| Tue 18 Mar 2008, 12:09 | | RAH - Real Africa - Profit and dividend announcement for the six months to 31 |
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RAH
RAH
RAH - Real Africa - Profit and dividend announcement for the six months to 31
December 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 Six Months to 31 December 2007
INCOME STATEMENTS
Six months to Nine months to Fifteen months to
31 December 31 December 30 June
2007 2006 2007
R`000 Unaudited Unaudited Audited
Revenue 1 532 28 445 83 507
Net investment profits 90 705 162 125 163 040
Share of profits of
associates 20 009 40 587 53 469
Interest income 3 030 8 872 10 508
Litigation settlement 110 000 - -
Operating income 225 276 240 029 310 524
Operating costs (5 237) (16 376) (18 729)
Interest and
preference dividends paid (4 001) (8 183) (14 268)
Profit before taxation 216 038 215 470 277 527
Taxation (29 425) (20 237) (12 477)
Profit after taxation 186 613 195 233 265 050
Attributable to:
Minorities 32 063 7 139 13 350
Ordinary shareholders 154 550 188 094 251 700
186 613 195 233 265 050
Earnings per share (cents) 42,7 52,1 69,7
Headline earnings
per share (cents) 19,3 10,7 28,0
BALANCE SHEETS
Six months to Nine months to Fifteen months to
31 December 31 December 30 June
2007 2006 2007
R`000 Unaudited Unaudited Audited
ASSETS
Non current assets
Equipment and
furniture - 73 -
Investments in
associates 146 634 173 854 160 511
Other investments 1 077 833 1 078 851 1 180 154
1 224 467 1 252 778 1 340 665
Current assets
Non current asset
held for sale - 70 486 71 295
Accounts receivable 23 340 245
Cash and cash
equivalents - 45 707 37 156
23 116 533 108 696
Total assets 1 224 490 1 369 311 1 449 361
EQUITY AND
LIABILITIES
Capital and reserves
Ordinary
shareholders` equity 1 026 282 1 067 448 1 147 838
Minority interest 102 917 103 276 150 656
1 129 199 1 170 724 1 298 494
Non current
liabilities
Preference shares 49 122 166 464 140 464
Deferred taxation 264 - 264
49 386 166 464 140 728
Current liabilities
Accounts payable 18 329 4 528 2 129
Bank overdraft 8 954 - -
Taxation 18 622 27 595 8 010
45 905 32 123 10 139
Total liabilities 95 291 198 587 150 867
Total equity and
liabilities 1 224 490 1 369 311 1 449 361
SUMMARISED CASH FLOW STATEMENT
Six months to Nine months to Fifteen months to
31 December 31 December 30 June
2007 2006 2007
R`000 Unaudited Unaudited Audited
Cash flows from
operating activities 132 193 34 612 (31 670)
Cash flows from
investing activities 163 204 307 885 436 615
Cash flows from
financing activities (341 507) (577 355) (648 354)
Net cash flows (46 110) (234 858) (243 409)
HEADLINE EARNINGS PER SHARE
Six months to Nine months to Fifteen months to
31 December 31 December 30 June
2007 2006 2007
R`000 Unaudited Unaudited Audited
Headline earnings
per share (cents) 19,3 10,7 28,0
Weighted average
number of shares (million) 361,6 361,3 361,3
Reconciliation of
headline earnings
(R`000)
Earnings
attributable to
ordinary
shareholders 154 550 188 094 251 700
Adjusted for:
Loss on disposal of
equipment and furniture - - 43
Realised investment
profits (90 705) (162 125) (163 360)
Taxation on above items 5 940 12 678 12 678
Headline earnings 69 785 38 647 101 061
NET ASSET VALUE
31 December 30 June 31 March
2007 2007 2007
R`000 Unaudited Audited Unaudited
Afrisun Leisure 1 566 787 1 693 863 1 597 990
Life Esidimeni - 157 116 187 842
Other net liabilities (18 000) (9 350) (10 102)
Cash (9 629) 16 167 40 426
Borrowings (21 497) (94 475) (121 464)
Share of litigation
settlement - 62 355 -
Net asset value 1 517 661 1 825 676 1 694 692
Issued shares net of
treasury shares (million) 361,6 361,3 361,3
Net asset value per
share (cents) 420 505 469
Special
distributions paid
to shareholders since
calculation of net
asset value:
Special dividend - (35) (35)
