| Fri 2 Jun 2006, 9:30 | | Acc-Ross Holdings - Unaudited Results and Renewal |
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ACC
ACC
Acc-Ross Holdings - Unaudited Results and Renewal of Cautionary Announcement
ACC-ROSS HOLDINGS LIMITED
(formerly Le-Sel Holdings Limited)
(Registration Number: 2000/000059/06)
Share code: ACC & ISIN code: ZAE000077335
("Acc-Ross Holdings" or "the company")
UNAUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2006 AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT
Balance Sheet Unaudited Reviewed Audited
28 Feb 2006 31 Aug 2005 28 Feb 2005
R R R
ASSETS
Non-current assets 331 338 979 460 589 321 15 330 953
Property, plant and 203 768 941 316 896 530 15 279 960
equipment
Intangible assets 85 289 041 130 181 601 49 961
Investment in associates -- 15 790 25
Investments 29 240 085 4 000 000
Loans receivable 13 040 912 9 495 400 --
Deferred tax -- -- 1 007
Current assets 47 249 774 12 714 596 2 941 791
Inventory 26 748 383 -- --
Trade and other receivables 2 694 706 10 014 467 56 182
Deposits 6 580 000 2 441 640 1 051 642
Cash and cash equivalents 11 226 685 258 489 1 833 967
Total assets 378 588 753 473 303 917 18 272 744
EQUITY AND LIABILITIES
Capital and reserves 177 616 618 158 141 185 47 799
Issued capital 171 175 392 162 547 714 47 714
Accumulated loss (4 263 543) (1 783 221) --
Minority interest 10 704 768 (2 623 308) 85
Non-current liabilities 99 701 000 195 838 265 18 167 763
Borrowings 98 088 925 173 695 931 18 167 763
Deferred tax 1 612 075 22 142 334
Current liabilities 101 271 135 119 324 467 57 182
Trade and other payables 48 230 191 24 645 850 --
Current portion of 53 040 944 94 678 617 57 182
borrowings
Total equity and liabilities 378 588 753 473 303 917 18 272 744
Shares in issue 877 930 034 737 141 000 47 714 100
Net asset value per share 20.2 21.5 0.10
(cents)
Net tangible asset value per 10.5 3.8 0.01
share (cents)
Income Statement Unaudited Reviewed Audited
12 months 6 months 12 months
28 Feb 2006 31 Aug 2005 28 Feb 2005
R R R
Revenue 179 955 864 -- --
Cost of sales 143 913 193
Gross profit 36 042 672
Interest earned 438 285 2 395
Operating expenses (34 234 862) (2 409 329)
Impairment of goodwill (6 152 778)
Operating loss before (3 906 683) (2 406 934)
interest
Finance costs (15 143 505) (6 174) --
Loss before taxation (17 436 493) (2 413 108) --
Taxation 9 590 097 (614 122) --
Loss after taxation (7 846 396) (1 798 986) --
Share of results of -- 15 765 --
associates
Net loss after taxation (7 846 396) (1 783 221) --
Minority interest in 3 582 853 --
subsidiaries
Loss attributable to (4 263 543) (1 783 221)
ordinary shareholders
Calculation of headline
earnings
Net profit for the year (4 263 543) (1 783 221)
Adjustments for:
Impairment of goodwill 6 152 778
Tax effect of adjustments
Headline earnings/(loss) for 1 889 235 (1 783 221)
the period
Weighted average shares in 618 708 037 477 141 000 --
issue (`000)
Loss per share ordinary (0.69) (0.4) --
share (cents)
Headline earnings/(loss) per 0.31 (0.4) --
ordinary share (cents)
Abridged Cash Flow Statement Unaudited Reviewed Audited
28 Feb 2006 31 Aug 2005 28 Feb
R 2005
R R
Cash flows from operating 16 192 823 11 503 893 --
activities
Cash flows from (utilised (297 791 (274 842 630) 1 786 253
in) investing activities 796)
Cash flows from financing 290 991 691 261 763 259 47 714
activities
(Decrease)/increase in cash 9 392 718 (1 575 478) 1 833 967
and cash equivalents
Cash and cash equivalents at 1 833 967 1 833 967 --
beginning of the period
Cash and cash equivalents at 11 226 685 258 489 1 833 967
end of the period
Statement of changes in Share Share Accumulat Total
equity capital premium ed loss
R R R R
Balance at 01 March -- -- -- --
2004
Net profit for the -- -- -- --
period
