| Fri 17 Feb 2006, 16:50 | | Cape Empowerment Trust Limited - Revised Interims |
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CAE
CAE
Cape Empowerment Trust Limited - Revised Interims And Cautionary Announcement
Cape Empowerment Trust Limited
Registration number 1998/014606/06
Share code CAE ISIN ZAE000016952
("Cape Empowerment Trust" or "the group")
REVISED
Revised Interims and Cautionary Announcement
Abridged Group Income Statement
for the period ended 30 June 2005
Unaudited Audited Audited
6 months 6 months 12 months
30 June 30 June 31 December
2005 2004 2004
R"000 R"000 R"000
Turnover 32,320 - 3,691
Gross Profit 9,403
Operating income/ (expenses) (net) 305 -293 17
Finance costs (net) -148 -55 -56,368
Negative goodwill 2,407 - -
Investment income 420 56,143
Share of associates fair value
adjustment 6,000
Share of profit of associates - 2,042 1,119
Profit/(loss) before taxation 8,984 -348 -208
Income tax expense -407 - 7,015
Profit for the period 8,577 1,694 7,926
Attributable to:
Equity holders of the company 6,826 1,694 7,923
Minority interest 1,751 - 3
8,577 1,694 7,926
Earnings per share for profit attributable to the equity holders
of the Group during the period (expressed as cents per share)
Basic 5.4 1.5 6.3
Headline 3.5 1.5 6.3
Fully diluted earnings
per share (cents) 4.4 1.1 5.1
Abridged Group Balance Sheet
as at 30 June 2005
Unaudited Audited Audited
30 June 30 June 31 December
2005 2004 2004
R"000 R"000 R"000
ASSETS
Non-current assets 65,919 45,480 53,494
Property, plant and equipment 5,956 687 1,018
Goodwill 20,305 - -
Other intangible assets 10,286
Investments in associates - 12,179 23,306
Loans receivable 3,567 18,579 7,144
Unlisted investments 18,700 13,948 14,921
Deferred tax asset 7,105 87 7,105
Current assets 29,153 569 884
Inventories 8,545 - -
Trade and other receivables 17,389 569 579
Cash and cash equivalents 3,219 305
Total assets 95,072 46,049 54,378
EQUITY
Capital and reserves attributable to
the
Company"s equity holders 58,252 45,187 51,426
Share capital and premium 116 116 116
Treasury shares 10 10
Retained earnings 58,126 45,071 51,300
MINORITY INTEREST 9,822 - 3
Total equity 68,074 45,187 51,429
LIABILITIES
Non-current liabilities 3,838 319 659
Borrowings 1,348 319 659
Deferred tax liability 2,490 - -
Current liabilities 23,160 543 2,290
Trade and other payables 13,248 244 2,212
Current income tax liabilities 8,593 - 3
Borrowings 1,319 210 75
Bank overdraft - 89 -
Total liabilities 26,998 862 2,949
Total equity and liabilities 95,072 46,049 54,378
Statement of Changes in Equity
for the period ended 30 June 2005
Share Treasury Retained
Capital Shares earnings
Unaudited R"000 R"000 R"000
Balance at
1 January 2004 (Audited) 116 10 43,377
IFRS Adjustments -
Restated balance at 1 January 2004 116 10 43,377
Net profit for the period 7,923
Net profit as previously reported 7,923
IFRS Adjustments -
Balance at 31 December 2004 116 10 51,300
At acquisition reserves attributable to
minorities
Net profit for period 6,826
Balance at 30 June 2005 116 10 58,126
Minority Total
interest
Unaudited R"000 R"000
Balance at
1 January 2004 (Audited) - 43,503
IFRS Adjustments -
Restated balance at 1 January 2004 43,503
Net profit for the period 3 7,926
Net profit as previously reported 3 7,926
IFRS Adjustments -
Balance at 31 December 2004 3 51,429
At acquisition reserves attributable to minorities 8,068 8,068
Net profit for period 1,751 8,577
Balance at 30 June 2005 9,822 68,074
Abridged Group Cash Flow Statement
for the period ended 30 June 2005
Unaudited Audited Audited
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 3,371 -523 -3,850
Operating profit/(loss) before
working capital changes 9,102 -293 50,737
Working capital changes -4,866 -175 1,781
Cash (utilised)/generated by
operations 4,236 -468 52,518
Interest received - 35 54
Interest paid -148 -90 -56,422
Taxation paid -717 - -
Cash flow from investing activities -311 508 4,024
Purchase of property, plant and
equipment -1,494
Purchase of subsidiary -2,431
Proceeds from sale of PPE 872
Purchase/ (disposal) other
investments 2,300 -1,459 -11,863
Other investments -180 1,967 16,509
Cash flow from financing activities -146 -49 156
(Repayments of)/Proceeds from non
current borrowings -46 -49 291
(Repayments of)/Proceeds from
current borrowings -100 - -135
Net (decrease)/increase in cash 2,914 -64 330
Cash surplus at the beginning of the
period 305 -25 -25
Cash resources at the end of the
period 3,219 -89 305
Supplementary Information
for the period ended 30 June 2005
Unaudited Audited Audited
6 months 6 months 12 months
30 June 30 June 31 December
2005 2004 2004
Shares in issue (000"s) 125,858 115,858 125,858
