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ACC
ACC
ACC - Acc-Ross Holdings - Unaudited results for the six months ended
31 August 2007
ACC-ROSS HOLDINGS LIMITED
(Registration Number: 2000/000059/06)
Share code: ACC & ISIN code: ZAE000077335
("Acc-Ross Holdings" or "the company")
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2007
Condensed Consolidated Income Unaudited Audited Restated
Statement 6 months 12 months 6 months
31 Aug 28 Feb 31 Aug
2007 2007 2006
R`000 R`000 R`000
Revenue 7 016 154 891 15 573
Cost of sales (7 304) (140 178) (10 377)
Gross (loss) / profit (288) 14 713 5 196
Other gains and losses 212 30 616 23 054
Investment revenue 132 806 241
Marketing and sales expenses (3 689) (10 706) (3 434)
Occupancy expenses (207) (571) (316)
Other expenses (22 929) (37 395) (9 089)
Finance costs (3 533) (13 845) (5 112)
(Loss) / Profit before tax (30 302) (16 382) 10 540
Income tax income / (expense) 5 747 (734) (3 446)
(Loss) / Profit for the (24 555) (17 116) 7 094
period
Minority interest 231 (745) 64
(Loss) / Profit attributable
to ordinary shareholders of (24 324) (17 861) 7 158
the parent
Headline loss reconciliation:
(Loss) / Profit attributable
to ordinary shareholders of (24 324) (17 861) 7 158
the parent
Adjustments for:
Impairment of goodwill 17 182 19 855 --
Impairment of investments -- 4 240 2 538
Impairment of property, plant -- 106 106
and equipment
Profit on disposal of
investments, adjusted for (78) (26 055) (19 666)
taxation effect
Headline loss for the period (7 220) (19 715) (9 864)
Earnings per share
information:
Basic (loss) / earnings per (1.99) (1.76) 0.74
share (cents)
Diluted (loss) / earnings per (1.99) (1.76) 0.73
share (cents)
Headline loss per share (0.59) (1.95) (1.01)
(cents)
Diluted headline loss per (0.59) (1.95) (1.01)
share (cents)
Weighted average shares in 1 222 412 1 012 689 972 734
issue (`000)
Weighted average shares in 1 222 412 1 012 689 976 734
issue for dilution (`000)
Condensed Consolidated Unaudited Audited Restated
Balance Sheet 6 months 12 months 6 months
31 Aug 2007 28 Feb 2007 31 Aug 2006
R`000 R`000 R`000
ASSETS
Non-current assets 300 713 268 489 253 759
Property, plant and 2 771 995 1 235
equipment
Inventory/Freehold land 132 250 94 536 56 358
and stands
Goodwill 141 084 157 772 179 627
Other financial assets 8 681 5 239 4 859
Deferred tax assets 15 927 9 947 11 680
Current assets 417 540 421 342 441 872
Inventory/Freehold land 381 911 368 321 390 501
and stands
Other financial assets 16 814 16 378 8 360
Trade and other 15 552 35 004 39 804
receivables
Cash and cash equivalents 3 263 1 639 3 207
Total Assets 718 253 689 831 695 631
EQUITY AND LIABILITIES
Equity and reserves 296 217 272 017 264 449
Issued capital, share
premium and share-based 329 124 280 600 248 014
payments
Accumulated (loss) profit (32 907) (8 583) 16 435
Minority interest 1 754 1 981 1 022
Non-current liabilities 197 507 247 087 327 302
Borrowings 156 276 205 482 294 458
Finance lease obligation 385 455 560
Deferred tax liabilities 40 846 41 150 32 284
Current liabilities 222 775 168 746 102 858
Trade and other payables 38 069 45 418 51 743
Borrowings 140 689 74 396 14 176
Finance lease obligation 142 138 110
Current tax payable 12 495 16 860 16 806
Provisions 31 380 31 934 20 024
Total Equity and 718 253 689 831 695 631
Liabilities
Shares in issue at year 1 255 630 1 122 430 976 734
end
Net asset value per share 23.59 24.23 27.07
(cents)
Net tangible asset value 12.35 10.18 8.68
per share (cents)
Condensed Consolidated Unaudited Audited Restated
Cash Flow Statement 6 months 12 months 6 months
for the year ended 28 31 Aug 2007 28 Feb 2007 31 Aug 2006
February 2007 R`000 R`000 R`000
Net cash used in (42 898) (56 716) (56 182)
operations
Interest income 132 806 241
Interest paid (3 533) (13 845) (5 112)
Net cash outflow from (46 299) (69 755) (61 053)
operating activities