Issue of share capital 47 714 47 714
Balance at 01 March 47 714 - - 47 714
2005
Net loss for the period (1 783 (1 783
221) 221)
Issue of share capital 26 000 20 063 20 089
(adjusted to fair 087 087
value)
Balance at 31 August 73 714 20 063 (1 783 18 353
2005 087 221) 580
Issue of share capital 14 079 151 024 151 038
(adjusted to fair 512 591
value)
Net loss for the period (2 480 (2 480
322) 322)
Balance at 28 February 87 793 171 087 (4 263 166 911
2006 599 543) 850
COMMENTARY
The board of directors presents the company"s results for the year ended 28
February 2006, reflecting the first results since the company"s listing on 16
February 2006. The directors are pleased to report that the profit forecast as
set out in the company"s prospectus as well as the revised profit forecast as
published on SENS on 16 February 2006, have both been exceeded for the year
ended 28 February 2006, further details of which are set out below.
These financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS"), with 01 March 2004 being the IFRS
transition date. Opening balances and comparative results have not required
restatement as the group had limited operations in the prior year and
effectively commenced operations in the current year under review.
BACKGROUND, INCORPORATION AND NATURE OF BUSINESS
Acc-Ross was registered and incorporated as a private company in the Republic of
South Africa on 14 January 2000 under the name Arcfin Trading 45 (Proprietary)
Limited. The company changed its name to Le-Sel Holdings Limited and was
converted to a public company on 04 October 2000. Being a shelf company, the
company was dormant and conducted no business from incorporation until control
was acquired by the shareholders of Accretio Holdings (Proprietary) Limited
("Accretio Holdings") during February 2005, through the acquisition of Accretio
Holdings. The company previously had no subsidiaries. The company first
entered into negotiations to acquire Gardener Ross Holdings Limited ("Gardener
Ross Holdings") during March 2005, which agreement was signed on 15 August 2005
and effected on 31 August 2005. The company then changed its name to Acc-Ross
Holdings Limited on 16 November 2005.
INDUSTRY AND BUSINESS OVERVIEW
Acc-Ross is primarily a developer of leisure resorts and residential lifestyle
estates, whereby land is acquired, rezoned and developed. Whilst revenue and
profits will initially be generated through the sale of stands, the projects
enable Acc-Ross to fund the development of substantial leisure assets as part of
the process. The strategy of Acc-Ross is to become a leading hotel and leisure
company over the next few years.
Revenue is initially derived from the sale of stands, where, although lead times
in developing projects is typically a couple of years, profitability is
typically extremely high. Once the stand sales are completed, Acc-Ross will
retain the leisure or commercial assets which have been developed, such as the
golf course, sport facilities, conference facilities, club house, hotel and
commercial or retail interests. These assets will ultimately generate annuity
income for the group.
Rights/Records of Decision (ROD"s) are in place for most of the group"s
projects, thereby reducing the risk typically associated with property
development. In addition, the group has substantial pre-sales, which sales will
be recognised on proclamation and transfer of the underlying stands. Facilities
are also in place for most of the group"s projects, which facilities are ring-
fenced in each project and secured by the land and pre-sales of each project.
Further details of each project, its ROD status, level of pre-sales and status
of facilities, are set out below. The company also has a couple of upmarket top
structure projects.