Shares in issue - weighted (000"s) 125,858 115,858 125,858
Diluted number of shares - weighted
(000"s) 155,279 155,279 155,279
Net asset value per share (cents) 46.3 39.0 40.9
Depreciation, amortisation and
impairment charge (R"000) 1,129 - 223
Finance and operating lease
commitments (R"000) 4,948 - -
Profit attributable to ordinary
shareholders (R"000) 6,826 1,694 7,923
Earnings per share (cents) 5.4 1.5 6.3
Fully diluted earnings per share
(cents) 4.4 1.1 5.1
Headline earnings per share (cents) 3.5 1.5 6.3
Fully diluted headline earnings per
share - (cents) 2.8 1.1 5.1
Reconciliation of Headline Earnings
Profit attributable to ordinary
shareholders (R"000) 6,826 1,694 7,923
Negative goodwill -2,403 - -
Headline earnings (R"000) 4,423 1,694 7,923
Reconciliation of diluted number of
shares
Number of shares in issue ("000) 125,858 125,858 125,858
Number of shares to be cancelled
("000) 29,421 29,421 29,421
Diluted number of shares ("000) 155,279 155,279 155,279
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 Group 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 effect of these changes are summarised below :
Unaudited Unaudited Audited
six months six months Year ended
ended 30 ended 30 31 December
June 2005 June 2004 2004
Income Statement R"000 R"000 R"000
Investment income
Previously reported as 6,420 0 56,143
Restated as
Investment income 420 0 56,143
Share of associate fair
value adjustment 6,000
Previously investment income included a fair value adjustment that was equity
accounted from an unlisted investment.
As this is neither interest nor dividends, it has been shown separately on the
face of the income statement as share of associate"s fair value adjustment.
Net operating income
Previously reported as 2,712 -293 17
Restated as
Negative goodwill 305
Net operating income/(expense) 2,407 -293 17
Previously net operating income included negative goodwill. Per IFRS 3 -
Business combinations the line item where negative goodwill is included must be
identified. This was therefore shown separately on the face of the income
statement in the restated results.
Outside shareholders" interest
Previously outside shareholders" interest was reported above the "Net Income"
line. This has now been reported below the "Profit for the period" line, in
accordance with IAS 1: Presentation of financial statements.
Balance sheet
Goodwill and Other intangibles :
Previously reported as goodwill 30,591 - -
Restated as 30,591 - -
Goodwill 20,305 - -
Other intangibles 10,286 - -
Previously all intangible assets were reported as goodwill. Goodwill has now
been separately disclosed from other intangibles assets in accordance with IAS
1 : Presentation of Financial Statements Deferred taxes:
Previously reported as 4,615 87 7,105
Restated as Deferred tax asset 7,105 87 7,105
Deferred tax liability -2,490
Previously deferred taxes were set off - As the deferred taxes relate to
separate underlying entities and there is no legally enforceable right to
offset, these have not been off-set in accordance with IAS 12 Income Tax
Share Capital and Premium
Previously reported as 126 116 126
Restated as
Share capital and premium 116 116 116
Treasury shares 10 0 10
Previously share capital and premium included treasury shares. Treasury shares
have been transferred to a separate reserve : Treasury shares in the restated
results in accordance with IAS 1 : Presentation of Financial statements
Statement of changes in equity
Outside Shareholders" Interest
Previously reported under capital and reserves. Restated as Minority interest
under equity and shown on the statement of changes in equity in accordance with
IAS 1 Presentation of financial statements
Consolidation
Subsidiaries are all entities (including special purpose entities) over which
the Group 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 Group.
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 Group.
The excess of the cost of acquisition over the fair value of the Groups share
of the identifiable net assets is recorded as goodwill. If the cost of
acquisition is less than the fair value of the Groups" 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 Group 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 Groups" transitional elections are set out below:
Business Combinations
The group adopted IFRS 3 - Business combinations, from 1 January 2004 and
therefore no adjustments are required. The exemption available allows the Group
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 Group is not
making use of this transitional exemption and elects to measure individual
items of property, plant and equipment at original cost.
