Mergers, Acquisitions and Financial Results

Dynamic Cables has reported an attributable profit of R8.29 million for the year to December 2005, almost triple the R2.86 million achieved in 2004.

This was on a 30% increase in revenue from R74.7 million to R97.3 million and represents a margin of 8.5%, compared with 3.8% previously.

Gross profit was 33% up at R28.7 million (2004: R21.57 million). Although other operating costs increased from R15.19 million to R18.19 million, the group added back negative goodwill of R3.16 million.

This resulted from acquiring asset holding company Capensis for R1.59 million, well below the fair value of its net assets, set at R4.75 million.

Basic earnings per share rose from 6.1c to 12.4c, although headline earnings per share, which excludes the negative goodwill benefit and includes goodwill impairment, fell from 10.5c to 9.2c.

The group was cash generative during the period, with cash generated from operations amounting to R8.37 million, against a negative R11.47 million the previous year. Dynamic Cables had net current assets at the end of the year, with current assets covering current liabilities 1.4 times.

Dynamic Cables says in its results announcement that all its divisions performed better than in previous years.

“Our engineering division had a slow first five months of the year, but achieved excellent turnover during the remaining seven months and was ahead of forecast earnings,” it says.

“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 bandwidth becomes more affordable, more companies will upgrade their networks.”

It adds that the impact of the 2010 Soccer World Cup being hosted in SA 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.”

The Dynamic Cables share closed 11c or 29.6% up at 48c on just one trade of 14 000 shares yesterday. It was trading at 50c this morning.

Parent Cape Empowerment Trust, which rose 7c or 11.9% to 66c yesterday, was trading unchanged this morning.