CIDA EMPOWERMENT TRUST
(Trust number: IT5016/04)
ANNUAL FINANCIAL STATEMENTS

CIDA Empowerment Trust Annual Financial Statements
28 February 2008


Report of the independent auditors to the members of CIDA Empowerment Trust

We have audited the annual financial statements and group annual financial statements of CIDA Empowerment Trust which comprises the Trustees’ report, the income statement, the balance sheet as at 29 February 2008, the statement of changes in equity and cash flow statement for the period then ended, a summary of significant accounting policies and other explanatory notes, as set out below.

Trustees’ Responsibility for the Financial Statements

The trust’s Trustees are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa.  This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.  An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant estimates made by the Trustees, as well as evaluating the overall financial statement presentation and disclosures.

We believe that the audit evidence that we have obtained is sufficient and appropriate to provide a reasonable basis for our opinion.

Emphasis of matter

As detailed in the Trustee's report, the 2007 Group comparatives comprise only the Trust's results as no consolidation was prepared.

Opinion

In our opinion, except for the impact of the above, the financial statements present fairly, in all material respects, the financial position of the group and trust at 29 February 2008, and of its financial performance and its cash flows for the period then ended in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa.

Deloitte & Touche

Per: B G C Fannin
Partner - Assurance
10 December 2008

CIDA EMPOWERMENT TRUST REPORT OF THE TRUSTEES 29 February 2008

The Trustees have pleasure in presenting their report on the activities of the Group and trust for the period ended
29 February 2008.

General review

CIDA Empowerment Trust is an investment trust which was established to fund higher level education in the accredited higher education institution, CIDA City Campus.  To achieve this objective, the Trust pursues investment opportunities related to broad-based Black Economic Empowerment.

The primary objectives of the CIDA Empowerment Trust and that of its subsidiary, CIDA Empowerment (Pty) Limited, are:

  • To fund the education of its beneficiaries, the current and future black students of the CIDA Education Group, 60% of whom must be black women students (in accordance with the specifications of its Trust Deed) in perpetuity.
  • To develop, educate and train Black persons (as defined in the Broad-Based Black Empowerment Act (“the Act”), Black women and Black Designated Groups (as defined in the Act.).

In its role as a Black Economic Empowerment investor, the principle activity of the Trust is to build and manage a high-yielding investment portfolio which will generate a continuous flow of income thus enabling the Trust to fulfil its stated objectives.

Group comparative figures

In 2007, the company did not prepare consolidated financial statements, therefore the group 2007 details disclosed in the financial statements comprise only the Trust's results.

Financial results

The results of the trust are set out in the attached annual financial statements.

Subsequent events

Insvestments

In line both the executive management and CIDA Empowerment Investment committee's recommendation, the company invested in 136 612 ordinary shares amounting to R2 500 000 in the proposed SASOL BEE transaction.

Trustees

The trustees of the trust during the year under review and up to the date of this report were as follows:

A P Blecher
W V Cuba (Resigned: 12 March 2007)
ME Davids
JS De Jager (Resigned: 25 August 2007)
NP Hani Dongwana(Resigned: 1 May 2007)
PL Heinamann (Resigned: 13 December 2007)
NP Khumalo
J Kogl
DM Lawrence
LY Mashologu
NN Mazwai
CT Mhlongo  (Resigned: 27 April 2007)
SS Ndlungwane
C Ramaphosa  (Resigned: 5 June 2006)
D Skwambane

 

The business and postal address is as follows:  