Net cash inflow from 1 989 1 061 847
investing activities
Net cash inflow from 45 934 59 141 52 221
financing activities
Net (decrease) increase in 1 624 (9 553) (7 985)
cash and cash equivalents
Cash and cash equivalents 1 639 11 192 11 192
at beginning of the year
Cash and cash equivalents 3 263 1 639 3 207
at end of the year
Statement of Share Share Accumu- Attributable Minority Total
changes in capital premium lated to equity interest
equity R`000 R`000 profit holders of s R`000
(loss) parent R`000
R`000 R`000
Balance at 01
March 2005 as 48 -- -- 48 -- 48
previously
reported
Loss for the
year as -- -- (3 (3 469) (5 254) (8 723)
previously 469)
reported
Issue of
ordinary shares 2 8 798 -- 8 800 -- 8 800
for directors
and staff
Issue of
ordinary shares 38 157 012 -- 157 050 -- 157 050
in settlement of
liabilities
Issue of -- 2 716 -- 2 716 -- 2 716
ordinary shares
for cash
Share issue -- (2 191) -- (2 191) -- (2 191)
costs
Acquired -- -- -- -- 6 122 6 122
minorities
Balance at 1 88 166 335 (3 162 954 868 163 822
March 2006 469)
Effect of
changes in -- 620 12 747 13 367 256 13 623
accounting
policies and
correction of
errors
Restated balance
at 1 March 2006 88 166 955 9 278 176 321 1 124 177 445
Profit for the -- -- 7 157 7 157 (64) 7 093
period
Issue of
ordinary shares 10 84 956 -- 84 966 -- 84 966
in settlement of
liabilities
Share issue -- (3 996) -- (3 996) -- (3 996)
costs
Acquired -- -- -- -- (38) (38)
minorities
Balance at 31 98 247 915 16 435 264 448 1 022 265 470
August 2006
Loss for the -- -- (25 (25 018) 809 (24 209)
period 018)
Issue of
ordinary shares 7 13 868 -- 13 875 -- 13 875
in settlement of
liabilities
Issue of 8 18 704 -- 18 712 -- 18 712
ordinary shares
for cash
Acquired -- -- -- -- 150 150
minorities
Balance at 28 113 280 487 (8 272 017 1 981 273 998
February 2007 583)
Acquired from -- -- -- -- 4 4
minorities
Loss for the -- -- (24 (24 324) (231) (24 555)
period 324)
Issue of
ordinary shares 9 17 992 -- 18 000 -- 18 000
in settlement of
liabilities
Issue of 6 29 994 -- 30 000 -- 30 000
ordinary shares
for cash
Tax effect of -- 523 -- 523 -- 523
share issue
costs
Balance at 31 128 328 996 (32 296 216 1 754 297 970
August 2007 907)
COMMENTARY
The directors present the company`s results for the six months ended 31 August
2007 which have been prepared in accordance with IAS 34 - Interim Financial
Reporting.
The accounting policies adopted for purposes of this report comply with
International Financial Reporting Standards ("IFRS"). These results have been
prepared in terms of accounting policies consistent with the prior year.
BUSINESS OVERVIEW
Acc-Ross is primarily a developer of hotel and leisure resorts and residential
lifestyle estates, whereby land is acquired, rezoned and developed. Revenue
is initially derived from the sale of stands, where lead times in developing
projects can be two to three years. Once stand sales are completed, Acc-Ross
plans to retain certain of the leisure or commercial assets which have been
developed, such as leisure golf courses, sport facilities, conference
facilities, club houses, hotels and commercial or retail interests as well as
rental units to ultimately build a portfolio of revenue generating assets in
order to provide annuity income for the group. The strategy of Acc-Ross is to
move into top structure development in conjunction with experienced partners
and to become a leading hotel and leisure company over the next few years.
Gardener Ross Golf & Country Estate is now fully proclaimed and Phase 3 has
been recently launched and with regard to Lizard Point, rights/Records of
Decision ("ROD`s") are in place, with final township approval imminent. The
group has pre-sales on Lizard Point, which sales will be recognised on
proclamation and transfer of the underlying stands. Facilities are ring-
fenced in each project and secured by the land and pre-sales of each project.
