| Thu 30 Mar 2006, 15:23 | | Cape Empowerment Trust Limited - Reviewed Provisio |
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CAE
CAE
Cape Empowerment Trust Limited - Reviewed Provisional Financial Results and
Further Cautionary Announcement
Cape Empowerment Trust Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/014606/06)
Share code CAE & ISIN ZAE000016952
("Cape Empowerment Trust" or "the Company" or "the Group")
REVIEWED PROVISIONAL FINANCIAL RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2005 and cautionary announcement
Condensed consolidated income statement
Reviewed Audited
Year Year
ended ended
31 December 31 December
Change 2005 2004
% R"000 R"000
Sales 106 512 3 691
Cost of goods sold (73 102) (2 655)
Gross profit 33 410 1 036
Other income 1 672 56 794
Operating expenses (25 634) (9 269)
Operating profit 9 448 48 561
Fair value gain 14 130 7 650
Share of profits of associates - 1 119
Finance costs (1 637) (56 422)
Profit before taxation 21 941 908
Taxation (2 688) 7 015
Profit for year 19 253 7 923
Attributable to:
Equity holders of the Company 15 224 7 920
Minority interest 4 029 3
19 253 7 923
Basic earnings per share (cents) 117 13.7 6.3
Headline earnings per share (cents) 102 12.7 6.3
Diluted earnings per share (cents) 145 12.5 5.1
Diluted headline earnings
per share (cents) 127 11.6 5.1
Number of shares in issue
during year ("000) 140 618 125 858
Headline earnings calculation:
Profit for year 19 253 7 923
Impairment of goodwill 1 037 -
Negative goodwill (2 402) -
Headline earnings 17 888 7 923
Condensed consolidated balance sheet
Reviewed Audited
At At
31 December 31 December
2005 2004
R"000 R"000
ASSETS
Non-current assets 75 717 53 494
Property, plant and equipment 8 738 1 018
Goodwill 20 456 -
Other intangible assets 9 244 -
Investment in associates - 23 306
Financial assets held at fair value through
profit or loss 32 313 14 921
Loans and other receivables - 7 144
Deferred tax 4 966 7 105
Current assets 56 059 884
Inventories 8 942 -
Trade and other receivables 22 639 579
Current income tax receivable 12 -
Financial assets held at fair value through
profit or loss 2 990 -
Cash and cash equivalents 21 476 305
Total assets 131 776 54 378
EQUITY AND LIABILITIES
Capital and reserves 99 713 51 429
Share capital and reserves 87 746 51 426
Minority interest 11 967 3
Non-current liabilities
Borrowings 2 608 659
Current liabilities 29 455 2 290
Trade and other payables 18 358 2 287
Current income tax liabilities 11 097 3
Total equity and liabilities 131 776 54 378
Condensed consolidated statement of
changes in equity
Reviewed Audited
Year Year
ended ended
31 December 31 December
2005 2004
R"000 R"000
Balance at beginning of year 51 429 43 503
Net profit 19 253 7 923
Shares issued during year 21 107 -
Minorities interest on acquisition 7 924 3
Balance at end of year 99 713 51 429
Condensed consolidated cash flow statement
Reviewed Audited
Year Year
ended ended
31 December 31 December
2005 2004
R"000 R"000
Cash flows from operating activities 1 367 (3 850)
Cash (utilised in)/generated from operations (5 324) 52 518
Investment income 169 54
Finance costs (1 637) (56 422)
Taxation 8 159 -
Cash flows from investing activities (3 285) 4 024
Property, plant and equipment acquired (6 373) (1 494)
Proceeds from sale of assets 83 872
Purchase/(disposal) of financial assets 126 (11 863)
Acquisition of subsidiaries, net of cash
acquired
Other investments 2 879 16 509
Cash flows from financing activities 23 089 156
Proceeds from non-current borrowings 1 983 291
Proceeds from share issue 21 106 -
Repayment of current borrowings - (135)
Net increase in cash and cash equivalents 21 171 330
Cash and cash equivalents at beginning of year 305 (25)
Cash and cash equivalents at end of year 21 476 305
HIGHEST RETURN ON average total ASSETS OF ALL LISTED COMPANIES ON THE JSE
LIMITED
Segmental information
Reviewed - Year ended 31 December 2005
R"000 R"000 R"000 R"000 R"000
Other Property Technology Security Group
Primary reporting
segments
Revenue - - 97 303 9 208 106 511
Operating profit:
Segment result (3 209) - 12 429 228 9 448
Fair value gain 14 130 14 130
Finance costs (181) - (1 410) (46) (1 637)
Profit before
income tax 21 941
Income tax (2 688)
Profit for year 19 253
Assets 51 555 22 000 55 959 2 262 131 776
Geographical
segments
Revenue
- Western Cape - - 66 440 9 208 75 648
- Gauteng - - 30 863 - 30 863
- - 97 303 9 208 106 511
Assets
- Western Cape 51 555 22 000 54 340 2 262 130 157
- Gauteng - - 1 619 - 1 619
51 555 22 000 55 959 2 262 131 776
Notes to the condensed consolidated financial statements
1. Basis of preparation
The condensed consolidated financial information ("the financial
information") announcement is based on the reviewed financial statements of
Cape Empowerment Trust for the year ended 31 December 2005 which have been
prepared in accordance with International Financial Reporting Standards
("IFRS"), the Listings Requirements of the JSE Limited and the South African
Companies Act, 1973. The financial information has been reviewed by the
Company"s auditors, Ramathe (Western Cape) and their report is available for
inspection at the Company"s registered office.