Registered office

3 on Glenhove
Corner of Glenhove and Tottenham roads
Melrose Estate
2196

Postal address

Postnet Suite 218
Private Bag X31
Saxonwold
2132


CIDA EMPOWERMENT TRUST INCOME STATEMENT for the year ended 29 February 2008

    Group Trust
      Restated   Restated
  Notes 2008 2007 2008 2007
    R R R R
           
Revenue 5 30 522 994 7 476 10 173 643 7 476
Administration costs   (3 119 290) (180) (132 504) (180)
Profit before fair value adjustments    27 403 704 7 296 10 041 139 7 296
Fair value gain (loss) 6 34 094 162 12 250 799 (4 510 800) 12 250 799
Profit from operations 7 61 497 866 12 258 095 5 530 339 12 258 095
Equity accounted profit from joint venture 8 39 124 - - -
Net finance costs 9 (3 933 003) - 964 509 -
Profit before taxation   57 603 987 12 258 095 6 494 848 12 258 095
Taxation 10 (7 789 561 ) - - -
Profit for the period   49 814 426 12 258 095 6 494 848 12 558 095

CIDA EMPOWERMENT TRUST BALANCE SHEET 29 February 2008

    Group Trust
  Notes 2008 Restated
2007
2008 Restated
2007
    R R R R
Assets          
           
Non-current assets          
Property, plant and equipment 11 26 391 - - -
Investments 12 130 583 930 12 250 800 7 740 000 12 250 800
Investment in joint venture 8 39 174 - - -
Investment in subsidiary 13 - 100 100 100
Loans receivable 14 6 466 419 - - -
    137 115 914 12 250 900 7 740 100 12 250 900
           
Current assets
         
Other receivables 15 110 839 - - -
Affiliated accounts receivable 16 - 4 431 - 4 431
Cash and cash equivalents   36 014 404 2 864 11 140 656 2 864
Total current assets   36 125 243 7 295 11 140 656 7 295
Total assets
  173 241 157 12 258 195 18 880 756 12 258 195
           
Funds and liabilities          
           
Funds          
Foundation donation 17 100 100 100 100
Accumulated surplus   104 022 005 12 258 095 18 752 943 12 258 095
Total funds and reserves   104 022 105 12 258 195 18 753 043 12 258 195
           
Non-current liability
         
Preference share capital   1 - - -
Long-term loan 18 59 666 133 - - -
Total non-current liabilities   50 666 134 - - -
           
Deferred taxation 19 12 750 636 - - -
           
Current liabilities
         
Trade and other payables 20 345 337 - - -
Provisions 21 22 750 - - -
Affiliated accounts payable 22 - - 127 713 -
Taxation   5 434 195 - - -
Total current liabilities   5 802 282 - 127 713 -
Total funds and liabilities
  173 241 157 12 258 195 18 880 756 12 258 195

CIDA EMPOWERMENT TRUST STATEMENT OF CHANGES IN EQUITY for the year ended 29 February 2008  

  Founding
donation
Accumulated
surplus
Total
  R R R
Group      
       
Balance at 28 February 2006 100 - 100
Surplus for the year - 12 258 095 12 258 095
Balance at 28 February 2007 100 12 258 095 12 258 195
Surplus for the year - 49 814 426 49 814 426
Add net cost of investment in subsiduary - 41 949 484 41 949 484
Balance at 29 February 2008 100 104 022 005 104 022 105
       
Trust      
       
Balance at 28 February 2006 100 - 100
Surplus for the year - 12 258 095 12 258 095
Balance at 28 February 2007 100 12 258 095 12 258 195
Surplus for the year - 6 494 848 6 494 848
Balance at 29 February 2008 100 18 752 943 18 753 043
       

CIDA EMPOWERMENT TRUST CASH FLOW STATEMENT for the year ended 29 February 2008

    Group Trust
  Notes 2008 2007 2008 2007
    R R R R
Operating activities:          
Cash generated from operating activities 23 27 720 026 (102 299) 10 173 283 (102 299)
Interest received   4 353 123 - 964 509 -
Interest paid   (8 286 126) - - -
Net cash used in operating activities   23 787 023 (102 299) 11 137 792 (102 299)
           
Investing activities:          
Additional investments during the year   (31 933 288) - - -
Additions to property, plant and equipment   (41 910) - - -
Net cash used in investing activities   (31 975 198) - - -
           
Financing activities:          
Long-term loan raised   51 146 015 - - -
Preference share issued   1 - - -
Increase in loan receivable   (6 946 301) - - -
Net cash from financing activities   44 199 715 - -  
           
Net increase in cash and cash equivalents   36 011 540 (102 299) 11 137 792 (102 299)
Cash and cash equivalents at beginning of the year   2 864 105 163 2 864 105 163
Cash and cash equivalents at end of the year   36 014 404 2 864 11 140 656 2 864

CIDA EMPOWERMENT TRUST NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 29 February 2008

1. Presentation of financial statements

    These financial statements are presented in Rands since this is the currency in which the majority of the trust’s transactions are denominated.

