CIDA EMPOWERMENT TRUST (Registration number: IT5016/04) ANNUAL FINANCIAL STATEMENTS CIDA Empowerment Trust Annual Financial Statements 28 February 2007 Report of the independent auditors to the trustees’ of the CIDA Empowerment Trust We have audited the annual financial statements of CIDA Empowerment Trust which comprises the trustees’ report, the balance sheet as at 28 February 2007, the income statement and the statement of changes in equity, a summary of significant accounting policies and other explanatory notes, as set out on pages 3 to 13.   Trustees’ Responsibility for the Financial Statements The trustees are responsible for the preparation and fair presentation of these financial statements in accordance with South African Statements of Generally Accepted Accounting Practice. 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 directors, 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. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the trust at 28 February 2007, and of its financial performance and its cash flows for the year then ended in accordance with South African Statements of Generally Accepted Accounting Practice.   Deloitte & Touche   Per: B.G.C. Fannin Partner 21 February 2008 REPORT OF THE TRUSTEES The trustees have pleasure in presenting their report on the activities of the trust for the year ended 28 February 2007. General review The trust was registered on 14 June 2004.   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) into 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.   Financial results The results of the trust are set out in the attached annual financial statements. Subsequent events No events of a significant nature have occurred between the reporting date and the date of this report. 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) M E Davids   J S De Jager (Resigned: 25 August 2007) N P Hani Dongwana (Resigned: 1 May 2007) P L Heinamann (Resigned: 13 December 2006) N P Khumalo   J Kogl D M Lawrence   L  Y Mashologu            N N Mazwai   C T Mhlongo (Resigned: 27 April 2007) S S Ndlungwane   C Ramaphosa   (Resigned: 5 June 2006) D Skwambane   The business and postal address is as follows: Registered office Postal address 3 on Glenhove Postnet Suite 218 Corner Glenhove and Tottenham Roads Private Bag X31 Melrose Estate Saxonwold 2196   2132 INCOME STATEMENT Notes 2007 2006 R R Income Donations 7 476 - Administration expenses   12 250 900 - Profit before fair value adjustments (180) - Fair value gains 3 12 250 799 - Profit before taxation 12 258 095 - Taxation 6 (2 450 160) - Net surplus for the year 9 807 935 - BALANCE SHEET Notes 2007 2006 R R Assets Non-current assets Investments 4 12 250 900 100         Current assets Affiliated accounts receivable 5 4 430 - Cash & cash equivalents 2 865 105 164 Total current assets 7 295 105 164 Total assets 12 258 195 105 264         Funds and liabilities Funds Founding donation 100 100 Accumulated surplus  9 807 935 - Total funds and reserves   9 808 035 100 Deferred capital gains taxation 6 2 450 160 - Current liabilities Affiliated accounts payable 7 - 105 164 Total current liabilities - 105 164 Total funds and liabilities   12 258 195 105 264 STATEMENT OF CHANGES IN FUNDS Founding donation Accumulated surplus Total R R Balance at 28 February 2006 100 - 100 Surplus for the year - 9 807 935 9 807 935 Balance at 28 February 2007   100 9 807 935 9 808 035 CASH FLOW STATEMENT Notes 2007 2006 R R Operating activities: Cash generated from operations 8 (102 299) 105 164 Net cash (utilised in) from operating activities   (102 299) 105 164         Financing activities Increase in trust funds received   - 100 Increase in investment - (100) Net cash  from financing activities - -         Net (decrease) increase in cash and cash equivalents (102 299) 105 164 Cash and cash equivalents at the beginning of the year 105 164 - Cash and cash equivalents at end of the year 2 865 105 164 NOTES TO THE ANNUAL FINANCIAL STATEMENTS   1.  Presentation of financial statements These financial statements are presented in Rands since this is the currency in which the majority of the company’s transactions are denominated.   2.  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 South African Statements of Generally Accepted Accounting Practice. 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 year.   Taxation Income tax expense represents the sum of the tax currently payable and deferred tax. Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.  The Trust’s liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method.  Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.  Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit not the accounting profit.    Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Trust is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.   Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the trust expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Trust intends to settle its current tax assets and liabilities on a net basis. Financial instruments Financial assets and financial liabilities are recognised on the company’s balance sheet when the company has become a party to the contractual provisions of the instrument. Measurement Financial instruments are initially measured at cost, which includes transaction costs.  Subsequent to initial recognition, these instruments are measured as set out below: Trade and other receivables Trade and other receivables are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. Cash and cash equivalents Cash and cash equivalents are measured at fair value. Trade and other payables Trade and other payables are stated at their nominal value. Gains and losses on subsequent measurement Gains and losses arising from a change in the fair value of financial instruments that are not part of a hedging relationship are included in net profit or loss for the year in which it arises. Investments Investments are recognised on a trade-date basis and are initially measured at cost. At subsequent reporting dates, debt securities that the company has the expressed intention and ability to hold to maturity (held-to-maturity debt securities) are measured at amortised cost, less any impairment loss recognised to reflect irrecoverable amounts.  The annual amortisation of any discount or premium on the acquisition of a held-to-maturity security is aggregated with other investment income receivable over the term of the instrument so that the revenue recognised in each period represents a constant yield on the investment. Investments other than held-to-maturity debt securities are classified as either a financial asset at fair value through profit and loss or as available-for-sale investments.  These investments are measured at subsequent reporting dates at fair value.  Unrealised gains and losses on a financial asset at fair value through profit and loss are dealt with in net profit or loss for the period. Unrealised gains or losses on investments classified as available-for-sale are recognised in equity, through the statement of changes in equity, until the financial asset is derecognised, at which time the cumulative gain or loss previously recognised in equity is recognised in profit or loss for the period. Cash and cash equivalents For the purpose of the cash flow statement a change in the fair value of financial instruments that are not part of a hedging relationship on call with bank nets of bank overdraft, all of which are available for use by the company unless otherwise stated. NOTES TO THE ANNUAL FINANCIAL STATEMENTS % Holding 2007 2006 R R 3. Fair value gains ABSA Batho Bonke investment - 180 000 ordinary shares held in Business Venture Investment no 927 8 12 250 799 -   12 250 799 -   4. Investments Unlisted       3.1 At cost     - Cida Empowerment (Pty) Ltd 100 % 100 100 3.2 At fair value     -  ABSA Batho Bonke investment 180 000 ordinary shares held in  Business venture Investment no 927 12 250 800 - 12 250 900 100 5. Affiliated accounts receivable       CIDA Empowerment (Pty) Ltd   4 430 - The amounts receivable are short-term in nature. The trustees consider that the carrying amount of affiliate accounts receivable approximate their fair value.                  6. Deferred capital gains taxation       Balance at the beginning of the year   - - Charge to the income statement 2 450 160 - Balance at the end of the year   2 450 160 -   Comprising:     - Fair value gains   2 450 160 - 7. Affiliated accounts payable       CIDA Empowerment (Pty) Ltd   - 105 164 8. Cash flow from operations       Surplus before taxation   12 258 095 - Adjustments for:   - Fair value gains   (12 250 800) -   Cash flow from operations before adjustments for changes in working capital   7 295 -         Adjustments to working capital:       Increase in affiliated accounts receivables   (4 430) - (Decrease) increase in affiliated accounts payable   (105 164) 105 164 Total   (105 164) 105 164 Cash flow from operations   (102 299) 105 164