| Wed 26 Sep 2007, 15:34 | | RAH - Real Africa - Profit and dividend announceme |
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RAH
RAH
RAH - Real Africa - Profit and dividend announcement for the fifteen months
ended 30 June 2007
Real Africa
Holdings Limited
(Registration number 1994/003919/06)
Share code: RAH
ISIN code: ZAE000008702
("Real Africa" or "RAH" or "the company")
Profit and dividend announcement
for the fifteen months ended
30 June 2007
INCOME STATEMENTS
Fifteen months Year ended
to 31 March 2006
30 June 2007 Restated
R`000 Reviewed Audited
Revenue 83 507 34 429
Net investment profits 163 040 26 507
Share of profits of associates 53 469 71 516
Interest income 10 508 30 559
Operating income 310 524 163 011
Operating costs (18 729) (11 367)
Interest and preference dividends (14 268) (12 882)
Profit for the period 277 527 138 762
Taxation (12 477) (10 055)
Profit after taxation 265 050 128 707
Attributable to:
Minorities` interests 13 350 9 023
Ordinary shareholders 251 700 119 684
265 050 128 707
Earnings per share (cents) 69,7 33,2
Headline earnings per share (cents) 28,0 33,6
BALANCE SHEETS
Fifteen months Year ended
to 31 March 2006
30 June 2007 Restated
R`000 Reviewed Audited
ASSETS
Non current assets
Equipment and furniture - 111
Investments in associates 160 511 188 172
Other investments 1 180 154 1 219 538
1 340 665 1 407 821
Current assets
Non current asset held for sale 71 295 174 825
Accounts receivable 245 342
Cash and cash equivalents 37 156 280 565
108 696 455 732
Total assets 1 449 361 1 863 553
EQUITY AND LIABILITIES
Capital and reserves
Ordinary shareholders` equity 1 147 838 1 583 064
Minorities` interests 150 656 149 144
1 298 494 1 732 208
Non current liabilities
Preference shares 140 464 121 465
Deferred tax 264 7 665
140 728 129 130
Current liabilities
Accounts payable 2 129 2 141
Taxation 8 010 74
10 139 2 215
Total liabilities 150 867 131 345
Total equity and liabilities 1 449 361 1 863 553
STATEMENT OF CHANGES IN EQUITY
Ordinary
share Capital Non - Non -
capital redemp- distri- controll-
and tion butable ing
premium reserve reserves reserve
R`000 R`000 R`000 R`000
Balance at 31 March 2006 416 953 1 080 47 828 -
Effect of adoption of
economic entity model - - - (3 751)
Correction of prior
period amounts - - - -
Restated balance at
31 March 2006 416 953 1 080 47 828 (3 751)
Profit for the period - - - -
Fair value adjustments - - - -
Dividends paid - - - -
Additional minority
funding - - - -
Capital distribution (342 018) - - -
Reclassification
of reserves - - (46 535) -
Release of associate
FCTR on disposal - - (1 293) -
Movement on
treasury shares 10 226 - - -
85 161 1 080 - (3 751)
Fair
Retained value Minority
earnings reserve interests Total
R`000 R`000 R`000 R`000
Balance at 31 March 2006 302 862 850 718 122 139 1 741 580
Effect of adoption of
economic entity model 703 - - (3 048)
Correction of prior
period amounts (33 329) - 27 005 (6 324)
Restated balance at
31 March 2006 270 236 850 718 149 144 1 732 208
Profit for the period 251 700 - 13 350 265 050
Fair value adjustments - (47 384) 2 448 (44 936)
Dividends paid (306 457) - (14 836) (321 293)
Additional minority
funding - - 550 550
Capital distribution - - - (342 018)
Reclassification
of reserves 46 535 - - -
Release of associate
FCTR on disposal - - - (1 293)
Movement on
treasury shares - - - 10 226
262 014 803 334 150 656 1 298 494
SUMMARISED CASH FLOW STATEMENT
Fifteen months Year ended
to 31 March 2006
30 June 2007 Restated
R`000 Reviewed Audited
Cash flows from operating activities (31 670) (25 232)
Cash flows from investing activities 436 615 154 519
Cash flows from financing activities (648 354) (646 072)
Net cash flows (243 409) (516 785)
HEADLINE EARNINGS PER SHARE
Fifteen months Year ended
to 31 March 2006
30 June 2007 Restated
R`000 Reviewed Audited
Headline earnings per share (cents) 28,0 33,6
Weighted average number of shares (million) 361,3 360,2
Reconciliation of headline earnings (R`000)
Earnings 251 700 119 684
Loss on disposal of equipment and furniture 43 -
Adjustment for realised investment
(profits)/losses (163 360) 1 200
Taxation on above items 12 678 -
Headline earnings 101 061 120 884
NET ASSET VALUE
30 June 2007 31 March 2007 31 March 2006
R`000 Reviewed Unaudited Audited
Afrisun Leisure* 1 693 863 1 597 990 1 759 937
Oceana - - 341 520
Life Esidimeni 157 116 187 842 205 100
Other net liabilities (9 350) (10 102) (1 875)
Cash 16 167 40 426 252 589
Borrowings (94 475) (121 464) (121 464)
Share of litigation
settlement 62 355 - -
Net asset value 1 825 676 1 694 692 2 435 807
Issued shares, net of
treasury shares (million) 361,3 361,3 360,2
Net asset value
per share (cents) 505 469 676
Special distributions paid
to shareholders since
calculation of net asset
value:
Oceana proceeds - - (92)
Special dividend - - (67)
Net asset value after
distribution 505 469 517
*Afrisun Leisure value is net of preference share debt and cash.