2. Adoption of new and revised standards

2.1 Standards and Interpretations effective in the current period

    In the current year, the Trust has adopted IFRS 7 Financial Instruments: Disclosures which is effective for annual reporting periods beginning on or after 1 January 2007, and the consequential amendments to IAS 1 Presentation of Financial Statements.

2.2  Standards and Interpretations in issue not yet adopted

    At the date of authorisation of these financial statements the following Interpretations were in issue but not yet effective:

    • IAS 23 (Revised) Borrowing Costs (effective for accounting periods beginning on or after 1 January   2009);
    • IFRIC 8 Scope of IFRS 2
    • IFRIC 9 Reassessment of embedded derivatives

    The Trustees anticipate that all of the above Interpretations will be adopted in the Trust’s financial statements for the period commencing 1 January 2008 and that the adoption of those Interpretations will have no material impact on the financial statements of the Trust in the period of initial application.

3. Summary of significant accounting policies

    The annual financial statements have been prepared under the historical cost convention with the exception of certain assets that are carried at fair value, and in accordance with International Financial Reporting Standards. The principal accounting policies adopted in the preparation of these annual financial statements are set out below and are consistent in all material respects with those applied in the previous period. 

    Basis of consolidation

    The consolidated financial statements incorporate the financial statements of the Trust and entities (including special purpose entities) controlled by the Trust (its subsidiaries). Control is achieved where the Trust has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

    The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

    Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

    All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.  

    Business combinations

    Acquisitions of subsidiaries and businesses are accounted for using the purchase method. The cost of the business combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 Business Combinations are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.

    Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

    Interests in joint ventures

    A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control, that is when the strategic financial and operating policy decisions relating to the activities of the joint venture require the unanimous consent of the parties sharing control.

    Where a group entity undertakes its activies under joint venture arrangements directly, the Group's share of jointly controlled assets and any liabilities incurred jointly with other venturers are recognised in the financial statements of the relevant entity and classified according to their nature. Liabilities and expenses incurred directly in respect of interests in jointly controlled assets are accounted for on an accrual basis. Income from the sale or use of the Group's share of the output of jointly controlled assets, and its share of joint venture expenses, are recognised when it is probable that the economic benefits associated with the transactions will flow to/from the Group and their amount can be measured reliably.

    Joint venture arrangements that involve the establishment of a separate entity in which each venturer has an interest are referred to as jointly controlled entities. The Group reports its interests in jointly controlled entities using proportionate consolidation, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non-current Assets Held for Sale or Discontinued Operations. The Group's share of the assets, liabilities, income and expenses of jointly controlled entities are combined with the equivalent items in the consolidated financial statements on a line-by-line basis.

    Where the Group transacts with its jointly controlled entities, unrealised profits and losses are eliminated to the extent of the Group's interest in the joint venture.

Revenue recognition

 

    Revenue is measured at the fair value of the consideration received or receivable.  Revenue is reduced fort estimated customer return, rebates and other similar allowances.

    Dividend and interest received

    Dividend revenue from instruments is recognised when the shareholder’s right to receive payment has been established.

    Interest revenue is accrued on a time basis, by reference to the principle outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

    Financial instruments

    Financial assets

    Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value

    Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL), ‘held-to-maturity’ investments, ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’.

    The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

    Effective interest method

    The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period.  Income is recognised on an effective interest basis for debt instruments other than those financial assets designated as at FVTPL.

