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Conduit Capital - Unaudited interim results for the six month period ended 31
August 2005 and renewal of cautionary announcement
CONDUIT CAPITAL LIMITED
(Formerly IMR Investments Limited)
Incorporated in the Republic of South Africa
(Registration number: 1998/017351/06)
Share code: CND & ISIN: ZAE000073128
("Conduit Capital" or "the Group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTH PERIOD ENDED 31 AUGUST 2005 AND
RENEWAL OF CAUTIONARY ANNOUNCEMENT
GROUP INCOME STATEMENT
Unaudited Unaudited
Unaudited restated restated
six six year
months months
ended ended ended
31 Aug 31 Aug 28 Feb
2005 2004 2005
(R"000) (R"000) (R"000)
Group revenue 5 064 1 676 5 523
Revenue 3 682 1 485 2 764
- Interest received 276 222 390
- Dividends received 53 253 280
- Advisory fees 2 216 - 115
- Other income 1 137 1 010 1 979
Realised profit on 106 191 2 758
investments sold
Unrealised profit on 1 276 - 1
revaluation of
investments
Group operating expenses (6 207) (6 357) (12 537)
Operating expenses (4 927) (3 688) (7 649)
Non-recurring expenses (85) (109) (1 325)
Realised loss on (1) - (102)
investments sold
Unrealised loss on (1 117) (2 280) (2 948)
revaluation of investment
Share of associate (68) (279) (512)
companies" loss
Interest paid (9) (1) (1)
Loss before taxation (1 143) (4 681) (7 014)
Taxation 1 595 - 6 737
Net income/(loss) for the 452 (4 681) (277)
year
Reconciliation of headline
earnings/(loss):
Attributable 452 (4 681) (277)
earnings/(loss) for the
year
Consolidation profit on (45) - -
sale of subsidiary
Impairment of goodwill - 107 215
Headline earnings/(loss) 407 (4 574) (62)
Number of shares in issue 81 882 81 882 81 882
("000)
Weighted average number 81 882 81 894 81 888
of shares in issue ("000)
Earnings/(loss) per share 0,55 (5,72) (0,34)
(cents)
Headline earnings/(loss) 0,50 (5,59) (0,08)
per share (cents)
Diluted earnings/(loss) 0,55 (5,72) (0,34)
per share (cents)
Diluted headline 0,50 (5,59) (0,08)
earnings/(loss) per share
(cents)
GROUP BALANCE SHEET
Unaudited Unaudited
Unaudited restated restated
six six year
months months
ended ended ended
31 Aug 31 Aug 28 Feb
2005 2004 2005
(R"000) (R"000) (R"000)
ASSETS
Non-current assets 704 969 757
Property, plant and 704 861 757
equipment
Goodwill - 108 -
Current assets 9 801 8 886 7 525
Investments held at fair 2 030 1 345 2 268
value
Investments held for 1 353 1 140 1 953
trading
Loans receivable 838 2 036 1 292
Current receivables 2 280 293 272
Short-term deposits and 3 300 4 072 1 740
cash
10 505 9 855 8 282
EQUITY AND LIABILITIES
Capital and reserves 6 500 1 559 6 048
Share capital 819 819 819
Share premium 4 956 4 956 4 956
Non-distributable reserves 7 250 7 165 7 250
Accumulated deficit (6 525) (11 381) (6 977)
Current liabilities 4 005 8 296 2 234
Current payables 3 884 8 293 2 231
Bank overdraft 121 3 3
10 505 9 855 8 282
Net asset value per share 7,94 7,39
(cents) 1,90
ABRIDGED GROUP CASH FLOW STATEMENT
Unaudited Unaudited
Unaudited restated restated
six six year
months months
ended ended ended
31 Aug 31 Aug 28 Feb
2005 2004 2005
(R"000) (R"000) (R"000)
Cash flows from operating 752 (1 469) (3 946)
activities
Cash flows from investing 690 357 (251)
activities
Cash flows from financing - (764) (11)
activities
Net increase/(decrease) in 1 442 (1 876) (4 208)
cash and cash equivalents
Cash and cash equivalents 1 737 5 945 5945
at the beginning of the
period
Cash and cash equivalents 3 179 4 069 1 737
at the end of the period
GROUP STATEMENT OF CHANGES IN EQUITY
Share Share Accumula Non-
capital premium ted distribu
deficit table Total
reserves
(R"000) (R"000) (R"000) (R"000) (R"000)
