281) (1 406) (9 687)
Treasury shares purchased
(15) (8 451) - - - - - (8 466) - (8 466)
Share based payment
transactions - 613 - - - (789) 361 185 - 185
Dividends paid to non-
controlling interest - - - - - - - - (1 406) (1 406)
Changes in ownership interest
in subsidiaries - - - - - - 229 229 (370) (141)
Acquisitions on non-
controlling interest without a
change in control - - - - - - 229 229 (370) (141)
Total transactions with owners
(15) (7 838) - - - (789) 590 (8 052) (1 776) (9 828)
Balance at 31 December 2012 928 178 241 9 970 128 1 000 3 736 95 392 289 395 18 654 308 049
Balance at 1 January 2013 928 178 241 9 970 128 1 000 3 736 95 392 289 395 18 654 308 049
Total comprehensive income for
the period
Profit for the period - - - - - - 134 135 134 135 3 129 137 264
Other comprehensive income - - (75) 1 175 - - 75 1 175 0 1 175
Foreign currency translation
differences - - - 1 175 - - - 1 175 - 1 175
Realisation of revaluation
reserve through depreciation - - (75) - - - 75 - - -
Total comprehensive income for
the period - - (75) 1 175 - - 134 210 135 310 3 129 138 439
Transactions with owners
recorded directly in equity 124 28 373 (9 406) - - (938) 11 541 29 694 28 970 58 664
Capitalisation issue 124 (124) - - - - - - - -
Treasury shares purchased (12
(45) (12 098) - - - - - 143) - (12 143)
Share based payment
transactions 3 2 503 - - - (938) 2 135 3 703 - 3 703
Dividends paid to non-
controlling interest - - - - - - - - (10 566) (10 566)
Acquisition of subsidiaries 42 38 092 - - - - - 38 134 52 433 90 567
Derecognition of subsidiary - - (9 406) - - - 9 406 - (12 897) (12 897)
Changes in ownership interest
in subsidiaries
Acquisitions on non-
controlling interest without a
change in control - - - - - - (280) (280) (603) (883)
Total transactions with owners 124 28 373 (9 406) - - (938) 11 261 29 414 28 367 57 781
Balance at 31 March 2014 1 052 206 614 489 1 303 1 000 2 798 240 863 454 119 50 150 504 269
NOTES TO THE GROUP FINANCIAL INFORMATION
1. Basis of preparation
These audited provisional condensed consolidated financial statements for
the fifteen months ended 31 March 2014 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 SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Reporting Pronouncements as
issued by Financial Reporting Standards Council, IAS 34 – Interim Financial
Reporting, the Listings Requirements of the JSE Limited and the requirements
of the Companies Act of South Africa (Act 71 of 2008), as amended. The
audited provisional 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.
The audited provisional condensed consolidated financial statements are
extracted from audited information and is available for inspection at the
Company’s registered office.
The directors take full responsibility for the preparation of the
provisional report and the financial information has been correctly
extracted from the underlying audited consolidated financial information.
All financial information presented in South African Rand has been rounded
to the nearest thousand.
2. Significant accounting policies
These audited provisional condensed consolidated 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. Audit opinion
The provisional consolidated 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.
4. Segment information
Audited Audited
15 months 12 months
Ended Ended
31 March 31 December
2014 2012
SEGMENT REVENUE
NOSA 330 426 228 689
MECS 340 431 296 056
Deltec Power Distributors - 47 732
IT Group 205 215 106 690
Securities Group 33 162 38 453
Holdings and consolidated
- Internal (15 610) (2 405)
- External 13 907 30 815
Total revenue 907 531 746 030
SEGMENT PROFIT / (LOSS)
NOSA 59 303 28 486
MECS 11 988 188
Deltec Power Distributors - 9 251
IT Group 24 701 5 760
Securities Group 1 750 9 225
Holdings and consolidated 36 393 (41 307)
Total profit 134 135 11 603
SEGMENT ASSETS
NOSA 358 769 95 561
MECS 67 605 39 240
Deltec Power Distributors - 39 837
IT Group 183 433 65 517
Securities Group 61 426 56 636
Holdings and consolidated 22 690 181 700
Total assets 693 923 478 491
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 Ltd
On 1 October 2013, the Group acquired 100% interest in NOSA Global Holdings
Ltd for a consideration of R35 million which constitutes a small related
party transaction and has been concluded in line with the JSE Listings
Requirements. NOSA Global Holdings has a 70% shareholding NOSA Shenzhen, an
operating company in the People’s Republic of China. The fair value of NOSA
Global Holdings has been valued at R181.3 million. This resulted in
a bargain purchase of R68.0 million in profit and loss.
