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IFH
IFH
IFH - IFA Hotels & Resorts Limited - Audited abridged financial information for
the year ended 30 June 2008 ("the period")
IFA HOTELS & RESORTS LIMITED
(Registration number 1919/001318/06)
Share code: IFH ISIN: ZAE000075669
("IFA SA" or "the company")
AUDITED ABRIDGED FINANCIAL INFORMATION FOR THE YEAR ENDED 30 JUNE 2008 ("the
period")
The annual report will be posted on 25 September 2008.
CONDENSED CONSOLIDATED INCOME STATEMENTS
Year ended 30 Year ended 30
June 2008 June 2007
Audited Audited
R`000 R`000
Revenue 118,800 120,305
Operating (loss)/profit (11,119) 35,646
Investment income 35,028 7,143
Finance costs (36,796) (9,662)
Share of results of associate 4,071 (4,382)
(Loss)/Profit before taxation (8,816) 28,745
Taxation 3,253 (8,424)
(Loss)/Profit for the period (5,563) 20,321
(Loss)/Profit attributable to equity holders
of the parent (5,563) 20,321
Basic and diluted (loss)/earnings per share
(cents)("EPS") (2,55) 9.31
SEGMENTAL ANALYSIS
IFA Hotels IFA Zimbali
Year ended 30 Year ended 30 Year ended Year ended
June 2008 June 2007 30 June 2008 30 June 2007
Audited Audited Audited Audited
R`000 R`000 R`000 R`000
Revenue
from external
customers 69,877 78,352 38,370 38,015
Internal
revenue - - - -
69,877 78,569 38,370 38,015
EBITDA 24,864 48,202 (15,764) 5,388
EBIT 24,727 48,135 (19,136) 2,461
Profit/(Loss)
after Tax 20,754 32,435 (22,956) (6,107)
IFA Boschendal IFA Estates
Year ended Year ended Year ended Year ended
30 June 2008 30 June 2007 30 June 2008 30 June 2007
Audited Audited Audited Audited
R`000 R`000 R`000 R`000
Revenue
from external
customers 67 54
Internal
revenue - - - -
- - 67 54
EBITDA (7,562) (6,035) (7,697) (5,247)
EBIT (7,562) (6,035) (7,723) (5,263)
Profit/(Loss)
after Tax (5,355) (6,094) (6,485) (3,733)
IFA SA IFA LEGENDS
Year ended Year ended Year ended Year ended
30 June 2008 30 June 2007 30 June 2008 30 June 2007
Audited Audited Audited Audited
R`000 R`000 R`000 R`000
Revenue
from external
customers 3,831 3,884 - -
Internal
revenue 4,771 2,794 - -
8,602 6,678 -
EBITDA (7,866) (4,686) 10,624 -
EBIT (8,167) (4,797) 10,624 -
Profit/(Loss)
after Tax (1,218) 7,058 10,784 -
IFA NAMIBIA Eliminations
Year ended Year ended Year ended Year ended
30 June 2008 30 June 2007 30 June 2008 30 June 2007
Audited Audited Audited Audited
R`000 R`000 R`000 R`000
Revenue
from external
customers 6,655 -
Internal
revenue - (4,771) (2,794)
6,655 (4,771) (2,794)
EBITDA 245 - (1) (3,238)
EBIT 191 - (1) (3,238)
Profit/(Loss)
after Tax (1,086) - (1) (3,238)
Consolidated
Year ended Year ended
30 June 2008 30 June 2007
Audited Audited
R`000 R`000
Revenue from external customers 118,800 120,305
EBITDA (3,157) 34,384
EBIT (7,047) 31,263
Profit/(Loss) after Tax (5,563) 20,321
CONDENSED CONSOLIDATED BALANCE SHEETS
30 June 30 June
2008 2007
Audited Audited
R`000 R`000
Assets
Non-current assets
Property, plant and equipment 166 144 95 072
Goodwill 2 298 2 298
Investments in subsidiaries - -
Loans to subsidiaries - -
Joint ventures 8 402 -
Investments in associates 233 743 60 529
Loans to group companies 21 261 12 203
Other financial assets 4 500 6 300
Deferred tax 6 695 4 218
443 043 180 621
Current assets
Inventories 1 812 2 819
Other financial assets 4 572 673
Current tax receivable - -
Township properties 130 306 81 016
Trade and other receivables 49 520 136 295
Cash and cash equivalents 102 176 45 688
288 386 266 491
Total assets 731 429 447 112
Equity and liabilities
Equity
Share capital 71 892 71 892
Reserves 44 050 32 830
Accumulated profit/(loss) 68 019 73 390
183 961 178 112
Liabilities
Non-current liabilities
Loans from shareholders 152 944 125 405
Borrowings 249 292 12 233
Deferred tax 8 677 27 334
Amount owing to joint venturer 25 886 -
436 799 164 973
Current liabilities
Loans from shareholders - 42 192
Current tax payable 11 627 7 900
Deferred revenue 32 996 27 099
Trade and other payables 64 060 25 630
Advance deposits 1 863 1 207
Other financial liabilities 123 -
110 669 104 027
Total liabilities 547 468 269 000
