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PROPER GROUP LIMITED - ABRIDGED AUDITED FINANCIAL RESULTS FOR THE GROUP FOR THE
YEAR ENDED 31 AUGUST 2003
Proper Group Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1998/001940/06)
Share code: PRO
ISIN: ZAE000027181
("Proper" or "the company")
ABRIDGED AUDITED FINANCIAL RESULTS FOR THE GROUP FOR THE YEAR ENDED 31 AUGUST
2003
BALANCE SHEET as at 31 August
(Figures in Rand`000) Audited 2003 Audited 2002
ASSETS
Non-current assets 18 193 26 800
Tangible assets 17 270 19 098
Intangible assets 40 5 722
Deferred tax assets 703 725
Loans receivable 180 1 255
Current assets 5 177 7 995
Receivables and deposits 3 194 5 548
Cash and cash equivalents 1 934 1 130
Inventories 14 129
Taxation receivable 35 503
Financial assets - 685
Total assets 23 370 34 795
EQUITY AND LIABILITIES
Capital and reserves 108 10 059
Issued capital 307 307
Share premium 5 866 5 866
Accumulated loss (12 619) (3 583)
Revaluation reserve 6 521 7 421
Outside shareholders 33 48
Non-current liabilities 11 685 10 108
Long term liabilities 11 225 9 648
Deferred tax liabilities 460 460
Current liabilities 11 577 14 628
Accounts payable 5 038 9 064
Bank overdraft 6 539 5 564
Total equity and liabilities 23 370 34 795
Net asset value per share (cents) 0.35 32.72
Net tangible asset value per share 0.22 14.11
(cents)
Shares in issue - closing (`000) 30 746 30 746
Reconciliation between loss and
headline loss:
Loss attributable to ordinary (9 036) (9 928)
shareholders
Adjusted for:
Amortisation of goodwill 166 195
Goodwill written off 3 469 449
Headline loss (5 401) (9 284)
INCOME STATEMENT for the year ended 31 August
(Figures in Rand`000) Audited 2003 Audited 2002
Revenue 99 168 213 249
Cost of sales (85 932) (200 446)
Gross profit 13 236 12 803
Other income 3 219 878
Operating expenses (22 623) (21 669)
Loss before finance costs and (6 168) (7 988)
taxation
Net finance costs (2 861) (2 069)
Loss before taxation (9 029) (10 057)
Taxation (22) 127
Net loss after taxation (9 051) (9 930)
Outside shareholders" interest 15 2
Net loss for the year (9 036) (9 928)
Loss per ordinary share (cents) (29.39) (31.48)
Headline loss per ordinary share (17.57) (29.44)
(cents)
Shares in issue - weighted average 30 746 31 537
(`000)
STATEMENT OF CHANGES IN EQUITY for the year ended 31 August 2003
(Figures in Ordinary Share Accumulated Total
Rand"000) share Premium Loss /
Capital Revaluation
Reserve
Balance at 01 323 7 309 6 707 14 339
September 2001
Previous year (362) (362)
deferred tax
adjustment
Net loss for the (9 928) (9 928)
year
Surplus on 7 421 7 421
revaluation of land
and buildings
Ordinary shares 8 632 640
issued
Ordinary shares (24) (2 075) (2 099)
repurchased
Balance at 01 307 5 866 3 838 10 011
September 2002
Net loss for the (9 036) (9 036)
year
Surplus on (900) (900)
revaluation of land
and buildings
Balance at 31 307 5 866 (6 098) 75
August 2003
CASH FLOW STATEMENT for the year ended 31 August
(Figures in Rand"000) Audited 2003 Audited 2002
Cash flows from operating activities (3 868) (479)
Cash receipts from customers 104 392 214 375
Cash paid to suppliers and employees (105 867) (212 463)
Cash utilised in operating activities (1 475) 1 912
Net interest paid (2 861) (2 069)
Taxation paid 468 (322)
Cash flows from investing activities 2 135 (650)
Acquisition of equipment and vehicles (35) (755)
Proceeds on the disposal of equipment and 406 -
vehicles
Acquisition of land and buildings - (919)
Proceeds on the disposal of land and 4 -
buildings
Decrease in investments - 2 086
Acquisition of financial assets 685 689
Acquisition of intangible assets - (884)
Decrease/(increase) in loans receivable 1 075 (867)
Cash flows from financing activities 1 562 (1 231)
(Decrease)/increase in outside (15) 48
shareholders" interest
Decrease in share premium - (1 443)
Shares repurchased - (16)
Long term liabilities raised 1 577 180
(Decrease)/increase in cash and cash (171) (2 360)
equivalents
Cash and cash equivalents at beginning of (4 434) (2 074)
year
Cash and cash equivalents at end of year (4 605) (4 434)
REVIEW OF RESULTS AND OPERATIONS
Overall revenue was reduced from R213 249 in 2002 to R99 168 for the year under
review, which is a reduction of 53.5% in revenue generated. This difference is
mainly attributable to the reduction in the commodity trading operations, which
were affected by the closure of the branches in Western Cape and Mpumalanga.
