| Tue 15 Jun 2010, 17:34 | | QHL - Queensgate - Unaudited results for the period ended 28 February 2010 |
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QHL
QHL
QHL - Queensgate - Unaudited results for the period ended 28 February 2010,
withdrawal of detailed cautionary announcement and renewal of cautionary
announcement
QUEENSGATE HOTELS AND LEISURE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/013649/06)
Share code: QHL ISIN Code: ZAE000113718
("Queensgate" or "the company")
UNAUDITED RESULTS FOR THE PERIOD ENDED 28 FEBRUARY 2010, WITHDRAWAL OF DETAILED
CAUTIONARY ANNOUNCEMENT AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
Statement of financial position
Unaudited Unaudited Audited
29 Feb 29 Feb 31 Aug
2010 2009 2009
R`000 R`000 R`000
ASSETS
Non-current assets 2 976 396 512 429 301
Property, plant and equipment 153 13 828 4 888
Intangible assets - 275 573 323 489
Long term receivables - 27 714 42 711
Interest in associates - 32 847 9 337
Interest in joint ventures (214) 11 709 9 899
Deferred tax 3 037 7 500 13 284
Prepaid operating lease - 27 341 25 693
Current assets 7 443 45 146 28 657
Inventories - 882 770
Trade and other receivables 997 16 500 17 541
Short term receivables 6 053 20 762 6 053
Other financial assets 340 4 684 3 067
Cash resources 53 2 318 1 226
Available for sale assets 116 549 - -
Assets of subsidiary in liquidation 32 710 - -
Surplus on liquidation of subsidiary 83 839 - -
Total assets 126 968 441 658 457 958
EQUITY AND LIABILITIES
Capital and reserves (760) 321 479 306 526
Shareholders` funds (760) 321 479 306 526
Non-current liabilities 2 62 593 62 680
Long-term liabilities - 62 593 62 607
Deferred tax 2 - 73
Current liabilities 19 399 57 586 88 752
Accounts payable and provisions 7 616 29 464 31 429
Other financial liabilities 53 107 98
Short term payables - - 30 062
Taxation 11 730 28 015 22 191
Short-term borrowings - - 4 972
Available for sale liabilities 108 327 - -
Liabilities of subsidiary in provisional 108 327 - -
liquidation
Total equity and liabilities 126 966 441 658 457 958
Net asset value per share information
Shares in issue at period end (`000) 1 809 045 1 606 820 1 606 820
Net asset value per share (cents) (0.04) 20.01 19.08
Net tangible asset value per share (cents) (0.04) 2.86 (1.06)
Segmental information
Total assets 126 968 441 658 457 958
Hospitality 119 828 328 809 308 927
Business development 7 140 112 849 149 031
Statement of comprehensive income
Unaudited Unaudited Audited 12
6 months 6 months months
28 Feb 29 Feb 31 Aug
2010 2009 2009
R`000 R`000 R`000
Revenue 37 512 76 053 121 011
Cost of sales (5 098) (19 777) (22 635)
Gross profit 32 414 56 276 98 376
Other income 406 59 1 199
Operating costs (45 897) (31 614) (77 924)
Lease premiums written off (30 938) (2 813) (5 625)
(Loss)/profit from operations (44 015) 21 908 16 026
Impairments (240 791) - (2 984)
Investment income 1 558 2 017 3 100
Loans written off (42 409) - -
Profit on disposal of non-current assets - 4 -
Loss on disposal of non-current assets (1 630) (28) (7 595)
Profit/(loss) from equity accounted investments 1 536 (565) (2 077)
Finance costs (4 156) (5 546) (10 059)
(Loss)/profit before tax (329 907) 17 790 (3 589)
Taxation (5 548) (6 080) 346
Attributable (loss)/earnings (335 455) 11 710 (3 243)
(Loss)/Earnings per share information
Weighted average shares in issue (000`s) 1 809 045 1 510 726 1 544 149
Attributable (loss)/earnings per ordinary share (18.54) 0.78 (0.21)
(cents)
Headline (loss)/earnings per share (cents) (5.14) 0.78 0.48
Diluted attributable (loss)/earnings per (18.54) 0.78 (0.21)
ordinary share (cents)
Diluted headline (loss)/earnings per share (5.14) 0.78 0.43
(cents)
Reconciliation of earnings
Basic (loss)/earnings (335 455) 11 710 (3 243)
- Profit on disposal of non-current assets - (4) -
- Loss on disposal of non-current assets 1 630 28 7 595
- Impairment losses 240 791 - 2 984
Headline (loss)/earnings for the period (93 034) 11 734 7 336
Segmental information
Revenue 37 512 76 053 121 011
Hospitality 32 582 37 069 68 122
Business development 4 930 38 984 52 889
(Loss)/profit from operations (44 015) 21 908 16 026
Hospitality (39 947) 1 687 (11 785)
Business development (4 068) 20 221 27 811
Profit/(loss) from equity accounted investments 1 536 (565) (2 077)
Hospitality 1 749 (565) (2 077)
Business development (213) - -
Statement of cash flows
Unaudited Unaudited Audited
28 Feb 29 Feb 31 Aug
2010 2009 2009
