| Thu 24 Aug 2006, 11:18 | | UDITED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUN |
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UDITED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2006 AND EXTENSION OF
CAUTIONARY
HIGHLIGHTS
REVENUE UP 57%*
EBITDA UP 109%*
PROFIT AFTER TAX UP 209%*
NET ASSET VALUE UP R130,9 MILLION
*see "Financial review - comparatives for commentary purposes"
INTRODUCTION
The consolidated financial results for the year ended 30 June 2006 are IFA SA"s
first set of annual financial results since the acquisition by the company on 16
January 2006 of all of the issued shares and portions of the shareholder"s loan
accounts in IFA Zimbali Lodge (Pty) Limited ("IFA Zimbali") and all of the
issued shares in IFA Hotels & Resorts (South Africa) (Pty) Limited ("IFA
Hotels") from IFA Hotels & Resorts KSCC ("IFA H&R KUWAIT"), as a reverse
takeover ("the reverse takeover"). IFA H&R KUWAIT is a Kuwaiti- based real
estate company.
The results presented include the consolidated results of IFA Hotels, IFA
Zimbali and IFA Boschendal Investments (Pty) Limited ("IFA Boschendal").
The directors are pleased to present the following results which reflect
significant growth in all major key performance indicators.
CONSOLIDATED INCOME STATEMENT
Year Six months
ended ended
30 June 2006 30 June 2005
R"000 R"000
Revenue 161 007 55 458
Operating profit 55 599 17 273
Investment income 15 227 3 243
Finance costs (10 731) (4 308)
Profit before taxation 60 095 16 208
Taxation (18 117) (3 911)
Profit for the period 41 978 12 297
Headline profit reconciliation
Profit attributable to
ordinary shareholders 41 978 12 297
Impairment losses 90 1
Headline profit 42 068 12 298
Number of shares
- in issue 218 210 680 218 210 680
- for EPS and HEPS calculation 215 028 441 212 755 413
Earnings per share (cents)
- headline earnings per share (HEPS) 19,56 5,78
- basic earnings per share (EPS) 19,52 5,78
There is no dilution effect to either EPS or HEPS.
CONSOLIDATED CASH FLOW STATEMENT
Year Six months
ended ended
30 June 2006 30 June 2005
R"000 R"000
Cash flows from operating activities 23 482 11 923
Cash generated by operating activities 21 816 13 056
Interest received 8 828 3 243
Interest paid (6 583) (4 308)
Taxation paid (579) (68)
Cash flows from investing activities (55 043) (408)
Expenditure to maintain
operating capacity
Property, plant and equipment acquired (1 140) (408)
Expenditure for expansion
Investments in associates (13 903) -
Loan to associate (40 000) -
Cash flows from financing activities 58 801 4 293
Transaction costs (6 814) -
Loans raised 71 615 5 641
Loans repaid (6 000) (1 348)
Increase in cash and cash equivalents 27 240 15 808
Cash and cash equivalents
at beginning of the year 52 688 36 880
Cash and cash equivalents
at end of the year 79 928 52 688
CONSOLIDATED BALANCE SHEET
30 June 30 June
2006 2005
R"000 R"000
ASSETS
Non-current assets 146 052 68 252
Property, plant and equipment 83 132 57 456
Intangible assets 5 534 2 298
Investment in associates 13 903 -
Loan to associate 35 851 -
Investments 7 300 7 300
Deferred tax 332 1 198
Current assets 312 645 191 431
Township properties 86 217 77 607
Inventories 2 454 2 177
Trade and other receivables 142 739 57 975
Other financial assets 1 095 984
Assets held-for-sale 212 -
Cash and cash equivalents 79 928 52 688
Total assets 458 697 259 683
EQUITY AND LIABILITIES
Capital and reserves 148 654 17 740
Issued capital and share premium 71 892 1
Non-distributable reserve 23 797 -
Distributable reserves 52 965 17 739
Non-current liabilities 133 594 103 619
Shareholder"s loan 113 571 96 227
Deferred tax 20 023 7 392
Current liabilities 176 449 138 324
Shareholder"s loan 47 794 74 578
Liabilities held-for-sale 212 -
Trade and other payables 66 707 19 070
Advance deposits 903 302
Deferred revenue 50 885 43 540
Taxation 9 948 834
Total equity and liabilities 458 697 259 683
Net asset value per
share (cents) ("NAV") 68,12 8,13
Net tangible asset value
per share (cents) ("NTAV") 65,59 7,08
Number of shares in issue 218 210 680 218 210 680
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non-
distributable Distributable
Share capital Share premium reserves reserves Total
R"000 R"000 R"000 R"000 R"000
Balance at
1 January 2005 1 5 442 5 443
Net profit for
the period 12 297 12 297
Balance at
1 July 2005 1 - - 17 739 17 740
Issue of
share capital 2 181 69 710 71 891
Transaction costs (6 815) (6 815)
Surplus on
revaluation of
land and buildings 28 933 28 933
