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QHL
QHL
QHL - Queensgate Hotels - Audited results for the financial year ended 31 August
2008 and renewal of cautionary announcement
QUEENSGATE HOTELS AND LEISURE LIMITED
(Formerly Cyberhost Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1998/013649/06)
Share code: QHL ISIN code: ZAE 000113718
("Queensgate Hotels" or "the company")
AUDITED RESULTS FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2008 AND RENEWAL OF
CAUTIONARY ANNOUNCEMENT
BALANCE SHEETS
Audited Audited
31 Aug 2008 31 Aug 2007
R`000 R`000
ASSETS
Non-current assets 11 771
18,094
Property, plant and equipment
7 0
Intangible assets
7,600 15,150
Deferred taxation
4 164 2,944
Current assets 4 698 1,854
Trade and other receivables
4,697 641
Bank and cash
1 1,214
Total assets
16,469 19,948
EQUITY AND LIABILITIES
Capital and reserves
15 223 19,746
Issued capital
35 296 35,296
Accumulated losses
(20 073) (15,550)
Current liabilities 1 246 202
Trade and other payables
1 246 202
Total equity and liabilities
16 469 19,948
Net asset value per share
(cents) 3.04 3.95
Net tangible asset value per
share (cents) 1.52 0.92
Number of shares in issue 500,000,000
500,000,000
INCOME STATEMENTS
Audited Audited
31 Aug 2008 31 Aug 2007
R`000 R`000
Revenue 2
4 032 266
Cost of sales
- -
Gross profit 2
4 032 266
Other operating income
10 44
Operating expenses (2
235) (235)
Profit from continued 2
operations 1 807 075
Impairments (7
550) -
Interest received
1 1
(Loss)/profit before taxation (5 2
743) 076
Taxation 1 220
(590)
Net (loss)/profit for the year (4 1
attributable to equity holders 523) 486
Weighted average number of 500 000 000 341 647 370
shares in issue
(Loss)/Earnings per share
(cents) (0.90) 0.43
Headline earnings per share 0.61
(cents) 0.42
Reconciliation of headline
earnings:
Basic earnings (4 523) 1 486
- impairment loss 7 550
-
- reversal of impairment loss
- (42)
Headline earnings per share 3 027 1 444
(cents)
ABRIDGED CASH FLOW STATEMENTS
Audited Audited
31 Aug 2008 31 Aug 2007
R`000 R`000
Cash (applied to)/generated
from operating activities (1,820) 1,669
Cash receipts from customers
44 1,858
Cash paid to suppliers and
employees (1,864) (189)
Cash (applied to)/ generated
from operations (1,821) 1,669
Interest received
1 1
- -
Cash flows from investing
activities (7) 28
Acquisition of property,
plant and equipment (7) -
Long term receivables
(advanced)/realised 28
- -
Cash flows from financing
activities 615 (496)
Share issue expenses paid
- (287)
Loans raised/(repaid)
615 (209)
- -
Net (decrease)/increase in
cash and cash equivalents (1,212) 1,201
Cash and cash equivalents at
beginning of period 1,214 12
Cash and cash equivalents at
end of period 1 1,214
STATEMENT OF CHANGES
IN EQUITY
Share Share Accumulated Total
Capital premium loss
R`000 R`000 R`000 R`000
Balance at 31 August 101 20 481 (17 035) 3 547
2006
Shares issued 399 14 994 - 15 393
Share issue expenses - (680) - (680)
Net loss for the - - 1 486 1 486
period
Balance at 31 August 500 34 796 (15 550) 19 746
2007
Net loss for the year - - (4 523) (4
523)
Transfer to - - - -
revaluation reserve
Balance at 31 August 500 34 796 (20 073) 15 223
2008
COMMENTARY
The results for the year end reflected above do not include the results relating
to the acquisition of Queensgate Leisure Holdings (Proprietary) Limited
("Queensgate Leisure"), which acquisition is effective 01 September 2008 and
further details of which are set out below.
Results and prospects
The results for the period ended 31 August 2008 reflect an attributable loss and
headline earnings of (0.90) and 0.61 cent per share respectively (31 August
2007: 0.43 cent earnings per share and 0.42 cent headline earnings per share),
based on 500 000 000 weighted average shares in issue (2007: 341 647 370). The
current year reflected an impairment loss in respect of the carrying value of
intangible assets relating to certain restaurant brands, which have been
discontinued.