SEGMENTAL REPORTING
The company has not presented segmental information as the turnover and profits
are primarily generated by the transfer of Phase 1 of Gardener Ross Golf &
Country Estate (Proprietary) Limited ("Gardener Ross"), which houses the Ernie
Els Golf Estate development in Centurion.
FINANCIAL OVERVIEW
For the year under review, revenue and profits were primarily generated by the
transfer of Phase 1 of Gardener Ross and the sale of 20 stands for R30 million,
which had formerly been debentures held for sale by Gardener Ross Holdings
Limited ("Gardener Ross Holdings") and which had automatically converted into 20
stands on the proclamation of Phase 1.
Income statement review
Due to the fact that the company had not generated revenue in the prior period
due its stage of property development and any comparison thereto would not be
meaningful, the directors have presented commentary on the income statement
results in comparison to the revised profit forecast as published on SENS on 16
February 2006, as detailed below:
Reviewed Profit
28 February forecast
2006 28 February
2006
R R
Revenue 179 955 864 157 548 140
Cost of sales (143 913 (91 486 275)
193)
Gross profit 36 042 672 66 061 865
Interest earned 438 285 2 794
Operating expenses (34 234 (33 194 372)
862)
Impairment of goodwill (6 152 778) (25 484 428)
Operating (loss)/profit before (3 906 683) 7 385 859
interest
Finance costs (15 143 (31 522 278)
505)
Loss before taxation (17 436 (24 136 419)
493)
Taxation 9 590 097 1 249 722
Secondary Tax on Companies -- 1 662 500
Loss after taxation before (7 846 396) (27 008 641)
minorities and dividends
Minority interest in subsidiaries 3 582 853 3 224 943
Preference dividends -- 13 300 000
Loss attributable to ordinary (4 263 543) (43 533 584)
shareholders
Weighted average shares in issue 618 708 037 877 930 034*
Loss per share (cents) (0.69) (5.1)
Headline earnings/(loss) per share 0.31 (2.1)
(cents)
* Profit forecast assumed a fully diluted position
Revenue exceeded the profit forecast by 15% primarily due to the sale of 20
additional stands, which were originally held as debentures, for R30 million,
which had not been included in the projections of the company. At year end, 14
stands from Phase 1 were still pending transfer through the deeds office and
accordingly have been recorded in inventory as at 28 February 2006.
Cost of sales was higher by 57% due to the cost relating to the abovementioned
sale of 20 stands as well as a charge raised against cost of sales relating to
the sale of 21 debentures in prior years. This charge arose once proclamation
of the underlying stands had taken place in October 2005 and is non-recurring in
nature in relation to the Gardener Ross Holding development. In accordance with
IFRS, approximately R19 million has been included in cost of sales due to the
allocation of a portion of the purchase price of Gardener Ross Holdings being
attributed to property, which, following proclamation becomes inventory until
such time as the stands are sold and transferred. The non-cash flow amount
included in cost of sales as a result of IFRS accounting treatment is
approximately R25.7 million.
The impairment of goodwill arises as a result of a portion of the goodwill
raised on the acquisition of Gardener Ross Holdings being attributed to the
stands, with the balance being attributed to, inter alia, the golf course
development. The portion of goodwill attributed to the stands is impaired in
direct proportion to the sale of stands in Gardener Ross Holdings. The charge
is lower than anticipated due to fair value adjustments on the acquisition of
Gardener Ross Holdings in terms of IFRS2.
Finance costs were lower than anticipated primarily due to the accrual for
Investec Bank Limited"s ("Investec") 20% profit share on Phase 1 of Gardener
Ross being lower than expected, due to the once off charge against cost of sales
noted above.
The taxation credit has arisen as a result of a deferred taxation asset being
raised on accumulated losses in Gardener Ross Holdings, which project is now
profitable.
Loss after taxation before minorities and dividends improved by 71%, whilst the
loss attributable to ordinary shareholders improved by 90% due to the factors
noted above and the fact that preference dividends were not declared during the
year under review.
