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DYM
DYM
Dynamic Cables RSA Limited - Revised Unaudited Interim Results For The Six
Months Ended 30 June 2005
DYNAMIC CABLES RSA LIMITED
Registration number 1987/001807/06
Share code DYM ISIN ZAE000028270
("Dynamic Cables" or "the company")
REVISED UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005
* The results have been restated due to the interpretation of IAS 17.Refer to
accounting policy notes
ABRIDGED GROUP INCOME STATEMENT
for the period ended 30 June 2005 Unaudited Restated* Restated*
% 6 months 6 months 12 months
6 months 30 June 30 June 31 December
change 2005 2004 2004
R"000 R"000 R"000
Turnover -0.32 28,158 41,462 74,697
Gross Profit -0.38 9,403 15,226 21,565
Operating profit -0.62 1,419 3,728 6,518
Negative Goodwill 2,407 -
Impairment adjustments - -1,272 -518
Operating lease
straight line
adjustment -15 -71 -142
Finance charges -66 - -1,214
Profit/(loss) before
taxation 0.40 3,748 2,682 4,669
Taxation -403 21 -1,808
Net profit
attributable to
ordinary
shareholders 0.24 3,345 2,703 2,861
Basic earnings per
share - (cents) -0.13 5.0 5.8 6.1
Headline earnings per
share - (cents) -0.83 1.4 8.5 10.5
Fully diluted earnings
per share (cents) 0.34 5.9 4.4 5.6
Fully diluted headline
earnings per share
(cents) -0.74 1.6 6.4 9.5
ABRIDGED GROUP BALANCE SHEET
as at 30 June 2005
Unaudited Restated* Restated*
30 June 30 June 31 December
2005 2004 2004
R"000 R"000 R"000
ASSETS
Non-current assets 15,754 22,335 12,914
Property, plant and equipment 5,344 4,853 2,515
Intangible assets 10,286 9,341 10,278
Investments 8,000
Deferred tax asset 124 141 121
Current assets 27,652 31,259 29,301
Inventories 8,545 8,471 7,106
Trade and other receivables 10,125 13,621 11,336
Short-term loans 583 - 583
Financial assets 5,576 3,696 4,427
Cash and cash equivalents 2,823 5,471 5,849
Total assets 43,406 53,594 42,215
EQUITY
Equity attributable to equity
holders of the
company 20,123 12,106 16,778
Share capital and premium 104,075 92,199 104,075
Accumulated losses -83,952 -80,093 -87,297
LIABILITIES
Non-current liabilities 3,175 2,942 3,222
Borrowings 685 1,337 732
Deferred tax liability 2,490 1,605 2,490
Current liabilities 20,108 38,546 22,215
Trade and other payables 9,845 11,102 11,338
Current income tax liabilities 8,593 8,290 8,902
Borrowings 987 18,822 1,353
Short-term portion of non-current
liabilities 265 - 219
Operating lease liability 418 332 403
Total equity and liabilities 43,406 53,594 42,215
STATEMENT OF CHANGES IN EQUITY
for the period ended 31 December 2005
Share Share Accumulated Total
Capital Premium profit/(loss)
Unaudited R"000 R"000 R"000 R"000
Balance at
1 January 2004 (Audited) 2,337 89,862 -89,976 2,223
Change in accounting
policy - IAS 17 -182 -182
Restated balance at
1 January 2004 -90,158 2,041
Issue of share capital 910 10,966 11,876
Net profit for the period 2,861 2,861
Net profit as previously
reported 2,961 2,961
IAS 17 - Change in
accounting policy -100 -100
Balance at 31 December 2004 3,247 100,828 -87,297 16,778
Net profit for period 3,345 3,345
Balance at 30 June 2005 3,247 100,828 -83,952 20,123
ABRIDGED GROUP CASH FLOW STATEMENT
for the period ended 30 June 2005 Unaudited
6 months 6 months 12 months
30 June 30 June 31 December
2005 2004 2004
R"000 R"000 R"000
Cash flow from operating activities -1,378 2,126 -11,752
Cash receipts from customers 26,832 41,740 83,405