Deferred tax on
revaluation surplus (5 073) (5 073)
Net profit
for the year 41 978 41 978
Transfer to
distributable
reserve (63) 63 -
Balance at
30 June 2006 2 182 69 710 23 797 52 965 148 654
SEGMENTAL ANALYSIS
IFA HOTELS IFA ZIMBALI
Year Six months Year Six months
ended ended ended ended
30 June 2006 30 June 2005 30 June 2006 30 June 2005
R"000 R"000 R"000 R"000
Revenue 127 314 38 940 34 756 15 518
EBITDA 55 923 17 534 4 321 2 348
Profit/(loss)
after tax 42 364 12 676 (3 603) (379)
IFA BOSCHENDAL OTHER
Four months Six months Year Six months
ended ended ended ended
30 June 2006 30 June 2005 30 June 2006 30 June 2005
R"000 R"000 R"000 R"000
Revenue - - 2 624 -
EBITDA (5) - (334) -
Profit/(loss)
after tax 1 662 - 1 555 -
ELIMINATIONS CONSOLIDATED
Year Six months Year Six months
ended ended ended ended
30 June 2006 30 June 2005 30 June 2006 30 June 2005
R"000 R"000 R"000 R"000
Revenue (3 687) - 161 007 55 458
EBITDA 2 - 59 907 19 882
Profit/(loss)
after tax - - 41 978 12 297
BASIS OF PREPARATION
The condensed consolidated financial results for the year ended 30 June 2006
have been prepared in compliance with IFA SA"s accounting policies which fully
comply with International Financial Reporting Standards ("IFRS") and the
Listings Requirements of the JSE Limited ("JSE"). All accounting standards that
are issued and effective have previously been adopted and no restatement of
prior period results is necessary.
IFA SA previously reported in terms of International Financial Reporting
Standards and IFRS 1 is therefore not applicable.
The condensed consolidated financial results have been audited by BDO Spencer
Steward (KZN) Inc., Chartered Accountants (SA), Registered Auditors. Their
unqualified audit opinion is available for inspection at the company"s
registered office.
The board acknowledges its responsibility for the preparation of the condensed
consolidated financial statements in accordance with IFRS and the requirements
of the JSE.
NOTES TO THE FINANCIAL RESULTS
1. Effect of change in year-end
The group changed its year-end from December to June with effect from 1 January
2005. The previous period results are therefore for the six months to June 2005.
2. Reverse acquisition
On 16 January 2006, the company acquired from IFA H&R KUWAIT, as an indivisible
transaction, IFA H&R KUWAIT"s entire shareholding and a portion of its loan
account (R68 655 512) in IFA Zimbali and its entire shareholding in IFA Hotels
in exchange for the issue of 212 755 413 shares (97,5% of the voting equity in
the company). The purchase consideration for IFA Zimbali"s shares and loan
account was R85 000 000 and IFA Hotel"s shares was R41 204 139 which totaled
R126 204 139. This transaction has been accounted for as a reverse acquisition
where the legal subsidiaries are treated as the acquirer and the company as the
acquiree. The financial statements are a continuation of the financial
statements of the subsidiaries. Accordingly, the consolidated annual financial
statements of the group for the comparative period ended 30 June 2005 comprise
the results of IFA Hotels and IFA Zimbali for the six months then ended.
3. Deferred revenue
Revenue from the sale of township property is recognised when legal title passes
or when the equitable interest in the property vests in the buyer. Where there
are further substantial acts to complete in the development of a township
property, revenue is deferred and recognised as the acts are performed. Revenue
is recognised by reference to the stage of completion of the development of the
township property at the balance sheet date, as measured by the proportion that
land and development costs incurred to date bear to the estimated total land and
development costs.
The substantial acts required to complete the development of township property
are expected to be completed within the next twelve months. Therefore the
revenue that has been deferred in terms of the revenue recognition policy is
likely to be recognised within the next twelve months.
4. Discontinued operations
As set out in the circular to the shareholders of Moribo dated 22 December 2005,
all of the shares in each of the subsidiaries of Moribo have now been
distributed to Moribo shareholders, the remaining assets of Moribo are being
realised, the liabilities settled and any remaining cash balance in Moribo will
be distributed to Moribo shareholders as a dividend. The group reports these
activities as a discontinued operation in the financial statements.