Share-based payments
The Group is electing not to apply IFRS 2 - Share Based Payments to equity
settled transactions prior to 7 November 2002 or to the same granted after that
date but which had vested prior to 1 January 2005 and has therefore taken the
available exemption.
Date of adoption for subsidiaries
A subsidiary that adopts IFRS later than its parent can elect to apply IFRS 1 -
First time adoption of International Financial Reporting Standards or to use
the carrying amounts of its assets and liabilities included in the consolidated
financial statements, subject to eliminating any consolidation adjustments. As
all subsidiaries of the group have adopted IFRS at the same adoption date 31
December 2005, no subsidiaries have elected this option.
Change in accounting policy
Due to the adoption of IFRS the following accounting policies have been
adopted/amended;
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/associate at the date of acquisition. Goodwill is tested annually
for impairment and carried at cost less accumulated impairment losses. Gains
and losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold. This policy has been applied prospectively in
accordance with IFRS 3 Business Combinations.
Trademarks
Trademarks is included under intangible assets. Trademarks with a definite
useful life are carried at cost less accumulated amortisation. Amortisation is
calculated using the straight line basis over their estimated useful lives.
Trademarks with an indefinite useful life are carried at fair value and tested
for impairment on a regular basis. Any impairment loss is recognised directly
in the income statement.
The useful life of trademarks are reviewed each period to determine whether
events and circumstances continue to support an indefinite useful life
assessment.
Interim Operations
The business has performed extremely well and diluted earnings per share has
grown by some 300% and the net asset value has grown by 19% for the half year.
All businesses under our control contributed positively to the bottom line.
Although Dynamic Cables traditionally provides the majority of the group"s
income in this particular period, the major source of income has been from the
group"s property investment.
Your board has no reason to believe that this trend will not continue for the
rest of the year and we anticipate exceeding the previous year"s income by a
significant margin.
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.
Segmental reporting
The company has diversified investments across three main categories, namely
Property, Technology and Security.
The condensed segment report deals with these three categories.
Subsequent Events
There have been no material subsequent events other than the progress of the
acquisition of interest in Sancino deal - Shareholders are referred to the
"withdrawal of the cautionary announcement" for further details in this regard.
Related Party Transactions
Related party transactions between subsidiaries of the group and between the
company and the group have been eliminated in full on consolidation. These
transactions are no less favourable than those arranged with third parties.
Business Combination
The financial results of Dynamic Cables RSA Limited ("Dynamic Cables") have
been consolidated for the first time with effect from the 1st January 2005,
being the date from which a controlling interest in the subsidiary company was
acquired.
Dynamic Cables RSA Limited allotted 20 065 751 shares to Cape Empowerment Trust
at 60cents per share, in terms of the agreement of purchase of Dynamic Cables
SA (Pty) Ltd by Dynamic Cables RSA Limited from Cape Empowerment Trust Limited.
As a result of the above issue of shares at the election of Dynamic Cables RSA
Limited, Cape Empowerment Trust Limited"s interest in Dynamic Cables increased
to a controlling interest and the parent - subsidiary relationship.
Previously this investment was accounted for under IAS 28: Investment in
associates, as the exact shareholding was difficult to ascertain owing to
certain share issue irregularities. These issues have since been resolved.
The Group held an effective 52.7% of the issued share capital of Dynamic Cables
RSA Limited and corresponding voting rights, thereby exercising control over
Dynamic Cables.
As it is impracticable to assess whether control was exercisable in prior
years, Dynamic Cables results have been consolidated prospectively from the 1st
January 2005, with no adjustments being made to the prior year figures.
The Group paid an effective R29 296 000 for the investment. The fair net asset
value attributable to the Group at the date of acquisition was R8 991 000 (R17
061 000 x 52.7%), resulting in goodwill of R20 305 000 being recognised.
Goodwill is mainly attributable to the overall synergy of the Dynamic Group.
Factors contributing to this include the growth in the brandmark of Dynamic
Cables SA (Pty) Ltd, the positive results of the engineering division and the
growth of the cabling and electrical operations. The fair value attributable to
these divisions is not reliably measurable and therefore no separate intangible
asset has been recognised. Goodwill will be tested on an annual basis for any
impairment in accordance with IAS 36: Impairment of assets. Currently directors
are of the opinion that goodwill is not impaired.
The Group has realised R6 826 000 after-tax profit in the current profit and
loss figures, being its share of the profits of Dynamic Cables RSA Limited,
since the acquisition date.