The closing of the Group"s interests in the Western Cape and Mpumalanga regions,
as announced in the February 2003 interim report resulted, in the retirement of
the two non-executive directors representing those regions" interests from the
Proper Group Board.
Expenses were, as planned, substantially reduced, and that together with higher
income from Properboer (Pty) Limited and Properboer Brokers (Pty) Limited,
resulted in the Group"s operating cash flow position, prior to working capital
changes, being remarkably improved against the previous year.
In compliance with AC133 regarding the recognition and measurement of financial
instruments, which became effective for financial periods commencing on or after
1 July 2002, directors" valuations were done on all the Group"s assets. As a
result both goodwill and computer software were written off in full, whilst the
revaluation of land and buildings was written back by an amount of R900 000.
The write-off of assets as set out above resulted in the Group still making a
loss for the year ending 31 August 2003.
DIVIDENDS
No dividends were declared during the year under review
(2002 : Rnil).
All earnings are currently retained to fund the growth and development of the
business and therefore the company will not pay cash dividends in the
foreseeable future. It is anticipated that should a dividend be declared in
future years, a typical dividend cover ratio of at least four times would be
maintained.
EVENTS SUBSEQUENT TO BALANCE SHEET DATE
Change in control
It was announced on 21 October 2003 that corporate restructuring specialists
Gandalf Trust ("Gandalf") had acquired control of Proper Group through the
purchase of 19 260 369 ordinary shares in the share capital of the company from
Properboer Trust, representing 63% of the company"s issued share capital. In
terms of the deal structuring Properboer Trust simultanously purchased 2 500 000
shares from Indequity Investment Company (Pty) Limited in order to retain an
interest in the company going forward. The change of control resulted in the
retirement of the remaining directors, except for NF Botha, and the appointment
of three new non-executive directors.
Gandalf, as the new controlling shareholder, will be considering new
opportunities for the company, but shareholders are assured that it is the
intention of the board to maintain the company"s listing on the JSE Securities
Exchange South Africa.
In the opinion of the directors of the company, no other item, transaction or
event has arisen in the interval between the end of the financial year and the
date of this report, which is material or unusual or will significantly effect
the operations or results of the Group in the current or future financial years.
AUDIT REPORT
The audit report in respect of the years ended 31 August 2003 and 31 August 2002
were unqualified and is available for inspection at the company"s registered
office.
ACCOUNTING POLICIES
The accounting policies of the company comply in all material respects with
South African Statements of Generally Accepted Accounting Practice and Schedule
4 of the Companies Act of 1973. These policies are consistent with those
adopted during the previous financial year.
ANNUAL GENERAL MEETING
Shareholders are advised that the Annual General Meeting will be held at 10:00
on Wednesday, 14 January 2004 at Upper Floor, Sihotha House, Gazelle Close,
Corporate Park, Old Pretoria Road, Midrand.
KJ Gribnitz
Chairman
Pretoria, 28 November 2003
Directors: NF Botha(Executive), KJ Gribnitz*, JP Nel*, PE du Preez* (*Non-
executive)
Corporate advisor Sponsor
Radagast Capital (Proprietary) LPC Manhattan Sponsors (Pty) Ltd
Limited
Transfer secretaries Registered address
Computershare Limited 18 Kellner Street
Bloemfontein 9301
Date: 02/12/2003 08:31:28 AM Produced by the JSE SENS Department
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