IFRS 1, First-time Adoption of International Financial Reporting
Standards, has been applied in preparing these financial statements. These
condensed consolidated financial statements are the first financial statements
to be prepared in accordance with IFRS by the Company. Certain accounting
policy changes and reclassifications were applied to comply with IFRS 1. These
had no financial effect and, accordingly, no adjustments were made to current
or prior year figures due to the adoption of IFRS.
2. 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.
3. Dividends
No dividends have been declared or paid at 31 December 2005.
4. Subsequent events
On 15 January 2006 13 176 406 ordinary shares of the Company were issued
at 48 cents per share in exchange for Sancino Projects Limited shares. This
share issue was accounted for in the books of the Company at 31 December 2005.
5. 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.
6. Business Combinations
The financial results of Dynamic Cables RSA Limited ("Dynamic Cables")
have been consolidated for the first time with effect from 1 January 2005,
being the acquisition date of the subsidiary. Previously this investment was
accounted for under IAS: Investment in Associates, as the exact shareholding
was difficult to ascertain owing to certain share issue irregularities. It has
since been resolved that, at 1 January 2005, the Group holds an effective
52.7% of the issued share capital of Dynamic Cables 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 1 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 Cables Group.
COMMENTARY
GROUP PROFILE
Cape Empowerment Trust is a black-controlled listed entity with a strong
broad-based component. Up to now our philosophy has been to acquire control of
cash-generative companies which could benefit from empowerment shareholders"
contentions. We have recently broadened our horizons to include joint
ventures and investments in under-valued assets.
INVESTMENTS
The Group is invested in the following areas: Telecommunications, printing,
property, security and gaming. Shareholders are advised that further
announcements of acquisitions in the gaming and financial services arenas are
imminent.
PERFORMANCE FOR THE YEAR
With an increase in diluted earnings per share of 145% and diluted headline
earnings of 127%, we believe that the results speak for themselves. Suffice
to say that every trading entity within the Group has performed well during
the year under review.
Shareholders are referred to a trading update issued on 5 December 2005
wherein the Company advised shareholders that earnings per share and headline
earnings per share would increase by 120%-140%, respectively, for the year
under review. We are pleased to announce that diluted earnings per share have
increased by 145% and that diluted headline earnings have increased by 127%
for the year under review. We have every reason to believe that the Group is
poised to achieve at least similar levels of growth this year. As and when
further clarity is reached, appropriate trading updates will be released to
the market.
FINANCE WEEK SURVEY
In the edition dated 30 March 2006 Finance Week published a supplement which
contained a review of business achievements. Your Board was delighted to note
that Cape Empowerment Trust was ranked the highest out of the top 200
companies for return on average total assets. We achieved a return on assets
of 123% over a one-year period and 47.51% over a five-year period.
TRADING LIQUIDITY AND SHARE PRICE
One of the Board"s objectives during the year was to improve the share price
as well as the liquidity by 20%-30% during the year. With a growth of
50 cents in price per share and 46 490 000 of the shares trading during the
year under review, we believe that these objectives have been achieved.
SANCINO LIMITED
Cape Empowerment Trust has reported that it had achieved a majority
shareholding of 53% of the ordinary shares issued. Subsequently Sancino has
converted Sanlam"s debt to ordinary shares resulting in the company being debt
free and our shareholding being diluted to 23%. We have objected to the
process and, if necessary, will take legal action to enforce our rights. We
are however in discussions with Sanlam and Sancino and we are hopeful that a
negotiated solution will soon be reached.
FURTHER CAUTIONARY ANNOUNCEMENT
Due to ongoing negotiations with Sanlam and vendors in other acquisitions,
shareholders are advised to exercise caution when dealing in the Company"s
shares.
For and on behalf of the Board
S L Rai R J McGregor
Chief Executive Company Secretary
Cape Town
29 March 2006
Date: 30/03/2006 03:23:10 PM Produced by the JSE SENS Department