The loss per share of (0.69) cents was better than the forecast of (5.1) cents
by 86%, even with the forecast assuming a fully diluted number of shares in
issue. Headline earnings was significantly better, with headline earnings per
share of 0.31 cents as opposed to an expected headline loss per share of (2.1)
cents, reflecting a 114% improvement from the anticipated headline loss per
share.
Balance sheet review
The balance sheet commentary has been addressed to the movement between the
interim results as at 31 August 2005 as opposed to 28 February 2005, as this is
considered to be more meaningful to shareholders.
Property, plant and equipment decreased as a result of the transfer of Phase 1
of Gardener Ross, which decrease was offset by the continued development of
Phases 2 and 3 of Gardener Ross. Intangibles decreased due to the amortisation
of goodwill relating to the transfer of Phase 1 to individual stand owners as
well as fair value adjustments primarily on the acquisition of Gardener Ross
Holdings.
Inventory of R26 million represents the stands remaining in Phase 1 of Gardener
Ross, which transfers had not been processed by the deeds office by 28 February
2006 as well as 4 stands that were formerly debentures that were unsold at year
end.
Non-current borrowings primarily comprise redeemable preference shares in
Gardener Ross Holdings, debentures issued in Lizard Point which will convert to
stands on proclamation of Phase 1 of Lizard Point and the provision for
Investec"s profit share on Phase 1 of Gardener Ross. The reduction of R75
million from the period ended 31 August 2005 is mostly attributable to the
elimination of the debenture liability relating to the 21 debentures sold by
Gardener Ross in prior years, which liability was extinguished on proclamation
of Phase 1 of Gardener Ross, as well as the settlement of certain preference
shares on the listing of Acc-Ross through the issue of shares.
Trade and other payables are mostly related to the underlying projects and are
settled through the project finance within each subsidiary. The current portion
of borrowings relates primarily to the Investec facility in Gardener Ross, which
is repayable at the completion of each phase. The reduction from 31 August 2005
was as a result of the full repayment of Investec funding of R94 million at 31
August 2005 from the proceeds of transfers of Phase 1, with a subsequent
increase in funding in relation to Phases 2 and 3 of Gardener Ross.
Cash Flow Statement review
Cash generated by operations increased from 31 August 2005 by R4.7 million as a
result of the proclamation and transfer of Phase 1 of Gardener Ross. The
increase in both cash used in investing activities and generated by financing
activities relate to the acquisitions of the company subsequent to 31 August
2005 and the listing of the company.
Other information
The sale of Seven Seasons (Proprietary) Limited ("Seven Seasons") to the
Abalengani group of companies for R35 million, effective 28 February 2006, has
been provided for in full as detailed in subsequent events.
DETAILS OF PROJECTS
Gardener Ross
Gardener Ross comprises an Ernie Els signature golf course and a housing
development comprising 1 153 full title stands and is situated in Centurion,
Gauteng. The land was acquired in 2003 for a purchase consideration of R12
million. The individual stands are to be sold, whilst the golf course,
clubhouse and all other developments will remain the property of Gardener Ross.
Gardener Ross has already transferred the majority of Phase 1, following
proclamation in September 2005 and transfer of the stands commenced in October
2005. Phase 2 sales are in progress with transfer expected to commence in July
2006 and approximately 71% of the stands have been sold to date totalling pre-
sales of R144 million. Pre-sales for Phase 3 will be launched in August 2006,
with proclamation expected towards the end of 2006 and transfer in early 2007.
Gardener Ross, per its projected budgets, projects total sales of R900 million
from all three phases and a total profit after tax from the entire development
upon sale of all stands, of approximately R200 million. Thereafter, it is
expected that Gardener Ross will start generating annuity income from the
retained leisure assets.
