| Tue 29 Mar 2011, 17:25 | | CAP - Cape Empowerment - Reviewed Provisional Results for the year ended 31 |
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CAP
CAP
CAP - Cape Empowerment - Reviewed Provisional Results for the year ended 31
December 2010
CAPE EMPOWERMENT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/001807/06)
JSE Code CAP
ISIN ZAE000145066
("Cape Empowerment" or "the company")
* CAPE EMPOWERMENT LIMITED- REVIEWED PROVISIONAL RESULTS FOR THE YEAR ENDED
31 DECEMBER 2010
* PARTIAL DISPOSAL OF INTEREST IN GRAND PARADE INVESTMENTS LTD
* FURTHER CAUTIONARY ANNOUNCEMENT
- TANGIBLE NAV PER SHARE + 45% TO 51 CENTS
REVIEWED PROVISIONAL GROUP STATEMENT OF COMPREHENSIVE
INCOME
Reviewed Audited
31 Dec 2010 31 Dec 2009
Note R`000 R`000
1
Revenue 155 670 57 928
Cost of sales (113 032) (47 699)
Gross profit 42 638 10 229
Other income 806 450
Operating expenses (53 736) (35 296)
Operating loss before capital items (10 292) (24 617)
Profit and (loss) on sale of capital
assets 36 (1 810)
Impairments 2 (8 555) (13 532)
Operating loss after capital items (18 811) (39 959)
Investment revenue 9 316 14 457
Fair value adjustments 3 25 329 628
Gain on bargain purchase 4 45 701 7 644
Gain on deconsolidation of subsidiary 4 058 -
Finance costs (4 630) (7 129)
Profit/(loss) before taxation 60 963 (24 359)
Taxation 7 445 17 145
TOTAL COMPREHENSIVE INCOME / (LOSS) FOR
THE YEAR 68 408 (7 214)
Non-controlling interest (346) (141)
TOTAL COMPREHENSIVE INCOME/(LOSS)
ATTRIBUTABLE TO OWNERS OF
THE PARENT 68 754 (7 073)
Basic earnings/ (loss) per share (cents) 11.8 (1.1)*
Headline earnings/ (loss) per share
(cents) 3.6 (1.5)*
Fully diluted earnings/ (loss) per share
(cents) 11.2 (1.1)*
Fully diluted headline earnings/(loss)
per share (cents) 3.4 (1.4)*
*Note: Per share Earnings and Headline Earnings for the comparative periods have
been restated based on the weighted average number of shares during the
comparable period multiplied by the exchange ratio of 2 Cape Empowerment Limited
("CEL`) shares for every 1 Cape Empowerment Trust Limited ("CET`) share in terms
of the reverse takeover by CET of CEL.
REVIEWED PROVISIONAL GROUP STATEMENT OF FINANCIAL POSITION
Reviewed Audited
31 Dec 2010 31 Dec 2009
R`000 R`000
ASSETS
Non-current assets 85 560 200 856
Investment property 3 420 -
Property, plant and equipment 11 142 3 142
Goodwill - 5 957
Other financial assets 70 322 191 757
Deferred tax assets 676 -
Current assets 326 040 155 432
Inventories 102 516 85 371
Other financial assets 152 635 22 630
Current tax receivable 704 -
Trade and other receivables 39 908 19 221
Cash and cash equivalents 30 277 28 210
TOTAL ASSETS 411 600 356 288
EQUITY AND LIABILITIES
EQUITY
Share capital 266 314 280 405
Share based payment reserve 1 350 401
Treasury shares (40 197) (42 599)
Retained income 38 012 (30 684)
Non-controlling interests 4 408 5 052
TOTAL EQUITY 269 887 212 575
LIABILITIES
Non-current liabilities 97 395 52 271
Other financial liabilities 90 549 40 392
Instalments sale obligations 3 247 2 044
Deferred tax 3 599 9 835
Current liabilities 44 318 91 442
Loans from shareholders - 1 831
Other financial liabilities - 64 376
Current tax payable 6 637 4 740
Instalment sale obligations 874 872
Trade and other payables 36 610 19 426
Dividend payable 197 197
TOTAL LIABILITIES 141 713 143 713
TOTAL EQUITY AND LIABILITIES 411 600 356 288
Net Asset Value per share (cents) +41% 51.0 36.2*
Net Tangible Asset Value per share (cents) +45% 51.0 35.1*
*Note: Per share NAV and TNAV for the comparative periods have been restated
based on the number of shares outstanding at the balance sheet date of the
comparable period, multiplied by the exchange ratio of 2 CEL shares for every 1
CET share in terms of the reverse takeover by CET of CEL.
