| Mon 26 Jun 2006, 15:58 | | RAH - Reviewed preliminary consolidated results an |
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RAH
RAH
RAH - Reviewed preliminary consolidated results and ordinary and special
dividend declaration
Real Africa Holdings Limited
(Registration number 1994/003919/06)
Share code: RAH
ISIN code: ZAE000008702
("Real Africa" or "RAH")
REVIEWED PRELIMINARY CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 MARCH 2006 AND
ORDINARY AND SPECIAL DIVIDEND DECLARATION
NET ASSET VALUE PER SHARE INCREASED BY 53% TO 676 CENTS
TOTAL DISTRIBUTION OF 77 CENTS PER SHARE
CONDENSED INCOME STATEMENT
2006 2005
Reviewed Restated
Notes R"000 R"000
Revenue 1 34 429 61 598
Investment gains/(losses) 2 26 507 (54 123)
Equity accounted earnings 71 503 56 896
- dividends received 1, 3 80 224 57 301
- share of profits in associates 562 8 878
- intangible amortisation 9 283 9 283
Interest income 30 559 57 881
Adjustment 4 - (47 776)
Operating income 162 998 74 476
Operating costs 11 836 23 021
Interest and preference dividends paid 12 882 31 365
Profit before taxation 138 280 20 090
Taxation 10 055 4 830
Profit after taxation 128 225 15 260
Outside shareholders 5 7 825 33 365
Attributable to ordinary shareholders 120 400 (18 105)
Earnings/(loss) per share (cents) 33,43 (4,95)
Number of ordinary shares (millions) 360,2 365,9
CONDENSED BALANCE SHEET
2006 2005
Reviewed Restated
Notes R"000 R"000
Ordinary shareholders" funds 1 619 441 1 355 130
Outside shareholders 5 122 139 484 462
Redeemable preference shares 6 121 464 168 000
Deferred taxation 7 665 1 868
1 870 709 2 009 460
Fixed assets 111 109
Intangible assets 3 048 3 517
Non-current asset held for sale 174 825 -
Investments 1 414 035 1 264 286
Cash resources 280 565 797 350
Net current liabilities (1 875) (55 802)
1 870 709 2 009 460
CONDENSED STATEMENT OF CHANGES IN EQUITY
Ordinary
share Capital
capital redemption Non-
and reserve distributable
Reviewed premium fund reserve
R"000 R"000 R"000
Balance at 1 April 2005 as 822 727 1 080 2 390
previously reported
IFRS adjustment to opening balance
Restated balance at 1 April 2005 822 727 1 080 2 390
Net profit for the year
Attributable share of associates (1 098)
foreign currency translation
reserve
Movement in treasury shares (34 016)
Preference share redemption 46 535
Transfer on disposal of investment
Investment revaluation
Capital redemption (371 757)
Balance at 31 March 2006 416 954 1 080 47 827
Retained Fair value
Reviewed earnings reserve Total
R"000 R"000 R"000
Balance at 1 April 2005 as 528 089 - 1 354 286
previously reported
IFRS adjustment to opening balance (307 349) 308 193 844
Restated balance at 1 April 2005 220 740 308 193 1 355 130
Net profit for the year 120 400 120 400
Attributable share of associates (1 098)
foreign currency translation
reserve
Movement in treasury shares (34 016)
Preference share redemption (46 535) -
Transfer on disposal of investment 8 257 (8 257) -
Investment revaluation 550 782 550 782
Capital redemption (371 757)
Balance at 31 March 2006 302 862 850 718 1 619 441
Impact of IFRS
The preliminary financial information has been prepared in accordance with IAS
34. Real Africa has adopted International Financial Reporting Standards (IFRS)
with effect from 1 April 2005. Real Africa has re-evaluated its presentation of
investment gains and losses in light of its current investment strategy and has
applied the IFRS 1 exemption to reclassify its investments other than those
which are associates as available-for-sale assets at 1 April 2004, the date of
transition to IFRS. This change requires that Real Africa reflects the movement
in the value of its investments in shareholders" equity as opposed to the
previous policy under which these fair value movements were reflected in the
income statement. These are strategic investments held for an indeterminate
period, and hence are classified under IFRS as available-for-sale assets with
fair value movements presented in equity. Other IFRS opening balance adjustments
resulted from the remeasurement of depreciation on property, plant and
equipment. In light of the impending sale of its indirect interest in Oceana
Group Limited ("Oceana"), the group has adopted IFRS 5 in classifying this
associate. Comparative figures have been restated to take account of these
changes in accounting policies. A reconciliation of the effect of adoption of
IFRS on the preliminary financial information is as follows:
Equity Assets
R"000 R"000
Opening balance at 1 April 2004 1 099 166 1 837 822
Reclassification of investments - -
Remeasurement of depreciation 1 146 1 146
As restated at 1 April 2004 1 100 312 1 838 968
CONDENSED CASH FLOW STATEMENT
2006 2005
Reviewed Audited
R"000 R"000
Cash flow from operating activities 71 696 120 750
Cash flow from investing activities 67 314 (63 805)
Cash flow from financing activities (284 038) (63 562)
(excluding capital redemption)
Cash flow from financing activities (371 757) -
(capital redemption)
NET ASSET VALUE
Unaudited Unaudited
23 June 22 June
Notes 2006 2005
Afrisun Leisure 7, 8 1 759 937 1 000 323
Oceana Group 7 341 520 300 608
