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CND
CND
CND - Conduit Capital Limited - Audited results for the 18 months ended 31
August 2007 and notice of annual general meeting
Conduit Capital Limited
Incorporated in the Republic of South Africa
(Registration Number 1998/017351/06)
Share code: CND & ISIN: ZAE000073128
("Conduit Capital" or "the company")
AUDITED RESULTS FOR THE 18 MONTHS ENDED 31 AUGUST 2007 AND NOTICE OF ANNUAL
GENERAL MEETING
Shareholders are advised that the audited financial statements for the 18 months
ended 31 August 2007 will be posted on 3 March 2008. These financial statements
contain no material modifications, other than those detailed below, to the
reviewed results that were published on 30 November 2007. Grant Thornton have
now completed their audit of the company`s annual financial statements and their
report is available for inspection at Conduit Capital`s registered office.
The audited financial statements differ from the reviewed financial statements,
published on 30 November 2007, for the following reasons:
* loans that do not have a specified payment date were reclassified from non-
current to current liabilities;
* a loan made by the minority shareholders of a subsidiary has been
reclassified from non-current liabilities to minority shareholders`
interest; and
* there was a reclassification between some of the operating expense line-
items.
The above items are merely reclassifications and had no impact on earnings,
headline earnings, or net asset value.
AUDITED RESULTS FOR THE 18 MONTHS ENDED 31 AUGUST 2007
CONSOLIDATED INCOME STATEMENT
Audited 18 Audited year ended
months ended 31 28 Feb 2006 R`000
Aug 2007 R`000
Gross revenue 1 566 513 6 545
Net insurance revenue 241 137 -
Other operating revenue 87 288 6 545
Net revenue 328 425 6 545
Operating expenses
- Administration and other (48 185) (5 872)
expenses
- Direct expenses - Insurance (193 493) -
- Depreciation (2 681) (307)
- Employee costs (66 236) (4 380)
Operating profit (loss) 17 830 (4 014)
Income (loss) from associates 918 (152)
Investment income 37 675 2 447
Other income 360 -
Finance charges (8 625) (82)
Impairment of goodwill (17) (22 219)
Profit (loss) before taxation 48 141 (24 020)
Taxation (16 060) 2 072
Profit (loss) for the period 32 081 (21 948)
Attributable to:
Equity holders of the parent 21 324 (22 083)
Minority interest 10 757 135
Profit (loss) for the period 32 081 (21 948)
Earnings (loss) per share 13,54 (25,71)
(cents)
Headline earnings per share 11,67 0,17
(cents)
Fully diluted earnings (loss) 11,70 (25,71)
per share (cents)
Fully diluted headline 10,08 0,12
earnings per share (cents)
SEGMENTAL ANALYSIS
Head Conduit Conduit Conduit Consoli-
office & Insuran- Direct Conduit Financial dated
Treasury ce & Risk R`000 Private Services R`000
R`000 services Equity (2) R`000
(1) R`000 R`000
Audited - 18
months ended
31 August
2007
Gross 513 1 508 42 283 2 889 12 173 1 566
revenue 655 513
Net revenue 513 270 567 42 283 2 889 12 173 328 425
Profit (10 714) 43 194 10 038 1 637 3 986 48 141
(loss)
before
taxation
Depreciation 133 1 739 654 120 35 2 681
Total assets 22 561 1 047 965 24 397 941 93 620 1 189
484
Total (3 064) (907 702) (10 359) (741) (77 303) (999 169)
liabilities
Capital 148 12 835 2 818 2 567 16 370
expenditure
Audited -
Year ended
28 February
2006
Gross 3 121 - 1 614 1 810 - 6 545
revenue
Net revenue 3 121 - 1 614 1 810 - 6 545
Loss before (20 584) - (3 146) (290) - (24 020)
taxation
Depreciation 165 - 30 112 - 307
Total assets 11 270 - 16 740 1 621 - 29 631
Total (3 500) - (3 415) (911) - (7 826)
liabilities
Capital 119 - 49 3 - 171
expenditure
(1) 10,5 months of earnings included.
(2) Six months of earnings included.
