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CAE
CAE
CAE - Cape Empowerment Trust Limited - Reviewed provisional results for the year
ended 31 December 2009 salient dates for proposed merger between the company and
Dynamic Cables RSA Limited
Cape Empowerment Trust Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/014606/06)
(Share code CAE ISIN: ZAE000016952)
("CET" or "the company")
REVIEWED PROVISIONAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2009 SALIENT DATES
FOR PROPOSED MERGER BETWEEN THE COMPANY AND DYNAMIC CABLES RSA LIMITED
REVIEWED PROVISIONAL GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2009
Restated Restated
Reviewed Audited Audited
31 Dec 2009 31 Dec 2008 31 Dec 2007
R`000 R`000 R`000
Revenue (note 1) 57 928 174 290 154 155
Cost of sales (47 699) (122 595) (101 569)
Gross Profit 10 229 51 695 52 586
Other income 450 1 659 4 351
Operating expenses (35 296) (60 189) (56 324)
Operating profit before (24 617) (6 835) 613
capital items
Profit on sale of capital 140 11 293 10 215
assets
Loss on sale of capital (1 950) (17 452) (16 986)
assets
Impairments (note 2) (13 532) (35 081) (3 612)
Operating profit after (39 959) (48 075) (9 770)
capital items
Investment revenue 14 457 65 186 9 737
Fair value adjustments 628 (360 555) 198 420
(note 3)
Gain on bargain purchase 7 644 3 521 19 695
(note 4)
Loss on sale of non- - (10 873) -
current assets held for
sale
Finance costs (7 129) (77 636) (10 340)
(Loss) / profit before (24 359) (428 432) 207 742
taxation
Taxation 17 145 46 176 (46 326)
(LOSS) / PROFIT FOR THE (7 214) (382 256) 161 416
YEAR
Non-controlling interest (141) (71 232) 15 594
(LOSS) /PROFIT
ATTRIBUTABLE
TO OWNERS OF THE PARENT (7 073) (311 024) 145 822
Basic (loss)/earnings per (2.26) (91.70) 53.64
share (cents)
Headline (loss)/earnings (2.94) (84.42) 44.22
per share (cents)
Fully diluted (2.20) (89.14) 50.66
(loss)/earnings per share
(cents)
Fully diluted headline
(loss)/earnings
per share (cents) (2.87) (82.07) 41.79
REVIEWED PROVISIONAL GROUP STATEMENT OF FINANCIAL POSITION
As at 31 December 2009 Restated Restated
Reviewed Audited Audited
31 Dec 2009 31 Dec 2008 31 Dec 2007
R`000 R`000 R`000
ASSETS
Non-current assets 200 856 281 359 1 091 061
Investment property - 2 871 2 609
Property, plant and 3 142 13 923 16 577
equipment
Goodwill 5 957 13 120 29 603
Intangible assets - 9 235 9 235
Other financial assets 191 757 242 210 1 033 037
Current assets 155 432 207 078 139 555
Inventories (note 5) 85 371 19 629 23 253
Other financial assets 37 668 16 013 20 894
Trade and other 4 183 68 976 23 853
receivables
Cash and cash equivalents 28 210 102 460 71 555
Non-current assets held - - 17 734
for sale
TOTAL ASSETS 356 288 488 437 1 248 350
EQUITY AND LIABILITIES
EQUITY
Equity attributable to
owners of the parent
Share capital 280 405 301 735 234 220
Share based payment 401 - -
reserve
Treasury shares (42 599) (37 853) (4 113)
Retained income (30 684) (23 611) 298 072
Non-controlling interests 5 052 79 629 157 784
TOTAL EQUITY 212 575 319 900 685 963
LIABILITIES