Total equity and liabilities 731 429 447 112
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share Share Revaluation
capital premium reserve
R`000 R`000 R`000
Balance at 1 July 2006 2 182 69 710 23 797
Changes in equity - - 9 033
Surplus on revaluation of land
and buildings - - 12 256
Deferred tax on revaluation surplus - - (3 119)
Transfer to distributable reserve - - (104)
Profit for the year - - -
Total changes - - 9 033
Balance at 1 July 2007 2 182 69 710 32 830
Changes in equity - - 11 220
Surplus on revaluation of land
and buildings - - 14 293
Deferred tax on revaluation surplus - - (2 882)
Transfer to distributable reserve - - (192)
Loss for the year - - -
Total changes - - 11 220
Balance at 30 June 2008 2 182 69 710 44 050
Accumulated Total
profit/(loss) equity
R`000 R`000
Balance at 1 July 2006 52 965 148 654
Changes in equity 104 9 137
Surplus on revaluation of land
and buildings - 12 256
Deferred tax on revaluation surplus - (3 119)
Transfer to distributable reserve 104 -
Profit for the year 20 321 20 321
Total changes 20 425 29 458
Balance at 1 July 2007 73 390 178 112
Changes in equity 192 11 412
Surplus on revaluation of land
and buildings - 14 293
Deferred tax on revaluation surplus - (2 882)
Transfer to distributable reserve 192 -
Loss for the year (5 563) (5 563)
Total changes (5 371) 5 848
Balance at 30 June 2008 68 019 183 961
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
30 June 30 June
2008 2007
Audited Audited
R`000 R`000
Cash flows from operating activities
Cash (utilised in)/generated by
operating activities 76 112 (23 018)
Interest received 25 648 6 943
Interest paid (35 938) (8 959)
Taxation paid (17 123) (10 166)
Net cash from operating activities 48 699 (35 200)
Cash flows from investing activities
Property, plant and equipment
acquired (60 676) (2 998)
Proceeds on disposals of property,
plant and equipment 354 148
Loans to subsidiaries - -
Loans to associates and joint
ventures (163 402) -
Subsidiary acquired - -
Investment in associates (15 000) (15 860)
Loans advanced to group companies (12 957) -
Other investments 1 800 1 000
Net cash from investing activities (249 881) (17 710)
Cash flows from financing activities
Loans raised 237 058 12 233
Loans repaid/advanced - -
Movement in amount owing to joint
venturer 25 886 -
Proceeds from shareholders loan - 6 432
Repayment of shareholders loan (5 273) -
Net cash from financing activities 257 671 18 665
Total cash movement for the year 56 488 (34 245)
Cash at the beginning of the year 45 688 79 933
Total cash at end of the year 102 176 45 688
Basis of Preparation
The condensed consolidated financial results for the year ended 30 June 2008
have been prepared in accordance with, and containing the information required
by, IAS 34: Interim Financial Reporting, International Financial Reporting
Standards ( IFRS ) , the International Financial Reporting Interpretations
Committee ( IFRIC ) interpretations adopted by Accounting Practices Board and
the Companies Act of South Africa and in compliance with the Group`s accounting
policies.
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 Listings
Requirements of the JSE.
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
are expected to be completed within the next eighteen months. Therefore the
revenue that has been deferred in terms of the revenue recognition policy is
likely to be recognised within the next twelve months.
Year ended Year ended
June 2008 June 2007
Audited Audited
R`000 R`000
2. Headline earnings per ordinary share
Headline and diluted headline
earnings per share (HEPS) (cents) (2,71) 10,82
The calculation of earnings per ordinary share is based on net (loss)/profit
attributable to ordinary shareholders of (R5 562 860) (2007: R20 320 786) and
218 210 680 (2007: 218 210 680) ordinary shares in issue throughout the year.
The calculation of headline earnings per share is based on loss of (R5 910 016)
(2007: profit of R23 603 299) and a weighted average of 218 210 680 (2007: 218
210 680) ordinary shares in issue throughout the year.