Once a facility has been approved, the drawdown thereof is dependent on a
minimum level of qualified pre-sales being achieved. Further details of each
project are set out below.
FINANCIAL OVERVIEW
Income statement review
For the period under review, revenue was primarily generated by the transfer
of lower-priced stands in the remainder of Phase 1 and Phase 2 of Gardener
Ross Golf & Country Estate. These sales declined in relation to the prior
year mainly due to the slow down experienced in the luxury residential market,
higher interest rates and an excess of stock in the higher end of the market.
Phase 2 of Gardener Ross Golf & Country Estate is also the smallest phase,
with fewer stands available for sale. Subsequent to the period end, sales
have started to increase with approximately R22 million of stand sales being
submitted for transfer in the deeds office, excluding the sale of The Bay for
R195 550 000.
Cost of sales includes the costs of construction of the Gardener Ross Golf
course on a pro rata basis in relation to stand sales, which was in line with
the original intention when construction of the golf course commenced in 2003
and is in line with the basis on which the funding and profit share
arrangements with Investec Bank Limited were concluded. The balance of the
cost of the golf course is included in inventory and will have a continuing
effect on cost of sales throughout the project. Cost of sales and inventory
furthermore includes capitalised borrowing costs, the provision for the
Investec profit share and an allocation of goodwill which had been attributed
to the underlying stands in accordance with IFRS at acquisition. It should be
noted that the cost of a stand is standard for all stands and thus the sale of
lower priced stands reflects a minor loss position on consolidation, due to
the proportionate allocation of goodwill on acquisition to the cost of stands.
However, in the underlying subsidiary housing the project, a profit is
recorded, which is backed by cash received.
Impairment of goodwill primarily resulted from the impairment of the
investment in Eagle Creek Investments 257 (Pty) Ltd, which held the right to
develop the cluster units on Gardener Ross Golf & Country Estate. However,
the cluster stands have been reserved in a mandate agreement with Zotos
Projects (Pty) Ltd, which will result in sales of approximately R66 million
over the next two years as the cluster stands are developed and transferred.
Consequently, the cluster unit development rights have been impaired.
Finance costs relate to debt funding that is not project related.
A headline loss of 0.59 cents per share was recorded for the period compared
to a headline loss of 1.01 cents per share per the restated prior period
results, representing an improvement of 41.6%.
The sale of the project known as The Bay, for R195.5 million, was unanimously
supported at a meeting of shareholders on 28 May 2007. However, the revenue
and related headline profit after tax of approximately R30 million has not
been recorded due to the suspensive condition of the delivery of the bank
guarantees not being met at period end. Subsequent to the reporting date, the
bank guarantees have been delivered and transfer of this property is expected
during November 2007, at which time the sale and the corresponding headline
profit will be recognised. Pro-forma effects of this disposal on the results
for the 6 months ended 31 August 2007 are set out below.
Balance sheet review
Property, Plant and Equipment increased due to the reclassification of the
Zeranza dwelling, currently used as the sales office on Gardener Ross Golf &
Country Estate, from inventory, as this asset was brought into use and will
now be generating rental income.
Inventory increased during the period primarily due to the continued
development of Gardener Ross Golf & Country Estate as well as the transfer of
Welvergenoegd into Chestnut Hill 111 (Pty) Ltd, a wholly owned subsidiary of
the group. The property is currently unbonded, with the balance of the
purchase price of R22 million having been paid in cash by the Group.
Goodwill decreased due to the impairment of Eagle Creek Investments 257 (Pty)
Ltd as discussed above.
Non-current borrowings primarily comprise the debentures issued in Lizard
Point which will convert to stands on proclamation of Phase 1 of Lizard Point
and the long term debt facilities on Lizard Point and Gardener Ross Golf &
Country Estate. Current borrowings comprise the redeemable preference shares
in Gardener Ross Holdings which are due on 1 March 2008 and the short term
debt facilities on The Bay. The Bay facilities of approximately R70 million
have been repaid from receipt of funds from the sale of The Bay during
November 2007. Total borrowings of R10 million were settled during the
period. This was offset by further draw downs on Gardener Ross Golf & Country
Estate.
Trade and other payables are mostly related to the underlying projects and are
settled through the development finance within each subsidiary.
