| Thu 28 Sep 2006, 16:42 | | Cape Empowerment Trust - Reviewed interim results: |
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CAE
CAE
Cape Empowerment Trust - Reviewed interim results: six months ended 30 June 2006
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 group")
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2006
ABRIDGED GROUP INCOME STATEMENT
for the period ended 30 June 2006
Reviewed Unaudited Audited
6 months 6 months 12 months
30 June 30 June 31
December
2006 2005 2005
R"000 R"000 R"000
Turnover 74 593 32 320 106 513
Gross profit 27 100 9 403 33 411
Operating income/(expenses) 6 819 305 6 873
(net)
Finance costs (net) (998) (148) (1 637)
Negative goodwill - 2 407 2 407
Investment income 275 420 169
Income from equity accounted 21 450 6 000 14 130
investments
Profit/(loss) before taxation 27 546 8 984 21 942
Income tax expense (2 480) (407) (2 688)
Profit for the period 25 066 8 577 19 254
Attributable to:
Equity holders of the company 21 891 6 826 15 225
Minority interest 3 175 1 751 4 029
25 066 8 577 19 254
Earnings per share for profit
attributable to the equity
holders of the group during the
period (expressed as cents per
share)
Basic 12,5 5,4 10,8
Headline 12,5 3,5 9,5
Fully diluted earnings per 12,5 4,4 9,9
share (cents)
ABRIDGED GROUP BALANCE SHEET
as at 30 June 2006
Reviewed Unaudited Audited
30 June 30 June 31
December
2006 2005 2005
R"000 R"000 R"000
ASSETS
Non-current assets 118 090 65 919 75 716
Property, plant and equipment 9 388 5 956 8 738
Goodwill 20 456 20 305 20 456
Other intangible assets 9 251 10 286 9 244
Investments in associates 69 841 - -
Other financial assets 3 387 22 267 32 312
Deferred tax asset 5 767 7 105 4 966
Current assets 59 312 29 153 56 060
Inventories 18 744 8 545 8 942
Other financial assets 3 095 - 2 990
Current tax receivable - - 13
Trade and other receivables 28 111 17 389 22 639
Prepayments 204 - -
Cash and cash equivalents 9 158 3 219 21 476
Total assets 177 402 95 072 131 776
EQUITY
Capital and reserves 109 637 58 252 87 745
attributable to the company"s
equity holders
Share capital and premium 21 222 116 21 222
Treasury shares - 10 -
Retained earnings 88 415 58 126 66 523
Minority interest 15 142 9 822 11 968
Total equity 124 779 68 074 99 713
LIABILITIES
Non-current liabilities 2 992 3 838 2 296
Borrowings 2 992 1 348 2 296
Deferred tax liability - 2 490 -
Current liabilities 49 631 23 160 29 767
Trade and other payables 27 933 13 248 18 057
Current income tax liabilities 13 675 8 593 11 097
Borrowings 6 930 1 319 613
Operating lease liability 371 - -
Provisions 722 - -
Total liabilities 52 623 26 998 32 063
Total equity and liabilities 177 402 95 072 131 776
ABRIDGED GROUP CASH FLOW STATEMENT
for the period ended 30 June 2006
Reviewed Unaudited Audited
6 months 6 months 12 months
30 June 30 June 31
December
2006 2005 2005
R"000 R"000 R"000
Cash flow from operating 8 328 3 371 2 393
activities
Operating profit/(loss) before 7 960 9 102 10 901
working capital changes
Working capital changes 1 704 (4 866) (15 199)
Cash (utilised)/generated by 9 664 4 236 (4 298)
operations
Interest received 275 - 169
Interest paid (998) (148) (1 637)
Taxation paid (613) (717) 8 159
Cash flow from investing (21 342) (311) (4 536)
activities
Purchase of property, plant and (1 844) - (7 901)
equipment
Purchase of subsidiary - (2 431) (23 448)
Proceeds from sale of PPE - - 3 390
Purchase/(disposal) other - 2 300 126
investments
Associate company changes (19 498) (180) 23 297
Cash flow from financing 696 (146) 23 314
activities
(Repayments of)/Proceeds from - (46) 1,670
non-current borrowings
(Repayments of)/Proceeds from 696 (100) 538
current borrowings
Proceeds on share issue - - 21 106
Net (decrease)/increase in cash (12 318) 2 914 21 171
Cash surplus at the beginning 21 476 305 305
