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SBL
SBL
SBL - Sable Holdings Limited - The audited group results for the year ended 30
June 2007
SABLE HOLDINGS LIMITED
(`SABLE`)
(Registration No. 1968/010636/06)
(Incorporated in the Republic of South Africa)
Share code: SBL ISIN code: ZAE000006383
The audited group results for the year ended 30 June 2007
The audited group results for the year ended 30 June 2007 are as follows:
Abridged consolidated income statement
Year ended Year ended
30 June 2007 30 June 2006
(Audited) (Audited)
R`000 R`000
Revenue 52,260 25,436
Operating profit 26,767 16,828
Net interest paid (15,291) (5,465)
Depreciation (709) (650)
Impairment of investments and goodwill written off (17,550) -
Dividends received 2,615 1,487
Realised capital profit on disposal of
investment properties - 5,283
Gross revaluation of company held for resale 34 400
Gross revaluation of investment properties 129,351 20,373
Profit before taxation 125,217 38,256
Taxation (38,939) (8,236)
Profit after taxation 86,278 30,020
Profit from associated companies 34,866 10,544
Net profit for the year 121,144 40,564
Number of ordinary shares in issue during
the year excluding treasury shares (`000) 7,378 7,506
Earnings per ordinary share (cents) 1,642.0 641.3
Earnings per ordinary share - restated (cents) 1,642.0 *540.4
Headline earnings per ordinary share (cents) 293.6 281.6
Dividend per ordinary share (cents) 50.0 50.0
Reconciliation - headline earnings and distributable earnings
Net profit for the year 121,144 40,564
Adjustments:
Straight-line rental income accrual:
- subsidiaries (1,567) (243)
- associates 60 (69)
Impairment of investments and goodwill written off 17,550 -
Realised capital profit on disposal of
investment properties - (4,383)
Net revaluation of investment properties and
company held for resale:
- subsidiaries (91,864) (13,500)
- associates (23,663) (1,228)
Headline earnings for the year 21,660 21,141
Abridged consolidated balance sheet
Year ended Year ended
30 June 2007 30 June 2006
(Audited) (Audited)
R`000 R`000
Assets
Non-current assets 596,905 282,757
Investment properties, vehicles and equipment 468,272 199,083
Investments - treasury 12,759 39,485
Investments - associates 113,789 41,974
Company held for resale 784 750
Deferred taxation asset 1,151 1,088
Loan receivable 150 377
Current assets 42,472 28,524
Trading property 18,739 13,223
Trade and other receivables 13,541 7,072
Cash and cash equivalents 10,192 8,229
Total assets 639,377 311,281
Equity and liabilities
Capital and reserves 295,624 180,136
Share capital and premium 16,430 18,397
Non-distributable reserves 79,582 44,805
Revaluation reserves 167,792 51,181
Retained profits 31,820 65,753
Non-current liabilities 285,728 105,707
Interest-bearing borrowings 225,696 96,484
Deferred taxation liability 60,032 9,223
Current liabilities 58,025 25,438
Trade and other payables 10,172 7,020
Interest-bearing borrowings 40,095 12,144
Current portion of interest-bearing borrowings 6,680 5,274
Shareholders for dividends 49 39
Taxation payable 1,029 961
Total equity and liabilities 639,377 311,281
Number of ordinary shares in issue (`000) 8,170 8,420
Less: Treasury shares (`000) (792) (914)
7,378 7,506
Net asset value per ordinary share (cents) 4,007 2,501
Net asset value per ordinary share - restated (cents) 4,007 *2,400
Market price at year-end (cents) 3,800 2,100
Interest-bearing liabilities to total equity (%) 92.2 60.7
Interest-bearing liabilities to total equity
- restated (%) 92.2 *63.2
Abridged consolidated cash flow statement
Year ended Year ended
30 June 2007 30 June 2006
(Audited) (Audited)
R`000 R`000
Cash outflow from operating activities (6,009) (4,397)
Cash generated by operations 20,342 8,564
Movements in working capital (8,833) (3,821)
Net interest paid (15,291) (5,465)
Dividends received 2,615 1,487
Dividends paid (3,679) (3,731)
Taxation paid (1,163) (1,431)
Cash outflow from investing activities (148,857) (72,949)
Cash inflow from financing activities 128,878 65,580
Net decrease in cash and cash equivalents (25,988) (11,766)
Cash and cash equivalents at the beginning
of the year (3,915) 7,851
Cash and cash equivalents at the end
of the year (29,903) (3,915)
Abridged consolidated statement of changes in equity
Year ended Year ended
30 June 2007 30 June 2006
(Audited) (Audited)
R`000 R`000
Balance at beginning of the year 180,136 143,325
Net profit for the year - restated 121,144 40,564
Net profit for the year 121,144 48,137
Deferred taxation compliancy restatement - (7,573)
Purchase of treasury shares by subsidiary company (1,967) -
Dividends paid (3,689) (3,753)
Balance at end of the year 295,624 180,136
Comments
Basis of preparation and accounting policies
The preliminary group profit statement, for the year ended 30 June 2007, has
been prepared in accordance with International Financial Reporting Standard
("IFRS"), IAS 34 - Interim Financial Reporting and the requirements of
the Companies Act of South Africa 1973, as amended.