Cash Flow Statement review
Cash used in operating activities of R46 million is primarily related to the
continued development of Gardener Ross Golf & Country Estate. Cash generated
by financing activities was mainly generated by increased development-related
funding on Gardener Ross Golf and Country Estate and issue of shares during
the period under review.
SEGMENTAL REPORTING
The group has early adopted IFRS 8 Operating Segments. This Standard requires
an entity to report financial and descriptive information about its reportable
segments, which are operating segments or aggregations of operating segments
that meet specified criteria. Operating segments are components of an entity
about which separate financial information is available that is evaluated
regularly by the chief operating decision maker in deciding how to allocate
resources and in assessing performance. The amount reported for each segment
item is the measure reported to the chief operating decision maker for these
purposes.
For management purposes, the group`s 7 operating segments are aggregated into
a single operating segment, because all these operating segments exhibit
similar long-term financial performance and economic characteristics, have the
same products, processes, customers, distribution lines and regulatory
environments. These operating segments derive their revenues from the sale of
freehold land in various stages of development.
The group also sells advertising space on its webpage and the webpages of its
projects. This segment is disclosed separately.
Unaudited 6 months 31 Aug Sale of Advertising
2007 freehold on web-page Group
land R`000 R`000
R`000
Segment revenue 7 016 -- 7 016
Segment loss before taxation (30 302) -- (30 302)
Other gains 212 -- 212
Investment income 132 -- 132
Depreciation of segment 95 -- 95
assets
Impairment losses recognised (17 182) -- (17 182)
in profit or loss
Finance cost (3 533) -- (3 533)
Segment assets (adjusted for 702 318 8 702 326
deferred tax assets)
Deferred tax assets 15 927 -- 15 927
Acquisition of segment assets -- -- --
Segment liabilities (adjusted
for deferred tax and current 366 918 24 366 942
tax liabilities)
Deferred tax liabilities 40 846 -- 40 846
Current tax payable 12 495 -- 12 495
Audited 12 months 28 Feb 2007 Sale of Advertising
freehold on web-page Group
land R`000 R`000
R`000
Segment revenue 154 886 5 154 891
Segment loss before taxation (16 367) (15) (16 382)
Other gains 30 616 -- 30 616
Investment income 806 -- 806
Depreciation of segment (227) -- (227)
assets
Impairment losses recognised (24 201) -- (24 201)
in profit or loss
Finance cost (13 845) -- (13 845)
Segment assets (adjusted for 679 741 143 679 884
deferred tax assets)
Deferred tax assets 9 947 -- 9 947
Acquisition of segment assets 144 803 -- 144 803
Segment liabilities (adjusted
for deferred tax and current (357 665) (159) (357 824)
tax liabilities)
Deferred tax liabilities (41 150) -- (41 150)
Current tax payable (16 860) -- (16 860)
Restated 6 months 31 August Sale of Advertising
2006 freehold on web-page Group
land R`000 R`000
R`000
Segment revenue 15 573 -- 15 573
Segment profit before 10 540 -- 10 540
taxation
Other gains 23 054 -- 23 054
Investment income 241 -- 241
Depreciation of segment (106) -- (106)
assets
Impairment losses recognised (2 644) -- (2 644)
in profit or loss
Finance cost (5 112) -- (5 112)
Segment assets (adjusted for 680 762 -- 680 762
deferred tax assets)
Deferred tax assets 11 680 -- 11 680
Acquisition of segment assets 144 803 -- 144 803
Segment liabilities (adjusted
for deferred tax and current (377 883) -- (377 883)
tax liabilities)
Deferred tax liabilities (32 284) -- (32 284)
Current tax payable (16 805) -- (16 805)
PRIOR PERIOD ADJUSTMENTS
The results for the 6 months ending 31 August 2006 and the financial position
at that date, were restated as follows:
6 months Capitalise Share- Debenture
ending 31 borrowing based amortisation
Aug 06 as cost and payments
previously other
reported expenses
Revenue 36 380 - - -
Cost of sales (13 419) - - -
Gross (loss) / 22 961 - - -
profit
Other gains and 3 - - -
losses
Investment 854 - - -
revenue
Marketing and - - -
sales expenses
Occupancy - - -
expenses
Other expenses (14 886) - - -
Finance costs (5 613) - - -
(Loss) / Profit 3 319 - - -
before tax
Income tax - - -
income / (1 486)
(expense)
(Loss) / Profit 1 833 - - -
for the year
Minority 63 - - -
interest
(Loss) / Profit
attributable to
ordinary 1 896 - - -
shareholders of
the parent
ASSETS
Non-current 603 229 (69) 638 -
assets
Property, plant 430 565 - - -
and equipment
Inventory/Freeho
ld land and - - -
stands
Goodwill 157 273 - - -
Other financial 15 391 - - -
assets
Deferred tax (69) 638 -
assets
Current assets 71 594 (13 501) - (7 036)
Inventory/Freeho
ld land and 26 841 (13 501) - (7 036)
stands
Other financial 14 416 - - -
assets
Trade and other 27 143 - - -
receivables
Cash and cash 3 194 - - -
equivalents
Total Assets 674 823 (13 570) 638 (7 036)
Table contiues:.