Balance at 1 March 820 4 966 (6 700) 7 165 6 251
2004 as restated
Treasury stock set-off (1) (10) - - (11)
Net loss for the - - (4 681) - (4 681)
period
Balance at 31 August 819 4 956 (11 381) 7 165 1 559
2004
Movement in foreign - - - 85 85
currency translation
reserve
Net income for the - - 4 404 - 4 404
period
Balance at 28 February 819 4 956 (6 977) 7 250 6 048
2005
Net income for the - - 452 - 452
period
Balance at 31 August 819 4 956 (6 525) 7 250 6 500
2005
COMMENTS
Introduction and general overview
The period under review is the first operating period for the new management and
directors of Conduit Capital. The period was characterised by significant
restructuring and the successful conclusion of a number of outstanding issues by
the Group.
Review of operations
Balance sheet
A Net Asset Value
Net assets were R6,5 million (August 2004: R1,6 million). The increase in the
Net Asset Value was partly due to a tax refund received from the South African
Revenue Services, which had not been accounted for previously.
Current assets, including cash and liquid investments, increased to R9,8 million
(August 2004: R8,9 million).
B Investments
1. Listed Investments
The Group"s portfolio of listed investments continued to perform as anticipated.
In conjunction with the management of Labat Holdings Limited ("Labat"), the
Group continues to explore strategies to extract value from the Labat
investment. In this regard, Conduit Capital was successful in negotiating the
settlement of significant Labat debt.
2. Unlisted Investments
On Line Lottery Services (Proprietary) Limited performed satisfactorily during
the period under review.
The Group"s investments in Evolve Internet Incubator (Proprietary) Limited and
Black Ginger 92 (Proprietary) Limited are performing as anticipated.
Conduit Capital sold 100% of the shares in one of its non-operating
subsidiaries, IMR 8 (Proprietary) Limited, to a Black Economic Empowerment
("BEE") group. Conduit Capital provides arms-length consulting and management
services to this company on an ad-hoc basis.
Conduit Capital introduced a 60% BEE partner in a non-operating subsidiary,
Appleton Pula (Proprietary) Limited, which changed its name to Maruapula Capital
(Proprietary) Limited. The parties are presently pursuing a number of exciting
prospects.
Income Statement
A Revenue
The Group"s revenue increased to R5,1 million (August 2004: R1,7 million) due to
increased activity in the operating subsidiaries during the period. These
amounts include unrealised gains on investments.
B Headline earnings/(loss)
The Group"s income statement reflects headline earnings for the period of R0,4
million (August 2004: R4,6 million loss).
Post Balance Sheet Events
In September and October 2005, the Group raised R5,84 million in working capital
through a general issue of 12,9 million shares for cash.
At a general meeting of shareholders held on 3 November 2005, shareholders
approved the Group"s acquisition of Marble Gold 213 (Proprietary) Limited.
Information relating to this acquisition was circularised on 11 October 2005.
On 3 November 2005, shareholders formally voted to approve the change of the
Group"s name to Conduit Capital Limited (JSE Code: CND).
Renewal of cautionary announcement
Further to the cautionary announcement dated 17 October 2005, shareholders are
advised that Conduit Capital is at an advanced stage in negotiations with
various parties, which, if successfully concluded, may have a material effect on
the price at which the company"s shares trade. Accordingly, shareholders are
advised to continue to exercise caution when trading in shares of the company on
JSE Limited until further announcements are made.