Reconciliation
between earnings and headline earnings
Loss/earnings attributable to ordinary
shareholders (IAS 33 earnings) (5 563) 20 321
Plus IFRS 3 goodwill adjustment - 3 236
Less IAS 16
Profit/(loss) on disposal of
property, plant and equipment (347) 47
Headline (loss)/earnings (5 910) 23 603
3. COMMITMENTS
Capital expenditure
Contracted for 22 911 11 046
Approved by the
directors but not
contracted for 48 043 18 500
70 953 29 546
Contracted for expenditure relates to the group`s share of approved development
expenditure not yet incurred by the TIFAZ (Joint Venture).
The group intends to finance this expenditure from existing borrowing
facilities and from internally generated funds.
Operating lease commitments
The future minimum lease payments under
non-cancellable operating leases
are as follows:
Not later than one year 83 165
Later than one year and not
later than five years 194 -
277 165
COMMENTS
GROUP PROFILE
IFA HR Kuwait holds the majority interest with an 85% shareholding. Through
six subsidiaries, IFA SA owns:
IFA Zimbali Lodge (Pty) Ltd ("IFA Zimbali")
IFA Zimbali is the owner of the Fairmont Zimbali Lodge which is operated by
Fairmont Hotels & Resorts. The Lodge is a magnificent five star boutique hotel
with 76 luxurious rooms and has been rated by Conde Nast Traveller magazine as
one of the top hotels in the world. It is located amongst indigenous
semitropical gardens, and overlooks the signature hole of the scenic Tom
Weiskopf-designed championship golf course, the magnificent lakes and
conservation area and the Indian Ocean beyond.
IFA Hotels & Resorts (South Africa)(Pty) Ltd ("IFA Hotels")
In 2003, IFA Hotels formed a joint venture with Tongaat Hulett Developments
(Pty) Ltd ("THD") to participate in the development of the Zimbali Coastal
Resort. IFA Hotels is responsible for the sales and marketing and THD is
responsible for the technical and development functions thereof. The Zimbali
Coastal Resort covers 3,7 million square metres (370 hectares) of coastal
forest estate with 3,5 km of coastline. The Zimbali Lakes development covers
3 million square metres (300 hectares) and is adjacent to the Zimbali Coastal
Resort. The Tongaat Hulett / IFA Resort Developments ("TIFAZ") joint venture
has also secured 681 hectares of land between greater Zimbali and the King
Shaka International Airport currently under construction. The principal
business of the TIFAZ joint venture is the subdivision and servicing of land
in greater Zimbali for subsequent sale.
IFA Boschendal Investments (Pty) Ltd ("IFA Boschendal)
IFA Boschendal has acquired a 26,57% stake in Boschendal Limited. The company
has development plans for the 2 400 hectare Boschendal estate near Franschhoek,
which includes an upmarket retirement village with 500 individual homes, a
boutique hotel with upwards of 120 rooms and a mixed-use development of a
shopping centre, offices and apartments.
IFA Hotels & Resorts 8 (Pty) Ltd ("IFA Estates")
IFA SA`s estate agency has the sole mandate to sell the R1,1 billion Fairmont
Resort development situated in Zimbali.
IFA Hotels & Resorts (Namibia) (Pty) Ltd ("IFA Namibia")
In March 2007, IFA Namibia formed a joint venture 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. It will
also develop a fourth site in Windhoek into a five star hotel. IFA HR Kuwait
introduced five star international hotelier Kempinski Hotels to Namibia, to
operate these hotels going forward.
IFA Legends Investments ("IFA Legends")
IFA Legends and Crimson King have partnered in an outstanding new project that
brings together the world`s finest in an African Big Five game experience,
world class hospitality, leisure and sport - a unique 18-hole championship golf
course with 18 top professional golfers providing their signatures and finest
design input to one hole each. Situated within the 22 000 hectare Entabeni
Safari Conservancy in the malaria-free Waterberg region of the Limpopo
Province, the Legend Golf & Safari Resort epitomises the free spirit of the
bushveld lifestyle, offering a world first within a world class setting.
FINANCIAL REVIEW
IFA Hotels
Recognised revenue from land sales has decreased by 21% from R78,5 million in
the previous year to R62,3 million. 2007 gross margins from revenues in IFA
Hotels were also buffered by an upward revision of the total project gross
margins, which accounting convention dictates should be retrospectively
adjusted as a change in estimate in the current year. A combination of deferred
revenue adjustments and the gross margin adjustment in 2007 has resulted in
gross margins after tax in IFA Hotels having decreased by R16 million over the
corresponding period. Commission earned from land re-sales is up 291% from
R2,62 million in the previous year to R10,25 million as a result of the
increasing inventory of resale stock. A key focus for IFA Hotels remains the
development of the next phase of the Zimbali Coastal Resort, namely Zimbali
Lakes. Limited land stock remains in the current phase.