Pref share Method of Record Tax Correct
conversion calculating accruals fixed
inventory asset
register
Revenue - - - - -
Cost of sales - 3 042 - - -
Gross (loss) / - 3 042 - - -
profit
Other gains and - - - - -
losses
Investment - - - - -
revenue
Marketing and - 417 - - -
sales expenses
Occupancy - - - - -
expenses
Other expenses - - (17) - -
Finance costs - - (115) - -
(Loss) / Profit - 3 459 (132) - -
before tax
Income tax - -
income / - 4 (3
(expense) 919)
(Loss) / Profit - 3 459 (128) (3 -
for the year 919)
Minority - - - - -
interest
(Loss) / Profit
attributable to
ordinary - 3 459 (128) (3 -
shareholders of 919)
the parent
ASSETS
Non-current - 6 716 4 - 16
assets
Property, plant - - - - 16
and equipment
Inventory/Freeho
ld land and - - - - -
stands
Goodwill - 896 - - -
Other financial - - - - -
assets
Deferred tax - 5 820 4 - -
assets
Current assets - 19 633 3 531 - -
Inventory/Freeho
ld land and - 19 633 3 531 - -
stands
Other financial - - - - -
assets
Trade and other - - - - -
receivables
Cash and cash - - - - -
equivalents
Total Assets - 26 349 3 535 - 16
Table continues:.
Record Reclassify Equity Consoli- Other Restated
financ accounting dation 6 months
e of ending
lease associates 31 Aug
06
Revenue - (21 406) - - 599 15 573
Cost of sales - - - - (10 377)
Gross (loss) / - (21 406) - - 599 5 196
profit
Other gains and - 21 440 - - 1 611 23 054
losses
Investment - (613) - - - 241
revenue
Marketing and - (3 252) - - (599) (3 434)
sales expenses
Occupancy - (313) - - (3) (316)
expenses
Other expenses - 5 821 - - (7) (9 089)
Finance costs - 616 - - - (5 112)
(Loss) / Profit - 2 293 - - 1 601 10 540
before tax
Income tax - -
income / 1 955 - - (3 446)
(expense)
(Loss) / Profit - 4 248 - - 1 601 7 094
for the year
Minority - 1 - - - 64
interest
(Loss) / Profit
attributable to
ordinary - 4 249 - - 1 601 7 158
shareholders of
the parent
ASSETS
Non-current 304 (374 380) (2 687) 23 792 (3 253 759
assets 804)
Property, plant 304 (429 650) - - - 1 235
and equipment
Inventory/Freeho
ld land and - 54 775 - - 1 583 56 358
stands
Goodwill - (18 647) (2 687) 42 792 - 179 627
Other financial - 8 155 - (19 000) 313 4 859
assets
Deferred tax - 10 987 - - (5 11 680
assets 700)
Current assets - 361 600 - - 6 051 441 872
Inventory/Freeho
ld land and - 354 617 - - 6 416 390 501
stands
Other financial - (6 056) - - - 8 360
assets
Trade and other - 13 039 - - (378) 39 804
receivables
Cash and cash - - - - 13 3 207
equivalents
Total Assets 304 (12 780) (2 687) 23 792 2 247 695 631
6 months Capitalise Share- Debenture Pref share
ending 31 borrowing based amortisation conversion
Aug 06 as cost and payments
previously other
reported expenses
EQUITY AND
LIABILITIES
Equity and 257 628 (13 570) 638 - (1 579)
reserves
Issued capital,
share premium and 259 201 - 2 200 - (1 579)
share-based
payments
Accumulated (1 573) (13 570) (1 562) - -
(loss) profit
Minority interest 805 - - - -
Non-current 245 830 - - (7 036) 1 579
liabilities
Borrowings 204 349 - - (7 036) 1 579
Finance lease 258 - - - -
obligation
Deferred tax 41 223 - - - -
liabilities
Current 170 560 - - - -
liabilities
Trade and other 50 823 - - - -
payables
Borrowings 110 828 - - - -
Finance lease 110 - - - -
obligation
Current tax 8 799 - - - -
payable
Provisions - - - - -
Total Equity and 674 823 (13 570) 638 (7 036) -
Liabilities
Table continued:
Method of Record Tax Correct Record
calculating accruals fixed finance
inventory asset lease
register
EQUITY AND
LIABILITIES
Equity and 13 127 (2 451) (3 919) 18 (1)
reserves
Issued capital,
share premium and - - - - -
share-based
payments
Accumulated 13 127 (2 451) (3 919) 18 (1)
(loss) profit
Minority interest - (164) - - -
Non-current - 115 5 546 (2) 305
liabilities
Borrowings - 115 - - -
Finance lease - - - - 302
obligation
Deferred tax - - 5 546 (2) 3
liabilities
Current 13 222 6 035 (1 627) - -
liabilities
Trade and other - 6 035 - - -
payables
Borrowings - - - - -
Finance lease - - - - -
obligation
Current tax 7 202 - (1 627) - -
payable
Provisions 6 020 - - - -
Total Equity and 26 349 3 535 - 16 304
Liabilities
Table continued:.
Reclassify Equity Consoli- Other Restated
accounting dation 6 months
of ending 31
associates Aug 06
EQUITY AND
LIABILITIES
Equity and (7 559) (2 687) 23 575 1 229 264 449
reserves
Issued capital,
share premium and (11 808) - - - 248 014
share-based
payments
Accumulated 4 249 (2 687) 23 575 1 229 16 435
(loss) profit
Minority interest - - 217 164 1 022
Non-current 80 895 - - 70 327 302
liabilities
Borrowings 95 381 - - 70 294 458
Finance lease - - - - 560
obligation
Deferred tax (14 486) - - - 32 284
liabilities
Current (86 116) - - 784 102 858
liabilities
Trade and other (3 467) - - (1 648) 51 743
payables
Borrowings (96 653) - - - 14 175
Finance lease - - - - 110
obligation
Current tax - - - 2 432 16 806
payable
Provisions 14 004 - - - 20 024
Total Equity and (12 780) (2 687) 23 792 2 247 695 631
Liabilities
ACQUISITIONS AND DISPOSALS
During December 2006, Acc-Ross entered into an agreement for the disposal of
The Bay at Hartbeespoort for R195 550 000. The transaction was unanimously
supported at a meeting of shareholders on 28 May 2007. This sale will be
recorded during the 6 months remaining to 28 February 2008.
On 21 May 2007, the company bought the 20% minority shareholding in Acc-Ross
Networks (Pty) Ltd for a purchase consideration of R135 101.
On 30 May 2007 the group disposed of its 25% shareholding in Accretio Bond
Originators (Pty) Ltd to E. Verster, a related party, for R340 000.
During May 2007, Gardener Ross Holdings Nominees (Pty) Ltd sold 4 703 291
cumulative redeemable preference shares in Gardener Ross Holdings Ltd to Jansk
International Ltd for R5 883 817 (cum div). An amount of R2 990 116 was paid
by way of settlement of the JCM Trust loan.
On 4 June 2007 the company bought 7,5% minority shareholding in GR Equity
(Pty) Ltd which company houses the project known as Blue Horizon Bay for a
purchase consideration of R300 000. The Group now holds 87.5% of Blue Horizon
Bay.
On 27 June 2007, Accretio Investments (Pty) Ltd sold its 24,5% shareholding in
Two Ships Trading 193 (Pty) Ltd to the Taute Family Trust for R425 000.
DETAILS OF PROJECTS
Gardener Ross Golf & Country Estate
Gardener Ross Golf & Country Estate comprises an Ernie Els signature golf
course and a housing development comprising 1 131 full title stands and is
situated in Centurion, Gauteng. The geographic position of the estate offers
owners the opportunity to enjoy a quiet and secure country lifestyle, within
range of major developing business areas, including Centurion, Midrand,
Sandton and Pretoria. The land was acquired in 2003 for a purchase
consideration of R15 million.