Net asset value
after distribution 420 470 434
Notes
1. Afrisun Leisure`s value is stated net of preference share debt and cash.
2. All the investments held by Afrisun Leisure have been valued using the
Discounted Cash Flow (DCF) value method applying a discount rate of 13,35%
(previously 12,46%) to management`s current estimated future cash flows.
STATEMENT OF CHANGES IN EQUITY
Ordinary
share Capital Non-
capital redemp- controll-
and tion ing Retained
premium reserve reserve earnings
R`000 R`000 R`000 R`000
Balance at
30 June 2007 85 161 1 080 (3 751) 262 014
Profit for the period - - - 154 550
Fair value
adjustments - - - -
Dividends paid - - - (169 951)
Purchase of
minorities` interest - - (38 503) -
Exercise of share -
trust options 1 902 - - -
87 063 1 080 (42 254) 246 613
Fair
value Minority
reserve interests Total
R`000 R`000 R`000
Balance at
30 June 2007 803 334 150 656 1 298 494
Profit for the period - 32 063 186 613
Fair value
adjustments (69 554) - (69 554)
Dividends paid - (41 237) (211 188)
Purchase of
minorities` interest - (38 565) (77 068)
Exercise of share -
trust options - - 1 902
733 780 102 917 1 129 199
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
(IFRS) 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 30 June 2007.
REVIEW OF RESULTS
Revenue comprising of dividends received was well below previous periods due to
SunWest International (Pty) Limited ("SunWest") and Afrisun KZN (Pty) Limited
("Afrisun KZN") having distributed a portion of their share premium in lieu of
dividends during the period under review totalling R42,8 million.
The net investment profit of R90,7 million relates to the sale of Life
Esidimeni Group Holdings (Pty) Limited ("Life Esidimeni") following its disposal
for
R180 million.
The share of profits from associates includes the group`s share of income from
Afrisun Gauteng (Pty) Limited ("Afrisun Gauteng"), Zonwabise Resort Holdings
Limited as well as the
national and regional management companies.
As announced previously, Afrisun Leisure Investments (Pty) Limited ("Afrisun
Leisure") agreed to settle the litigation brought against Sun International
(South Africa) Limited for an amount of R110 million.
Operating costs have been significantly reduced due to the closure of RAH`s
offices. In addition the previous period`s costs included non-recurring
expenses in respect of the offer by Sun International.
The tax charge includes capital gains taxation on the litigation settlement and
the taxable gain on the disposal of Life Esidimeni.
Headline earnings per share were positively impacted by the litigation
settlement.
The board has declared an interim dividend of 8 cents per share.
A portion of the proceeds received on the disposal of Life Esidimeni was used
to reduce preference share funding by R91,4 million.
During the period, the group acquired an additional interest
in Afrisun Leisure, additional shares in SunWest and Emfuleni Resorts (Pty)
Limited ("Emfuleni") and a 7,4% shareholding in Worcester Casino (Pty)
Limited. The group`s effective interest in Afrisun Leisure`s underlying
investments has increased a s follows:
RAH`s effective shareholding
31 December 30 June
% 2007 2007
SunWest 14,6 14,1
Afrisun Gauteng 21,6 21,0
Afrisun KZN 13,7 12,1
Emfuleni 8,1 7,0
Worcester 9,2 -
National Manco 25,3 21,8
Gauteng Manco 23,0 19,9
Notwithstanding the increased shareholdings, the value of Afrisun Leisure has
reduced from R1 694 million at 30 June 2007 to R1 567 million principally due
to the increased discount rate used in the valuations as a result of increased
long-term interest rates.