Non-current liabilities 52 127 52 452 418 933
Other financial 40 392 19 068 337 343
liabilities (note 6)
Instalments sale 1 900 4 173 3 327
obligations
Deferred tax 9 835 29 211 78 263
Current liabilities 91 586 116 085 143 454
Loans from shareholders 1 831 10 708 18 068
Other financial 64 376 52 270 53 420
liabilities (note 6)
Current tax payable 4 740 17 358 18 997
Instalment sale 1 016 1 797 1 307
obligations
Trade and other payables 19 426 33 749 51 079
Dividend payable 197 203 -
Bank overdraft - - 583
TOTAL LIABILITIES 143 713 168 537 562 387
TOTAL EQUITY AND 356 288 488 437 1 248 350
LIABILITIES
Net Asset Value per share 72.3 69.0 162.2
(cents)
Net Tangible Asset Value 70.2 62.5 150.5
per share (cents)
REVIEWED PROVISIONAL GROUP STATEMENT OF CASH FLOWS
For the period ended Restated Restated
31 December 2009
Reviewed Audited Audited
31 Dec 2009 31 Dec 2008 31 Dec 2007
R`000 R`000 R`000
Cash flow from operating 41 203 (75 815) 20 541
activities
Cash (utilised)/ 34 098 (59 401) 25 588
generated by operations
Interest received 10 500 41 374 8 126
Dividends received 3 957 23 811 1 611
Interest paid (7 129) (77 636) (10 340)
Taxation paid (223) (3 963) (4 444)
Cash flows from investing (34 184) 409 431 (535 233)
activities
Purchase of property, (1 712) (5 385) (3 657)
plant and equipment
Proceeds from sale of 3 420 3 335 1 590
property, plant and
equipment
Purchase of investment - - (2 609)
property
Acquisition of subsidiary (1 000) - 10 486
Sale of business - 23 -
Acquisition of business (3 000) - -
Sale/ (purchase) of (13 623) 409 356 (513 064)
financial assets
Sale of capital assets - 12 693 6 741
Non-current assets held - 6 861 (17 734)
for sale
Loss on sale of financial - (17 452) (16 986)
liability
Deconsolidation of (18 269) - -
subsidiaries
Cash flow from financing (81 269) (302 128) 572 823
activities
Proceeds on issue of - 67 516 184 595
shares
Purchase of treasury (26 214) (33 740) (4 113)
shares
Proceeds/ (repayment) of (46 456) (319 425) 386 487
financial liabilities
Proceeds/ (repayment) of (7 877) (7 359) 6 420
shareholder loans
Proceeds/ (repayment) of (716) 1 336 (566)
instalment sale
obligations
Dividends paid (6) (10 456) -
Net (decrease)/ increase (74 250) 31 488 58 131
in cash and cash
equivalents
Cash resources at the 102 460 70 972 12 841
beginning of the period
Cash resources at the end 28 210 102 460 70 972
of the period
SEGMENTAL INFORMATION
For the period ended 31 December 2009
Security Gaming
and and
Property Services Leisure Other Total
Total assets 182 805 27 491 110 640 35 352 356 288
Total 64 486 17 374 30 865 30 988 143 713
liabilities
Total net 118 319 10 117 79 775 4 364 212 575
assets
56% 5% 38% 2% 100%
Profit/(loss) 11 603 (15 542) 23 639 (44 060) (24 360)
before tax
Notes to the segmental information:
1. The loss before tax relating to the Security & Services Segment included a
goodwill impairment charge of R12,9 million
2. The loss before tax of the Segment - Other includes the net downward fair
value adjustment of R17,2 million as a result of the Dynamic deconsolidation.