Gardener Ross Golf & Country Estate has already transferred the majority of
Phase 1 and a number of Phase 2 stands to purchasers. Phase 3, the final
phase, was proclaimed in May 2007. All remaining stands are reflected in
inventory and are ready to transfer on purchase and payment. Construction of
a number of owner properties has commenced with certain owners already
occupying their homes on the estate. A number of show houses were built for
The Star Homes Show, which was held on site from 8 - 11 November 2007.
Gardener Ross Golf & Country Estate, per its projected budget, projects total
sales of R900 million from all three phases and a total profit after tax and
minority interests from the entire development upon sale of all stands, of
approximately R110 million.
The development is fully financed by Investec. The development finance is a
rolling facility, attracting interest at prime less 0.5% and a profit share of
25% of the pre-tax profit from the project. Project management for this
development is being undertaken by Devco Africa (Pty) Ltd, which owns 10% of
the development and has developed, and is currently developing, numerous
property projects throughout South Africa. The necessary ROD and Environmental
Impact Report approvals were obtained and construction commenced in September
2004. The development is currently ahead of schedule. With all 18 golf holes
having been completed, the course will be officially opened for play on 25
November 2007.
Lizard Point
Acc-Ross owns 100% of the shareholding in the subsidiary which will develop
the Lizard Point Resort. The land was acquired in 2004 for a purchase
consideration of R11,5 million, plus stands to the value of R9 million to be
delivered once phase 1 is completed. Professional fees have been paid through
funds raised from bank funding and sale of debentures.
Lizard Point is a 700 hectare resort development with 6,4 kilometres of water
frontage, situated at the mouth of the Wilge river and on the banks of the
Vaal Dam next to Oranjeville in the Free State.
The project was granted its ROD from the environment authorities on 02
November 2005 and the final amendment to the Guide Plan was promulgated on 19
May 2006. The company is planning to break ground during next year, after
receipt of the final township development rights, which are imminent. The
first phase of the development comprises an 18 hole championship links golf
course, which will be co-designed by Retief Goosen, with 526 Residential One,
freehold stands and approximately 800 high density units. Phase 1 was
officially launched in August 2005 and pre-sales of approximately R150 million
have been achieved to date.
Phase 2 will comprise a second 18-hole signature parklands golf course with
315 Residential One, freehold stands and 621 Residential Two sites. Other
products in the development include boat storage and launching facilities, a
golf driving range, tennis courts, the two club houses for the golf courses
and an island with resort pools and sundowner bars.
Phases 3 and 4 comprise the development of residential units and the
waterfront area, which consists of a commercial hotel, retail outlets,
restaurants, cinemas, entertainment, a boutique hotel and a timeshare
component.
An updated independent valuation of R600 million has been received on the
project.
Welvergenoegd
Welvergenoegd is a planned township development situated outside Durbanville
in the Cape. Water Rights have been secured for the development through part
funding of the Durbanville water pipeline. Environmental Impact Assessments
have been initiated and applications for rights are at an early stage. It is
anticipated that the development will commence during 2009 and be completed
within 36 months thereafter. The project is similar in nature and size to the
Gardener Ross Golf & Country Estate.
Transfer of the property was effected during July 2007 following payment by
Acc-Ross of R22 million for the balance of the purchase price. The property
is currently unbonded. The township application is in the process of
formulation and banks will be approached to finance the project in the normal
manner once rights have been obtained.
Blue Horizon Bay
Acc-Ross effectively owns 87.5% of Blue Horizon Bay Eco-Estate, a 76 hectare
property located in an extremely sought-after area of coastal land, between
Port Elizabeth and Jeffreys Bay. The sea facing development will cater to the
holiday market. The development is expected to be an low density eco estate,
with ample open space to allow small game to roam freely and allow for the
majority of the homes to have uninterrupted ocean views.
Blue Horizon Bay Eco-Estate is a smaller project but given its location, it is
expected to be a popular holiday destination. The land was purchased for
R550 000 in 2003 and transfer has been affected. The Environmental Impact
Assessment has been initiated and the applications for rights are at and early
stage. The township application is in the process of formulation. Banks will
be approached to finance the project in the normal manner once rights have
been obtained.
LITIGATION
Acc-Ross and its subsidiaries are not involved in any material legal or
arbitration proceedings or legal actions, nor are the directors aware of any
proceedings that are pending or threatened, that may have, or have had in the
12 month period preceding the last practicable date, a material effect on the
company`s financial position, other than a motion against Gardener Ross
Holdings Limited, which matter has been defended by the submission of an
opposing affidavit as the company has been advised that the applicant has no
locus standi.
