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IFH
IFH
IFH - IFA SA - Annual Results for the year ended 30 June 2007
IFA HOTELS & RESORTS LIMITED
(Registration number 1919/001318/06)
Share code: IFH & ISIN: ZAE000075669
("IFA SA" or "the company")
ANNUAL RESULTS FOR THE YEAR ENDED 30 JUNE 2007
CONSOLIDATED INCOME STATEMENTS
Year ended 30 Year ended 30
June 2007 June 2006
Audited Audited
R`000 R`000
Revenue 120,522 161,007
Operating profit 35,646 55,599
Investment income 7,143 15,227
Finance costs (9,662) (10,731)
Share of results of associate (4,382)
Profit before taxation 28,745 60,095
Taxation (8,424) (18,117)
Profit for the period 20,321 41,978
Profit attributable to equity holders of
the parent 20,321 41,978
Basic and diluted earnings per share
(cents)("EPS") 9.31 19.52
SEGMENTAL ANALYSIS
IFA Hotels IFA Zimbali
Year ended Year ended Year ended Year ended
30 June 2007 30 June 2006 30 June 2007 30 June 2006
Audited Audited Audited Audited
R`000 R`000 R`000
Revenue from
external
customers 78,569 127,314 38,015 34,756
Internal revenue - - - -
78,569 127,314 38,015 34,756
EBITDA 48,202 55,923 5,388 4,321
EBIT 48,135 55,827 2,461 109
Profit/(Loss)
after Tax 32,435 42,364 (6,107) (3,603)
IFA Boschendal IFA Estates
Year ended Year ended Year ended Year ended
30 June 2007 30 June 2006 30 June 2007 30 June 2006
Audited Audited Audited Audited
R`000 R`000 R`000 R`000
Revenue from
external
customers - - 54 -
Internal
revenue - - - -
- - 54 -
EBITDA (6,035) (5) (5,247) -
EBIT (6,035) (5) (5,263) -
Profit/(Loss)
after Tax (6,094) 1,662 (3,733) -
IFA SA Eliminations
Year ended Year ended Year ended Year ended
30 June 2007 30 June 2006 30 June 2007 30 June 2006
Audited Audited Audited Audited
R`000 R`000 R`000 R`000
Revenue from
external
customers 3,884 2,624 - (3,687)
Internal
revenue 2,794 - (2,794) -
6,678 2,624 (2,794) (3,687)
EBITDA (4,686) (334) (3,238) 2
EBIT (4,797) (334) (3,238) 1
Profit/(Loss)
after Tax 7,058 1,555 (3,238) -
Consolidated
Year ended Year ended
30 June 2007 30 June 2006
Audited Audited
R`000 R`000
Revenue from
external
customers 120,522 161,007
Internal revenue - -
120,522 161,007
EBITDA 34,384 59,907
EBIT 31,263 55,599
Profit/ (Loss) after Tax 20,321 41,978
CONSOLIDATED BALANCE SHEETS
30 June 2007 30 June 2006
Audited Audited
R`000 R`000
ASSETS
Non-current assets 164,198 146,052
Property plant and equipment 95,072 83,132
Intangible assets 2,298 5,534
Investment in associates 25,380 13,903
Loan to associate 35,148 35,851
Investments 6,300 7,300
Deferred tax - 332
Current assets 283,497 312,645
Inventories 2,819 2,454
Township properties 81,016 86,217
Trade and other receivables 153,301 142,733
Other financial assets 673 1,095
Assets held for sale - 212
Cash and cash equivalents 45,688 79,934
Total assets 447,695 458,697
EQUITY AND LIABILITIES
Capital and reserves 178,112 148,654
Issued share capital and share premium 71,892 71,892
Revaluation reserve 32,830 23,797
Distributable reserves 73,390 52,965
Non-current liabilities 160,754 133,594
Shareholder`s loans 125,405 113,571
Borrowings 12,233 -
Deferred tax 23,116 20,023
Current liabilities 108,829 176,449
Shareholder`s loans 42,192 47,794
Trade and other payables 30,432 66,707
Advance deposits 1,206 903
Deferred revenue 27,099 50,885
Liabilities held for sale - 212
Taxation 7,900 9,948
Total equity and liabilities 447,695 458,697
Net asset value per share (cents) ("NAV") 81.62 68.12
Net tangible asset value per share (cents)
("NTAV") 80.57 65.59
Number of shares in issue 218,210,680 218,210,680