Cash paid to suppliers and employees -27,838 -39,912 -93,696
Cash (utilised)/generated by
operations -1,006 1,828 -10,291
Interest paid -66 - -1,214
Interest received 3 298 25
Taxation paid -309 - -272
Cash flow from investing activities -1,602 -2,442 161
Additions to property, plant and
equipment -1,551 -2,442 -1,182
Proceeds on disposal of investments 1,861
Purchase of other financial assets -51 -518
Cash flow from financing activities -46 -403 11,271
Proceeds from issue of share capital 11,876
(Decrease)/increase in long-term
borrowings -46 -403 -605
Net (decrease)/increase in cash -3,026 -719 -320
Cash surplus at the beginning of the
period 5,849 6,170 6,169
Cash resources at the end of the
period 2,823 5,451 5,849
SUPPLEMENTARY INFORMATION
for the period ended 30 June 2005 Unaudited Restated* Restated*
6 months 6 months 12 months
30 June 30 June 31 December
2005 2004 2004
R"000 R"000 R"000
Shares in issue (000"s) 66,800 46,734 46,734
Shares in issue - weighted (000"s) 66,800 46,734 46,734
Diluted number of shares - weighted
(000"s) 57,039 62,000 51,500
Net asset value per share (cents) 30.6 26.4 36.5
Capital expenditure (R"000) 1,551 2,442 1,186
Capital commitments (R000"s) 1,500 - -
Depreciation, amortisation and
impairment charge (R"000) 1,129 1,671 1,256
Finance and operating lease
commitments (R"000) 4,948 7,287 5,235
Profit attributable to ordinary
shareholders (R000) 3,345 2,703 2,861
Earnings per share (cents) 5.0 5.8 6.1
Fully diluted earnings per share
(cents) 5.9 4.4 5.6
Headline earnings per share (cents) 1.4 8.5 10.5
Fully diluted headline earnings per
share - (cents) 1.6 6.4 9.5
RECONCILIATION OF HEADLINE EARNINGS R"000 R"000 R"000
Net profit for the period 3,345 2,703 2,861
Surplus on liquidation of subsidiary 518
Impairment of goodwill 1,272 327
Other impairment adjustments 1,186
Negative goodwill -2,407
Headline earnings 938 3,975 4,892
Accounting Policies
The condensed financial statements for the six months ended 30 June 2005
were prepared in accordance with IAS 34 - Interim Financial Reporting and in
compliance with the Listings Requirements of the JSE Limited.
The company has adopted and applied IFRS for the first time for the year ended
2005.
IFRS 1 - First time Adoption of International Financial Reporting Standards,
has been applied.
The transition date is 1 January 2004 ("the transition date").
Certain accounting policy changes and reclassifications were applied to comply
with IFRS 1. The changes are summarised below
REVISED REVISED REVISED
6 months 6 months 12 Months
30-Jun-05 30-Jun-04 31-Dec-04
R"000 R"000 R"000
Negative goodwill
Previously reported as investment
income 2407 0 -518
Restated 0 0 -518
Difference - restated as negative
goodwill arising 2407 0 0
as a result of the cost of the acquisition
being less than the net fair value of the
assets acquired at acquisition date.
Refer Acquisition of subsidiary note
Reclassification of non current
assets to current assets
Further disclosure of "other current assets"
as previously reported was given to comply
with IAS 1.
With the application of IAS 1 Presentation
of Financial Statements, certain financial
assets were reclassified from non-current
to current.
The reason was due to the financial assets
having no unconditional deferred terms of
repayment and as such are repayable on
demand. IAS 1 provides that such assets be
classified as current.
