Future growth will come from its investments in the IT and support services sectors, says investment holding company MICROmega.
MICROmega has operating investments in five sectors: automotive, financial services, support services, IT, and property investment, which it launched last year.
MICROmega yesterday reported its results for the last financial year. It said revenue dropped to R682 million, from R747 million in 2009. Its profit for the year also fell, going from R17.7 million to R7.8 million.
“The period under review was a year in which we consolidated our existing operations, while preparing to re-focus our activities back to our more preferred 'intellectual property'-driven businesses,” the company says.
It decided not to grow through acquisitions as “revenue generation in our current sectors remained volatile and sustainability was under question”. Trading conditions improved in the second half of the year, but MICROmega is not convinced the recovery is sustainable.
Its results were impacted by an underperformance in the automotive sector, which led to trading losses of R16.3 million. It also impaired its investment in the automotive sector by R9.1 million, leading to a loss of R25.4 million for the sector during the year.
MICROmega has now discontinued operations in the sector, and says shareholders will not see any further negative impact on the operating earnings of the group, as it has impaired the unit and discontinued its activities.
Future growth prospects can be seen in its IT and support services operations, the company notes. “In these two sectors, we are pleased to report that market conditions remain kind and our challenge is to secure the requisite skills to meet our clients' expectations and demands.”
MICROmega says the IT sector continuously requires investment in product development and it invested substantially in that area during the year. “This investment is expected to assist in growing earnings in 2011 and beyond.”
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