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Non-
Share Share distributable Distributable
capital premium reserves reserves Total
R`000 R`000 R`000 R`000 R`000
Balance at
1 July 2005 1 - - 17,739 17,740
2,181 69,710 23,797 35,226 130,914
Issue of share
capital 2,181 69,710 - - 71,891
Transaction costs (6,814) (6,814)
Surplus on
revaluation of
land and
buildings - - 28,933 - 28,933
Deferred tax on
revaluation
surplus - - (5,073) - (5,073)
Net profit for
the period - - 41,977 41,977
Transfer to
distributable
reserves - - (63) 63 -
Balance at
1 July 2006 2,182 69,710 23,797 52,965 148,654
Surplus on
revaluation of
land and
buildings - - 12,256 - 12,256
Deferred tax on
revaluation
surplus - - (3,119) - (3,119)
Net profit for
the period - - - 20,321 20,321
Transfer to
distributable
reserves - - (104) 104 -
Balance at
30 June 2007 2,182 69,710 32,830 73,390 178,112
CONSOLIDATED CASH FLOW STATEMENTS
Year ended Year ended
30 June 2007 30 June 2006
Audited Audited
R`000 R`000
Cash flows from operating activities (35,201) 23,488
Cash generated by operating activities (23,018) 21,822
Interest received 6,942 8,828
Interest paid (8,959) (6,583)
Taxation paid (10,166) (579)
Cash flows from investing activities (17,710) (55,043)
Expenditure to maintain operating capacity
Property, plant and equipment acquired (2,997) (1,140)
Proceeds on disposals of property, plant and
equipment 147 -
Expenditure for expansion
Investment in associates (15,860) (13,903)
Loans to subsidiaries and associates - (40,000)
Other Investments 1,000 -
Cash flows from financing activities 18,665 58,801
Transaction costs - (6,814)
Loans raised 18,665 71,615
Loans repaid - (6,000)
(Decrease)/Increase in cash and cash
equivalents (34,246) 27,246
Cash and cash equivalents at beginning of the
year 79,934 52,688
Cash and cash equivalents at end of the year 45,688 79,934
Basis of Preparation
The condensed consolidated financial results for the year ended 30 June 2007
have been prepared in compliance with the Group`s accounting policies which
fully comply with International Financial Reporting Standards ("IFRS") and the
JSE Limited Listings Requirements.
The condensed consolidated financial results have been audited by BDO Spencer
Steward (KZN) Inc., Registered Auditors. Their unqualified opinion is available
for inspection at the company`s registered office.
The board acknowledges its responsibility for the preparation of the condensed
consolidated financial statements in accordance with IFRS and the JSE Limited
Listings Requirements.
NOTES TO THE FINANCIAL RESULTS
1. Deferred revenue
Revenue from the sale of township property is recognised when legal title
passes or when the equitable interest in the property vests in the buyer. Where
there are further substantial acts to complete in the development of township
property, revenue is deferred and recognised as the acts are performed.
Revenue is recognised by reference to the stage of completion of the
development of the township property at the balance sheet date, as measured by
the proportion that land and development costs incurred to date bear to the
estimated total land and development costs.
The substantial acts required to complete the development of township property
within Zimbali South and West are expected to be completed within the next
twelve months. Therefore the revenue that has been deferred in terms of the
revenue recognition policy relating thereto is likely to be recognised within
the next twelve months.