Conclusion
Conduit Capital is satisfied with the progress made during the first six months
under new management and will continue to explore opportunities to unlock
shareholder value.
For and on behalf of the Board
JD Druian LE Louw
Chief Executive Officer Acting Financial Director
Johannesburg
30 November 2005
BASIS OF PRESENTATION
The interim financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS"), to be adopted by the group
for the period ended 28 February 2006 and which will comply with IAS 34 -
Interim Reporting. These standards and practices are subject to ongoing review
and may change.
As the Group"s annual financial statements for the year ending 28 February 2006
will be the first annual financial statements to comply with IFRS, the group has
applied IFRS 1 (First Time Adoption of International Financial Reporting
Standards) in preparing these interim financial statements.
Conduit Capital"s transition date is 1 March 2004 ("the transition date"). The
Group"s opening IFRS balance sheet at the transition date has therefore been
restated to reflect all IFRS statements expected to be applicable at 28 February
2006. Certain accounting policy changes and reclassifications were applied to
comply with IFRS 1 and the comparative figures in respect of 2004 have been
restated to reflect these adjustments.
The following new accounting policies were applied:
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value
of the Group"s share of the net identifiable assets of the acquired subsidiary
at the date of acquisition. Goodwill is tested annually for impairment and
carried at cost less accumulated impairment losses. Goodwill is allocated to
cash-generated units for the purposes of impairment testing. No adjustments were
required, as goodwill was fully impaired as at 28 February 2005.
Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and
are tested annually, or whenever events or changes in circumstances indicate
that the carrying amount might not be recoverable, for impairment. An impairment
loss is recognised for the amount by which the asset"s carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of the asset"s fair
value less costs to sell, and value in use. For the purpose of assessing
impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash generating units).
Property, plant and equipment
Conduit Capital has elected to measure individual items of property, plant and
equipment at fair value at the date of transition to IFRS, hence the fair value
is deemed to be cost at that date.
Investments
Investments previously classified as Available for Sale, have been reclassified
as Held at Fair Value Investments with fair value adjustments being passed
through the income statement. This has resulted in no adjustments being passed
in the financial statements, as all movements on the Available for Sale assets
were previously passed through the income statement.
Reconciliations and descriptions of the effect of the transition from South
African standards of Generally Accepted Accounting Practice to IFRS on the
group"s assets, liabilities, equity and net profit, are provided below:
RECONCILIATION OF ASSETS, LIABILITIES AND EQUITY
Assets Liabilities Equity
(R"000) (R"000) (R"000)
1 March 2004
As previously reported 14 292 8 062 6 230
Adjusted for:
- Property, plant and 26 - 26
equipment
- Impairment of loans (5) - (5)
receivable
As reported under IFRS 14 313 8 062 6 251
31 August 2004
As previously reported 9 943 8 296 1 647
Adjusted for:
- Property, plant and 41 - 41
equipment
- Impairment of loans (129) - (129)
receivable
As reported under IFRS 9 855 8 296 1 559
28 February 2005
As previously reported 8 566 2 234 6 332
Adjusted for:
- Property, plant and 55 - 55
equipment
- Impairment of loans (339) - (339)
receivable
As reported under IFRS 8 282 2 234 6 048
RECONCILIATION OF INCOME STATEMENT
Restated for Restated for
the six the year
months
ended Ended
31 Aug 2004 28 Feb 2005
(R"000) (R"000)
Net profit/(loss) attributable to
shareholders
As previously reported (4 572) 28
Adjusted for:
- Property, plant and equipment 14 29
- Impairment of loans receivable (124) (334)
As reported under IFRS (4 682) (277)
Directors:
Executive directors:
Jason D Druian (CEO), Paul Diamond, Lourens E Louw, Stanley D Shane
Non-executive directors:
Reginald S Berkowitz, Scott M Campbell, Megan Kruger
Company secretaries:
Gruzd Zets & Co, 2nd Floor, 3 Sturdee 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
Date: 30/11/2005 05:10:09 PM Produced by the JSE SENS Department
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