Notes
1. All the investments held by Afrisun Leisure have been valued using the
Discounted Cash Flow (DCF) value method applying a discount rate of 12,46%
(previously 12,14%), to management`s current estimated future cash flows.
National Manco and Gauteng Manco were previously valued using a dividend
discount methodology which the board considers to be incorrect as both
companies distribute 100% of their earnings on a quarterly basis.
2. Life Esidimeni has been valued at R180 million based on a potential
disposal, less capital gains tax of R5 million and an R18 million share of the
provision raised by Life Esidimeni in respect of the Lifecare Group Pension
Fund litigation.
3. The litigation settlement represents RAH`s share of the R110 million
cash settlement agreed to between Afrisun Leisure and Sun International (South
Africa) Limited (SISA) on 27 July 2007.
REVIEW OF RESULTS
Revenue of R83,5 million is predominantly dividends received by Afrisun
Leisure.
The net investment profits relate primarily to the disposal of the group`s
investment in Oceana in September 2006 for R338 million, realising a profit of
R163 million. The proceeds from the disposal were distributed to shareholders
by way of a capital distribution.
The decline in profits from associates is largely attributed to the
reclassification of Life Esidimeni, with effect from 1 October 2006, to non
current assets held for sale in terms of IFRS5 due to the group having made the
decision to dispose of this investment.
As a result of the distribution of excess cash by way of a special distribution
early in the period under review, interest income reduced from R30,6 million in
the prior year to R10,5 million for the fifteen months to 30 June 2007.
The increase in operating costs is attributed to costs of R5,3 million incurred
on the SISA offer and costs incurred on the Oceana transaction.
Profit after taxation of R265 million was well ahead of the prior period due
largely to the profit on the disposal of Oceana.
The board has declared a final dividend of 12 cents per share, bringing the
total dividends per share for the period to 20 cents.
Review of gaming investments
The gaming industry continued to enjoy favourable trading conditions in South
Africa and the group`s core interests performed strongly over the past fifteen
months.
SunWest International (Pty) Limited in which the group has a 14,1% effective
economic interest owns the GrandWest Casino and The Table Bay in Cape Town.
GrandWest achieved satisfactory revenue growth of 14,1% in the year to 30 June
2007. The expanded salon prive opened at the beginning of December 2006 and the
new smoking casino opened at the end of June 2007. The slot machine capacity
available at GrandWest has increased to 2 500 slot machines. The existing
casino floor is currently being upgraded and the new 5 000 seat arena will be
opened in October 2007.
Afrisun Gauteng (Pty) Limited trading as Carnival City, in which the group has
an effective economic interest of 21,0%, enjoyed revenue growth of 15,5% in the
year to 30 June 2007 and maintained its share of the Gauteng gaming market.
Room inventory increased by 57 keys to 105 rooms available from April 2007.
Construction of an R82 million multi-level parkade for over 1 000 vehicles
has commenced and is scheduled for completion in May 2008.
Emfuleni Resorts (Pty) Limited in which the group has an effective economic
interest of 7,0% owns the Boardwalk Casino in Port Elizabeth and the Fish River
Sun. This interest was increased from 2,3% on 2 August 2006. The Boardwalk
Casino has enjoyed satisfactory trading with revenues up 13,2% for the twelve
months to 30 June 2007.
Afrisun KZN (Pty) Limited in which the group has an effective economic interest
of 12,1%, up from 11,5% since February 2007, operates the Sibaya Casino north
of Durban. The new 118 room Sibaya Lodge was opened in October 2006 and Sibaya
has enjoyed gaming revenue growth of 23,5% over the twelve months to 30 June
2007. Sibaya has retained its market share of the KwaZulu - Natal market at
35%.