As detailed in a circular to shareholders, the acquisition of Queensgate Leisure
from Queensgate Holding (Proprietary) Limited and Mvelaphanda Holdings
(Proprietary) Limited ("Mvelaphanda") was approved by shareholders in general
meeting, which acquisition is effective 01 September 2008. The reviewed and
audited results and balance sheets of Queensgate Leisure for the six months
ended 29 February 2008 and 31 August 2007 as extracted from the circular to
shareholders dated 26 August 2008 are set out below:
INCOME STATEMENTS Reviewed Audited
(6 months (6 months
ended) ended)
29 February 31 August
2008 2007
R R
Revenue 34 183 693 18 164 530
Cost of sales (2 459 474) (584 555)
Gross profit 31 724 219 17 579 975
Other operating income 8 790 661 607
Operating expenses (21 203 496) (15 155 588)
Profit from continued operations 10 529 513 3 085 994
Interest received 458 084 379 370
Discount on acquisition of - 21 284
subsidiary
Profit/(loss) from equity accounted 1 640 850 2 207 534
investments
Finance costs (12 529) (265 954)
Profit before fair value adjustments 12 615 918 5 428 228
and taxation
Fair value adjustments - (233 784)
Profit before taxation 12 615 918 5 194 444
Taxation (3 577 555) (1 058 927)
Profit for the period 9 038 363 4 135 517
(Loss)/profit from discontinued (280 239) (836 521)
operations
Net profit for the period 8 758 124 3 298 996
BALANCE SHEETS Reviewed Audited
29 February 31 August
2008 2007
R R
ASSETS
Non-current assets 102 973 576 104 536 007
Property, plant and equipment 1 739 099 1 509 808
Goodwill 22 661 096 22 661 096
Interest in associates 34 127 197 34 450 319
Interest in joint ventures - 10 091 541 7 783 064
unlisted
Intra-group indebtedness - 4 263
Deferred taxation 2 333 533 1 862 117
Operating lease premium 32 021 110 36 265 340
Current assets 17 266 891 10 756 623
Inventories 743 018 298 267
Trade and other receivables 15 599 919 9 051 099
Bank and cash 923 954 1 407 257
Non-current assets classified as - 15 000 000
held for sale
TOTAL ASSETS 120 240 467 130 292 630
EQUITY AND LIABILITIES
Capital and reserves 39 278 140 30 520 016
Share capital 243 243
Share premium 98 762 501 98 762 501
Non-distributable reserve 638 820 638 820
Accumulated losses (60 123 424) (68 881 548)
Non-current liabilities 53 020 902 78 025 090
Borrowings 53 020 902 76 208 974
Deferred taxation - 1 816 116
Current liabilities 27 941 425 21 747 524
Trade and other payables 13 626 849 10 610 524
Taxation 12 454 359 7 133 396
Provisions 1 501 507 1 267 411
Short-term borrowings 358 710 2 736 193
TOTAL EQUITY AND LIABILITIES 120 240 467 130 292 630
In addition, the reviewed summarised consolidated projected income statement for
the years ending 31 August 2009 and 31 August 2010, as extracted from the
circular to shareholders dated 26 August 2008, are set out below:
R`000 for the years ending 31 August 31 August
2009 2010
Revenue 129 753 206 734
Cost of sales 41 335 71 067
Gross profit 88 418 135 667
Operating expenses (53 087) (78 848)
Profit from operations 35 331 56 819
Profit from equity accounted 7 336 11 095
investments
Finance charges (998) (1 149)
Profit before taxation 41 669 66 765
Taxation (12 083) (18 703)
Profit for the year 29 586 48 062
Less preference dividend (7 200) (7 200)
Net profit attributable to 22 386 40 862
ordinary shareholders
Shares in issue 1 231 819 736 1 231 819
736
Earnings per share (cents) 1.82 3.37
Headline earnings per share 1.82 3.37
(cents)
The directors of Queensgate Hotels are responsible for the preparation and
presentation of the profit forecast. The profit forecast has been prepared on
the basis of the assumptions outlined below, which, with the exception of the
rate of taxation, are within the influence of the directors, and on the
assumption that the accounting policies of the company will remain consistent
pursuant to the change in control. The profit forecast has been prepared in
accordance with IFRS and has taken account of potential adjustments required in
line with accounting under IFRS.
