Unaudited Condensed Consolidated Interim Results for the Six Months Ended 30 September 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”) UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014 CONDENSED GROUP STATEMENT OF PROFIT AND LOSS Unaudited Unaudited Audited 6 months 6 months 15 months ended ended ended 30 September 30 June 31 March 2014 2013 2014 R’000 R’000 R’000 Revenue 484 165 372 264 907 532 Cost of sales (253 555) (232 950) (549 241) Gross profit 230 610 139 314 358 291 Other income 8 677 16 750 119 237 Distribution expenses (1 851) (2 167) (5 692) Administration expenses (162 000) (119 800) (304 337) Results from operations 75 436 34 097 167 499 Finance income 2 660 2 199 6 450 Finance cost (1 179) (3 073) (5 026) Share of profit of equity accounted associate 649 123 1 392 Profit before tax 77 566 33 346 170 315 Tax expense (20 278) (7 693) (33 051) Profit for the period 57 288 25 653 137 264 Profit from continuing operations 57 288 18 550 137 264 Profit from discontinued operations - 7 103 - Profit attributable to: Owners of the parent 48 821 24 062 134 135 Non-controlling interest 8 467 1 591 3 129 CONDENSED GROUP STATEMENT OF OTHER COMPREHENSIVE INCOME Unaudited Unaudited Audited 6 months 6 months 15 months ended ended ended 30 September 30 June 31 March 2014 2013 2014 R’000 R’000 R’000 Profit for the period 57 288 25 653 137 264 Other comprehensive income: Foreign currency translation differences 4 817 718 1 175 Total comprehensive income for the period 62 105 26 371 138 439 Total comprehensive income attributable to: Owners of the parent 53 638 24 780 135 310 Non-controlling interests 8 467 1 591 3 129 Reconciliation of headline earnings: Profit attributable to owners of the parent 48 821 24 062 134 135 (Profit)/Loss on disposal of property, plant and equipment (5) (30) 24 Loss on disposal of investments in subsidiaries - - 653 Impairment of loans receivable - - 1 405 Reversal of impairment of loans receivable - - (3 504) Bargain purchase on acquisition - - (68 023) Headline earnings 48 816 24 032 64 690 Earnings per share: Headline earnings per share (cents) 45.96 22.57 62.91 Basic earnings per share (cents) 45.96 22.60 130.44 Diluted earnings per share (cents) 45.06 22.35 128.37 Weighted average number of shares (000’s) 106 214 106 463 102 830 Diluted weighted average number of shares (000’s) 108 342 107 637 104 493 Total number of shares in issue (000’s) 110 311 104 962 105 184 CONDENSED GROUP STATEMENT OF FINANCIAL POSITION Unaudited Unaudited Audited As at As at As at 30 September 30 June 31 March 2014 2013 2014 R’000 R’000 R’000 ASSETS Non-current assets 497 463 231 102 414 081 Property, plant and equipment 52 867 124 049 47 718 Intangible assets 369 674 52 241 305 760 Investments in associates 11 528 161 10 879 Other investments 208 163 208 Loans receivable 3 779 4 339 9 167 Deferred tax assets 59 407 50 149 40 349 Current assets 415 988 257 399 279 842 Inventories 19 506 3 218 13 292 Trade and other receivables 224 512 119 915 142 581 Tax receivable 7 033 - 7 455 Loans receivables 12 656 14 399 7 668 Cash and cash equivalents 152 281 119 867 108 846 TOTAL ASSETS 913 451 488 501 693 923 EQUITY AND LIABILITIES EQUITY 601 920 319 301 504 269 Share capital and share premium 257 349 174 265 207 666 Non-distributable reserves 11 327 15 408 5 590 Retained earnings 268 548 119 902 240 863 Non-controlling interests 64 696 9 726 50 150 LIABILITIES Non-current liabilities 89 504 68 061 57 227 Borrowings 13 245 59 272 11 491 Deferred vendor payments 18 484 - 3 484 Deferred tax liabilities 57 775 8 789 42 252 Current liabilities 220 027 101 139 132 427 Trade and other payables 169 915 63 977 117 364 Bank overdraft - 23 821 - Borrowings 3 204 2 679 4 351 Tax payable 16 656 10 296 6 863 Deferred vendor payments 32 252 366 3 849 TOTAL EQUITY AND LIABILITIES 913 451 488 501 693 923 Net asset value per share (cents) 487.42 294.94 431.74 Net tangible asset value per share (cents) 152.30 245.17 141.05 CONDENSED GROUP STATEMENT OF CASH FLOWS Unaudited Unaudited Audited 6 months 6 months 15 months ended ended ended 30 September 30 June 31 March 2014 2013 2014 R’000 R’000 R’000 Cash flows from operating activities 71 133 21 982 74 129 Movement in working capital 19 641 (26 540) (7 249) Cash flows from investing activities (74 643) 15 150 (46 837) Cash flows from financing activities 27 304 (22 273) (18 924) Increase/(Decrease) in cash and cash equivalents 43 435 (11 681) 1 119 Cash and cash equivalents at the beginning of the period 108 846 107 727 107 727 Cash and cash equivalents at the end of the period 152 281 96 046 108 846 CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY Share Share Revaluation Foreign Deal difference Share Retained Total Non-controlling Total equity capital premium reserve currency reserve based earnings interest translation payment 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 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 - - - - - - 24 062 24 062 1 591 25 653 Other comprehensive income - - (73) 718 - - 73 718 - 718 Foreign currency translation differences - - - 718 - - - 718 - 718 Realisation of revaluation reserve through depreciation - - (73) - - - 73 - - - Transactions with owners recorded directly in equity (19) (4 885) - - - (71) 147 (4 828) (10 291) (15 119) Treasury shares purchased (19) (4 885) - - - - - (4 904) - (4 904) Share based payment transactions - - - - - (71) 147 76 - 76 Dividends paid to non-controlling interest - - - - - - - - (10 291) (10 291) Changes in ownership interest in subsidiaries Acquisitions on non-controlling interest without a change in control - - - - - - 228 228 (228) - Balance at 30 June 2013 909 173 356 9 897 846 