Sun International (South Africa) Limited offer
The offer by SISA to acquire the entire issued share capital of RAH closed on
15 September 2006 and SISA now controls 61,3% of RAH.
Disposal of Oceana
The company disposed of its indirect interest in the Oceana Group held through
Ocfish Holdco for R338 million realising a profit of R163 million. The proceeds
were distributed to shareholders by way of a capital reduction of R333 million
(net of treasury shares) which equated to 92 cents per share that was paid on
16 October 2006.
Acquisition of Zonwabise
On 2 August 2006 Afrisun Leisure acquired a 34,9% interest in Zonwabise Resort
Holdings Limited for R45,6 million, thereby increasing RAH`s effective
economic interest in Emfuleni Resorts (Pty) Limited from 2,3% to 7,0% and its
interest in Emfuleni Casino Resorts Manco (Pty) Limited from 10,9% to 23,5%.
The acquisition was financed by raising preference share funding of R45 million
in Afrisun Leisure.
Post balance sheet events
Settlement of litigation
As previously announced a special purpose committee (the committee) was
appointed by the Afrisun Leisure board to consider the merits of the litigation
brought against SISA and to reach a decision regarding the matter.
The committee, which was constituted on 7 March 2007, after taking legal and
financial advice, recommended to the Afrisun Leisure board that it was in the
best interest of that company to settle the matter. Accordingly on 26 July
2007, Afrisun Leisure and SISA agreed to an out of court settlement of R110
million in exchange for a withdrawal of the legal proceedings.
Acquisition of further interest in Afrisun Leisure
On 24 August 2007 RAH acquired an additional 10,5% interest in the Afrisun
Leisure ordinary shares for R59,9 million and the remaining 11,8% Afrisun
Leisure KZ shares for R17,1 million that it did not already own. RAH now has a
76,8% interest in the Afrisun Leisure ordinary shares and owns all of the other
classes of shares being the Afrisun Leisure KZ, AG and SW shares.
Outlook
The economic outlook remains positive in the year ahead despite the higher
levels of inflation and interest rates, which are likely to temper the growth
in consumer spending. Real growth in disposable income is nevertheless
anticipated, which should result in improved performances from RAH`s underlying
investments. Dividends from the group`s gaming investments should continue to
grow.
Dividend
Notice is hereby given that a final dividend of 12 cents (2006: 10 cents) per
share for the fifteen months ended 30 June 2007 has been declared, payable to
shareholders recorded in the register of the company at the close of business
on the record date appearing below. The salient dates applicable to the final
dividend are as follows:
2007
Last day to trade cum final dividend Friday, 12 October
First day to trade ex final dividend Monday, 15 October
Record date Friday, 19 October
Payment date Monday, 22 October
No share certificates may be dematerialised or rematerialised between Monday,
15 October 2007 and Friday, 19 October 2007, both days inclusive. Dividend
cheques will be posted and electronic payments made, where applicable, to
certificated shareholders on the payment date. Dematerialised shareholders will
have their accounts with their Central Securities Depository Participant or
broker credited on the payment date.
Accounting policies
The condensed consolidated financial information has been prepared in
accordance with the recognition and measurement criteria of all applicable
statements and interpretations of International Financial Reporting Standards
and is presented in terms of the disclosure requirements set out in IAS 34 -
Interim Financial Reporting. The accounting policies applied to the condensed
consolidated financial information are consistent with those as set out in the
annual financial statements for the year ended 31 March 2006 except for the
adoption of IAS 27 (revised) - Consolidated and Separate Financial Statements.
The group has elected to adopt the economic entity model in accounting for
transactions with minority shareholders in terms of the revisions to IAS27 so
as to bring its accounting policies in line with those of its new holding
company, Sun International Limited. This model requires all premiums or
discounts incurred and profits and/or losses on transactions with minorities to
be recognised directly in equity. As a consequence, the 2006 income statement
has been restated and the intangible assets and ordinary shareholders equity at
31 March 2006 have been reduced by R3 million.
Prior year restatement
A misallocation in the prior year resulted in an understatement of minority
interests of R27,0 million and equity earnings being overstated by R6,3 million
with the consequential impact on distributable reserves being R33,3 million.
This correction has been reflected in the statement of changes in equity and
prior year results have been restated.
For and on behalf of the board
DA Hawton RP Becker
Chairman Director
26 September 2007
REGISTERED OFFICE
27 Fredman Drive
Sandown
Sandton, 2031
REGISTRAR
Computershare Investor Services 2004 (Pty) Limited, 70 Marshall Street,
Johannesburg 2001
DIRECTORS
DA Hawton (Chairman), RP Becker, DC Coutts-Trotter, Dr NN Gwagwa, MJ Leeming,
MV Moosa
SECRETARIES
Sun International Corporate Services (Pty) Limited
Date: 26/09/2007 15:34:01 Produced by the JSE SENS Department.
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