    Financial assets at FVTPL

    Financial assets are classified as at FVTPL where the financial asset is either held for trading or it is designated as at FVTPL.

    A financial asset is classified as held for trading if:

    • it has been acquired principally for the purpose of selling in the near future; or
    • it is a part of an identified portfolio of financial instruments that the Trust manages together and has a recent actual pattern of short-term profit-taking; or
    • it is a derivative that is not designated and effective as a hedging instrument.

    A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if:

    • such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
    • the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Trust's documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
    • it forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments:
    • Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.
    • Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset. Fair value is determined in the manner described in note 24.

    Loans and receivables

    Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

    Impairment of financial assets

    Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

    For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include observable changes in national or local economic conditions that correlate with default on receivables.

    The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

    If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

    Derecognition of financial assets

    The Trust derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Trust neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Trust recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Trust retains substantially all the risks and rewards of ownership of a transferred financial asset, the Trust continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

4. Critical judgements in applying accounting policies

The following are the critical judgements, apart from those involving estimations (see below), that  management has made in the process of applying the entity’s accounting policies and that have the  most significant effect on the amounts recognised in financial statements.

    Revenue recognition  

    Judgements

    In the process of applying the group and company's accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:

    Income Taxes

    The company recognises the net future tax benefit related to deferred income tax assets to the extent that it is probable that the deductible temporary differences will reverse in the foreseeable future. Assessing the recoverability of deferred income tax assets requires the company to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the company to realise the net deferred tax assets recorded at the balance sheet date could be impacted. Additionally, future changes in tax laws in the jurisdictions in which the company operates could limit the ability of the company to obtain tax deductions in future periods.

    Contingent liabilities

    Management applies its judgment to the fact patterns and advice it receives from its attorney, advocates and other advisors in assessing if an obligation is probable, more likely than not, or remote. This judgement application is used to determine if the obligation is recognised as a liability or disclosed as a contingent liability.

    Fair value of derivatives and other financial instruments

    As described in note 24, the directors use their judgement in selecting an appropriate valuation technique for financial instruments not quoted in an active market. Valuation techniques commonly used by market practitioners are applied. Other financial instruments are valued using a price earnings analysis based on assumptions supported, where possible, by observable market price or rates. The estimation of fair value of unlisted shares includes some assumptions not supported by observable market prices or rates. The carrying amount of the shares for the Group is R130 583 930 (2007: 12 250 800). Details of the assumptions used and of the results of sensitivity alalyses regarding these assumptions are provided in note 24.  

 
  Group Trust
  2008 2007 2008 2007
  R R R R
5.  Revenue        
Revenue comprises:   - - -
- Consulting fees 632 623 - - -
- Donations 10 422 943 7 476 10 173 643 7 476
- Grants 81 714 - - -
- Capital profit on sale of donated shares 18 700 000 - - -
- Licensing fees 150 000 - - -
- Dividend income 535 714 - - -
  30 522 994 7 476 10 173 643 7 476
         
6.  Net fair value gains (losses)        
Fair value gains comprise of:        
- ABSA Bathe Bonke Investment (4 510 800) 12 250 799 (4 510 800) 12 250 799
- SOMA Initiative Investment 2 552 125 - - -
- Trans Union Credit Bureau Investment 23 857 900 - - -
- CIDA BCE Investments (Pty) Ltd - - - -
- Via Capital (Pty) Ltd (436 339) - - -
- Ownership Solution (Pty) Ltd 336 881 - - -
- BCE Foodservices Equipment 12 294 395 - - -
  34 094 162 12 250 799 (4 510 800) 12 250 799
7. Profit from operations        
This is arrived at after taking  the following into account:        
Expenses:        
Auditors remuneration        
- Audit fees 231 557 195 000 57 889 -
         
  Depreciation:        
- Office equipment 314 - - -
- Furniture and fittings 836 - - -
- Computer equipment 13 708 - - -
  14 858 - - -
- Consulting fees 258 175 - - -
Loss on disposal of fixed assets 661 - - -

- Operating lease - property rental

130 755 - - -
The trust does not have any obligations under future non-cancellable leases.
         