Life Esidimeni 7, 9 205 100 228 360
Dimension Data - 63 698
Cash 252 589 559 887
Debt (121 464) (168 000)
Other net (1 875) 314
assets/(liabilities)
2 435 807 1 985 190
Issued shares 360 151 469 365 852 995
Value per share 676 542
Less: Capital redemption - 100
Value per share after capital 676 442
redemption
HEADLINE EARNINGS
Reviewed Restated
2006 2005
Headline earnings/(loss) per share 33,43 (2,79)
(cents)
R"000 R"000
Headline earnings is determined as
follows:
Attributable to ordinary shareholders 120 400 (18 105)
Adjusted for (net of outside
shareholders):
Investment impairment - 7 903
Headline earnings/(loss) 124 000 (10 202)
COMMENTARY
Real Africa"s core casino interests performed particularly well in the period
under review and growth exceeded expectations. The gaming industry continues to
grow and Real Africa"s casino interests are positioned to benefit from this
growth. This is reflected in the substantial increase in the value of Real
Africa"s interest in Afrisun Leisure (Proprietary) Limited ("Afrisun Leisure")
which is supported by significant expansions currently underway at the
GrandWest, Carnival City and Sibaya casinos. During the period under review,
Afrisun Leisure acquired, subject to gaming board approval, a further 34,9%
interest in Zonwabise Resort Holdings Limited for a cash consideration of R46,2
million, effectively increasing Real Africa"s attributable economic interest in
Emfuleni Resorts (Proprietary) Limited ("Emfuleni") from 2,3% to 7%. Emfuleni
operates the Boardwalk casino in Port Elizabeth. A previously announced
agreement reached to acquire a 10% stake in the casino to be built in Worcester
was subject to the fulfilment of certain conditions which conditions were not
met and accordingly the transaction will not be implemented.
Strategy
In line with its strategy of focusing on the gaming industry, Real Africa has
continued to dispose of its non-gaming investments. As detailed below, Real
Africa has concluded a transaction for the disposal of its indirect shareholding
in Oceana. Real Africa has disposed of its remaining investment in Dimension
Data Holdings plc for a total cash consideration of R26,1 million. Subsequent to
the disposal of Oceana, the remaining significant non-gaming investment will be
a 45% shareholding in Life Esidimeni (Proprietary) Limited ("Life Esidimeni"),
which will be sold at an appropriate time.
Dividend policy
The attention of shareholders is drawn to the dividend policy of Real Africa as
set out in the circular to shareholders dated 19 June 2006 wherein shareholders
were advised that "The Board has resolved that, subject to the capital
requirements, RAH will, on an ongoing basis, declare and distribute semi-annual
dividends equal to net cash revenues after allowance for operational cash
requirements".
Surplus capital distributions
It remains Real Africa"s intention to distribute surplus capital on the
realisation of non-core investments. Shareholders are referred to the paragraph
below regarding the disposal of Oceana.
Offer
With regard to the unsolicited conditional offer by Sun International (South
Africa) Limited ("SISA"), to acquire all the issued ordinary shares in Real
Africa, the Board of Directors believes that the offer is neither fair nor
reasonable and that retention of shares in Real Africa offers more upside.
Shareholders are referred to the circular dated 19 June 2006 for further details
of the offer and the Board"s recommendation.
Litigation
As announced on 17 May 2006 and with reference to the circular of 19 June 2006,
the attention of shareholders is drawn to the litigation statement contained
therein in the "letter from the board of RAH", in terms of which Afrisun Leisure
has instituted a claim seeking an order of specific performance that SISA
fulfils its obligations in terms of the SunWest International (Pty) Limited
("SunWest") shareholders" agreement and articles of association by
unconditionally offering to sell and transfer a maximum of 768 650 "N" ordinary
shares in SunWest to Afrisun Leisure (representing 5,5% of SunWest"s issued
share capital) at R75 per share with effect from June 2003. Afrisun Leisure is
further claiming the dividends declared to date on these shares amounting to a
maximum of R22,9 million (interest excluded). The net asset value indicated
above does not take into account the value of any relief granted as a result of
this claim. Shareholders are reminded that Real Africa stands to benefit in an
amount equal to 66,3% of any relief granted.
Notes to the condensed income statement
1. Dividends from gaming interests increased by 41% from R52,6 million in 2005
to R74,3 million in 2006. This was made up as follows;
* Dividends received from gaming investments included in revenue amounting to
R33,5 million (2005 - R24,5 million); and
* Equity accounted dividends from gaming investments amounting to R40,8 million
(2005 - R28,1 million).
Revenues in 2005 included non-recurring dividends from, inter alia, Business
Connexion Group Limited ("BCX") of R29,5 million which was attributable to
outside shareholders.
