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DYM
DYM
Dynamic Cables RSA Limited - Reviewed Provisional 2005 Financial Results
DYNAMIC CABLES RSA LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/001807/06)
Share code DYM & ISIN ZAE000028270
("Dynamic Cables" or "the company" or "the Group")
REVIEWED PROVISIONAL 2005 FINANCIAL RESULTS
Group Income Statement
for the year ended 31 December 2005
Reviewed Audited
year ended year ended
% 2005 2004
change R"000 R"000
Turnover 30 97 304 74 697
Gross profit 33 28 702 21 565
Other operating costs (18 186) (15 190)
Negative goodwill 3 164 -
Impairment adjustments (1 037) (518)
Results from operating activities 116 12 643 5 857
Income from investments 38 25
Finance charges (1 410) (1 214)
Profit before taxation 141 11 271 4 668
Taxation (2 982) (1 808)
Profit attributable to
ordinary shareholders 190 8 289 2 860
Basic earnings per share (cents) 103 12.4 6.1
Headline earnings per share (cents) (12) 9.2 10.5
Shares in issue (`000) 66 800 46 734
Headline earnings calculation:
Net profit for year 8 289 2 860
Surplus on liquidation of subsidiary - 518
Impairment of goodwill 1 037 327
Other impairment adjustments - 1 186
Negative goodwill (3 164) -
Headline earnings 6 162 4 891
Group Balance Sheet
at 31 December 2005
Reviewed Audited
year ended year ended
2005 2004
R"000 R"000
ASSETS
Non-current assets 16 558 12 793
Property, plant and equipment 6 905 2 515
Intangible assets 9 244 10 278
Deferred tax asset 409 -
Current assets 39 858 29 301
Inventories 8 942 7 106
Trade and other receivables 17 815 11 336
Short-term loans 3 319 583
Financial assets 2 990 4 427
Cash and cash equivalents 6 792 5 849
Total assets 56 416 42 094
EQUITY
Equity attributable to equity
holders of the company 25 064 16 775
Share capital and premium 104 075 104 075
Accumulated losses (79 011) (87 300)
LIABILITIES
Non-current liabilities 3 322 3 105
Borrowings 792 732
Deferred tax liability 2 530 2 373
Current liabilities 28 030 22 214
Trade and other payables 15 838 11 337
Current income tax liabilities 11 476 8 902
Borrowings - 1 353
Short-term portion of
non-current liabilities 300 219
Operating lease liability 416 403
Total equity and liabilities 56 416 42 094
Group Cash Flow Statement
for the year ended 31 December 2005
Reviewed Audited
year ended year ended
2005 2004
R"000 R"000
Cash flow from operating activities 7 651 (11 752)
Cash receipts from customers 90 269 83 405
Cash paid to suppliers and employees (81 904) (94 877)
Cash (utilised in)/generated by operations 8 365 (11 472)
Interest paid (93) (33)
Interest received 38 25
Taxation paid (659) (272)
Cash flow from investing activities (4 147) 161
Additions to property, plant and equipment (3 996) (1 182)
Proceeds on disposal of investments 1 437 1 861
Purchase of subsidiary (1 588) -
Increase in other financial assets - (518)
Cash flow from financing activities (2 561) 11 271
Proceeds from issue of share capital - 11 876
Decrease in borrowings (2 561) (605)
Net (decrease)/increase in cash 943 (320)
Cash surplus at beginning of year 5 849 6 169
Cash resources at end of year 6 792 5 849
Supplementary Information
Reviewed Audited
year ended year ended
2005 2004
Fully diluted earnings per share (cents) 14.5 5.6
Fully diluted headline earnings
per share (cents) 10.8 9.5
Net asset value per share (cents) 38 25
Shares in issue - weighted (`000)* 66 800 46 734
Diluted number of shares - weighted (`000) 57 039 51 500
Capital expenditure (R"000) 2 736 1 186
Capital commitments (R"000) 1 500 -
Depreciation, amortisation and impairment
charge (R"000) 2 796 1 256
Finance and operating lease commitments (R"000) 3 883 5 235
* The company holds 9 439 126 shares which it acquired in terms of the
resolution of the "tainted" share dispute referred to in the 2004 annual
financial statements. These shares will be cancelled and have been excluded
from the diluted number of shares used in the calculation of diluted earnings
per share and diluted headline earnings per share. This exclusion is anti-
dilutive.
Basis of Preparation and Accounting Policies
The consolidated financial statements are prepared in accordance with, and
comply with the Listing Requirements of the JSE Limited, International
Financial Reporting Standards ("IFRS") and the South African Companies Act,
1973, as amended.
Accounting policies of the Group are consistent with those adopted in the
prior year, except for the accounting treatment for operating lease payments
that are now recognised on a straight-line basis in line with IAS 17.