5. Change in accounting policy
Property, plant and equipment
During the year, the group changed its policy for the subsequent measurement of
land and buildings from the cost model to the revaluation model. The impact of
the change in accounting policy in the current year has resulted in an increase
in operating expenses being additional depreciation of R88 973 before deferred
tax of R25 802; an increase in land and buildings of R28 933 302 before deferred
tax of R5 047 639 and an increase in net assets of R23 796 690 at 30 June 2006.
6. Investment in associates
Income from the company"s associates (Boschendal Limited and Purple Plum
Properties 59 Limited ("Boschendal")) was not equity accounted in the current
year as the acquisition of the 19,25% interest in the unlisted shares of
Boschendal only took place on 21 June 2006 and is not material.
7. Capital expenditure commitments R"000 R"000
2006 2005
- contracted 35 168 22 130
- approved but not contracted 18 565 18 500
Total 53 733 40 630
8. Operating lease commitments 304 218
COMMENTARY
GROUP PROFILE
In terms of the reverse takeover, IFA Zimbali and IFA Hotels were acquired by
the company from IFA H&R KUWAIT in exchange for the issue of 212 755 413 shares
in the company. These shares were listed on the JSE on 27 February 2006. IFA H&R
KUWAIT maintains a majority interest with an 85% shareholding. The former Moribo
operations are presently being discontinued, which was a pre-condition of the
reverse takeover, and there is no operational or management link between the
former Moribo and IFA SA.
Through three subsidiaries, IFA SA owns:
the exclusive Zimbali Lodge on the KwaZulu-Natal"s north coast, rated by Conde
Nast as one of the world"s top hotels;
a 50% stake in the development of the multi-million rand Zimbali Coastal Resort
which is being jointly developed with Moreland-Zimbali Resorts (Pty) Limited, a
subsidiary of Moreland Developments (Pty) Limited ("Moreland") which owns the
remaining 50% interest, ("the Mifaz joint venture") and offers hotels, luxury
residences, golf courses and leisure facilities; and
a 19,25% stake in Boschendal, which was acquired by IFA SA through its
subsidiary, IFA Boschendal. This acquisition of a signicant stake in a world-
renowned wine-estate in the Western Cape, as announced on 20 June 2006, aligns
the group with an iconic South African brand. IFA SA intends to elevate
Boschendal onto the international real estate market and present the estate as a
world-class destination.
EFFECTS OF THE REVERSE TAKEOVER
The effects of the reverse takeover are as follows:
a) 677 843 unconsolidated shares held by the Moribo Share Incentive Trust were
repurchased and the Moribo Share Incentive Scheme was terminated.
b) The company"s shares were consolidated on a one-for-ten basis in order to
reduce the number of shares in issue after the reverse takeover to a
manageable level.
c) The company was authorised to increase its share capital to 500 000 000
consolidated shares by the creation of 461 121 152 new consolidated shares.
d) The company changed its main business and trading objects to "invest in, as
principal, develop and manage land, apartments, hotels and timeshare
resorts".
e) The board of directors was reconstituted to reflect the changed nature of
the business and new controlling shareholder of the company.
f) Should any liabilities arise within three years from the effective date of
the reverse takeover (16 January 2006) that relate to any activities
conducted by Moribo prior to the effective date, IFA H&R KUWAIT may settle
the balance in exchange for the issue of consolidated shares to IFA H&R
KUWAIT at the weighted average traded price of such shares over the 30 days
prior to the date of issue (to a maximum of R20 million).
FINANCIAL REVIEW
Comparatives for commentary purposes
In the highlights above and the commentary below, certain references and
calculations refer to comparative results. For commentary purposes only, the
comparative results of IFA SA are for the twelve months ended 30 June 2005 and
have been taken from management information and are therefore not audited. This
approach allows for a more useful comparison as, due to the year-end change, the
previous period audited results are for the six months to June 2005.
To calculate the results for the twelve months to 30 June 2005, the published
income statements of IFA SA for the six months to 30 June 2005, as presented
above, were added to the following:
- the full year audited income statement to 31 December 2004 of IFA Hotels
divided by two; and
- the audited income statement of IFA Zimbali for the five months to December
2004 (i.e. from the effective date of acquisition of the Zimbali Lodge by IFA
Zimbali), divided by five and multiplied by six.
IFA ZIMBALI has shown steady improvement in revenues with an increase of 12%
from R31,0 million for the year to June 2005 to R34,8 million. Earnings before
interest, tax, depreciation and amortisation ("EBITDA") similarly grew by 9% to
R4,3 million as a result of securing additional income streams in the form of
ongoing service fees and rental commission. Of significance is earnings before
interest and taxation ("EBIT") which has shown a strong improvement over 2005.