Key assumptions and notes
- Rooms revenue from the hotel businesses, being the main contributor to
revenue in the group, has been forecasted on the existing hotel portfolio
only, while two new hotels which are already in the pipeline have been
forecasted for the year ended 31 August 2009, with a further three new
hotels being forecasted for the year ending 31 August 2010. The revenue
forecast contains uncertainty as to the timing of the commencement of
operations of the hotels as well as other hotel operations which may be
secured in the interim.
- Revenue from food and beverage is assumed to be in line with existing
ratios being experienced in the group`s existing hotel operations. No
independent food and beverage outlets are held, with branded restaurants
such as The Famous Butchers Grill and Amici`s being housed within hotel
operations.
- The first ONEwellness centre was opened at the Radisson Hotel at the Cape
Town V&A Waterfront in December 2007, with the group recently being awarded
the tender for the management of the wellness centre at the Alfred Hotel at
the V&A Waterfront. The 2009 assumptions assume the opening of two more
ONEwellness centres during the period under review, which is considered
realistic, although timing thereof is uncertain. Revenue is assumed from
both the hotel covers as well as walk-in customers.
- Costs have been assumed in line with those percentages currently being
experienced within the existing hotel, food and beverage and conferencing
businesses.
- Profit from equity accounted investments relates to revenue from the
group`s joint venture operations with the Hollow hotels.
- No amortisation of intangible assets has been provided as the intangible
asset is assumed to have an indefinite useful life. The carrying value of
the intangible asset will be tested for impairment on an annual basis.
- Normal tax will not be payable until the assessable loss has been utilised.
Taxation and deferred taxation are provided at the nominal rate of 28%.
- All cash generated by the operations of the company is kept as cash or cash
equivalents.
- The preference dividend has been assumed at 12% per annum for a full year
for the year ending 31 August 2009.
Queensgate Leisure revenue is derived from four integrated areas in the leisure
industry, namely hotel operations, food and beverage, conferencing and wellness.
Queensgate Hotels previously acquired the IT platform and certain brands from
QH, which are used in the leisure operations and will further glean expansive
benefits from Queensgate Leisure`s established track record, in-depth management
experience and attractive hospitality portfolio, which includes revenues from,
inter alia, Tinga Private Game Reserve (Proprietary) Limited ("Tinga Private
Game Reserve") (Kruger Park), BMW Pavilion Conferencing (Cape Town, V&A
Waterfront), Radisson Hotel (Cape Town), The Famous Butchers Grill, etc. In
addition, there are significant opportunities in the market for a freshly
positioned hotel brand which offers a holistic approach that incorporates all
the various aspects of hotel management, specifically integrating hotel
management, food and beverage, conferencing and wellness. During December 2007,
Queensgate Leisure also launched its wellness brand, namely ONEwellness, with
the opening of its first wellness spa at the Radisson Hotel in Cape Town.
Queensgate Leisure has entered a critical growth phase, which will see
aggressive growth over the next few years. Queensgate Leisure is an experienced
player in the leisure market with a management team that understands the hotel
investor profile/s, simultaneously boasting a diverse and attractive hospitality
and leisure portfolio. In addition, the company is positioning itself as a real
partner to property landlords, for those assets where pure hotel management
applies.
The acquisition of Queensgate Leisure, with the recent Mvelaphanda transaction,
has brought an empowered status to Queensgate Hotels going forward.
Going forward, Queensgate Hotels offers an integrated operational solution to
the hotel and leisure market, combining hotel management, food and beverage,
conferencing and wellness. The company sees itself as long-term partners of
hotel owners, preferably at a minimum of ten years. Queensgate is the catalyst
between the property developer and hotel management company, providing a
bankable project from vision to reality.
Queensgate` future business plans and objectives will be driven by the same
management team that has taken the company to its current levels of success,
with specific reference to Queensgate`s 5-star hotel developments such as the
Radisson and Park Inn in Cape Town and Tinga Private Game Lodge, located in the
Kruger Park.