SUPPLEMENTARY INFORMATION
For the period ended 31 December 2009
Restated Restated
Reviewed Audited Audited
31 Dec 2009 31 Dec 2008 31 Dec 2007
R`000 R`000 R`000
Number of shares in issue 287 030 348 450 325 125
- consolidated (`000)
Fully diluted number of
shares in issue
- consolidated (`000) 302 030 363 554 341 769
Weighted number of shares 313 416 339 180 271 873
in issue (`000)
Fully diluted weighted 321 142 348 926 287 664
number of shares (`000)
Reconciliation of
headline
earnings/ (loss)
Profit / (loss) for the (7 073) (311 024) 145 822
year
Profit / (loss) on sale 809 (635) (6 741)
of shares and assets
Gain on bargain purchase (7 644) (3 521) (19 695)
Impairments 13 532 29 110
Gain on deconsolidation (8 834) - -
of subsidiary
Fair value adjustment on - (262)
investment property
Tax effect - (19) 833
Headline (loss) / (9 210) (286 351) 120 219
earnings for the year
REVIEWED PROVISIONAL GROUP statement of changes in equity
For the year ended 31 December 2009
Share Share Total Treasury Share
share based
payment
Capital premium capital shares reserve
R`000 R`000 R`000 R`000 R`000
Balance at 01 January 231 49 393 49 624 - -
2007
Profit for the year - - - - -
Issue of shares 96 184 499 184 595 - -
Purchase of own - - - (4 113) -
shares
Business combinations - - - - -
Balance at 01 January 327 233 892 234 219 (4 113) -
2008 as restated
Loss for the year - - - - -
Issue of shares 46 67 470 67 516 - -
Purchase of own - (33 740) -
shares
Dividends - - - - -
Business combinations - - - - -
Opening balance as 373 301 362 301 735 (37 853) -
previously reported
Prior year adjustment - - - - -
Balance at 01 January 373 301 362 301 735 (37 853) -
2009 as restated
Loss for the year -
Share based payment - 401
expense
Cancellation of (41) (21 289) (21 330) 21 330 -
shares
Purchase of own - (26 214) -
shares
Deconsolidation of - 138 -
subsidiary
Business combinations -
Balance at 31 332 280 073 280 405 (42 599) 401
December 2009
Total
Attribu-table
Retained to owners of Non-
the controlling
income parent interests Total
R`000 R`000 R`000 R`000
Balance at 01 152 250 201 874 24 532 226 406
January 2007
Profit for the year 145 822 145 822 15 594 161 416
Issue of shares - 184 595 - 184 595
Purchase of own - (4 113) - (4 113)
shares
Business - - 117 659 117 659
combinations
Balance at 01 298 072 528 178 157 785 685 963
January 2008 as
restated
Loss for the year (309 940) (309 940) (71 112) (381 052)
Issue of shares - 67 516 - 67 516
Purchase of own (33 740) (33 740)
shares
Dividends (10 659) (10 659) - (10 659)
Business - - (6 924) (6 924)
combinations
Opening balance as (22 527) 241 355 79 749 321 104
previously reported
Prior year (1 084) (1 084) (120) (1 204)
adjustment
Balance at 01 (23 611) 240 271 79 629 319 900
January 2009 as
restated
Loss for the year (7 073) (7 073) (141) (7 215)
Share based payment 401 401
expense
Cancellation of - -
shares
Purchase of own (26 214) (26 214)
shares
Deconsolidation of 138 (34 070) (33 932)
subsidiary
Business - (40 366) (40 365)
combinations
Balance at 31 (30 684) 207 523 5 052 212 575
December 2009
NOTES TO THE RESULTS
R`000
1. Revenue
The decrease in Revenue form R174 million in 2008 to R58
million in 2009 is attributable to the deconsolidation
of Dynamic during the 2009 financial year.
2. Impairments
Unrealised impairments (13 532)
Goodwill - Security assets (12 882)
Other loans and receivables (650)
3. Fair value adjustments
Upward fair value adjustments 24 604
Grand Parade Investments Limited 16 914
African Alliance Property portfolio 6 250
Other financial assets 1 440
Downward fair value adjustments (23 976)
Deconsolidation of Dynamic Cables RSA Limited (17 206)
African Independent Horizons (Pty) Ltd (2 500)
Rapiprop 159 (Pty) Ltd (1 713)
Western Cape Women`s Investment Forum Limited (1 398)
Purple Capital Limited (1 159)
Net fair value adjustments 628
4. Gain on bargain purchase
In February 2009 the group acquired an additional 47,8% of the issued ordinary
share capital of Sancino Projects Limited ("Sancino") by way of a scheme of
arrangement. As a result Sancino became a wholly owned subsidiary of CET Gaming
Holdings (Proprietary) Limited. Negative goodwill of R7,5 million was recognised
as a result.