8. Joint venture

  The following amounts are included in the financial statements:
Group Issued
Share Capital
%
Held
Cost Equity
Share profit
Total
2008   % R R R
           
MRX 78 Investment Holdings (Pty) Ltd 100 50 50 39 124 39 174
           
 
  A summary of the financial position and results of operations are as follows:
  Current
assets
Current
liabilities
Accumulated
(loss)
Non-Distributable
Reserve
  R R   R
         
MRX 78 Investment Holdings (Pty) Ltd 454 - (172 753) 252 000
         
 
  Group Trust
  2008 2007 2008 2007
9. Net finance costs R R R R
         
Interest received 4 353 123 - 964 509 -
Interest paid (8 286 126) - - -
  (3 933 003) - 964 509 -
         
10. Taxation        
         
South African normal taxation        
- Current – normal 328 186 - - -
- Capital gains taxation 2 711 500 - - -
- Deferred taxation 5 025 763 - - -
- Rate change (275 888) - - -
  7 789 561 - - -
         
Taxation rate reconciliation        
Profit before taxation 57 603 987 12 258 095 6 494 848 12 258 095
Taxation at the statutory rate 16 705 156 3 554 848 1 883 506 3 554 848
         
Permanent differences        
Dividends received (155 357) - - -
Grants received (23 697) - - -
Non-deductible expenses 99 907 - - -
Capital gains taxation on fair value gains (5 794 581) - - -
Capital gain realized in the current year (2 711 500) - - -
Change in taxation rate (662 329) - - -
Assessed loss utilized 2 215 458 - - -
Trust income not taxable (3 230 064) (3 554 900) (3 230 064) (3 554 900)
Trust expenses not deductible 1 346 568 52 1 346 558 52
Reconciled balance 7 789 561 - - -

11.  Property, plant and equipment

Group Office
equipment
Furniture
and fittings
Computer
equipment
Total
  R R R R
2008        
         
Cost        
At 1 September 2007 - - - -
Additions 12 346 5 869 23 695 41 910
Disposals - (825) - (825)
At 29 February 2008 12 346 5 044 23 695 41 085
         
Accumulated depreciation        
At 1 September 2007 - - - -
Disposals - (164) - (164)
Depreciation 314 836 13 708 14 858
At 29 February 2008 314 672 13 708 14 694
         
Carrying value        
At beginning of the period - - - -
At end of the period 12 032 4 372 9 987 26 391
 

  Group Trust
  2008 2007 2008 2007
12. Investments  R R R R
         
ABSA Bathe Bonke Investment 7 740 000 12 250 800 7 740 000 12 250 800
Transunion Credit Bureau 67 691 201      
SOMA Initiative 4 881 085 - - -
Via Capital 763 661 - - -
Ownership Solutions 336 908 - - -
Scatterings of Africa 13 333 - - -
Interwill 50 - - -
BCE Foodservices Equipment (Pty) Ltd        
Ordinary shares 27 913 933 - - -
BCE Foodservices Equipment (Pty) Ltd        
Preference share capital 21 243 809 - - -
  130 583 930 12 250 800 7 740 000 12 250 800
         
13. Investment in subsidiary        
         
CIDA Empowerment (Pty) ltd - 100 100 100
         
14. Loans receivable        
         
- Ownership Solutions 2 308 164 - - -
- BCE Foodservices Equipment (Pty) Ltd 4 158 255 - - -
  6 466 419 - - -
         
15.  Other receivables        
         
Trade receivables 110 839 - - -
         
16. Affiliated accounts receivable        
         
CIDA Empowerment (Pty) Ltd - 4 431 4 431 4 431
         
The amounts receivable are  short-term
in nature.  The  trustees consider that the  
carrying amount of  affiliate  accounts
receivable approximate  their fair value.
       