Gardener Ross is fully financed by Investec, which has provided a total facility
of R334 million for the project. The project finance is a rolling facility,
attracting interest at prime less 0.5% and a profit share of 20% of the pre-tax
profit. The necessary ROD and Environmental Impact Report approvals were
obtained in 2004 and construction commenced in September 2004. The development
is currently ahead of schedule, with all 18 golf holes having been completed.
The project is expected to be completed in the current financial year ending 28
February 2007.
The Gardener Ross project development management is being undertaken by Devco
Africa (Proprietary) Limited, which owns the remaining 10% in Gardener Ross, and
has developed, and is currently developing, numerous property projects
throughout South Africa. An independent valuation of R235 million has
previously been obtained for Gardener Ross.
Lizard Point
Acc-Ross owns 65% of the shareholding in the subsidiary which will develop the
Lizard Point Resort Development, estimated by directors to be a R4,5 billion
development over 8 years. The land was acquired in 2004 for a purchase
consideration of R11,5 million, which has been settled in full. All
professional fees have been carried by the company to date through funds raised
from the sale of debentures. Lizard Point is a 700 hectare resort development
with 4.6 kilometres of water frontage, situated at the mouth of the Wilge river
and on the banks of the Vaal Dam next to Orangeville, Free State Province and
currently has a land value of R170 million, with phase 1 of the project funded
by Investec. Facilities of R140 million are in place to fund the development of
Phase 1.
The project achieved its ROD from the environment authorities on 02 November
2005 and the final amendment to the Guide Plan was promulgated on 19 May 2006.
The company is planning to break ground in June 2006. The first phase of the
development comprises an 18 hole championship Links golf course, which will be
co-designed by Retief Goosen and DDV Design Group, with 513 Residential One,
freehold stands and 135 cluster units. Phase 1 was officially launched in
August 2005 and pre-sales of stands in excess of R300 million have been achieved
to date.
Phases 2 and 3 comprise the development of residential units and the waterfront
area, which consists of a commercial hotel, retail outlets, restaurants,
cinemas, entertainment and the boutique hotel and timeshare component.
The 4th phase will comprise a second 18 hole signature Parklands golf course
with 315 Residential One, freehold stands and 621 Residential Two sites. Other
products in the development include boat storage and launching facilities, a
golf driving range, tennis courts, the 2 club houses for the golf courses and
the island with the resort pools and sundowner bars.
An independent valuation of R50 million has been obtained on Phase 1 of Lizard
Point and R120 million for Phases 2 to 4.
Brooklyn Stone
Brooklyn Stone comprises the first ultra-luxury apartment development in
Brooklyn, Pretoria. The initial plan for 40 units was not approved by the
relevant authorities and the project was redesigned for up to 26 units. As a
result, prior pre-sales have needed to be cancelled and as at year end 14
apartments were pre-sold totalling approximately R48 million. The land was
acquired for a purchase consideration of R6,5 million, of which R2.4 million is
still owing. A third party-funder, Pieter Venter, has a 30% profit share in the
project"s net profit after tax.
Finance has been offered by Imperial Bank Limited but more favourable terms are
being negotiated. Construction commenced in May 2006. The project is expected
to be completed by August 2007.
Comuine Coastal Resort, Vilanculos, Mozambique
Acc-Ross effectively owns 50% of the Comuine Coastal Resort in Vilanculos,
Mozambique. The Comuine Coastal Resort is located approximately 700 kilometres
north of Maputo on the coast, opposite Bazaruto Island and 10 kilometres from
the Vilanculos international airport. The resort will incorporate a golf course
designed by Retief Goosen in association with DDV Design Group and will comprise
415 residential and fractional ownership units with an additional 125 timeshare
opportunities, all integrated into the natural bush and having access to the
Resort"s 1.6 kilometres of beachfront.
The resort will also incorporate a number of dams and water features on the golf
course, the golf course clubhouse and halfway house, provisions for boat
storage, a world class hotel and wellness centre, workshop facilities and a
driving range, jetties for boat launching and yacht docking, beachfront
restaurants and a scuba diving centre, entrance parking and local community and
cultural villages.