5. Inventories
Inventories include R85,3 million of development land as a result of the
consolidation of Lions Hill Development Company (Proprietary) Limited with
effect from 1 October 2009.
6. Other financial liabilities
Total other financial liabilities of R104,8 million includes the addition of
R63,4 million existing bond finance in Lions Hill Development Company (Pty) Ltd
that has been consolidated with effect from 1 October 2009. Also included is
R17,1 million of funding raised in December 2009 in anticipation of the proposed
merger with Dynamic Cables RSA Limited as announced on 15 December 2009.
Excluding these as well as the impact of the deconsolidation of Dynamic other
financial liabilities reduced by R62,7 million.
7. Prior period error
Certain selling costs relating to the sale of financial assets was incorrectly
accounted for during January 2009 instead of December 2008. As a result the
2008 trade payables were understated by R1,4 million, tax payable overstated by
R196,000 and the 2008 loss attributable to owners of the parent was understated
by R1,084 million.
COMMENTARY
1. INTRODUCTION
CET is a diversified BEE investment group with substantial investments in
various sectors of the economy, including Property, Gaming and Leisure, and
Security and Services.
2. BASIS OF ACCOUNTING
The reviewed provisional results for the year ended 31 December 2009 have been
prepared in accordance with IAS34 - Interim Financial Reporting and in
compliance with the Listings Requirements of the JSE Limited. The accounting
policies and methods of computation used in the preparation of this report
comply with the Companies Act of South Africa and International Financial
Reporting Standards (IFRS). The accounting policies of the group have been
applied consistently with the accounting policies in the previous year, except
for the adoption of the following IFRS that became effective during the
reporting period:
- IAS 1 - Preparation of Financial Statements (Revised 2007)
- IFRS 8 - Operating Segments
- IAS 23 - Borrowing costs
The group`s independent auditor, Grant Thornton, have reviewed the results
contained in this provisional report and their unmodified review report is
available for inspection at the company`s registered office.
3. OVERVIEW
3.1 Results
The group ended the year with a loss for the year of R7,1 million, compared to a
loss for the six months to 30 June 2009 of R7,9 million and a loss for the year
ended 31 December 2008 of R311 million. Net asset value per share improved to
72,3 cents per share (2008: 69 cents). These results are largely as a result of:
- The poor market conditions experienced during 2008 and most of 2009 and the
impact thereof on the valuation of the group`s investment portfolio;
- The costs associated with the restructuring and substantial de-leveraging of
the group`s balance sheet, which has now been largely completed; and
- The repurchase of 61,5 million shares during 2009, of which 40,4 million
shares were cancelled and restored to the status authorised but unissued.
3.2 Investment activity
The following significant investment activities took place during the year under
review:
- In February 2009 Sancino Projects Ltd became a wholly-owned subsidiary of the
group;
- In April 2009, the group disposed of 11,8 million shares in Grand Parade
Investments Ltd for a total consideration of R25,6 million;
- As a result of corporate actions by Dynamic Cables RSA Limited ("Dynamic") the
group no longer controls Dynamic and its results and financial position have
been deconsolidated; and
- CET increased its shareholding in Lions Hill Development Company (Pty) Ltd
("Lions Hill") to 60%.
3.3 Subsequent events
- The investment in Rapiprop 159 (Pty) Ltd was disposed of on 1 February 2010
for R9 million;
- The investment in Lions Hill was increased to 85%.
4. salient dates for PROPOSED MERGER OF DYNAMIC CABLES RSA LIMITED AND CET
INTRODUCTION
In an announcement released on SENS on 15 December 2009 shareholders were
advised that the company had received a notice from Dynamic Cables RSA Limited
("Dynamic") of its firm intention to make an offer to acquire all of the issued
ordinary shares in CET (the "scheme shares") for a cash consideration of 40
cents per scheme share or a share consideration of 2 Dynamic ordinary shares for
every 1 scheme share held ("the offer").