1 000 3 665 119 902 309 575 9 726 319 301 Total comprehensive income for the period Profit for the period - - - - - - 110 073 110 073 1 538 111 611 Other comprehensive income - - (2) 457 - - 2 457 - 457 Foreign currency translation differences - - - 457 - - - 457 - 457 Realisation of revaluation reserve through depreciation - - (2) - - - 2 - - - Transactions with owners recorded directly in equity 143 33 258 (9 406) - - (867) 11 394 34 522 39 261 73 783 Capitalisation issue 124 (124) - - - - - - - - Treasury shares purchased (26) (7 213) - - - - - (7 239) - (7 239) Share based payment transactions 3 2 503 - - - (867) 1 988 3 627 - 3 627 Dividends paid to non-controlling interest - - - - - - - - (275) (275) 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 - - - - - - (508) (508) (375) (883) Balance at 31 March 2014 1 052 206 614 489 1 303 1 000 2 798 240 863 454 119 50 150 504 269 Total comprehensive income for the period Profit for the period - - - - - - 48 821 48 821 8 467 57 288 Other comprehensive income - - (32) 4 817 - - 32 4 817 - 4 817 Foreign currency translation differences - - - 4 817 - - - 4 817 - 4 817 Realisation of revaluation reserve through depreciation - - (32) - - - 32 - - - Transactions with owners recorded directly in equity 51 49 632 - - - 952 (21 168) 29 467 6 079 35 546 Treasury shares purchased (5) (6 707) - - - - - (6 712) - (6 712) Treasury shares sold 48 49 237 - - - - - 49 285 - 49 285 Share based payment transactions 1 359 - - - 952 - 1 312 - 1 312 Acquisition of subsidiaries 7 6 743 - - - - - 6 750 6 699 13 449 Dividends paid - - - - - - (21 168) (21 168) - (21 168) Dividends paid to non-controlling interest - - - - - - - - (620) (620) Balance at 30 September 2014 1 103 256 246 457 6 120 1 000 3 750 268 548 537 224 64 696 601 920 NOTES TO THE GROUP FINANCIAL INFORMATION 1. Basis of preparation These condensed consolidated 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 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, 2008 (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. The condensed consolidated financial results have been prepared under the supervision of Russell Dick, CA(SA), the Financial Director, and have not been reviewed by the Company’s auditors. All financial information presented in South African Rand has been rounded to the nearest thousand. 2. Significant accounting policies These 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 March 2014. 3. Segment information Unaudited Unaudited Audited 6 months 6 months 15 months ended ended ended 30 September 30 June 31 March 2014 2013 2014 R’000 R’000 R’000 SEGMENT REVENUE NOSA 158 816 120 562 330 426 MECS 124 477 163 495 340 431 IT Group 184 394 54 015 205 215 Securities Group 16 840 17 808 33 162 Holdings and consolidated - Internal (3 084) (6 523) (15 610) - External 2 722 22 907 13 908 Total revenue 484 165 372 264 907 532 SEGMENT PROFIT / (LOSS) NOSA 32 600 22 719 59 303 MECS 766 6 078 11 988 IT Group 32 877 5 346 24 701 Securities Group 1 410 2 387 1 750 Holdings and consolidated (18 832) (12 468) 36 393 Total profit 48 821 24 062 134 135 SEGMENT ASSETS NOSA 405 181 159 898 358 769 MECS 73 125 68 584 67 605 IT Group 272 923 71 576 183 433 Securities Group 75 231 64 465 61 426 Holdings and consolidated 86 991 123 978 22 690 Total assets 913 451 488 501 693 923 4. Business combinations Mubesko Africa (Pty) Ltd On 1 June 2014, the Group acquired a 50% interest in Mubesko Africa (Pty) Ltd for a consideration of R27 million. Goodwill to the value of R20.3 million was accounted for. The amount of net assets acquired amounted to R13.4 million and a non- controlling interest of R6.7 million was recognised. Action Training Academy (Pty) Ltd & Action Training Consulting (Pty) Ltd With effect from 1 September 2014, the Group acquired 100% interest in Action Trading Academy (Pty) Ltd & Action Trading Consulting (Pty) Ltd for a consideration of R30 million. The amount of net assets acquired amounted to R3.0 million and goodwill to the value of R26.9 million. The fair value of assets acquired and liabilities assumed relating to the above business combinations are subject to change should additional information become available within the 12 month re-measurement period from date of acquisition. 5. Subsequent events No other significant events have occurred in the period between the reporting date and the date of this report. 6. Changes to the board of directors of MICROmega (“Board”) There were no changes to the Board during the period under review. 7. Commentary on results The Board is pleased that the strong growth in profitability that the Group delivered to shareholders in the last financial year has carried forward into the first six months of this financial year with headline earnings per share having more than doubled to 45.96 cents per share, when compared to the first six months of the prior year. It is also pleasing that the earnings growth was fully translated into cash receipts. That is the ultimate test of the quality of any company’s earnings. Due to the change in our year end the results are not directly comparable however what is clear is that, following on from the commentary in our year end results, the Group continues to demonstrate that it is at the early stage of a rapid growth period. We have reasonable visibility into the remainder of this year and anticipate further growth in the second half of the year despite it including the seasonally low months of December and January. By order of the Board 29 October 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: 29/10/2014 01:20:00 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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