REVIEWED PROVISIONAL STATEMENT OF CASH FLOWS
For the period ended 31 December 2010
Reviewed Audited
31 Dec 2010 31 Dec 2009
R`000 R`000
Cash flow from operating activities 4 642 23 908
Cash generated by operations 1 277 16 646
Interest received 6 313 10 500
Dividends received 3 003 3 957
Interest paid (4 633) (7 129)
Taxation paid (13 18) (66)
Cash flows from investing activities 31 108 (20 200)
Purchase of property, plant and equipment (2 586) (1 712)
Proceeds from sale of property, plant and equipment 245 3 420
Business combinations 25 502 (1 025)
Acquisition of business - (3 000)
Sale/ (purchase) of financial assets 9 000 386
Deconsolidation of subsidiaries (1 053) (18 269)
Cash flow from financing activities (33 683) (77 958)
Proceeds on issue of shares 114 -
Purchase of treasury shares (17 505) (26 214)
Proceeds/(repayment) of financial liabilities (15 176) (42 145)
Proceeds/(repayment) of shareholder loans (1 831) (8 877)
Proceeds/(repayment) of instalment sale obligations 715 (716)
Dividends paid - (6)
Net (decrease)/ increase in cash and cash
equivalents 2 067 (74 250)
Cash resources at the beginning of the period 28 210 102 460
Cash resources at the end of the period 30 277 28 210
REVIEWED PROVISIONAL GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2010
Share Share Total share Treasury
capital premium capital shares
R`000 R`000 R`000 R`000
Balance at 01 January 2009 373 301 362 301 735 (37 853)
Total comprehensive income
for the year -
Share based payments -
Cancellation of shares (41) (21 289) (21 330) 21 330
Purchase of own shares - (26 214)
Deconsolidation of subsidiary - 138
Business combinations -
Balance at 31 December 2009 332 280 073 280 405 (42 599)
Total comprehensive income
for the year - - - -
Share based payments - - - -
Deemed cost of reverse
acquisition 33 377 (13 927) 19 450 -
Purchase of own shares - - - (37)
Cancellation of shares (3 974) (29 681) (33 655) 9 620
Issue of shares 29 85 114 -
Business Combinations - - - (7 181)
Changes in ownership -
control not lost - - - -
Balance at 31 December 2010 29 764 236 550 266 314 (40 197)
Total
Share based attributable to
payment Retained owners of the
reserve income parent
R`000 R`000 R`000
Balance at 01 January 2009 - (23 611) 240 271
Total comprehensive income for
the year (7 073) (7 073)
Share based payments 401 401
Cancellation of shares - -
Purchase of own shares - (26 214)
Deconsolidation of subsidiary - 138
Business combinations -
Balance at 31 December 2009 401 (30 684) 207 523
Total comprehensive income for
the year - 68 754 68 754
Share based payments 949 - 949
Deemed cost of reverse acquisition - - 19 450
Purchase of own shares - - (37)
Cancellation of shares - - (24 035)
Issue of shares - - 114
Business Combinations - - (7 181)
Changes in ownership - control
not lost - (58) (58)
Balance at 31 December 2010 1 350 38 012 265 479
Non-
controlling
interests Total
R`000 R`000
Balance at 01 January 2009 79 629 319 900
Total comprehensive income for the year (142) (7 215)
Share based payments 401
Cancellation of shares -
Purchase of own shares (26 214)
Deconsolidation of subsidiary (34 070) (33 932)
Business combinations (40 365) (40 365)
Balance at 31 December 2009 5 052 212 575
Total comprehensive income for the year (346) 68 408
Share based payments - 949
Deemed cost of reverse acquisition - 19 450
Purchase of own shares - (37)
Cancellation of shares - (24 035)
Issue of shares - 114
Business Combinations - (7 181)
Changes in ownership - control not lost (298) (356)
Balance at 31 December 2010 4 408 269 887
SUPPLEMENTARY INFORMATION
For the period ended 31 December 2010
Reviewed Audited
31 December 31 December
2010 2009
Number of shares in issue - consolidated (`000) 520 473 574 060
Fully diluted number of shares in issue -
consolidated (`000) 550 473 604 060
Weighted number of shares in issue (`000) 582 364 626 832
Fully diluted weighted number of shares (`000) 612 364 642 284
Reconciliation of headline earnings/ (loss)
Profit / (loss) for the year (R`000) 68 754
(7 073)
(Loss)/ profit on sale of shares and assets (124) 809
Gain on bargain purchase (45 701) (7 644)
Impairments 2 257 13 532
Gain on deconsolidation of subsidiary (4 058) (8 834)
Fair value adjustment on investment property (200) -
Other 96 -
Tax effect 63 -
Headline earnings / (loss) for the year 21 087 (9 210)
SEGMENTAL INFORMATION
For the year ended 31 December 2010
Security Gaming
Property Property and and
R`000 Development - Other Services Leisure
Total assets 85 748 93 741 24 117 127 653
Total liabilities (64 300) (784) (12 274) (24 568)
Total net assets 21 448 92 957 11 843 103 085
Percentage of total
assets 8% 34% 4% 38%
Revenue 93 802
Profit/(loss) before tax (6 558) 6 375 1 893 19 022
R`000 Dynamic * Other Total
Total assets 48 757 31 584 411 600
Total liabilities (20 973) (18 817) (141 716)
Total net assets 27 784 12 767 269 884
Percentage of total
assets 10% 5% 100%
Revenue 61 868 155 670
Profit/(loss) before tax 5 617 34 614 60 963
*- The Dynamic results are only included for the 7 months since 1 June 2010
after the reverse takeover by CET.