of the period
Cash resources at the end of 9 158 3 219 21 476
the period
SUPPLEMENTARY INFORMATION
for the period ended 30 June 2006
Reviewed Unaudited Audited
6 months 6 months 12 months
30 June 30 June 31
December
2006 2005 2005
Shares in issue (000"s) 175 767 125 858 175 767
Shares in issue - weighted 175 767 125 858 140 618
(000"s)
Diluted number of shares - 175 767 155 279 153 794
weighted (000"s)
Net asset value per share 71,0 46,3 56,7
(cents)
Depreciation, amortisation and 1 141 1 129 1 621
impairment charge (R"000)
Finance and operating lease 10 293 4 948 2 201
commitments (R"000)
Profit attributable to ordinary 21 891 6 826 15 225
shareholders (R"000)
Earnings per share (cents) 12,5 5,4 10,8
Fully diluted earnings per 12,5 4,4 9,9
share (cents)
Headline earnings per share 12,5 3,5 9,5
(cents)
Fully diluted headline earnings 12,5 2,8 8,7
per share (cents)
Reconciliation of Headline
Earnings
Profit attributable to ordinary 21 891 6 826 15 225
shareholders (R"000)
Goodwill amortised - - 546
Negative goodwill - (2 403) (2 403)
Headline earnings (R"000) 21 891 4 423 13 368
Reconciliation of diluted
number of shares
Number of shares in issue 175 767 125 858 175 767
("000)
Share options - 29 421 -
Number of shares to be - - (21 973)
cancelled ("000)
Diluted number of shares ("000) 175 767 155 279 153 794
STATEMENT OF CHANGES IN EQUITY
for the period ended 30 June 2006
Share Share Retained Minority
capital premium earnings interest Total
Reviewed R"000 R"000 R"000 R"000 R"000
Balance at 1 January 116 51 299 3 51 418
2005 (Audited)
Profit for the year 15 225 4 029 19 254
Issue of shares 59 21 047 21 106
At acquisition 7 935 7 935
reserves
attributable to
minorities
Balance at 31 175 21 047 66 524 11 967 99 713
December 2005
Net profit for 21 891 3 175 25 066
period
Balance at 30 June 175 21 047 88 415 15 142 124 779
2006
SEGMENTAL INFORMATION
for the period ended 30 June 2006
Geographical Technology Property Gaming Security Other Total
segment R"000 R"000 R"000 R"000 R"000 R"000
Revenue 68 027 - - 6 566 - 74 593
- Gauteng 22 123 - - - - 22 123
- Western 45 904 - - 6 566 - 52 470
Cape
Total assets 16 263 - - 3 190 157 949 177 402
- Gauteng 1 723 - - - - 1 723
- Western 14 540 - - 3 190 157 949 175 679
Cape
Business segments
The company has diversified investments across four main categories, namely
Technology, Property, Gaming and Security. It is on this 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.
ACCOUNTING POLICIES
The condensed financial statements for the six months ended 30 June 2006 were
prepared in accordance with IAS 34 - Interim Financial Reporting and in
compliance with the Listings Requirements of the JSE Limited.
The financial information has been prepared on the basis of the recognition and
measurement requirements of International Financial Reporting Standards (IFRS).
The accounting policies of the group have remained consistent with those
previously reported in the 2005 audited annual financial statements.
The results have been reviewed by Grant Thornton. Their unqualified review
opinion is available for inspection at the company"s registered office.
CONSOLIDATION
Associates are those entities over which the group is able to exert significant
influence but which are neither subsidiaries nor interests in a joint venture.
Investments in associates are initially recognised at cost and subsequently
accounted for using the equity method.
INTERIM OPERATIONS
Cape Empowerment Trust CEO"s review of operations
I am pleased to report that Cape Empowerment Trust Limited has performed
strongly in a number of areas for the six month period ended 30 June 2006. The
group grew fully diluted headline earnings per share to 12,5 cents compared with
2,8 cents in 2005 and grew the tangible net asset value per share from 46,3
cents to 71,0 cents.