The results incorporate accounting policies which are consistent with those
applied in the previous year.
Financial results
The group reported a net profit of R121.1 million (30 June 2006 - restated -
R40.6 million) for the year ended 30 June 2007. Earnings per share increased by
203.8% from 540.4 cents (restated) to 1,642.0 cents, with headline earnings per
share increasing by 4.3% from 281.6 cents to 293.6 cents.
Operating profits are represented as follows:
June 2007 June 2006
R`000 R`000
Net rentals and property trading 23,275 8,748
Treasury investments 3,492 8,080
26,767 16,828
Rental revenue increased substantially by 103.5% to R34.4 million (June 2006 -
R16.9 million) and is reflective of the investment of R140.0 million in
investment property during the last 12 months. R17.8 million, being the balance
of revenue, pertains to the sale of sectional title industrial warehousing.
Investment impairments and goodwill written off of R17.6 million have been
presented in the consolidated income statement. An amount of R16.3 million,
relating primarily to the provision of a deferred tax liability in respect of
the acquisition of 50% of a diversified property investment portfolio
("Rotaflex"), has been impaired. The remaining balance of R1.3 million related
to an impairment on the disposal of The PSG Global Hedge Portfolio treasury
investment.
The net asset value per share has increased by 67.0% to R40.07 (June 2006 -
restated - R24.00) and the ratio of interest-bearing liabilities to capital and
reserves increased from 63.2% (restated) to 92.2% during the same period.
During the year, the directors of Sable elected to cancel 250 000 ordinary Sable
shares thereby reducing the number of issued shares from 8,420,000 to 8,170,000.
Deferred taxation restatement - prior year*
In order to comply with Circular 1/2006, issued by the South African Institute
of Chartered Accountants, which stipulates that deferred tax on unrealised gains
on the revaluation of investment properties be raised at the company income tax
rate of 29.0%, Sable has increased its deferred tax liability in respect of
investment property revaluation surpluses presented in previous years.
Accordingly, an amount of R7.5 million has been charged to the 2006 earnings,
resulting in earnings decreasing from R48.1 million to R40.6 million and
earnings per share decreasing from 641.3 cents to 540.4 cents. The effect of
this restatement on net asset value per share at 30 June 2006 is a reduction of
R1.01 from R25.01 to R24.00.
Property acquisitions and developments
During the year, Sable has acquired and developed investment property of R140.0
million as follows:
Property Investment Share- 2007 Cash Year-end
description Location usage holding outflow valuation
- Rotaflex Gauteng &
portfolio Cape Town Diversified 50.0% R91.5m R89.5m
- Cramerview
Shopping Bryanston,
Centre Sandton Retail 50.0% R27.9m R47.6m
- Ferndale Ferndale,
Village Randburg Retail 50.0% R15.8m R41.9m
- Land and
other Johannesburg, 50.0% to
improvements Gauteng Diversified 100.0% R4.8m R4.8m
As reported in the December 2006 interim circular, Sable appointed an
independent and recognised property valuer to assess the market valuation of its
retail, office, industrial and residential property investments. The resultant
after-tax revaluation surpluses of R91.9 million and R23.7 million arising from
the valuation of Sable`s subsidiary and associate company investment property
portfolios respectively, are presented in the
consolidated income statement.
Treasury investments
Sable has concluded the disposal of its overseas treasury investment in The PSG
Global Hedge Portfolio. Cash resources of R33.6 million from the disposal were
received and deployed in both investment and property trading opportunities.
The domestic share portfolio managed by BOE Securities (Pty) Ltd added profits
and investment growth of R3.5 million through a strong continuation of share
performances on the JSE Limited ("JSE"). Additional funds of R4.5 million were
invested, resulting in the market value of the BOE treasury portfolio being
R12.7 million at 30 June 2007 (June 2006 - R4.6 million).
Associate investments
During the year, Sable has acquired investment stakes in associate companies of
R36.9 million as follows:
Share- 2007 Cash
Company description Location Usage holding outflow
- Longland Investments Fourways, Mixed land
Sandton development 13.5% R22.3 million
- Crimson King Germiston Industrial
Properties Gauteng land
development 10.0% R8.2 million
- Blue Waves Properties Hughes, Industrial
Boksburg land
development 25.0% R2.6 million
- Rotaflex portfolio Kyalami, Industrial
Midrand investment 16.7% R2.2 million
- Sable Place Kya Sand, Industrial
Properties 102 Randburg land
development 35.0% R1.1 million
- Meso Outdoors Gauteng Outdoor signage 18.0% R0.3 million
- Portion 3/4 of Erf Bryanston, Office
5495 Bryanston Sandton investment 25.0% R0.2 million
Associate company earnings of R34.9 million, on an after-tax basis, added to
Sable`s net profit for the year. The Sable Homes group delivered profits of
R11.6 million from residential sales during the year. As a consequence of the
substantial increase in residential sectional title apartment prices, a
revaluation surplus of R21.6 million was taken to associate profits so as to
more accurately reflect the retail prices of the 269 residential investment
units which Sable Homes currently owns and rents.