         
17. Trust funds        
         
Founding donation 100 100 100 100
         
18. Long-term loan        
         
Investec Bank Limited 50 666 133 - - -
         
The loan bears interest at prime plus
4% and is by intent long term in nature.
       
         
19.  Deferred taxation        
         
Deferred taxation purchased on acquisition 7 287 616 - - -
Charge to the income statement 5 025 763 - - -
Change in rate (275 888) - - -
Opening balance for CIDA  BCE 713 145 - - -
  12 750 636 - - -
         
20. Trade and other payables        
         
Trade payables 165 337 - - -
Other payables and accruals 180 000 - - -
  345 337 - - -
         
21.  Provisions        
         
 Group Leave pay      
         
Balance at the beginning of the year -      
Charge to the income statement 22 750      
Balance at the end of the year 22 750      
         
22. Affiliated accounts payable        
         
CIDA Empowerment (Pty) ltd - - 127 713 -
         
23. Cash generated from operations        
         
Surplus for the year 57 603 987 12 258 095 6 494 848 12 258 095
Adjustments for:        
- Fair value gains (34 094 162) (12 250 799) 4 510 800 (12 250 799)
- Depreciation 14 858 - - -
- Loss on disposal of assets 661 - - -
- Interest received (4 353 123) - (964 509) -
- Interest paid 8 286 126 - - -
- Increase in provisions 22 750 - - -
         
Cash flow from operations before
adjustments for changes in working capital
27 481 097 7 296 10 041 139 7 296
         
Adjustments for working capital:        
- Increase in other receivables (110 839) - - -
- Descrease (increase) in
  affiliated accounts receivables
4 431 (4 431) 4 431 (4 431)
- Increase (decrease) in
  accounts payable
345 337 (105 164) 127 713 (105 164)
  238 929 (109 595) 132 144 (109 595)
  27 720 026 (102 299) 10 173 283 (102 299)

 

24. Financial instruments

Collateral pledged by Group

In the event of default on repayment of the loan from Investec Bank Ltd when due, the following pledged assets become the property of Investec Bank Ltd:


Financial assets pledged Carrying
value 2008
Carrying
value 2007
     
250 Ordinary shares in BCE Foodservices Equipment (Pty) Ltd
    27 913 933
    17 303 443
250 Cumulative redeemable preference shares in
BCE Foodservices Equipment (Pty) Ltd
    21 243 809
    19 559 904
Total
    49 157 742
    36 863 347

A preference share was issued to Investec together with the loan from them to finance the shares purchased in BCE Foodservices Equipment (Pty) Ltd. The preference share issued to Investec are redeemable at the discretion of the preference shareholder. The preference shareholder is entitled to 49% of the amount which is distributable to the ordinary shareholders of the company on the date at which such amount becomes available. The preference share is also redeemable at any time after 3 years from the date of issue which was 1 December 2005.

Collateral pledged by the Trust

There were no financial assets pledged as collateral by the company in the current year.    

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the trust.  The trust only transacts with entities that are rated the equivalent of investment grade and above. 

The trust is not vulnerable to credit risk, as the trust does not hold any receivables that could result in a financial loss for the trust.


  Group
   
Trade receivables 110 839
Loans receivable 6 466 419
Total 6 577 258

Credit quality

The Group has two types of financial assets that could be exposed to credit risk: Loans receivable from investment companies and other receivables. 

Loans to investment companies – prior to acquisition of any investment, the company’s risk profile, company strategy and performance is evaluated.  The loans to BCE Foodservices Equipment and Ownership Solutions are therefore considered to have a low credit risk and hence good credit quality.

The other receivables in the current year are considered to be immaterial.

Market risk management

Interest rate risk refers to the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Price risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices other than those arising from interest rate risk or foreign currency risk.

Foreign currency risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The trust’s activities expose it primarily to the financial risks of fluctuations in equity prices due to the fact that investments are valued using P/E ratio’s, as well as fluctuations in interest rates due to the loan from Investec Bank Ltd bearing interest at prime plus 4% and a loan issued to BCE Foodservices Equipment (Pty) Ltd which bears interest at the prime rate.  The trust is not vulnerable to foreign currency risk, as none of its transactions have been done in a foreign currency.