IFA Zimbali
Revenue has remained relatively unchanged at approximately R38,0 million from
the prior year. EBITDA has dropped due to the once-off charges arising from the
change of operator from Sun International Management Limited to Fairmont Hotels
& Resorts. The net asset value of IFA Zimbali has increased by R11,4 million as
a result of the revaluation of land and buildings at year end.
IFA Boschendal
The 2 400 hectare Boschendal estate is still in the planning phase and is
accordingly incurring costs in anticipation of future revenues. The group
recognised an after-tax loss of R5,3 million (2007: R6,1 million).
IFA Estates
IFA SA`s estate agency has a number of projects due to launch shortly which
will assist in bringing the company to profitability. The Fairmont Zimbali
project commenced sales in 2008. However, costs were incurred during the period
to gear the operation, which, in the absence of revenue, resulted in a loss. As
a result an after-tax loss of R6,5 million (2007: R3,7 million) was incurred.
IFA SA
IFA SA is the holding and administration company of the group. Net loss after
tax of R1,2 million (2007: profit of R7,1 million) was incurred for the year.
IFA Legends
IFA SA`s 20% share of profits in the Legend Golf & Safari Resort contributed
R10,8 million to IFA SA`s total after-tax profit for the period. Phase 1 of the
development is complete and the golf course is substantially complete and is
expected to open in April 2009. The directors are pleased with progress made to
date.
IFA Namibia
The joint venture ("JV") between IFA Namibia and Olthaver and List was
effective from 1 February 2008. The company has an operating lodge, Mokuti
Lodge, the operation of, which was recently taken over by 5-star German
Operator Kempinski Hotels. The JV also receives rental from a site in Windhoek,
which will ultimately be developed into a mixed use hotel and residential
building. Mokuti Lodge is currently undergoing a facelift to provide an
exceptional bush experience. The Strand Hotel in Swakopmund has been closed
pending demolition in anticipation of a mixed use residential and hotel
development. IFA Namibia is currently in the planning phase for these projects
and has, as such incurred a loss of R1,1 million.
PROSPECTS
IFA Hotels
In addition to the remaining sales in Zimbali Coastal Resort planning approvals
(ROD) have been obtained for the 300 hectare extension of the Zimbali Coastal
Resort - "Zimbali Lakes". This should generate sales beginning in the second
quarter of the 2009 financial year. Through the TIFAZ joint venture, IFA SA
stands to benefit from 50% of the sales revenue and attributable profits.
Whilst the additional TIFAZ land in Westbrook offers further opportunity for
expanding the current Zimbali resort and additional residential nodes as well
as introducing a significant business/commercial node close to the new airport,
planning thereof is not expected to commence until construction of the new King
Shaka International Airport is substantially complete.
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
Boschendal`s stake in the above revenues of 26,57% should accordingly impact
positively on group revenues.
IFA Estates
Approximately R175,3 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 2009 financial year as these sales become legally binding.
IFA Namibia
Revenues from running the three existing hotels that form part of the OLIFA
joint venture following their redevelopment and/or refurbishment should begin
impacting on results in the 2010 financial year. The OLIFA joint venture will
also be looking at the best mixed use of these sites to maximise values. The
development of the land in Windhoek is also likely to commence in 2009.
IFA Legends
Only phase one of four has currently been completed at the Legends Golf and
Safari resort. Approximately 90% of land stock remains in inventory and is yet
to be released.
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.
NOTICE OF ANNUAL GENERAL MEETING
The annual general meeting of the company will be held at Fairmont Zimbali
Lodge on Thursday, 16 October 2008 at 8:00.
For and on behalf of the board
TJM Al-Bahar
(Chairman)
WJ Burger
(Chief Executive Officer)
Zimbali, Durban, KwaZulu-Natal
25 September 2008
CORPORATE INFORMATION
Directors
TJM Al-Bahar (Chairman)*, WJ Burger (Chief Executive Officer), GE Larson*,
JAM Wilson*, PGR de Sylva, VM Nkosi, KM El Marsafy*
* Non-executive
Registered office
Zimbali Northgate Suites, Zimbali Coastal Resort, KwaZulu-Natal.
Company secretary
KA Watson CA(SA), MBA
Transfer secretaries
Computershare Investor Services (Pty) Ltd, 70 Marshall Street,
Johannesburg
Sponsor
QuestCo Sponsors (Pty) Ltd
Date: 25/09/2008 14:40:01 Produced by the JSE SENS Department.
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