R`000 R`000 R`000
Net cash (outflow)/inflow from operating (6 846) 31 748 11 709
activities
Net cash inflow/(outflow) from investing 3 194 (28 008) (15 950)
activities
Net cash inflow/(outflow) from financing 3 034 (1 423) 5 446
activities
Net (decrease)/increase in cash and cash (618) 2 317 1 205
equivalents
Cash and cash equivalents at beginning of 1 206 1 1
period
Cash and cash equivalents at end of period 588 2 318 1 206
Statement of Changes in Equity
Share Share Accumulated Total
Capital premium loss
R`000 R`000 R`000 R`000
Balance at 01 September 2008 500 34 796 (20 073) 15 223
Net loss for the year - - (3 243) (3 243)
Shares issued 1 107 293 439 - 294 546
Balance at 01 September 2009 1 607 328 235 (23 316) 306 526
Net loss for the period - - (335 455) (335 455)
Shares issued 202 27 967 - 28 169
Balance at 28 February 2010 1 809 356 202 (358 771) (760)
COMMENTARY
The directors of Queensgate announce the results for the six months ended 29
February 2010 in accordance with IAS 34 - Interim Financial Reporting. The
accounting policies adopted for purposes of this report comply, and have been
consistently applied in all material respects, with International Financial
Reporting Standards ("IFRS"). The same accounting policies and methods of
computation have been followed as compared to the prior year with the exception
of the adoption of the revised IAS 1 - Presentation of Financial Statements.
Such adoption did not have any material effect on the financial performance or
position of the group. The results have not been reviewed or audited.
Overview
Queensgate expanded its operations into the hospitality sector and business
development sector within the hospitality environment during the prior year
through the acquisition of Queensgate Leisure Holdings (Pty) Ltd ("Queensgate
Leisure") and Queensgate Business Development (Pty) Ltd ("QBD")
Queensgate Leisure specialises in the hospitality and leisure sector in South
Africa, whilst QBD establishes businesses in the hospitality field and disposes
of these once the businesses are fully operational.
Shortly after the Company`s reverse listing in September 2008, the global
financial crisis occurred and the resultant recession, impacted on QHL in many
different ways:
1. The hotel industry experienced a sharp decline in occupancies and achieved
room rates, with Queensgate`s main market segments (international tourists)
particularly hard hit.
2. Queensgate`s traditional source of funding, German investors, became
cautious and risk averse.
3. Local financial institutions withdrew from the hotel development market.
4. Equity financing for emerging companies, the primary motivation for the
reverse-listing transaction, became extremely difficult to access.
This combination of operational and funding pressure negatively impacted
Queensgate`s cash flow to the point where most of its leases could no longer be
serviced. The result was vicious cycle of lease cancellations, reputational
fallout, a collapse of the share price and the cancellation of a number of new
development opportunities.
The company`s financial situation led to one of Queensgate Leisure`s largest
creditors putting Queensgate Leisure into provisional liquidation subsequent to
28 February 2010.
Results
The results for the six months ended 28 February 2010 reflect an attributable
loss and headline earnings of (18.54) and (5.14) cents per share respectively
(31 August 2009: (0.21) cent loss per share and 0.48 cent headline earnings per
share), based on 1 809 044 530 weighted average shares in issue (2009: 1 544 148
503). The decrease in the attributable earnings is as a result of the decision
to impair and write off intangible assets of R323 332 622 and loans of R42 408
510 to Rnil pursuant to the chain of events experienced during the first six
months of the year. The impairment of the intangible assets has been offset by
the surplus of the liabilities over the assets of Queensgate Leisure based on
the anticipated liquidation of this company. This offset amounted to R83 839
142.
In anticipation of the liquidation of Queensgate Leisure (refer subsequent
events below), the assets and liabilities of Queensgate Leisure have been
included on a liquidation basis and are stated as available for sale assets and
liabilities respectively. Operating costs were also higher due to the resultant
write off of prepaid operating lease premiums of approximately R31 million in
the current period.