The property earmarked for the development has been secured through the relevant
authorities in Mozambique and all the required development rights have been
obtained. All necessary approvals from the South African Exchange Control
authorities have been obtained, with the project being approved for Foreign
Direct Investment. Negotiations are far advanced for securing casino rights to
the resorts. It is the intention to try to introduce dedicated flights to the
resort from Lanseria Airport, on a daily basis, once the development is
complete. Negotiations have commenced with international cruise liners to
incorporate Comuine Resort in their travel packages as a stopover destination.
The land was acquired in terms of a 99 year lease and there is therefore no
purchase consideration. All professional fees have been carried by the company
to date through own funding. Subsequent to year end, Acc-Ross sold 50% of
Comuine to Abalengani. The project will be funded through normal bank funding,
with the contractually enforceable assistance of Abalengani to raise the
necessary funding.
Blue Horizon Bay
Acc-Ross effectively owns 80% of Blue Horizon Bay Eco-Estate, which property of
76 hectares is located in an extremely sought-after area of coastal land,
between Port Elizabeth and Jeffreys Bay. The eco-game estate development will
be a low density development with less than 150 homes, leaving ample open space
to allow small game to roam freely. The majority of the homes to be built will
have uninterrupted ocean views.
Blue Horizon Bay Eco-Estate is one of the first estates of its kind in the area,
potentially setting the standard for other eco-estates to follow. Every
possible precaution will be taken during the design and development of the
project to minimise negative environmental impact. Comprehensive studies of the
existing flora and fauna, the soil conditions and land use have been done and
will continue to play a critical role in the development.
The land was purchased for R550 000 three years ago and transfer has been
effected. The Environmental Impact Assessment has been prepared and submitted
for approval. The township application is in the process of formulation.
Twelve months have been estimated for the construction of the development
infrastructure, currently planned to commence during early 2007. Banks will be
approached to finance the project in the normal manner once the ROD has been
received.
Rock Ridge Resort
Acc-Ross effectively owns a 50% stake in Rock Ridge Golf and Fly-fishing Resort
through a joint venture agreement with Smilin" Thru. Rock Ridge is being
developed on hilly terrain, not far from Parys, on the banks of the Vaal River,
just over an hour"s drive from Johannesburg.
The scope of works for Phase 1 of the development includes an 18 hole
championship golf course designed to United States Golf Association ("USGA")
specifications, a clubhouse with conferencing and banquet facilities and a pro-
shop, all with views over the golf course to the surrounding mountain ranges, a
sports centre, incorporating a squash court, two tennis course, bowls and a
swimming pool, entrance gatehouse and workshop facility for estate and golf
course maintenance, extensive water features and general estate landscaping and
the infrastructure for 315 residential stands and construction of the perimeter
boundary walling.
A decision to proceed with participation in this project will be taken before
the end of the year pending feasibility studies. Should Acc-Ross decide to
proceed with this project, banks will be approached in the normal manner to fund
the project. The project duration will cover an estimated 18 months but will
only commence once funding has been raised.
Royal Palms
Acc-Ross disposed of its shareholding in Seven Seasons, which will develop Royal
Palms, effective 28 February 2006. However, Seven Seasons may revert back to
Acc-Ross as described under subsequent events. Accordingly, details of this
project are set out below.
Royal Palms, located in Plettenberg Bay, has uninterrupted views over
Plettenberg Bay and Keurbooms. Phase 1 of the development comprises 17 upmarket
residential stands, as well as the original estate Manor House, recently valued
at R15 million. It is planned that the Manor House will be converted into a
boutique hotel and wellness centre. Phase 2 of the development will comprise of
a further 14 proposed residential stands.
The land was acquired for a purchase consideration of R12,5 million, for which
guarantees had been provided. The transfer of the land is expected in early
June 2006. All professional fees have been carried by the company to date
through own funding. The development is to be funded by Investec, with funding
already approved and documentation lodged with attorneys. The development is
expected to commence during September 2006, with finalisation of Phase 1 in
January 2007 and Phase 2 in early 2008.