CONSOLIDATED BALANCE SHEET
Audited 31 Audited 28
Aug 2007 Feb 2006
R`000 R`000
ASSETS
Non-current assets 194 060 16 703
- Property, vehicles and 38 083 1 315
equipment
- Intangible assets 78 546 10 800
- Loans receivable 739 -
- Deferred taxation 4 534 569
- Investments in associates 3 478 181
- Investments held at fair 68 804 3 838
value
Current assets 995 424 12 928
- Insurance assets 652 791 -
- Investments held at fair 4 723 1 194
value
- Trade and other receivables 151 151 6 468
- Taxation 7 117 -
- Funds at call, bank balances 179 642 5 266
and cash
Total assets 1 189 484 29 631
EQUITY AND LIABILITIES
Shareholders` equity and 230 509 21 805
reserves
- Ordinary share capital and 170 315 10 130
share premium
- Retained income (Accumulated 807 (20 517)
losses)
- Share based payment reserve 288 -
- Vendors for equity 18 905 30 479
190 315 20 092
- Minority shareholders` 40 194 1 713
interest
Non-current liabilities 77 800 1 767
- Policyholder liabilities 22 587 -
under insurance contracts
- Interest bearing borrowings 45 968 -
- Deferred taxation 6 545 -
- Other non-current 2 700 1 767
liabilities
Current liabilities 881 175 6 059
- Insurance liabilities 726 664 -
- Vendors for cash 4 825 -
- Trade and other payables 110 283 4 624
- Current portion of interest 36 865 500
bearing borrowings
- Taxation 2 370 910
- Bank overdraft 168 25
Total equity and liabilities 1 189 484 29 631
Net asset value per share 85,81 21,20
(cents)
Tangible net asset value per 50,40 9,80
share (cents)
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Audited 18 Audited year
months ended ended
31 Aug 2007 28 Feb 2006
R`000 R`000
Net cash flows from operating activities (71 679) (2 706)
Net cash flows from investing activities (118 293) (893)
Net cash flows from financing activities 193 367 5 782
Total cash movement for the period 3 395 2 183
Cash at the beginning of the period 5 241 1 737
Cash acquired 170 838 1 321
Total cash at the end of the period 179 474 5 241
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Retained Other Minority Total
capital income R`000 reserves interest R`000
and R`000 R`000
share
premium
R`000
Balance at 1 March 4 348 1 566 - - 5 914
2005
Proceeds from issue 5 782 - - - 5 782
of shares
Acquisition of - - 30 479 1 578 32 057
interest in
subsidiaries
Loss for the year - (22 083) - 135 (21 948)
Balance at 1 March 10 130 (20 517) 30 479 1 713 21 805
2006
Net proceeds from 128 841 - (11 574) - 117 267
issue of shares
Acquisition of 31 344 - - 16 302 47 646
interest in
subsidiaries
Profit for the - 21 324 - 10 757 32 081
period
Equity options - - 288 - 288
issued to executives
Loans advanced - - - 13 517 13 517
Dividends paid - - - (2 095) (2 095)
Balance at 31 August 170 315 807 19 193 40 194 230 509
2007
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 Change of year-end
As previously disclosed, Conduit Capital`s board of directors passed a
resolution on 1 November 2006 in terms whereof it changed its year-end from
the last day of February to 31 August to bring it in line with the year-end
of Conduit Risk and Insurance Holdings (Proprietary) Limited (previously
CICL Investment Holdings (Proprietary) Limited) ("CRIH"), the Conduit
group`s largest subsidiary, which was acquired with effect from 16 October
2006. Accordingly, these audited financial statements are presented for the
18 months ended 31 August 2007 and care should be taken when comparing
these results with the results for prior years, as the periods under
comparison will differ. The first full year of results for Conduit Capital
in its current format will be for the year ended 31 August 2008.
2 Basis of preparation and report of the independent auditors
These summarised consolidated audited results have been prepared using
accounting policies compliant with IAS 34: Interim Financial Reporting and
International Financial Reporting Standards ("IFRS"). The accounting
policies used are consistent with those of the prior period.