It is important to note that the causa of the above mentioned action was the
issue of the Preference shares and a claim for the dividend to be paid on the
preference shares so issued. The matter has been defended and subsequently
postponed sine die and it is anticipated that should the matter proceed to
court, it would only be on a date which is after the date of redemption of the
preference shares. There would therefore not be any reason for the matter to
proceed before that date.
SUBSEQUENT EVENTS
Shareholders are to be advised that the transfer of The Bay has been processed
and the initial cash payment has been received. Pro forma financial effects
of the sale of The Bay on the interim results of Acc-Ross published above have
been prepared for illustrative purposes only. These pr forma financial
effects are the responsibility of the directors and accordingly may not give a
true reflection of the financial effect on the balance sheet, statement of
changes in equity, results of operations and cash flows of the group. The pro-
forma effects on the income statement of the sale of The Bay are reflected
below:
Condensed Consolidated Unaudited Disposal
Income Statement 6 months of The Pro-forma
31 Aug 2007 Bay after "A"
R`000 "A" R`000
R`000
Revenue 7 016 195 500 202 516
Cost of sales (7 304) (152 885) (160 189)
Gross (loss) / profit (288) 42 615 42 327
Other gains and losses 212 -- 212
Investment revenue 132 -- 132
Marketing and sales (3 689) -- (3 689)
expenses
Occupancy expenses (207) -- (207)
Other expenses (22 929) (55 608) (78 537)
Finance costs (3 533) -- (3 533)
Loss before tax (30 302) (12 993) (43 295)
Income tax income / 5 747 (12 358) (6 611)
(expense)
Loss for the year (24 555) (25 351) (49 906)
Minority interest 231 -- 231
Loss attributable to
ordinary shareholders of (24 324) (25 351) (49 675)
the parent
Headline loss
reconciliation:
Loss attributable to
ordinary shareholders of (24 324) (25 351) (49 675)
the parent
Adjustments for:
Impairment of goodwill 17 182 55 608 72 790
Profit on disposal of
investments, adjusted for (78) -- (78)
taxation effect
Headline (loss)/(earnings (7 220) 30 257 23 037
for the year
Earnings per share
information:
Basic loss per share (1.99) (4.06)
(cents)
Diluted loss per share (1.99) (4.06)
(cents)
Headline (loss)/earnings (0.59) 1.89
per share (cents)
Diluted headline (0.59) 1.89
(loss)/earnings per share
(cents)
Weighted average shares in 1 222 412 1 222 412
issue (`000)
Weighted average shares in 1 222 412 1 222 412
issue for dilution (`000)
Notes:
The figures shown in the column headed "Disposal of The Bay ("A")", reflects
the financial effects of the disposal of The Bay on the assumption that the
disposal occurred on 31 August 2007.
"Pro forma After A" shows the pro forma income statement of Acc-Ross after the
financial effects on the disposal of The Bay have been taken into account as
though the disposal occurred with effect from 31 August 2007.
DIRECTOR CHANGES
During the period under review the following director changes occurred:
Resigned Date
JM Sono 04 October 2007
DIVIDENDS
The directors have decided not to declare a dividend for the period under
review.
FUTURE PROSPECTS AND REVISED PROFIT FORECAST
Acc-Ross continues to be approached with numerous high quality projects, both
generally and through its relationship with Els International and is
evaluating ways to take advantage of such opportunities. In the short term it
will continue with its current projects, which will ultimately lead to the
group holding leisure assets at key locations.
By order of the Board
AM Mashiatshidi W Robinson
Chairperson Chief Executive Officer
16 November 2007
Johannesburg
Registered Office
Arcay House, Number 3 Anerley Road, Parktown, Johannesburg,
2193
PO Box 62397, Marshalltown, Johannesburg, 2107
Business Address
INSERT
Directors
AM Mashiatshidi *(Chairman), W Robinson (CEO), N Owen, A
Wiese, KS Mthembu*
* Non-executive
Designated Advisor Transfer Office
Arcay Moela Sponsors Computershare Investor Services 2004
(Pty) Ltd (Proprietary) Limited
Date: 16/11/2007 15:01:38 Produced by the JSE SENS Department.
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