Tough six months take toll on CET

By Iain Scott, ITWeb group consulting editor

Johannesburg, 30 Nov 2000

Tough trading conditions and a dispute with the vendors of Intella have taken their toll on Cape Empowerment Trust (CET), which incurred a 63.6% decline in headline earnings per share for its interim six months.

A creditor of Intella Limited, a subsidiary of Paradigm Capital Holdings, applied to have Intella liquidated.

The Intella businesses were sold by IT company Intella to a wholly owned subsidiary of CET, H Investments 194, and while there are no legal proceedings against CET or its subsidiary, the sale would be void if Intella is liquidated.

CET has not included the earnings of Intella in the latest set of results for the six months to August or those of the year-earlier period.

However, owing to "an exceptionally tough six months", CET`s results for the six months are mainly attributable to the Dynamic Cables subsidiary, which continued to show very healthy growth, says CE Shaun Rai.

The group`s gross revenue decreased to R37.04 million (1999: R44.07 million), while operating income fell to R2.93 million (R6.5 million).

After-tax income showed a decline to R2.58 million (R3.63 million). After a boost from exceptional items, attributable income rose marginally to R3.83 million from R3.54 million previously.

Headline earnings fell to 1.6c (4.4c) a share.

The balance sheet shows a decline in capital and reserves from R18.33 million to R12.11 million, which Rai says is the result of the write-off of goodwill arising from various acquisitions.

He adds that Printhouse is continuing to suffer due to the high rate of bad debt and low margins in the clothing industry.

Creative Response has been awarded a significant outsourcing contract from Telkom and the Dynamic Cable contract has been renewed.

As a result Rai believes the second half of the year will yield "significantly" better results than the first half.

He says the group is still in talks regarding its involvement in Conlog, and he believes that the conclusion of the talks will result in a much improved CET.