3 Changes in share capital
During the period under review:
3.1 the authorised share capital was increased to 500 million ordinary shares
with a par value of one cent each;
3.2 a total of R160,185 million in additional share capital and premium were
raised: R119,628 million by way of the issue of 91,544 million shares for
cash and R40,557 million by way of the issue of 36,865 million shares in
part payment of acquisitions that were made;
3.3 the number of treasury shares held by the Conduit group increased by 1,415
million.
3.4 Details of shares in issue as at 31 August 2007 are as follows:
31 Aug 2007 28 Feb 2006
`000 `000
Number of shares in issue 221 777 94 782
- Shares in issue 227 880 99 470
- Shares held as treasury shares (6 103) (4 688)
Weighted average number of 157 463 85 901
shares
- Shares in issue 162 628 90 589
- Shares held as treasury shares (5 165) (4 688)
Fully diluted weighted average 182 294 122 840
number of shares
- Shares in issue 187 459 127 528
- Shares held as treasury shares (5 165) (4 688)
4 Reconciliation of headline earnings
Audited 18 Audited year
months ended 31 ended 28 Feb
Aug 2007 R`000 2006
R`000
Attributable profit (loss) for the 21 324 (22 083)
period
Loss on disposal of vehicles and 13 6
equipment (net of tax)
Profit on acquisition of subsidiaries (360) -
Revaluation of investment property (2 621) -
(net of tax)
Impairment of goodwill 17 22 219
Headline earnings 18 373 142
5 Business combinations
The 100% investment in CRIH, the holding company of a diversified insurer and
risk services group, was acquired through a series of transactions during the
period under review with an initial 72,5% interest being acquired with effect
from 16 October 2006. The total consideration for the acquisition was R122,7
million. In addition, a 50,05% interest in Gateway Capital Limited, a company
that provides short-term commercial bridging finance, offering specialised
commercial, asset and property finance was acquired on 1 March 2007 for a
consideration of R14,073 million.
The original purchase consideration for CRIH has been reduced by R27,89
million as a result of the final determination of the fair value of the
assets and liabilities of CRIH on acquisition. This adjustment has been
included in the numbers reported above.
The acquisitions were settled through the issue of 23,926 million ordinary
shares for R31,345 million, the issue of R2,75 million in redeemable
preference shares, the capitalisation of investment profits of R9,554 million
and payment in cash of R93,124 million. Intangible assets, primarily
goodwill, arising from the acquisitions amount to R64,082 million.
6 Commitments
The estimated future commitments of the Conduit group under non-cancellable
operating leases for office premises and equipment are as follows:
31 Aug 2007 28 Feb 2006
R`000 R`000
- Within one year 8 149 997
- In second to fifth years, 15 467 1 732
inclusive
23 616 2 729
7 Post balance sheet events
There were no material post balance sheet events.
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the annual general meeting of shareholders of
Conduit Capital will be held at 10:00 on Monday, 31 March 2008 in the boardroom
of the company, 1st Floor, 3 Melrose Square, Melrose Arch, Melrose North,
Johannesburg, 2076, to transact the business stated in the notice of the annual
general meeting, which is contained in the Annual Report.
29 February 2008
Directors:
Executive directors: Jason D Druian (CEO), Paul Diamond, Lourens E
Louw, Stanley D Shane, Robert L Shaw
Non-executive directors: Reginald S Berkowitz (Chairman), Scott M Campbell,
Megan Kruger, Gunter Z Steffens OBE
Company secretaries:
Probity Business Services (Proprietary) Limited
Third Floor, JHI House, 11 Cradock Avenue
Rosebank, 2196
Registered address:
1st Floor, 3 Melrose Square
Melrose Arch, 2076
PO Box 97, Melrose Arch, 2076
Telephone: (011) 684-1055/6/7
Facsimile: (011) 684-1058
Transfer secretaries:
Computershare Investor Services 2004 (Proprietary) Limited
(Registration number: 2004/003647/07)
Ground Floor, 70 Marshall Street
Johannesburg, 2001
Auditors:
Grant Thornton
Chartered Accountants (SA)
Registered Auditors
Member of Grant Thornton International
Sponsor:
Merchant Sponsors (Proprietary) Limited
Date: 03/03/2008 10:50:01 Produced by the JSE SENS Department.
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