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 a non-controlling interest of R1.6 million being
recognised.
USC Metering (Pty) Ltd
On 1 January 2013, the Group acquired a 83.3% interest in USC Metering (Pty)
Ltd for a consideration of R58.5 million. The fair value of the net assets
acquired amounted to R44.0 million, which resulted in goodwill of
R21.7 million and non-controlling interest of R7.3 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.
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 now 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
No other significant events have occurred in the period between the
reporting date and the date of this report.
11. Commentary on results
On any comparative basis the results, by all measures, are excellent.
However, investors should exercise caution when assessing the Group’s
performance based on the comparative figures. We have completed the
previously announced change in year-end and, in addition, the prior period
results were impeded by the long-standing dispute between our main
shareholder and the South African authorities. Attributable earnings have
been substantially boosted by one-off benefits from the acquisition of
related international businesses that arose as a result of this settlement.
Furthermore, HEPS for the period being reported upon benefited from 6 months
of unfettered trading and corporate activity following the successful
conclusion of this settlement.
What is of importance is that the Board has good visibility into the
anticipated Group performance for the coming year and is pleased with the
business climate that the Group companies are presently enjoying. All Group
companies are strategically positioned to take advantage of changes and
developments within our customer base- both locally and internationally.
Strong growth will continue.
The Group’s financial health has allowed the Board to declare a gross
dividend of 20 cents per share while still retaining a level of funding that
comfortably meets the growth requirements for the present financial year.
A major focus of the Board going forward will be on diversifying and
expanding the shareholder base and, in the process, increasing the liquidity
of the share. It plans to achieve this by issuing additional shares as part
of our ongoing acquisition strategy.
12. Cash dividend
Notice is hereby given that the directors have declared a final gross cash
dividend of 20 cents for the financial year ended 31 March 2014, which is
based on the dividend policy and adjusted for withholding tax. The final
dividend has not been included as a liability in these provisional condensed
consolidated financial statements as it was declared subsequent to year end.
The final dividend for March 2014 is payable to all shareholders on the
Register of Members on Friday, 4 July 2014. In terms of the dividends tax,
effective 1 April 2012, the following additional information is disclosed:
- the local dividend tax rate is 15%;
- the dividends will be payable from income reserves;
- no STC credits have been utilised. Accordingly, the dividend to utilise
in determining the dividends tax is 20 cents per share;
- the dividend tax to be withheld by the Company amounts to 3 cents per
share;
- therefore the net dividend payable to shareholders who are not exempt
from dividends tax amounts to 17 cents per share, while the gross
dividend payable to shareholders who are exempt from dividends tax
amounts to 20 cents per share;
- the issued share capital of the Company at the declaration date
comprises 114 915 089 ordinary shares; and
the Group’s income tax reference number is 9457/323/84/9
Declaration date: Thursday, 12 June 2014
Last day to trade: Friday, 27 June 2014
Shares trade ex-dividend: Monday, 30 June 2014
Record date: Friday, 4 July 2014
Payment date: Monday, 7 July 2014
Share certificates may not be dematerialised or rematerialised between
Monday, 30 June 2014 and Friday, 4 July 2014, both days inclusive.
By order of the Board
12 June 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: 12/06/2014 02:54:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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