Eagle Creek
On 15 August 2005, Gardener Ross entered into an agreement for the acquisition
of 100% of Eagle Creek Investments 257 (Proprietary) Limited ("Eagle Creek") for
a purchase consideration of R15 million, payable in cash. Eagle Creek has a 60%
vested interest in the Cluster Homes Development of Gardener Ross through its
60% shareholding in Zeranza 50 (Proprietary) Limited.
The Cluster Homes Development comprises the exclusive right relating to the
development of 164 cluster units, which development commenced in May 2006 and is
expected to be completed during 2007. The estimated profit before taxation of
the entire development over 2 years is R50 million before taxation, based on an
average cost of development of R2,4 million each.
Welvergenoegd
Welvergenoegd is a planned signature golf and leisure development situated
outside Durbanville in the Cape. Water Rights have been secured for the
development through part funding of the Durbanville water pipeline.
Environmental Impact Assessments still need to be submitted and, subject to this
approval, the ROD is expected to be received in late 2006. It is anticipated
that the development will commence during 2008 and be completed within 36 months
thereafter. The project is similar in nature and size to Gardener Ross and
estimated profit before taxation of the entire development over 4 years is R400
million.
The balance of the payment for the land is only payable in 18 months time and is
expected to be funded through project finance or own cash resources at that
time.
LITIGATION
There is no litigation pending against the company.
CHANGE OF NAME
Pursuant to the company"s acquisition of Gardener Ross Holdings Limited, the
company changed its name from Le-Sel Holdings Limited to Acc-Ross Holdings
Limited with effect from 16 November 2005.
CHANGES IN AUTHORISED SHARE CAPITAL
On 13 September 2000, shareholders approved a resolution to sub-divide the
authorised share capital from R1 000 divided into 1 000 ordinary shares of R1.00
each into R1 000 divided into 1 000 000 ordinary shares of R0.001 each and the
increase of the authorised share capital from R1 000 to R200 000 by the creation
of 199 000 000 ordinary shares of R0.001 each, thereby increasing the authorised
share capital to 200 000 000 shares of R0.001 each. On 31 August 2005,
shareholders approved a resolution to sub-divide the authorised share capital
from R200 000 divided into 200 000 000 ordinary shares of R0.001 each into R200
000 divided into 2 000 000 000 ordinary shares of R0.0001 each.
ACQUISITIONS AND ISSUE OF SHARES FOR CASH
Details of the shares issued during the period under review are set out below:
Details Number of Date Issue Price
Shares
Acquisition of 100% of 260 000 000 31 August 2005 R0.625
Gardener Ross
Acquisition of 50% of 6 500 000 14 October 2005 R1.00
Tauve 2 000 000 14 October 2005 R1.00
Acquisition of 25% of 4 000 000 14 October 2005 R1.00
Peel Pickering
Acquisition of Comuine
Golf Estate
Directors and employees
in lieu of share 16 000 000 23 November 2005 R0.0001
incentive scheme
Private placement on 112 289 034 16 February 2005 R1.00
listing
SUBSEQUENT EVENTS
Subsequent to the year end, Acc-Ross entered into an agreement for the combined
acquisition of The Bay at Hartbeespoort, Icon@HydePark and Icon@Sandhurst and at
the same time disposed of certain of its assets to Abalengani, namely the Royal
Palms development held in Seven Seasons, 35% of Lizard Point and 50% of Comuine
Resort, with the balance of the purchase price being settled through the issue
of 98 000 000 new shares at 86.7 cents. Full details were announced on SENS on
08 March 2006.
It has recently emerged that an agreement has been presented whereby, prior to
the acquisition by Acc-Ross, a director of Seven Seasons had agreed to the sale
of the Manor House for R9 million, subject to certain conditions precedent. It
has been advised that this agreement was cancelled in the prior year, however,
as Seven Seasons was principally acquired for private use of the Manor House by
Abalengani, Acc-Ross is investigating the legal position of the claim. In the
event that this proves to have substance then, in good faith to its empowerment
partners, the Royal Palms transaction and Icon@Hyde Park will be reversed, as
Icon@Hyde Park was part of the purchase price settlement for Royal Palms. Acc-
Ross will then proceed to develop Royal Palms as originally planned.