2. Headline earnings per ordinary share
Year ended Year ended
30 June 2007 30 June 2006
Audited Audited
R`000 R`000
Headline profit reconciliation
Profit attributable to ordinary shareholders 20,321 41,978
Profit / loss on disposal of property, plant
and equipment 46 -
Goodwill adjustment/ impairment losses 3,236 90
Headline profit 23,603 42,068
Number of shares
- in issue 218,210,680 218,210,680
- for EPS and HEPS calculation 218,210,680 215,028,441
- Headline earnings per share (HEPS) 10.82 19.56
3. Capital expenditure commitments 30 June 2007 30 June 2006
- contracted 11,046 35,168
- approved but not contracted 18,500 18,565
Total 29,546 53,733
4. Operating lease commitments
165 304
COMMENTS
GROUP PROFILE
IFA SA`s shares were listed on the Main Board of JSE Limited ("the JSE") on 27
February 2006. IFA H&R Kuwait holds the majority interest with an 85%
shareholding. Through five subsidiaries, IFA SA owns:
a 50% stake in the development of the multi-million Rand Zimbali Coastal
Resort which is being jointly developed through IFA Hotels & Resorts (South
Africa (Pty) Limited ("IFA Hotels") with Moreland-Zimbali Resorts (Pty)
Limited, a subsidiary of Tongaat Hulett Developments (Pty) Limited which
owns the remaining 50% interest ("the Mifaz joint venture"). As announced
in March 2007 the Mifaz joint venture acquired a further 427 hectares of
land between Zimbali and the proposed King Shaka International Airport from
the Tongaat-Hulett Group. This brings the total amount of additional land
acquired since June 2006 to 681 hectares ("the additional Mifaz land").
(254 hectares of land on the south bank of the Tongaat River was acquired in
June 2006.)
the exclusive Zimbali Lodge on KwaZulu-Natal`s north coast, rated as one of
the world`s top hotels. This is held through IFA Zimbali Lodge (Pty) Limited
("IFA Zimbali");
26,57% in Boschendal Limited ("Boschendal"), the world-renowned estate in the
Western Cape, having acquired a further 7,32% in May 2007. The interest is held
through a wholly owned subsidiary, IFA Boschendal (Pty) Limited ("IFA
Boschendal"). The acquisition furthers the strategy of parent company, IFA H &
R Kuwait, to expand its reach as a global developer of mixed-use integrated
resorts. It further reinforces IFA H & R Kuwait`s commitment to transformation
in South Africa as it ensures that IFA SA becomes a more integral contributor to
Boschendal`s transformation, empowerment and development plans.
an estate agency, IFA Hotels and Resorts 8 (Pty) Ltd ("IFA Estates") which
has the sole mandate to sell the R1,1 billion Fairmont Zimbali project
offering a hotel, luxury residences, a golf course and leisure facilities.
This subsidiary is held through a wholly owned subsidiary, IFA Assets (Pty)
Ltd ("IFA Assets").
a 50% stake in the Namibian joint venture formed with the Ohlthaver & List
Group ("the Olifa joint venture") to redevelop three hotels - The Strand
Hotel in Swakopmund, Kings Den Lodge on the banks of the Chobe River and
Mokuti Lodge located at the gateway to the renowned Etosha Park game
reserve. The Olifa joint venture will also develop a fourth site in Windhoek
into a five star hotel. IFA H & R Kuwait has introduced five star
international hotelier, Kempinski Hotels, to Namibia to operate these hotels
going forward.
FINANCIAL REVIEW
IFA HOTELS - As expected, recognised revenue from land sales has decreased by
39.5% causing total revenue to decrease from R127,3 million in the previous year
to R78,6 million. The decline is largely attributable to the under supply of
land inventory because of the near sell-out of land in the South and West phases
of the Zimbali Coastal Resort, following bouyant demand. Property re-sales in
the resort are up 101% to R361,1 million in 2007 from R179,6 million in the
previous corresponding period as a result of the increasing demand for Zimbali
property. This is a positive indicator for sales in the next phase of
development, Zimbali Lakes, which is set to begin in the 2008 financial year.
The method of accounting for revenue has resulted in deferred revenue being
released to the income statement which has countered, to some extent, the
slowing in land sales. After taking into account the positive impact of a
reduction in operating costs, EBITDA only decreased by 13.8% from R55,9 million
to R48,2 million as a result of this increased efficiency.