Market risk exposures are measured using sensitivity analyses.  A sensitivity analysis shows how profit or loss before taxation and equity would have been affected by changes in the relevant risk variable that were reasonably possible at the reporting date.

Interest rate

The sensitivity analyses below have been determined based on the relevant financial instruments’ exposure to interest rates at the balance sheet date.  In the current year the exposure to the interest rates can be linked to the long term loan from Investec Bank Ltd which bears interest at prime rate plus 4% as well as the loan issued to BCE Foodservices Equipment (Pty) Ltd which bears interest at the prime interest rate.  The analysis is prepared assuming the amount of the liability outstanding at the balance sheet date was outstanding for the whole year.  The following basis points increases or decreases is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.  The change for 2007 (comparative year) is the actual 250 basis points increase in interest rates that occurred over the 2008 financial year.

Interest rate sensitivity analyses - Group


Loan to BCE Foodservices Equipment (Pty) Ltd 2008 2007
  R R
  % %
RSA prime rates    
Basis point increase 150 250
Potential movement in profit after taxation 62 374 101 409
     
Loan from Investec Bank Ltd R R
  % %
RSA prime rates    
Basis point increase 150 250
Potential movement in profit after taxation (759 992) (1 074 855)

Price risk

The sensitivity analysis below have been determined based on the average volatility of the JSE Securities Exchange All Share Index (ALSI), over the preceding 5 years.

This is a specific risk at this entity, since the fair value adjustments to the investments are calculated using the Price/Earnings valuation model. The Price/Earnings ratio's of similar listed companies were used in the valuations performed and as a result the volatility of the JSE Securities Exchange All Share Index (ALSI) were used to assess the other price risk of this entity.

The volatility of this market index has been used for the volatility of the investment held by this trust.  It was decided to use the movement in the ALSI as a representative movement of all investments, given that the ALSI broadly represents the market and the South African economy as a whole.

The effect on the profit after taxation is based on an upward movement in the ALSI of 15.29% (2007 13.55%).  A positive number below indicates an increase in profit after taxation and a negative number represents a decrease in profit after taxation.

Price risk sensitivity analysis – Group  

 
Investment in BCE Foodservice Equipment (Pty) Ltd 2008 2007
  R R
Movement in P/E ratio 7% 13.55 %
Potential movement in profit after taxation 3 072 638 5 711 500
     
Investment in Transunion Credit Bureau 2008 2007
  R R
Movement in P/E ratio 7% 13.55 %
Potential movement in profit after taxation 5 368 348 7 965 199
     
Investment in SOMA 2008 2007
  R R
Movement in P/E ratio 7% 13.55 %
Potential movement in profit after taxation 834 037 472 413
     
Investment in Ownership solutions 2008  
  R  
Movement in P/E ratio 7%  
Potential movement in profit after taxation 20 282  
   
Investment in ABSA Bathe Bonke Group Trust
  2008 2007 2008 2007
  R R R R
ALSI Index Increase 7% 13.55% 7% 13.55%
Potential movement to profit after taxation 1 440 000 3 409 200 1 440 000 3 409 200

Liquidity risk management

Liquidity risk is the risk that the trust will not be able to meet its financial obligations as they fall due.

The trust is not vulnerable to liquidity risk, since the trust does not have any long-term commitments.

25. Restatement of prior year figures

The trust obtained Public Benefit Organisation status in the current year.  As a result the deferred taxation raised on the fair value gains in the prior year is not longer appropriate as was reversed.


“The education offered at CIDA City Campus is designed to make students relevant, truly empowered, integrated citizens and leaders that are skilled and equipped to build the South African economy and society.”

- President Thabo Mbeki, addressing Parliament, 2001

 

“I believe the students at CIDA are using creativity and lateral thinking skills to a remarkable degree.”

- Edward De Bono

 


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