The effect of the above is as follows: REVISED REVISED REVISED
6 months 6 months 12 Months
30-Jun-05 30-Jun-04 31-Dec-04
Current assets as previously reported 23,174 27,563 24,874
Current assets restated 27,652 31,259 29,301
Net increase in current assets due
to IAS 1 previously shown
as non current 4,478 3,696 4,427
Non-current financial assets
previously reported 4478 3696 4427
Restated 0 0 0
Net (decrease) in non current assets
due to IAS 1 now shown as current -4478 -3696 -4427
Consolidation
Subsidiaries are all entities (including special purpose entities) over which
the company has the power to govern the financial and operating policies
generally accompanying a shareholding of more than one half of the voting
rights.
Subsidiaries are fully consolidated from the date on which control is
transferred to the company. They are de-consolidated from the date control
ceases.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the company.
The excess of the cost of acquisition over the fair value of the company"s
share of the identifiable net assets is recorded as goodwill. If the cost of
acquisition is less than the fair value of the company"s share of the net
assets of the subsidiary acquired, the difference is recognised directly in the
income statement as negative goodwill.
Goodwill is tested annually for impairment and carried at cost less accumulated
impairment losses.
Transitional Report
The date of transition to IFRS for The company is 1 January 2004. The key
principle of IFRS 1 - First-time Adoption of International Financial Reporting
Standards is full retrospective application of these standards.
IFRS 1 however provides exemptions from retrospective application in certain
instances due to cost and practical considerations.
The company"s transitional elections are set out below:
Business Combinations
The company adopted IFRS 3 - Business combinations, from 1 January 2004 and
therefore no adjustments are required. The exemption available allows the
company not to apply the principles of IFRS 3 retrospectively. This exemption
was exercised.
Property, plant and equipment
A first-time adopter may elect to use the fair value of individual property,
plant and equipment at transition date as the deemed cost. The company is not
making use of this transitional exemption and elects to measure individual
items of property, plant and equipment at original cost.
Change in accounting policy
Operating Leases
The company previously accounted for operating leases by recognising the lease
expense in the year in which the financial obligation arose. Due to changes in
the interpretation of the accounting standard regarding operating leases, lease
payments are now recognised as an expense on a straight line basis over the
lease term unless another systematic basis is more representative of the time
pattern of the user"s benefit, in accordance with IAS 17 (International
Accounting Standard 17). The comparative figures have been restated
accordingly.
Effect of interpretation of IAS 17 - change in
accounting policy - refer
policy notes 6 months 6 months 12 Months
Opening reserves 1 January 2004 30-Jun-05 30-Jun-04 31-Dec-04
R"000 R"000 R"000 R"000
Gross -260
Deferred tax 78
Net decrease in reserves -182
(Refer statement of
changes in equity)
Current liabilities
Current liabilities as
previously reported 19,690 38,214 21,812
Current liabilities
restated 20,108 38,546 22,215
Net increase in current
liabilities due to IAS 17 -
operating lease liability 418 332 403
(Refer balance sheet)
Deferred tax asset
Previously reported 0 42 0
Restated 124 141 121
Net increase in deferred
tax asset due to IAS 17 -
operating lease liability 124 99 121
(Refer balance sheet)
Income statement
Previously Reported profit
in the income statement 3356 2753 2961
Restated profit after tax
in the income statement 3345 2703 2861
Net decrease in profit
after tax due to IAS 17; -11 -50 -100
Operating lease straight
line adjustment: -11 -5 0 -100
Operating lease expense -15 -7 1 -142
Deferred tax 4 2 1 42
Interim Operations
Traditionally this group does better in the second half of the year than the
first. In this particular year we however feel obliged to draw to shareholders"
attention that the first half of this year was uncharacteristically slow.
Notwithstanding the above, we are pleased to report that the second half of the
year has been uncharacteristically busy and we have no reason to doubt the
company"s ability to at least maintain its performance of previous years.
At present we are pleased to report that the engineering business is operating
at double shifts and that the cable business is under pressure to keep up with
demand.
Changes in estimates
There are no changes to estimates made under previous SA GAAP for transition to
IFRS.
Where estimates have previously been made under SA GAAP, consistent estimates
(after adjustments to reflect any difference in accounting policies) have been
made for the same date.
Dividends
No dividends have been declared or paid at interim date.
