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RAH
RAH
RAH - Real Africa - Reviewed Interim Results For The Six Months Ended
30 September 2006 and dividend declaration
Real Africa Holdings Limited
(Registration number 1994/003919/06)
Share code: RAH
ISIN code: ZAE000008702
("Real Africa" or "RAH" or "the company")
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006
INCOME STATEMENTS
Six months ended Year
ended
30 September 31 March
2006 2005 2006
R`000 Reviewed Unaudited Audited
restated
Revenue 28 415 14 553 34 429
Net investment profits 162 109 25 619 26 507
Share of profits of associates 27 646 41 986 71 503
Interest income 6 753 20 540 30 559
Operating income 224 923 102 698 162 998
Operating costs (12 930) (7 123) (11 836)
Interest and preference (4 919) (9 675) (12 882)
dividends paid
Profit for the period 207 074 85 900 138 280
Taxation (6 178) (5 563) (10 055)
Profit after taxation 200 896 80 337 128 225
Attributable to:
Minority interest 4 987 9 760 7 825
Ordinary shareholders 195 909 70 577 120 400
200 896 80 337 128 225
Earnings per share (cents) 54,2 19,0 33,4
Headline earnings per share 12,8 19,0 33,8
(cents)
BALANCE SHEETS
30 September 31 March
2006 2005 2006
R`000 Reviewed Unaudited Audited
restated
Assets
Non-current assets
Equipment and furniture 94 94 111
Investments in associates 237 705 393 626 194 496
Other investments 1 101 1 035 895 1 219
123 538
Intangible assets 2 814 3 283 3 048
1 341 1 432 898 1 417
736 193
Current assets
Asset held for sale - - 174 825
Accounts receivable 152 3 530 342
Cash and cash equivalents 373 354 233 901 280 565
373 506 237 431 455 732
Total assets 1 715 1 670 329 1 872
242 925
Equity and liabilities
Capital and reserves
Ordinary shareholders` equity 1 432 1 379 885 1 619
607 441
Minority interest 101 124 114 713 122 139
1 533 1 494 598 1 741
731 580
Non-current liabilities
Preference shares 166 464 168 000 121 465
Deferred taxation - - 7 665
166 464 168 000 129 130
Current liabilities
Accounts payable 1 508 7 731 2 141
Taxation 13 539 - 74
15 047 7 731 2 215
Total liabilities 181 511 175 731 131 345
Total equity and liabilities 1 715 1 670 329 1 872
242 925
STATEMENT OF CHANGES IN EQUITY
Reviewed Ordinary
share Capital Non-
capital redemp- distri-
and tion butable
R`000 premium reserve reserves
Balance at 31 March 416 953 1 080 47 828
2006
Profit for the period - - -
Fair value - - -
adjustments
Dividends paid - - -
Preference share - - 2 997
redemption
Exercise of share- 1 726 - -
trust options
418 679 1 080 50 825
Reviewed
Fair
Retained value Minority
R`000 earnings reserve interests Total
Balance at 31 March 302 862 850 718 122 139 1 741
2006 580
Profit for the 195 909 - 4 987 200 896
period
Fair value - (105 (13 014) (118
adjustments 402) 416)
Dividends paid (279 - (12 988) (292
067) 055)
Preference share (2 997) - - -
redemption
Exercise of share- - - - 1 726
trust options
216 707 745 316 101 124 1 533
731
SUMMARISED CASH FLOW STATEMENT
Six months ended Year
ended
30 September 31 March
2006 2005 2006
R`000 Reviewed Unaudited Audited
restated
Cash flows from operating 16 732 48 947 106 518
activities
Cash flows from investing 321 388 26 068 9 887
activities
Cash flows from financing (245 (638 464) (633
activities 330) 190)
Net cash flows 92 790 (563 449) (516
785)
HEADLINE EARNINGS PER SHARE
Six months ended Year
ended
30 September 31 March
2006 2005 2006
Reviewed Unaudited Audited
restated
Headline earnings per share 12,8 19,0 33,8
(cents)
Weighted average number of 361,3 371,8 360,2
shares (million)
Reconciliation of headline
earnings (R`000)
Earnings 195 909 70 577 120 400
Adjusted for realised (149 - 1 200
investment (profits)/losses 680)
Headline earnings 46 229 70 577 121 600
NET ASSET VALUE
30 September 31 March
2006 2005 2006
R`000 Unaudited Unaudited Unaudited
restated
Afrisun Leisure* 1 408 552 507 185 1 759 937
Oceana - 371 314 341 520
Life Esidimeni 205 100 270 409 205 100
Dimension Data - 50 767 -
Other net assets (14 800) 13 092 (1 875)
Cash 367 682 553 327 252 589
Borrowings (121 464) (168 000) (121 464)
Net asset value 1 845 070 1 598 094 2 435 807
Issued shares, net of treasury 361,3 371,8 360,2
shares (million)
Net asset value per share 511 430 676
(cents)
Special distributions paid to
shareholders since calculation
of net asset value:
Ocfish proceeds (92) (92) (92)
Special dividend - (67) (67)
Capital reduction - (100) -
Net asset value after 419 171 517
distributions
* Afrisun Leisure value is net of preference share debt and cash.
COMMENTARY
The gaming industry continues to perform well with Real Africa`s core
casino interests, held via a controlling shareholding in Afrisun Leisure,
experiencing good growth in revenues and profitability. The major
components of the GrandWest expansion will be completed in July 2007 with
the multi-purpose arena scheduled for opening in October 2007. The
expansion includes the increase in slot machines from 1 831 to 2 500.