Shareholders are also referred to subsequent events below.
Segmental analysis
No segmental analysis has been presented as the company only operates one major
segment, within South Africa.
Share Capital
As at 31 August 2008 there were 500 000 000 ordinary issued shares of 0.1 cent
each and 2 000 000 000 authorised ordinary shares of 0.1 cent each.
Subsequent to year end, the following shares were issued:
- 731 819 736 shares at 30 cents per share in settlement of the purchase
consideration of R219 545 921 for the acquisition of Queensgate Leisure, as
detailed in a circular to shareholders dated 26 August 2008 ("the
Queensgate Leisure acquisition").
At a general meeting of shareholders held on 11 February 2008, shareholders
approved the increase in the authorised share capital of 1 000 000 000 shares of
0.1 cent each by 1 000 000 000 shares to 2 000 000 000 shares of 0.1 cent each.
Contingent liabilities and litigation
The company does not have any contingent liabilities or knowledge of any
material litigation against the company as at 31 August 2008.
Change in name of the company
In anticipation of the Queensgate Leisure acquisition as detailed above, the
company changed its name to Queensgate Hotels and Leisure Limited, trading under
its new name on the lists of the JSE with effect from 31 March 2008.
The company was transferred from the VCM to the AltX on 12 September 2008,
following the approval of the Queensgate Leisure acquisition by shareholders in
general meeting.
Director changes
The following changes in directors have taken place during the year under
review:
Director Date of change Nature of change
JH Brand 21 January 2008 Resignation
W Voigt 21 January 2008 Appointment as
financial director
MD van Rooyen 13 March 2008 Resignation
S Swana 24 July 2008 Appointment as non-
executive director
Subsequent to year end Mr Lindikhaya Sipoyo and Ms Tham-Tham Ndziba were
appointed as directors, with effect from 25 November 2008.
Dividends
No dividends were paid or declared during the accounting period under review and
none are recommended at this stage (2007: nil).
Subsequent events
Further to the cautionary announcement dated 03 November 2008, shareholders are
advised that Queensgate Hotels has negotiated the conclusion of an agreement
dated 17 November 2008 in terms of which Queensgate Hotels will acquire 100% of
the issued share capital in Queensgate Business Development (Proprietary)
Limited ("QBD") from QH. Shareholders are advised that a separate announcement
in this regard will be made on SENS before the end of this week once pro forma
financial effects of the acquisition have been finalised. A circular providing
details on the acquisition will be posted to shareholders during December 2008.
QBD`s turnover is derived from property development specifically for the leisure
industry. QBD purchases, leases and/or refurbishes buildings in the leisure
industry, which buildings are then sold to third parties, primarily property
funds, both locally and internationally. Often, Queensgate Leisure is
contracted on a long term basis as the leisure operator, providing hotel, food
and beverage, conferencing and wellness operations. Depending on the hotel`s
size and location, Queensgate Leisure will install the appropriate branded
operations such as Radisson, Park Inn, Hollow or its own Queensgate brand.
Historically, two major clients of QBD include the German Investment Trust Fund,
based in Europe and the Hospitality Property Fund, a property fund listed on the
JSE.
Renewal of cautionary announcement
Further to the cautionary announcement dated 03 November 2008, shareholders are
advised that Queensgate has acquired QBD, subject to shareholder approval,
details of which are expected to the published before the end of this week.
Accordingly, shareholders are advised to exercise caution when dealing in the
company`s securities until a full announcement is made.
By order of the Board
Colin Human
Chairman
26 November 2008
Johannesburg
Company Secretary and Registered Office
Arcay Client Support (Proprietary) Limit (Registration number
1998/025284/07)
Arcay House, Number 3 Anerley Road, Parktown, 2193
PO Box 62397, Marshalltown, 2107
Transfer Office
Computershare Investor Services (Proprietary) Limited
Directors
JC Human Chairman*
, AJ Hubbard, HGB Friedrichsen, W Voigt, MH
Weetman*, S Swana*
, L Sipoyo*, TT Ndziba*
*Non-executive
Independent
Designated Advisor
Arcay Moela Sponsors
(Proprietary) Limited
Date: 28/11/2008 09:14:17 Produced by the JSE SENS Department.
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