Segment Revenue
Due to the establishment of the engineering operations, the entity is in a
position to present meaningful segmental information based on its principal
business segments identified as Engineering and Cabling divisions.
respectively. Refer to segmental information.
Subsequent Events
Subsequent to 30 June 2005, The company purchased the property utilised by its
Johannesburg based operations for an amount of R1 500 000.
Related Party Transactions
Related party transactions between subsidiaries of the company and between the
company and the subsidiaries have been eliminated in full on consolidation.
These transactions are no less favourable than those arranged with third
parties.
Acquisition of subsidiary
On the 1st January 2005 Dynamic Cables RSA Limited acquired 100% of the shares
of Capensis (Proprietary) Limited.
Capensis (Proprietary) Limited is an asset holding company.
Dynamic Cables RSA Limited purchased the company for an amount of R1 587 836,
being the balance of that company"s debit loan account at the effective date.
The fair value of the net assets purchased amounted to R3 995 000. These values
have been determined on a provisional basis as the company"s figures have not
been audited.
The full value of the net assets is attributed to the machinery held by the
company and therefore the group has recognised property plant and equipment of
R 3 995 000 on consolidation. The company engaged an independent valuer to
value the equipment in order to determine its fair value based discounted
future cash flows.
Negative goodwill in the amount of R2 407 164 was recognised in profit and loss
in accordance with IFRS 3 - para 56.
Negative goodwill resulted mainly as a result of a bargain purchased by Dynamic
Cables RSA Limited.
Capensis (Proprietary) Limted has not been trading and therefore no since
acquisition profits and losses have been recognised.
Comments
Lifting of Suspension
We are pleased to report that Dynamic Cables has successfully obtained a Court
Order regularising its share register. This has led to the lifting of the
suspension of trading of shares on the JSE Limited. We are therefore pleased to
inform shareholders that the saga which began on 28 February 2002 has now been
settled.
Prospects
The company expects to trade very profitably in the second half of the year
given the fact that the uncertainty around its share capital has been resolved.
Dynamic Cables is now in a position to expand its business activities
respectively pursuing new markets and opportunities.
Corporate Governance
The directors fully support the principles of good corporate governance as set
out in the King Report and the company accepts the need to conduct the
enterprise with integrity, transparency and equal opportunity.
For and behalf of the board
SL Rai R MC Gregor Cape Town
Acting Chairman Company Secretary 17 February 2005
Segmental information
for the period ended 30 June 2005
Engineering Cabling Total
Primary Segment R"000 R"000 R"000
REVENUE 8,482 19,676 28,158
Sales 8,482 19,676 28,158
RESULT
Segment Results -256 2,760 2,504
Unallocated corporate expenses -1,101
Operating profit 1,403
Interest received 3
Interest expense -13 -52 -66
Negative Goodwill 2,407
Income taxes -403
Net Profit 3,345
OTHER INFORMATION
Segment assets 4,076 861 4,937
Segment intangible assets 10,286 10,286
Total consolidated assets 15,223
Segment interest bearing liabilities 112 573 685
Unallocated corporate liabilities 6,932
Total consolidated liabilities 7,617
Accounts receivable 4,371 5,754 10,125
Accounts payable 11,702 705 12,407
Capital Expenditure 1,551 - 1,551
Depreciation 736 393 1,129
Geographical Segment
REVENUE 8,482 19,676 28,158
- Gauteng 11,019 11,019
- Western Cape 8,482 8,657 17,139
TOTAL ASSETS 4,076 861 5
- Gauteng 689 689
- Western Cape 4,076 172 4,248
Business segments : for management purposes, the company is organised into two
major operating divisions namely the engineering division and the cabling
division. The divisions are the basis on which the company reports its primary
segment information.
The engineering division manufactures steel products for telecommunication and
other industries.
The cabling division supplies cabling and electrical components to the
telecommunication and associated industries.
Geographical segments :
The Company operates locally with outlets in Gauteng and the Western Cape. Its
entire engineering facility is based in the Western Cape.
Date: 17/02/2006 04:27:51 PM Produced by the JSE SENS Department
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