NOTES TO THE RESULTS
1. Revenue
The increase in revenue of R97,7 million is mainly as a result of the
consolidation of the Dynamic businesses with effect from 1 June 2010 that
contributed R61,8 million to revenue and revenue growth in the Services cluster
of R33,8 million.
2. Impairments
R`000
Impairment of capitalised borrowing cost on development land 6 298
Impairment of other financial assets 2 168
Other 89
8 555
3. Fair value adjustments
R`000
Grand Parade Investments Ltd 19 028
Dynamic Cables RSA Ltd prior to merger 2 595
Lexshell 44 (Pty) Ltd 1 758
Purple Capital Ltd 1 353
Other fair value adjustments 595
Net fair value adjustments 25 329
4. Gain on bargain purchase
CET concluded the reverse takeover of Dynamic with effect from 1 June 2010 with
the latter changing its name to Cape Empowerment Limited ("CEL"). These results
therefore include the trading results of the Dynamic businesses for the 7 months
since June 2010.
The reverse takeover has been accounted for as required by IFRS 3 as summarised
below:
R`000
Fair value of net assets and liabilities acquired 65 151
Total cost of acquisition 19 450
Deemed cost of acquisition by CET in terms of IFRS 3 12 963
Plus fair value of existing interest in CEL at acquisition 6 487
Gain on bargain purchase 45 701
CEL contributed revenue of R61,8 million and profit after tax of R6,3 million to
the Group for the 7 months since acquisition.
5. Inventories
Included in inventories is R85,7 million (2009: R85,3 million) of development
land of CEL`s 85% subsidiary Lions Hill Development Company (Proprietary)
Limited ("Lions Hill").
6. Other financial liabilities
Non-current other financial liabilities include R63,9 million of existing bond
finance in Lions Hill that was classified as current in the previous period.
COMMENTARY
1. INTRODUCTION
Cape Empowerment Limited is a black-owned and managed diversified investment
holding company with strong broad-based empowerment credentials. We hold
substantial investments in various sectors of the economy, including Property,
Gaming and Leisure, Security and Services, and Information and Communications
Technologies.
2. BASIS OF PREPARATION
The reviewed provisional results for the year ended 31 December 2010 have been
prepared in accordance with IAS 34 - Interim Financial Reporting, AC 500
standards, the South African Companies Act 1973 and in compliance with the
Listings Requirements of the JSE Limited. The financial information has been
prepared based on the requirements of International Financial Reporting
Standards (IFRS). The accounting policies and methods of computation used in the
preparation of these results are consistent with those applied in the
preparation of the Group`s annual financial statements for the year ended 31
December 2009, except for the adoption of the following revised standards that
became effective during the current year:
-IAS 27 (amended) Consolidated and separate financial statements
- IFRS 3 Business Combinations
The Group`s independent auditor, Grant Thornton, has 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 total attributable comprehensive income of R68,8
million or 11,8 cents per share (2009: loss of R7,1 million or 1,1 cents per
share). Net asset value and net tangible asset value per share improved to 51,0
cents per share (2009: 36,2 cents and 35,1 cents per share respectively). These
results were dominated by the successful conclusion of the reverse takeover of
CEL by CET.
3.2 Subsequent events, investment strategy and prospects
On 15 March 2011 CEL announced the disposal of 11 million Grand Parade
Investments Ltd ("GPI") shares for a total consideration of R28,6 million,
subject to certain conditions precedent. Included below is an announcement of
the further disposal of interests in GPI for R32,7 million, subject to certain
conditions precedent. Following these disposals the Group`s remaining interests
in GPI consist of 18 701 220 freely tradable unrestricted GPI shares,
representing approximately 4,1% of the net consolidated number of GPI shares in
issue.