Segmental analysis
The group`s reportable segments have been identified as hospitality and business
development units. The hospitality unit is involved in the hotels and leisure
industry in South Africa. The business development unit is involved in the
development of properties in the hospitality sector.
Acquisitions and disposals
There were no acquisitions or disposals during the period under review.
Share capital
As at 28 February 2010 there were 1 809 044 530 ordinary shares (28 February
2009: 1 606 819 736) in issue. There were 490 955 470 unissued ordinary shares.
The vendor of QBD received an additional 202 224 794 Queensgate shares pursuant
to profit warranties achieved in QBD for the year ended 31 August 2009 as
mentioned in the circular to shareholders dated 17 December 2008 and approved by
shareholders on 07 January 2009.
Litigation
Shareholders are referred to subsequent events below regarding the provisional
liquidation of Queensgate Leisure, a 100% subsidiary of Queensgate.
There is no material litigation pending against Queensgate or QBD as at the date
of this announcement.
Director changes
The following changes in directors have taken place during the six months under
review and to the date of this announcement:
Directors Appointed / Resigned Dates
W Voigt Resigned 31 December 2009
AJ Hubbard Resigned 03 March 2010
HGB Friedrichsen Resigned 03 March 2010
NM Noland Resigned 29 March 2010
TN Ndziba Resigned 01 April 2010
LW Sipoyo Resigned 01 April 2010
AJ Hubbard Reappointed 01 April 2010
HGB Friedrichsen Reappointed 01 April 2010
Mr MD van Rooyen was to be appointed as interim financial director to
Queensgate. However the formalities of this appointment were never finalised.
Dividends
No dividends were paid or declared for the six months ended 28 February 2010 and
none are recommended at this stage.
Subsequent events
Subsequent to the period end, an order provisionally winding up Queensgate
Leisure was handed down in the Western Cape high Court on 13 April 2010. The
order was granted at the instance of Mvelaphanda Holdings (Pty) Ltd
("Mvelaphanda") and Investec Bank Limited ("Investec"). Mvelaphanda contends
for a claim against Queensgate Leisure of approximately R67.6 million whereas
Investec contends for a claim of approximately R30.1 million against Queensgate
Leisure. Queensgate Leisure did not oppose the application. Queensgate has not
signed any sureties or guarantees in relation to Queensgate Leisure. This event
has negatively impacted on the business and earnings of the group in the
subsequent period and various options for the group are being considered.
Shareholders are referred to future prospects and the renewal of cautionary
below.
There were no other material subsequent events outside the normal course of
business from 28 February 2010 to the date of this report.
Withdrawal of detailed cautionary
Shareholders are referred to the detailed cautionary as published on SENS on 13
May 2010 and are advised that negotiations are not proceeding as conditions
precedent were not met by Mr Joseph Khumalo or his nominee and proof of funding
was not procured. The company has elected not to pursue this agreement.
Future prospects
Although the operational arm of the company, Queensgate Leisure is in
provisional liquidation, the business development division, namely QBD, remains
in operation. Queensgate has access to a variety of different projects with good
opportunity to make profits. The key to a successful turn-around lies in
retaining a small team of key players on board to realise these opportunities,
while at the same time attracting new investment into the listed company.
Management has been pleasantly surprised at the level of interest expressed and
is in the process of negotiating with various interested parties. The challenge
is to find the right investor for the long term interest of all the shareholders
of the company. This process should be concluded by the end of July.
Renewal of cautionary announcement
Shareholders are advised that the company is continuing negotiations with
various interested parties for the recapitalisation of the group and has
received written interest in this regard, which is forming the base for
negotiations. In addition, alternative options available in relation to
Queensgate Leisure (in provisional liquidation) are being investigated.
Accordingly, shareholders are advised to continue to exercise caution when
dealing in the company`s securities until a further announcement is made.
By order of the Board
JC Human
Chairman
15 June 2010
Johannesburg
Directors
JC Human Chairman, AJ Hubbard, HGB Friedrichsen, S Swana*, MH Weetman*
(*Non-executive)
Company Secretary and Registered Office
Arcay Client Support (Pty) Ltd (Registration number 1998/025284/07)
Arcay House II, Number 3 Anerley Road, Parktown, 2193
PO Box 62397, Marshalltown, 2107
Transfer Office
Computershare Investor Services (Pty) Ltd
Sponsor
Arcay Moela Sponsors (Pty) Ltd
Date: 15/06/2010 17:34:01 Produced by the JSE SENS Department.
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