Dealings with Enterprise Risk Management Limited ("ERM")
- Joint Venture, Sale of Shares Agreement and Subscription Agreement
As per previous announcements dated 16 February 2007 and 15 May 2007, subsequent
to the acquisition by ERM and Sable of 100% of the issued share capital of
Rotaflex through a jointly owned entity named Amrich 58 Properties (Pty) Ltd
("Amrich"), Sable simultaneously concluded the purchase of ERM`s 50%
shareholding in Amrich ("sale of shares agreement") through the issue of
1,187,500 Sable shares at R40.00 per share as well as the further issue of
392,500 Sable shares to ERM ("subscription agreement") for a cash consideration
of R15.7 million. These agreements are subject to specified conditions precedent
as contained in each of the agreements, most importantly written confirmation by
the ERM board of directors that it is satisfied, in its sole discretion, that
the Sable share
is fairly valued at R40.00 per share, and that the option agreement more fully
described below, is exercised at any time prior to 30 November 2007. A circular
to shareholders detailing the above will be posted to shareholders once approved
by the JSE.
- Option agreement
In terms of an option agreement dated 14 May 2007, Sable has granted an option
to ERM to subscribe for a further 3,948,822 new shares in Sable
at a price of R40.00 per share, or so many newly issued shares in Sable as will
bring the total holding of ERM equal to the total number of shares
held by Isdale Holdings BV ("Isdale"), Sable`s controlling shareholder. The
shares so issued will rank pari passu in all respects with the shares held by
Isdale and will increase ERM`s holding in Sable to 45.51% prior to an offer to
minorities. The option may be exercised at any time prior to 30 November 2007.
In the event that the option is exercised, ERM will make an offer to minority
shareholders. Furthermore, Isdale has undertaken to take up so many of the
shares on offer by minority shareholders, as will maintain parity in the
shareholdings between Isdale and ERM.
In the event that the option lapses, Sable and ERM have agreed that the sale of
shares agreement and subscription agreement referred to above, shall be
terminated and the parties shall take such steps as may be required to return
them to the joint venture in Amrich existing prior to the signature of the two
agreements.
Further cautionary
A further cautionary regarding the above-mentioned series of transactions
between ERM and Sable was released on 19 September 2007 in which shareholders
were advised that the companies are in discussions regarding proposals that, if
implemented, would modify the agreements previously entered into between them.
Shareholders were advised to exercise caution when dealing in their ERM and
Sable securities.
Prospects
Sable Homes is developing large land holdings in Hazeldean, Pretoria East,
comprising retail and homeworld centres, office parks, upmarket residential
sectional title and retirement homes estates. The 16,500m retail centre will be
completed during September 2007 and will be complemented by a lifestyle
homeworld centre opening in 2008. The node is fast developing into a well-
established suburb with a diversified spread of property roll-outs being catered
for.
Sable has continued to invest in industrial land so as to take advantage of the
buoyant demand from both small and large industrial users. Material
refurbishments and expansionary investments to two of Sable`s retail shopping
centres are currently underway and expected to be completed by mid 2008.
Audit report
The consolidated results for the year have been audited by Andre van der Merwe
and Associates and their unqualified audit report is available for inspection at
the company`s registered office.
Dividends
Notice is hereby given that a cash dividend of 50 cents per share (2006 - 50
cents per share) ("the dividend") has been declared, payable to shareholders
recorded in the books of the company at the close of business on Friday, 26
October 2007. Shareholders are advised that the last day to trade "cum" the
dividend will be Friday, 19 October 2007. Shares will trade "ex" dividend as
from Monday, 22 October 2007, and the record date will be Friday, 26 October
2007. Payment will be made on Monday, 29 October 2007.
Shares may not be dematerialised or rematerialised during the period Monday, 22
October 2007, to Friday, 26 October 2007,
both days inclusive.
For and on behalf of the board
PH Nash (Chairman)
GBJ Bowes (Managing director)
26 September 2007
Registered office: Sable Place, Fairway Office Park, 52 Grosvenor Road,
Bryanston 2021. PO Box 786390, Sandton 2146
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited,
70 Marshall Street, Johannesburg. PO Box 61051, Marshalltown 2107
Directors: PH Nash (Chairman), GBJ Bowes (Managing), IR Kemp, JA Pelser*
*Non-executive
Sponsor: Sasfin Capital - A division of Sasfin Bank Limited
Date: 26/09/2007 17:47:01 Produced by the JSE SENS Department.
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