Significant Acquisition of Subsidiary
On 1 January 2005 Dynamic Cables acquired 100% of the shares of Capensis
(Proprietary) Limited. Capensis (Proprietary) Limited is an asset holding
company.
Dynamic Cables purchased the company for an amount of R1 587 836.
The fair value of the net assets purchased amounted to R4 752 000 at
acquisition date (1 January 2005) (previously reported as R3 990 000 as the
initial accounting figures were based on provisional amounts).
The fair value of the net assets is recognised on consolidation as required by
IFRS 3 at R4 752 000 which amount is attributed to property, plant and
equipment in terms of an independent valuation obtained by the company at
acquisition date for this purpose.
Depreciation of R712 800 on the fair value of this property, plant and
equipment has been charged to the income statement.
Negative goodwill in the amount of R3 164 164 was recognised in the income
statement in accordance with IFRS 3 - para 56. Negative goodwill resulted from
a bargain purchase by Dynamic Cables.
Capensis (Proprietary) Limited has no since acquisition profits and losses.
Statement of Changes in Equity
Share Share Accumulated
capital premium profit/(loss) Total
R"000 R"000 R"000 R"000
Balance at 1 January 2004
- Audited 2 337 89 862 (89 975) 2 224
Change in
accounting policy
- IAS 17 (185) (185)
Restated balance at
1 January 2004 (90 160) 2 039
Issue of share capital 910 10 966 11 876
Net profit for year 2 860 2 860
Net profit as
previously reported 2 961 2 961
IAS 17 - Change
in accounting
policy (101) (101)
Balance at 31 December 2004 3 247 100 828 (87 300) 16 775
Net profit for year 8 289 8 289
Balance at 30 June 2005 3 247 100 828 (79 011) 25 064
Segmental Information
for the year ended 31 December 2005
Engineering Cable Total
Primary segment R"000 R"000 R"000
REVENUE 41 288 56 015 97 303
Operating costs (38 883) (47 433) (86 316)
Segmental results 2 405 8 582 10 987
Unallocated corporate expenses (1 508)
Negative goodwill 3 164
Operating profit 12 643
Interest received 38
Interest expense (1 410)
Profit before tax 11 271
Income tax (2 982)
Profit after tax 8 289
Other Information
Engineering Cable Total
R"000 R"000 R"000
Segment assets 4 399 2 506 6 905
Segment intangible assets 9 244 9 244
Total consolidated assets 16 149
Depreciation 713 1 038 1 751
Geographical segment
REVENUE 41 288 56 015 97 303
- Gauteng 30 863 30 863
- Western Cape 41 288 25 152 66 440
Total assets 4 399 2 506 6 905
- Gauteng 1 619 1 619
- Western Cape 4 399 887 5 286
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 the 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.
Dividends
No dividends have been declared or paid at 31 December 2005.
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.
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 deconsolidated 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.
Audit Opinion
Grant Thornton"s unmodified review report on the condensed financial
statements contained in this provisional report is available for inspection at
the company"s registered office.
Commentary
It is with pleasure that we greet our shareholders and present the 2005
financial results for Dynamic Cables.
All our divisions performed above previous years, resulting in fully diluted
headline earnings exceeding last year"s figures by 13.68%.
Our engineering division had a slow first five months of the year, but
achieved excellent turnover during the remaining seven months and were ahead
of forecasted earnings.
There is a continuing demand for infrastructure rehabilitation and new metal
enclosures from the parastatals supplying electricity and telecommunication
services. We are well-poised to continue the supply of essential enclosures to
these sectors.
Our electrical cable division was well-placed to take advantage of the
expansion in the industrial sector with major motor manufacturers, as well as
the port and marine sectors requiring maintenance and expansion of facilities.
We have also supplied cable for the Airport"s expansion.
In the telecom and IT sectors, our fibre optic and copper connectivity
products enjoyed continuing demand and will persist for the next two to three
years in having demand from many companies that are upgrading networks to take
advantage of new technologies. As band-width becomes more affordable, more
companies will upgrade their networks. Recently deregulation in the mobile and
fixed-line domains have increased competition amongst large communication by
upgrading their networks and providing new services. The impact of the 2010
World Cup Soccer hosting will result in expansion of telecommunication and
broadcasting services.
These are, in summary, the best results Dynamic Cables has achieved to date
and we anticipate good results in the 2006 financial year.
We wish to thank our management and workforce for the hard work that was
performed in achieving these remarkable year-on-year results.
For and on behalf of the board
T D Rai R J McGregor
Chief Executive Company Secretary
Cape Town
29 March 2006
Date: 30/03/2006 03:24:12 PM Produced by the JSE SENS Department
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