Carnival City has commenced the expansion to the Carnival Club hotel, which
will increase the number of rooms from 48 to 105. The 118 room Sibaya Lodge
opened in October 2006.
Gaming board approval for the acquisition by Afrisun Leisure of a 34,9%
interest in Zonwabise Resort Holdings Limited has been received and the
purchase has been concluded. The acquisition effectively increases Real
Africa`s economic interest in Emfuleni Resorts from 2,3% to 7%.
During the period under review Real Africa disposed of its indirect
interest in the Oceana Group for R338 million, realising a profit of R162
million.
The offer by Sun International (South Africa) Limited (SISA) to acquire the
entire issued share capital of Real Africa closed on 15 September 2006.
SISA now controls 61,3% of RAH and consequently Real Africa is a subsidiary
of SISA.
The board has resolved that future dividends will be determined at the
board meetings, which deal with the half-year and full-year results.
Litigation and pre-emptive rights
The board has appointed Mr Mike Leeming (an independent non-executive
director) to investigate the claims brought against SISA by Afrisun
Leisure, with the objective of deciding on the appropriate action required
of RAH in regards to this matter.
Capital distributions
During the period under review a special dividend of 67 cents per share was
paid to shareholders utilising excess cash resources. The proceeds from the
sale of Ocfish were distributed on 16 October 2006 by way of a 92 cents per
share capital reduction.
Notes to the condensed income statements
1. Dividends from gaming interests increased by 62% from R31,7 million for
the previous corresponding period to R51,4 million for the period under
review. This was made up as follows:
- dividends from gaming interests included in revenue amounting to R28,1
million (2005: R13,8 million); and
- dividends from equity accounted investments amounting to R23,3 million
(2005: R17,9 million).
2. The net investment profits primarily relate to the disposal of Ocfish
Holdco.
3. As a result of the cash distributions during the period, interest income
reduced from R20,5 million in the prior period to R6,8 million for the six
months under review.
4. The increase in operating costs is attributed to costs incurred on the
SISA offer (R5,3 million) and the Ocfish transaction (R1 million).
5. The interest expense has decreased due to the group no longer paying
interest to the minorities in the PQAH structure, which has been unwound.
Notes to the condensed balance sheets
6. Cash on hand at 30 September 2006 of R373 million is before the capital
reduction of 92 cents per share (R332 million) paid on 16 October 2006.
7. Preference share capital of R48 million was raised by Afrisun Leisure to
fund the acquisition of Zonwabise.
8. All the investments held by Afrisun Leisure have been valued using the
Discounted Cash Flow (DCF) value method applying a discount rate of 12,5%,
which differs from the rates previously applied, to management`s current
estimated future cashflows. National Manco and Gauteng Manco were
previously valued using a dividend discount methodology which the board
considers to be incorrect as both companies distribute 100% of their
earnings on a quarterly basis.
9. The value of Life Esidimeni has not been changed. The valuation equates
to a 6,7% dividend yield together with surplus cash on hand. The outcome of
a pension fund exposure, which is currently the subject of various
litigations, cannot be assessed at this stage.
Accounting policies
The condensed interim financial information has been prepared in accordance
with International Financial Reporting Standards (IFRS) and complies with
IAS 34, Interim Financial Reporting. The comparative information for
September 2005 has been restated for the adoption of IFRS.
Review opinion
These results have been reviewed by the group`s auditors,
PricewaterhouseCoopers Inc., and their unqualified review opinion is
available for inspection at the company`s registered office.
Directorate
At the Real Africa annual general meeting held on 18 September 2006, Messrs
FWJ Kilbourn and AH Arnott were not re-elected as directors and Messrs DC
Coutts-Trotter and RP Becker were appointed as directors in their place. At
the general meeting held on 23 October 2006, Messrs DJJ Vlok and FJ van der
Merwe were removed as directors of the company and Messrs DA Hawton, MJ
Leeming, MV Moosa and Dr NN Gwagwa were appointed to the board as non-
executive directors. Mr DA Hawton was appointed Chairman of the board on 29
November 2006.
Declaration of interim dividend
Notice is hereby given that an interim dividend of 8 cents per share for
the six months ended 30 September 2006 has been declared, payable to
shareholders recorded in the register of the company at the close of
business on the record date appearing below. The salient dates applicable
to the interim dividend are as follows:
2007
Last day to trade cum interim dividend Friday, 5 January
First date to trade ex interim dividend Monday, 8 January
Record date Friday, 12 January
Payment date Monday, 15 January
No share certificates may be dematerialised or rematerialised between
Monday, 8 January 2007 and Friday, 12 January 2007, both days inclusive.
Dividend cheques will be posted and electronic payments made, where
applicable, to certificated shareholders on the payment date.
Dematerialised shareholders will have their accounts with their Central
Securities Depository Participant or broker credited on the payment date.
For and on behalf of the board
DA Hawton RP Becker
Chairman Director
12 December 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)
DIRECTORS
DA Hawton (Chairman), RP Becker, DC Coutts-Trotter, Dr NN Gwagwa, MJ
Leeming, MV Moosa
SECRETARIES
Sun International Corporate Services (Pty) Limited
Date: 12/12/2006 16:55:38 Produced by the JSE SENS Department.
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