The disposals referred to above are in line with our ongoing strategy of
repositioning the Group`s investment focus mainly on the property sector and on
assets that we control. Shareholders may expect further transaction activity in
this regard.
4. PARTIAL DISPOSAL OF INTEREST IN GRAND PARADE INVESTMENTS LIMITED ("GPI") AND
FURTHER CAUTIONARY ANNOUNCEMENT
4.1 INTRODUCTION
Shareholders are referred to the cautionary announcement dated 15 March 2011 and
are advised that Cape Empowerment and its subsidiaries Cape Empowerment Trust
Limited, Business Venture Investments No 1275 (Proprietary) Limited ("BVI") and
BLRT Investments Limited have entered into agreements to dispose of certain
interests in GPI as more fully set out below ("the GPI interests") to Baleine
Capital (Proprietary) Limited or its nominee ("Baleine") for a total cash
consideration of R32 714 843 ("the disposal").
4.2 RATIONALE FOR THE DISPOSAL
4.2.1 The GPI interests being disposed of form the remaining part of the
component of the Cape Empowerment Group`s holding in GPI that is subject
to certain Black Economic Empowerment restrictions which has an impact on
its tradability. The disposal is an opportunity to realise these GPI
interests at close to the current market value of unrestricted GPI shares.
4.2.2 The disposal is also in line with the Cape Empowerment Group`s strategy
of repositioning its investment focus mainly on the property sector and on
assets that it controls.
4.3 TERMS OF THE DISPOSAL
4.3.1 The GPI interests consist of the following:
4.3.1.1 1 000 000 shares in GPI;
4.3.1.2 5 600 000 units in the GPI Special Purpose Vehicle Trust
("GPI SPV Trust"); and
4.3.1.3 5 982 632 units in the GPI Broad Based Black Economic Empowerment
Trust ("GPI BBBEE Trust").
4.3.2 The effective date of the disposal is the closing date thereof, being the
third business day after fulfilment of the conditions precedent detailed
in paragraph 4.3.4 below.
4.3.3 The purchase consideration for the GPI interests of R 32 714 843 is
payable in cash on the closing date.
4.3.4 Conditions precedent
The disposal is subject to fulfilment of the outstanding conditions precedent,
by not later than 30 June 2011, that:
4.3.4.1 the shareholders of Cape Empowerment pass the necessary resolutions to
approve the disposal as may be required in terms of the JSE Listings
Requirements;
4.3.4.2 the section 228 special resolutions passed by the shareholder of BVI and
the shareholders of CET Gaming Holdings (Pty) Ltd approving of the disposal of
the relevant GPI interests by BVI be registered by the Companies and
Intellectual Property Registration Office; and
4.3.4.3 Baleine obtains the necessary approvals from GPI and/or the GPI SPV
Trust and/or the GPI BBBEE Trust for the disposal.
4.4 PRO FORMA FINANCIAL EFFECTS
The pro forma financial effects of the disposal on Cape Empowerment`s earnings
per share, headline earnings per share, net asset value and net tangible asset
value per share for the twelve months ended 31 December 2010 are not significant
(i.e. are less than 3%), and are therefore not required to be disclosed.
4.5 CATEGORISATION OF THE TRANSACTION
In terms of the Listings Requirements of the JSE Limited the disposal is
aggregated with the disposal announced on 15 March 2011 and, as a result, the
disposal is categorised as a Category 1 transaction.
A circular containing further details of the disposal and a notice to convene a
general meeting of Cape Empowerment shareholders to approve the disposal shall
be posted to shareholders in due course.
4.6 FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are advised that the company is still in other negotiations which,
if successfully concluded, may have a material impact on the price of the
company`s securities. Accordingly shareholders are advised to continue to
exercise caution when dealing in the company`s securities until a further
announcement is made.
For and on behalf of the board
AC Nissen SL Rai J de Villiers
Chairman Chief Executive Officer Managing Director
Cape Town
29 March 2011
Board of Directors:
AC Nissen** (Chairman), TD Rai (Deputy Chairman), SL Rai (Chief Executive
Officer), J de Villiers (Managing Director), HB Dednam (Financial Director), PB
Hesseling*, E Tshabalala**, H Takolia**
* Non-executive ** Independent non-executive
Company Secretary:
HB Dednam
Registered Office:
2nd Floor, Sunclare Building, 21 Dreyer Street, Claremont 7700
Sponsor
Sasfin Capital
(A division of Sasfin Bank Limited)
Legal advisors
Cliffe Dekker Hofmeyr Inc.
Date: 29/03/2011 17:25:01 Produced by the JSE SENS Department.
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