DIRECTOR CHANGES
Acc-Ross Holdings was a shelf company prior to its acquisition of Accretio
Holdings on 28 February 2005. Following the acquisition of Accretio Holdings
and during the year under review the following director changes occurred:
Appointed Date Resigned Date
JJ Verster 28 February 2005 AD Frodsham 15 March 2005
MJ Krastanov 15 March 2005 G Palmer 15 March 2005
A Venter 15 March 2005 MJ Krastanov 07 October 2005
AB 07 October 2005 A Venter 07 October 2005
Mashiatshidi
Dr NM Phosa 07 October 2005 JF de Beer 06 December 2005
KS Mthembu 07 October 2005 CP Pretorius 06 December 2005
EM Sono 07 October 2005
JF de Beer 07 October 2005
CP Pretorius 07 October 2005
N Owen 06 December 2006
A Wiese 28 February 2006
DIVIDENDS
In line with information contained in the prospectus, the directors have decided
not to declare a dividend.
FUTURE PROSPECTS
Acc-Ross continues to be approached with numerous high quality projects, both
generally and through its relationship with Els International and is evaluating
ways to take advantage of such opportunities. In the short term it will
continue with its current projects, which will ultimately lead to the group
holding significant leisure assets at key locations. The first generation of
annuity revenue is expected for the year ending 28 February 2008, which is
expected from the opening of the Ernie Els designed golf course in Centurion,
the clubhouse and associated conference facilities and niche corporate office
park. The signature golf course will be the longest course in the Southern
Hemisphere and is expected to attract high profile tournaments, which in turn
will generate revenue associated with such events.
RENEWAL OF CAUTIONARY ANNOUNCEMENT
The company is considering, inter alia, the potential introduction of a second
strategic partner for Acc-Ross, which, if negotiations are successful, could
affect the price at which the companies securities trade. Accordingly,
shareholders are advised to continue to exercise caution in dealing in their
securities.
GENERAL
In accordance with AltX Listings Requirements, shareholders are advised of the
risks of investing in a company listed on the AltX and that the JSE does not
guarantee the viability or the success of a company listed on the AltX. In
terms of the JSE Listings Requirements, a Designated Advisor has to be retained
by the company. The Designated Advisor is required, inter alia, to attend all
board meetings held by the company to ensure that all the JSE Listings
Requirements and applicable regulations are complied with, approve the financial
director of the company and guide the company in a competent, professional and
impartial manner. If the company fails to retain a Designated Advisor it must
make arrangements to appoint a new Designated Advisor within 10 business days,
failing which the company faces suspension of trading of its securities. If a
Designated Advisor is not appointed within 30 days of its suspension, the
company faces the termination of its listing without an offer to minorities.
By order of the Board
AM Mashiatshidi JJ Verster
Chairperson Chief Executive Officer
31 May 2006
Johannesburg
Registered Office
Arcay House, Number 3 Anerley Road, Parktown, Johannesburg,
2193
PO Box 62397, Marshalltown, Johannesburg, 2107
Directors
AM Mashiatshidi *(Chairman), JJ Verster (CEO), N Owen, A
Wiese, Dr NM Phosa*, KS Mthembu*, EM Sono* (Alternate - H
Friedman)
* Non-executive
Designated Advisor Transfer Office
Arcay Corporate Services Computershare Investor Services 2004
(Proprietary) Limited
Date: 02/06/2006 09:30:31 AM Produced by the JSE SENS Department