The offer is to be implemented, subject to the conditions set out in the
announcement of 15 December 2009, by way of a scheme of arrangement ("the
scheme") in terms of section 311 of the Companies Act, 61 of 1973, as amended
("the Act"), to be proposed by Dynamic between CET and all of its shareholders.
CET shareholders are advised that in terms of an Order of Court dated Tuesday,
30 March 2010, the High Court of South Africa (Western Cape High Court), Cape
Town has granted the company leave to convene a meeting to consider the scheme
("scheme meeting"). The scheme meeting will be held at 09h00 on Monday, 26
April 2010, or ten minutes after the general meeting of CET shareholders which
is scheduled for 08h30 on that date is concluded, whichever is the later, at the
boardroom, Dynamic, 5 Fitzmaurice Avenue, Epping, Cape Town.
SALIENT DATES AND TIMES 2010
Court grants application to convene the Tuesday, 30 March
scheme meeting on
Last day to trade in CET shares in order to
be recorded in
the register to vote at the scheme meeting Wednesday,14 April
(see note 2 below) on
Voting record date to vote at the scheme Wednesday, 21 April
meeting by close of trading on
Last day for receipt of proxies for the
scheme meeting
by 10h00 (see note 3 below) on Thursday, 22 April
Scheme meeting to be held at 09h00 on Monday, 26 April
Publication of results of scheme meeting on Monday, 26 April
SENS on
Publication of results of scheme meeting in Wednesday, 28 April
the press on
Court hearing to sanction the scheme on Friday, 14 May
Register order with Registrar on Friday, 14 May
Results of sanction hearing published on SENS Friday, 14 May
on
Results of scheme published in the press on Monday, 17 May
If the scheme is sanctioned and becomes
effective:
Last day to trade in order to participate in
the scheme
consideration (see note 5 below) Friday, 21 May
Suspension of listing of CET shares at Monday, 24 May
commencement of trading on
Scheme consideration record date, being the
date on
which scheme participants must be recorded in
the register
to receive the scheme consideration, by close Friday, 28 May
of trading on
Operative date of the scheme at the Monday, 31 May
commencement of trading on
Scheme consideration paid/posted to
certificated scheme
participants (if documents of title are
received on or prior
to 12h00 on the scheme consideration record Monday, 31 May
date) on or about
Dematerialised scheme participants` accounts
(held
at their CSDP or broker) updated on or about Monday, 31 May
Termination of listing of CET shares at the
commencement
of trading on or about Tuesday, 1 June
Notes:
1. All dates and times may be changed by mutual agreement between CET and the
proposer and/or may be subject to certain regulatory approvals. Any change will
be published in the press and on SENS.
2. CET shareholders should note that as transactions in ordinary shares are
settled in the electronic settlement system used by Strate, settlement of trades
takes place five business days after such trade. Therefore shareholders who
acquire CET shares after Wednesday, 14 April 2010 will not be eligible to vote
at the scheme meeting.
3. If a form of proxy is not received by the time and date shown above, it may
be handed to the chairman of the scheme meeting not later than 10 minutes before
the scheme meeting is due to commence.
4. All times given in this announcement are local times in South Africa.
5. CET share certificates may not be dematerialised after Friday, 21 May 2010.
CIRCULAR
A circular providing further information in respect of the scheme, and
containing, inter alia, a notice of the scheme meeting, an explanatory
statement, the Order of Court, a form of proxy and a form of surrender, will be
posted to CET shareholders on or about 31 March 2010.
For and on behalf of the board
SL Rai J de Villiers
Executive Chairman Managing Director
Cape Town
30 March 2010
Sponsor
Sasfin Capital
(A division of Sasfin Bank Limited)
Board of Directors:
SL Rai (Executive Chairman), TD Rai (Deputy Chairman),
J de Villiers (Managing Director), PB Hesseling*,
O Valley**, H Takolia**, Fezile Calana*
* Non-Executive ** Independent Non-Executive
Date: 30/03/2010 17:10:02 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. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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