2. In 2005, an option obligation of R42,5 million, equal to the difference
between the directors" valuation and the exercise price, was provided for
against investment profits. In 2006 these options were exercised, but Real
Africa was able to pre-empt the sale at below the directors" value resulting in
a write-back of R26,9 million.
3. Dividends received from equity accounted associate entities are tabulated
below;
2006 2005
R"000 R"000
Oceana 16 453 17 009
Life Esidimeni 22 950 12 150
Gaming investments 40 821 28 142
Total 80 224 57 301
4. The equity interest held by Afrisun Leisure in Afrisun Gauteng (Proprietary)
Limited ("Afrisun Gauteng"), National Casino Manco (Proprietary) Limited
("National Manco") and Gauteng Casino Manco (Proprietary) Limited ("Gauteng
Manco") were accounted for on the fair value basis in the reporting periods up
to and including 31 March 2004. These investments have subsequently been
measured using the equity accounting method. The cumulative adjustment in 2005
related to this change in the basis of accounting.
Notes to the condensed balance sheet
5. Outside shareholders interest decreased following the distribution of the
BCX, Dimension Data Holdings plc ("DiData") shares and cash to the Persetel Q
Data Africa Holdings ("PQAH") minority shareholders and the acquisition of the
remaining shares in PQAH.
6. Preference share capital of R46,5 million was redeemed on the last day of the
financial year.
Notes on the net asset value
7. The net asset value reflects Real Africa"s attributable portion of Oceana, at
the transaction value as at the date of this report. Unlisted shares are
reflected at directors" valuation as at 31 March 2006.
8. The valuation of Afrisun Leisure implies an historic dividend yield of 3,7%.
The shares held by Afrisun Leisure have been valued as set out below:
Gaming investment Valuation method Discount rate %
SunWest Discounted cash flow 10,9
Afrisun Gauteng Discounted cash flow 10,6
Afrisun KZN Discounted cash flow 11,5
Emfuleni Discounted cash flow 10,6
Capitalisation rate %
National Manco Dividend capitalisation 4,5
Gauteng Manco Dividend capitalisation 4,5
9. Life Esidimeni was valued by capitalising sustainable normalised dividends at
a rate of 6,9% and adding surplus cash.
Notes on the basis of preparation
10. The preliminary financial information has been prepared in accordance with
IAS 34. The group has adopted International Financial Reporting Standards (IFRS)
with effect from 1 April 2004.
11. The auditors, PricewaterhouseCoopers Inc., have issued their review opinion
on the preliminary financial information for the year ended 31 March 2006. A
copy of the auditors" review report is available for inspection at Real Africa"s
registered office.
Disposal of Real Africa"s indirect interest in Oceana
Further to the joint cautionary announcements released by Real Africa and Oceana
on the Securities Exchange News Service of the JSE Limited on Thursday, 20 April
2006 and Thursday, 8 June 2006 and Oceana"s Black Economic Empowerment ("BEE")
transaction announcement to be released simultaneously with this announcement
(the "Oceana BEE announcement"), shareholders are advised that Real Africa has,
subject to the conditions precedent below ("the disposal conditions"), entered
into an agreement to dispose of its indirect interest in Oceana to Tiger Brands
Limited ("Tiger Brands") for a cash consideration of R341,5 million which
includes the interim dividend of R3,3 million payable on Monday, 3 July 2006.
The implementation of the transaction is subject to the fulfilment of various
conditions precedent including, inter alia, Oceana shareholder approval and the
Securities Regulation Panel granting dispensation to Tiger Brands and Brimstone
Investment Corporation Limited from having to make a mandatory offer to Oceana
minority shareholders. This dispensation is required as it is the intention of
Tiger Brands to replicate certain aspects of the existing Ocfish shareholders"
agreement in a new voting pool agreement between Tiger Brands and Brimstone.
Shareholders are advised that the Board has resolved to distribute the proceeds
from this disposal to Real Africa shareholders. An appropriate announcement in
this regard will be made subsequent to receipt of the proceeds by Real Africa.
Declaration of ordinary dividend
Notice is hereby given that a dividend of 10 cents per Real Africa share has
been declared for the six month period ended 31 March 2006.
Declaration of special dividend
Notice is hereby given that, in addition to the ordinary dividend of 10 cents
per share referred to above, a special dividend of 67 cents per Real Africa
share has been declared for the financial year ended 31 March 2006.
Dates of importance
Last day to trade in order to participate Friday, 14 July 2006
in the ordinary and special dividend
Trading on or after this date will be ex Monday, 17 July 2006
the ordinary dividend and ex the special
dividend
Record date Friday, 21 July 2006
Payment date of the ordinary and special Monday, 24 July 2006
dividend
Shareholders may not dematerialise or rematerialise their holdings of ordinary
shares between Monday, 17 July 2006 and Friday, 21 July 2006, both days
inclusive.
By order of the Board of Directors.
FJ van der Merwe DJJ Vlok
(Chairman) (Director)
26 June 2006
Physical address
Aberdeen House, Peter Place Park
54 Peter Place, Bryanston, 2021
Tel: 011 463 0010
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 26/06/2006 03:59:32 PM Produced by the JSE SENS Department