The R0,1 million EBIT reversed a trend of losses, the most recent being a loss
of R1,3 million for the previous year. The net asset value of IFA Zimbali has
increased by R20,2 million as a result of revaluing the property. The
revaluation is not reflected in earnings. The directors are pleased at the
positive EBITDA and EBIT trend as well as the growth in value of the business
and will continue to focus on elevating the brand equity of the Zimbali Lodge,
which they believe is key to driving higher occupancies and average revenue per
visit.
IFA HOTELS has shown strong growth in land sales. Revenue increased by 78% to
R127,3 million from R71,3 million for the year to June 2005. Healthy EBITDA has
followed in this segment of the business with R55,9 million for the year
reflecting a 126% increase over 2005. A pleasing aspect of this profit growth is
the reduction of operating costs as a percentage of revenue from 18% to 11%.
As the scale of the operation increases, IFA SA intends to further leverage the
fixed cost base. The heightened awareness of the Zimbali brand should ensure
that value is achieved for land currently in township property stock, which
includes the area known as "The Lakes" and the recently purchased land on the
south bank, opposite "The Lakes", both of which have yet to be released to the
market.
IFA SA has a strong balance sheet with no borrowings other than shareholder"s
loans. The board is currently investigating opportunities to leverage the strong
balance sheet to maximise returns to shareholders.
PROSPECTS
IFA H&R KUWAIT is well-positioned to invest further capital and expertise in
resort development in South Africa. South Africa has emerged as an ideal
investment opportunity in light of positive economic factors and an untapped
property asset base. IFA H&R KUWAIT"s multi-million rand investment in South
African property development to date reflects its confidence in the economy.
The continued positive performance of IFA SA"s assets bodes well for future
growth, particularly in light of steadily increasing tourism as South Africa"s
coastline finds favour with international tourists. The standard of leisure and
living offered by Zimbali continues to offer an attractive proposition to
holidaymakers and serious international property investors. The area"s growth
prospects are further supported by the proposed King Shaka airport soon to be
completed between Zimbali and Durban. IFA SA will continue to seek further
appropriate opportunities in this area.
The future development plans for the 2 400 hectare Boschendal estate include an
upmarket retirement village with 500 individual homes, a boutique hotel with
upwards of 80 rooms and a mixed-use development of a shopping centre, offices
and apartments. The acquisition affirms the intention of the international IFA
Hotels & Resorts group to use the South African operation as a platform for
continued investment in Africa in order to expand its global network of resorts
and offer prime opportunities to global investors. In addition, the acquisition
further demonstrates IFA SA"s commitment to sustainable transformation as the
company will now be participating in the Boschendal transformation programme.
DIVIDEND
In view of the strategy to retain capital for investment in future developments,
no dividend has been declared for the year.
As set out in the circular to the shareholders of Moribo dated 22 December 2005,
the board of directors undertook to distribute all of the company"s excess cash
that existed before the implementation of the reverse takeover ("the Moribo
dividend") to its shareholders who were recorded in the register as such on the
record date. The last date to trade in order to participate in the Moribo
dividend was Friday, 10 February 2006 and the record date was Friday, 17
February 2006, both prior to the implementation of the reverse takeover.
Subsequent to the implementation of the reverse takeover, the South African
Revenue Service ("SARS") acquired all of Moribo"s excess cash to settle certain
claims. The previous directors of the company continue to apply for the
settlement of the company"s previous receivables including the excess cash
acquired by SARS. It is not possible at this time to quantify the extent, if
any, of the Moribo dividend.
EXTENSION OF CAUTIONARY
Shareholders are referred to the cautionary announcements dated 10 May 2006, 20
June 2006 and 1 August 2006 and are advised that the company is continuing
negotiations with third parties which, if successfully concluded, may have a
material effect on the price of the company"s shares. Accordingly, shareholders
are advised to continue exercising caution when dealing in the company"s shares
until a full announcement in this regard is made.
ANNUAL GENERAL MEETING
The annual general meeting of the company will be held at Zimbali Lodge, Zimbali
Coastal Resort, Kwazulu Natal, on Wednesday, 20 September 2006 at 09:00.
For and on behalf of the board
JM Al-Bahar TJM Al-Bahar
Chairman Chief Executive Officer
Zimbali, Durban, KwaZulu-Natal 24 August 2006
CORPORATE INFORMATION
Directors
JM Al-Bahar (Chairman)*, TJM Al-Bahar (Chief Executive Officer), WJ Burger*,
PGR de Sylva, GE Larson*
VM Nkosi, JAM Wilson* *Non-executive
Registered office Company secretary
1 Amanbali, Zimbali Coastal Resort, KwaZulu-NatalKA Watson CA (SA), MBA
Transfer secretaries
Computershare Investor Services 2004 (Pty) Limited, 20 Marshall Street,
Johannesburg
Sponsor
BDOQuestCo (Pty) Limited
Date: 24/08/2006 10:45:11 AM Produced by the JSE SENS Department