IFA ZIMBALI has performed well and posted improved revenue of R38,0 million
reflecting an increase of 9% from R34,8 million for the previous year. Earnings
before interest, taxation , depreciation and amortisation ("EBITDA") also grew
by a significant 25% to R5,4 million. The net asset value of IFA Zimbali has
increased by R12,2 million as a result of the revaluation of land and buildings
at year end.
IFA BOSCHENDAL - The 2 400 ha Boschendal estate is still in the planning phase
and is accordingly incurring costs in anticipation of future revenues. An after
tax loss of R6,1 million was recognised.
IFA ESTATES - IFA Assets` estate agency has the sole mandate to sell the R1,1
billion Fairmont Zimbali project. While sales only began in January 2007, costs
were incurred during the period in setting up the operation. An after tax loss
of R3,7 million was incurred during this period and will be recovered through
commission earned as reservations convert to binding sales.
IFA SA - IFA SA is the holding and administration company of the group. Net
profit after tax of R7,1 million was achieved for the year.
PROSPECTS
IFA Hotels
A key focus for IFA Hotels remains the assembly on the balance sheet of land
inventory for development of future phases of the Zimbali Coastal Resort and
recent land acquisitions have been made in this regard. The current phase of
the Zimbali Coastal Resort accounts for less than 30% of IFA`s total
development potential in Zimbali.
It is further anticipated that planning approvals will be obtained in Q4 2007
for the 300 hectare extension of the Zimbali Coastal Resort - "Zimbali Lakes".
This should generate sales beginning in the 2008 financial year. Through the
Mifaz joint venture, IFA SA stands to benefit from 50% of the sales revenue and
attributable profits.
Whilst the additional Mifaz land offers further opportunity for expanding the
current Zimbali resort with additional residential nodes as well as introducing
a significant business/commercial node close to the new airport, planning
thereof is not expected to begin until construction of the new airport has
commenced.
IFA Boschendal
Boschendal is expected to generate in excess of R1,7 billion in sales going
forward, of which approximately R660 million has already been reserved. IFA
SA`s increased stake in Boschendal to 26,57% should accordingly impact
positively on group revenues.
IFA Estates
Approximately R176 million of sales in the Fairmont Zimbali project have
already been reserved. It is anticipated that related commissions will begin to
be recognised in the 2008 financial year as these sales become legally binding.
IFA Namibia
Revenues from running the 3 existing hotels that form part of the Olifa joint
venture following their redevelopment and/or refurbishment should begin
impacting on results in the 2008 financial year. The Olifa joint venture will
also be considering the best mixed use of these sites to maximize values. The
development of the land in Windhoek is also likely to commence in 2008.
The investment to date in Boschendal, IFA Estates and IFA Namibia has laid the
foundation for long-term sustainable profits. Following capital expenditure on
set-up and development costs, the operations should begin to yield benefit for
the group in the year ahead.
DIVIDEND
The group and company are currently investing profits back into the business to
enable future growth. As such the directors have decided not to declare a
dividend for this period.
ANNUAL GENERAL MEETING
The annual general meeting of the company will be held at Zimbali Lodge, Zimbali
Coastal Resort, Kwa-Zulu Natal on Thursday, 6 September 2007 at 9:00.
For and on behalf of the board
JM Al-Bahar
(Chairman)
TJM Al-Bahar
(Chief Executive Officer)
Zimbali, Durban, KwaZulu-Natal
15 August 2007
CORPORATE INFORMATION
Directors
JM Al-Bahar (Chairman)*, TJM Al-Bahar (Chief Executive Officer),
WJ Burger*, PGR de Sylva, GE Larson*, VM Nkosi, JAM Wilson*
*Non-executive
Registered office
1 Amanbali, Zimbali Coastal Resort, KwaZulu-Natal.
Company secretary
KA Watson CA(SA), MBA
Transfer secretaries
Computershare Investor Services 2004 (Pty) Ltd, 70 Marshall Street,
Johannesburg
Sponsor
BDOQuestCo (Pty) Ltd
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