The main thrust behind the increase in earnings has come from our aggressive
acquisition trail and resultant effective increase in our exposure to Grand
Parade Investments Limited at favourable acquisition costs, which accounted for
R21 million of the profits and which we have valued at R37 million under other
financial assets on our balance sheet. GPI has exceptionally good prospects for
strong, sustained growth in earnings and in addition to the enhanced economic
value the acquisitions have afforded us we have also managed to broaden our
black shareholder base by the manner in which the acquisitions have been
structured. Other areas of note are the Dynamic Cables RSA Limited group
experiencing an exceptionally good first half of the year. Revenues increased by
141% to R68 million from R28 million in 2005. We also achieved growth in our
property portfolio once again, where we increased the net asset value of our
property assets to R32 million from R22 million at 31 December 2005. Alexandra
security has also continued to grow steadily and although it still only
contributes on a relatively small scale towards our net earnings we are
confident that it has the potential to grow into a good cash generator for the
group.
As mentioned in our annual report in order to diversify our income stream and
enlarge our asset base we are still planning certain acquisitions in the
financial services sector, notably in the fields of implemented consulting,
alternative strategy asset management and property asset management. These are
fields in which we have been able to deliver superior performance in managing
our own assets, as the growing prosperity of Cape Empowerment Trust attests, and
we look forward to achieving great success in these activities.
In general, we are confident that our principal investments are well managed and
well positioned in their respective markets to make further advances in the
years ahead. We will continue to deploy our expertise and experience to benefit
our growing shareholder base and in particular the various empowerment trusts
that hold our shares.
DIVIDENDS
No dividends have been declared or paid at interim date.
SEGMENTAL REPORTING
The company has diversified investments across four main categories, namely
Technology, Property, Gaming and Security. The condensed segment report deals
with these four categories.
SUBSEQUENT EVENTS
Subsequent to 30 June 2006 African Alliance Properties has signed further leases
in respect of its properties, thus increasing the value of its portfolio.
Additional properties are in the process of being purchased.
There have been no other material subsequent events other than our effective
increase in our exposure to Grand Parade Investments. 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
During the period the company acquired a significant influence over the
following companies and has equity accounted for the following investments in
terms of IAS 28 - Investment in associates. (See consolidation above.)
Investment Holding Date acquired
BLRT Investments Limited R7 000 000 43% 3 April 2006
Western Cape Women"s R6 566 100 40% 7 March 2006
Investment Forum
PRIOR PERIOD ERROR
In the prior period Investments in the following entries were incorrectly
disclosed as Other Financial Assets at fair value through profit and loss in
terms of IAS 32 - Financial Instruments: Disclosure and presentation. Due to the
significant influence of the group"s holding in these underlying investments
more appropriate disclosure is in terms of IAS 28 - Investment in associates.
(See consolidation above.)
Effect of the change in policy on the prior period net profits and taxation is R
nil.
Reclassified investments Holding
African Alliance Properties (Pty) Limited 20%
Sancino Projects Limited 23%
COMMENTS
GROUP PROFILE
Cape Empowerment Trust is a holding company with strong broad based empowerment
credentials. Our philosophy is either to acquire 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, gaming
sector, or technology sector through Dynamic Cables RSA Limited, and security
sector through Alexandra Security (Pty) Limited.
PROSPECTS
The group is in an expansionary phase and is currently involved in the following
acquisitions:
The GPI SPV Trust
The group is currently subscribing to obtain 1 million units in the above trust
at a cost of R6,50 per unit. Each unit in the trust is supported by one share in
Grand Parade Investments Limited. The voting rights in the trust are matched to
an individual"s unit holding.
Property Investments
Cape Empowerment Trust through African Alliance Properties is currently in
negotiations with various major role players in the property industry with a
view to establishing a black-controlled variable loan stock property company
with an initial portfolio of at least R800 million. We expect to reach this
level of critical mass during the first quarter of next year.
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.
Profitability
Shareholders are referred to our trading update of 2 May 2006. The company has
exceeded that trading update and a new trading update will be issued in the near
future to guide the market.
For and behalf of the board
SL Rai R McGregor Cape Town
Chief Executive Company Secretary 29 September 2006
Date: 28/09/2006 04:42:20 PM Produced by the JSE SENS Department