Review of Gaming Investments
The review of RAH`s gaming investments for the six months to 31 December 2007
has been compared to the six months to 31 December 2006. The gaming industry
enjoyed satisfactory trading conditions despite the slower growth rates
experienced towards the end of the period.
SunWest, in which the group has a 14,6% effective economic interest, owns the
GrandWest Casino and the Table Bay Hotel in Cape Town. GrandWest generated
revenue growth of 13% over last year and EBITDA was 8% higher at R363 million.
The additional costs associated with the significantly enlarged casino and
entertainment facilities resulted in an EBITDA margin decline of 1,9 percentage
points to 41,3%.
The GrandWest expansion was completed within the forecast R450 million. The
multi-purpose arena opened in October 2007 and the refurbishment of the original
casino areas was completed in early December 2007.
The Table Bay Hotel achieved an occupancy of 72% (70%) for the period, while
the average room rate of R1 609 was 4% ahead of the previous year.
Afrisun Gauteng, trading as Carnival City, in which the group has
an effective economic interest of 21,6%, generated revenue which was 11% ahead
of last year. EBITDA of R165 million grew 7% with margins declining 1,2
percentage points to 34,0% due to higher marketing and promotional expenditure,
although the margin is anticipated to improve over the full year.
Construction of an R82 million multilevel parkade for over 1 000 vehicles at
Carnival City will be completed by June 2008 and will provide customers with
improved access and convenience.
Afrisun KZN, in which the group has an effective economic
interest of 13,7%, operates the Sibaya Casino north of Durban. Sibaya achieved
revenues of R392 million and EBITDA of R142 million, 23% and 38% ahead of last
year respectively. The improvement in EBITDA margin of 3,8 percentage points to
36,2% was primarily due to strong revenue growth. Sibaya improved its overall
share of the KwaZulu-Natal market to 36% with the additional rooms at Sibaya
Lodge assisting this performance.
Emfuleni, in which the group has an effective economic
interest of 8,1%, owns the Boardwalk Casino in Port Elizabeth and the Fish
River Sun. Boardwalk`s revenue grew by 11% to R230 million despite the local
economy being affected by strikes in the motor industry. The EBITDA margin of
40,4% was in line with the previous year. Revenue growth has been particularly
slow at this unit over the last few months.
CONTINGENT LIABILITY
In terms of the Life Esidimeni sale agreement, RAH has warranted its share of
the pension fund exposure in the company which is capped at the proceeds
received from the sale amounting to R180 million. RAH has raised a provision of
R18 million for its share of the provision held in Life Esidimeni, however a
contingent liability exists for the balance of the warranty given.
OUTLOOK
Trading within the group`s major investments reflects a significant slowdown in
the rate of casino revenue growth. This is likely to result in lower earnings
growth in the group`s underlying gaming investments.
DIVIDEND
Notice is hereby given that an interim dividend of 8 cents per share for the
six months ended 31 December 2007 (2007: 12 cents for the nine 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 interim dividend are as follows:
2008
Last day to trade cum interim dividend Friday, 4 April
First day to trade ex interim dividend Monday, 7 April
Record date Friday, 11 April
Payment date Monday, 14 April
No share certificates may be dematerialised or rematerialised between Monday, 7
April and Friday, 11 April 2008, 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.
For and on behalf of the board
DA Hawton RP Becker
Chairman Director
17 March 2008
REGISTERED OFFICE
27 Fredman Drive, Sandown, Sandton, 2031
REGISTRAR
Computershare Investor Services (Pty) Limited, 70 Marshall Street,
Johannesburg, 2001
SPONSOR
Investec Bank Limited
DIRECTORS
DA Hawton (Chairman), RP Becker, DC Coutts-Trotter, Dr NN Gwagwa, MJ Leeming,
MV Moosa
SECRETARIES
Sun International Corporate Services (Pty) Limited
Date: 18/03/2008 12:09:48 Produced by the JSE SENS Department.
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