The following amounts were recognised for Dynamic Cables"s assets and
liabilities. These are the same as the carrying values determined in accordance
with IFRS immediately before the combination.
R"000
ASSETS 42,094
Property, plant and equipment 2,515
Intangibles 10,278
Inventories 7,106
Trade and other receivables 11,336
Other current assets 5,011
Cash and cash equivalents 5,848
LIABILITIES 25,032
Long term borrowings 731
Deferred tax 2,490
Trade and other payables 11,338
Taxation 8,902
Other current liabilities 1,571
Comments
GROUP PROFILE
Cape Empowerment Trust is a holding company with strong broad based empowerment
credentials. Our philosophy is to acquire either significant stakes in
operating companies or to control them. The ability of Cape Empowerment Trust
to grow operations, in which it invests, is a major criterion in their
selection.
INVESTMENTS
At present Cape Empowerment Trust is invested in the property sector,
technology sector through Dynamic Cables RSA Limited, and security sector
through Alexandra Security (Pty) Ltd.
PROSPECTS
The group is in an expansionary phase and is currently involved in the
following acquisitions:
Sancino (Pty) Ltd
Shareholders attention is drawn to the notice published : Results of offer to
Sancino Projects Limited ("Sancino") shareholders and acquisition of interest
on Sancino withdrawal of cautionary announcement.
Property Investments
Cape Empowerment Trust is currently in negotiations with various major role
players in the property industry with a view to establishing a black-controlled
listed variable loan stock property company with an initial portfolio of at
least R800 million. Further announcements in this regard are expected in the
near future.
Other Sectors
We are currently investigating potential acquisitions in the financial services
and agricultural sectors, details of which are expected to be announced in the
near future.
Trading Liquidity
Your board has been in consultation with various vendors, pool shareholders and
institutions with a view to increasing the amount of shares traded by twenty to
thirty percent of the issued share capital of the company within the next
twelve months. This is being done to address concerns expressed by many
potential shareholders of there not being sufficiently large quantities of
shares available on the market at any given time.
Further Cautionary Announcement
Until such time as detailed announcements are published in regard to the above
investment activity, CET shareholders are advised to exercise caution when
dealing in CET shares.
For and behalf of the board
SL Rai R MC Gregor Cape Town
Chief Executive Company Secretary 17 February 2005
Segmental information
for the period ended 30 June 2005
Property Technology Security
Primary Segment R"000 R"000 R"000
REVENUE 6,000 28,158 4,162
Sales - 28,158 4,162
Fair value adjustment of property 6,000
RESULT
Segment Results 1,450 2,504 335
Unallocated corporate expenses
Operating profit
Interest received 3 0
Interest expense -66
Negative Goodwill
Income taxes
Net Profit
OTHER INFORMATION
Segment assets 4,937 397
Segment intangible assets 10,286
Total consolidated assets
Segment interest bearing liabilities 685 663
Unallocated corporate liabilities
Total consolidated liabilities
Accounts receivable 10,125 673
Accounts payable 12,407 235
Capital Expenditure 1,551 -
Depreciation 1,129 -
Geographical Segment
REVENUE 6,000 28,158 4,162
- Gauteng 11,019
- Western Cape 6,000 17,139 4,162
TOTAL ASSETS - 4,937
- Gauteng 689
- Western Cape 4,248 397
Other Total
Primary Segment R"000 R"000
REVENUE 38,320
Sales 32,320
Fair value adjustment of property 6,000
RESULT
Segment Results 2,433 6,722
Unallocated corporate expenses
Operating profit 6,722
Interest received 3
Interest expense -82 -148
Negative Goodwill 2,407
Income taxes -407
Net Profit 8,577
OTHER INFORMATION
Segment assets 622 5,956
Segment intangible assets 20,305 20,305
Total consolidated assets 26,261
Segment interest bearing liabilities 1,348
Unallocated corporate liabilities
Total consolidated liabilities 1,348
Accounts receivable 6,591 17,389
Accounts payable 606 13,248
Capital Expenditure 1,551
Depreciation 1,129
Geographical Segment
REVENUE 38,740
- Gauteng 11,019
- Western Cape 420 27,721
-
TOTAL ASSETS 5,956
- Gauteng 689
- Western Cape 622 5,267
Business segments
The company has diversified investments across three main categories, namely
Property, Technology and Security. It is on these basis that the Group presents
its primary segments. These are managed independently to a large degree.
Geographical segments
The Group predominantly operates in the Western Cape, with activity in the
Gauteng region being attributable to Dynamic Cables" Johannesburg based
operations.
Date: 17/02/2006 04:51:07 PM Produced by the JSE SENS Department
