REG - South African Prop. - Final Results - Part 3
30 Dec 2009
- Part 3: For the preceeding part double click [ID:nRSd8168Eb]
of P2,000 and a fee determined by reference to the number of hours spent on the work undertaken by the Sponsor
by reference to its standard hourly charging rate.
Sponsor fees payable for the year ended 30 June 2009 were P2,058 (30 June 2008: P1,968).
Strategic Adviser fees
The Strategic Adviser received a fee for its services of P40,000 per annum, payable quarterly in advance. This agreement
was terminated during the year. Strategic Adviser fees refunded during the year ended 30 June 2009 were P65,492 (30 June
2008: expense P40,000).
Directors' remuneration
The maximum amount of remuneration payable to the Directors permitted under the Articles of Association is P200,000 per
annum. The Directors are each entitled to receive reimbursement of any expenses incurred in relation to their appointment.
The non-executive Directors are entitled to receive an annual fee of P20,000 each per annum and the Chairman P25,000 per
annum. These fees were increased from 1 April 2009 to P40,000 per annum and P50,000 per annum respectively.
Total fees and expenses paid to the Directors for the year ended 30 June 2009 amounted to P210,171 (30 June 2008: P95,033)
and Directors' insurance cover amounted to P10,183 (30 June 2008: P64,111). The fees for the current year include P71,500
as one-off fees in relation to the strategic review.
7 Income tax expense
Group GroupYear ended 30 June 2009 GroupYear ended 30 June 2008
P'000 P'000
Current tax 19 (13)
19 (13)
The tax on the Group's profit/(loss) before tax is higher than the standard rate of income tax in the Isle of Man of zero%.
The differences are explained below:
Group GroupYear ended 30 June 2009 GroupYear ended 30 June 2008
P'000 P'000
Profit/(loss) before tax 7,502 (2,643)
Tax calculated at domestic tax rates applicable in the Isle of Man (0%) - -
Tax effect of expenses that are not deductible for tax purposes - -
Effect of higher tax rates in South Africa (28%) 19 (13)
Tax expense/(credit) 19 (13)
There are no losses carried forward.
8 Basic and diluted earnings per share
Basic and diluted earnings per share are calculated by dividing the profit/(loss) attributable to equity holders of the
Group by the weighted average number of Ordinary Shares in issue during the year.
Year ended 30 June 2009 Year ended 30 June 2008
Profit/(loss) attributable to equity holders of the Company (P'000) 7,482 (2,630)
Weighted average number of Ordinary Shares in issue (thousands) 62,293 62,293
Basic and diluted profit/(loss) per share (pence per share) 12.01 (4.22)
9 Subsidiaries and associates
9.1 Subsidiaries
Since inception and for efficient portfolio management purposes, the Company established the following subsidiary
company:-
Country ofincorporation Percentage ofshares held
SAPSPV Holdings RSA (Pty) Limited South Africa 100%
SAPSPV Holdings RSA (Pty) Limited is a direct subsidiary of South African Property Opportunities plc. SAPSPV Holdings RSA
(Pty) Limited was incorporated on 20 October 2006 with a share capital of ZAR 101 and share premium of ZAR 24,999,899.
During the year there has been no change in the Company's investment in the direct subsidiary.
The direct and indirect subsidiaries held by SAPSPV Holdings RSA (Pty) Limited are as follows:-
Country of incorporation Percentage of shares held *
8 Mile Investments 504 (Pty) Limited South Africa 100%
Breeze Court Investments 31 (Pty) Limited South Africa 100%
Breeze Court Investments 34 (Pty) Limited South Africa 100%
Breeze Court Investments 35 (Pty) Limited South Africa 100%
Business Venture Investments No 1152 (Pty) Limited South Africa 100%
Business Venture Investments No 1172 (Pty) Limited South Africa 100%
Business Venture Investments No 1180 (Pty) Limited South Africa 100%
Business Venture Investments No 1187 (Pty) Limited South Africa 100%
Business Venture Investments No 1189 (Pty) Limited South Africa 100%
Business Venture Investments No 1191 (Pty) Limited South Africa 100%
Business Venture Investments No 1205 (Pty) Limited South Africa 100%
Business Venture Investments No 1237 (Pty) Limited South Africa 100%
Business Venture Investments No 1238 (Pty) Limited South Africa 100%
Business Venture Investments No 1239 (Pty) Limited South Africa 100%
Business Venture Investments No 1256 (Pty) Limited South Africa 100%
Business Venture Investments No 1262 (Pty) Limited South Africa 100%
Business Venture Investments No 1268 (Pty) Limited South Africa 100%
Business Venture Investments No 1269 (Pty) Limited South Africa 79%
Business Venture Investments No 1270 (Pty) Limited South Africa 100%
Business Venture Investments No 1300 (Pty) Limited South Africa 100%
Business Venture Investments No 1306 (Pty) Limited South Africa 100%
Crane's Crest Investments 28 (Pty) Limited South Africa 100%
Crimson King Properties 378 (Pty) Limited South Africa 75%
Dream World Investments 551 (Pty) Limited South Africa 100%
Living 4 U Developments (Pty) Limited South Africa 65%
Madison Park Properties 33 (Pty) Limited South Africa 100%
Madison Park Properties 34 (Pty) Limited South Africa 100%
Madison Park Properties 36 (Pty) Limited ** South Africa 50%
Madison Park Properties 40 (Pty) Limited ** South Africa 50%
Royal Albatross Properties 313 (Pty) Limited South Africa 89%
SAPSPV Clayville Property Investments (Pty) Limited South Africa 100%
SAPSPV Imbonini Property Investments (Pty) Limited South Africa 100%
Wonderwall Investments 18 (Pty) Limited South Africa 100%
* this also represents the percentage of ordinary share capital and voting rights held - 2009
** the Group controls the company by means of direct control of the board
On 10 June 2009 the Company disposed of 21% of the ordinary share capital of Business Venture Investments No 1269 (Pty)
Limited, a property holding company incorporated in South Africa, for P16 (ZAR 210). There was a loss on disposal of
P11,549 (ZAR 166,792).
9.2 Associates
2009 2008
P'000 P'000
Start of the year 5,469 5,794
Acquisition of associates 211 219
Foreign exchange gain/(loss) 1,349 (662)
Share of (loss)/profit of associates (322) 118
End of the year 6,707 5,469
During the year a second payment, P207,732 (ZAR 3,000,000), was made in relation to the initial purchase price of Imbonini
Park (Phase 2) (Pty) Limited. This transaction increased the goodwill on the investment in associate to P426,819 (ZAR
5,999,500).
In July 2008 the Group acquired 30% of the ordinary share capital of Blue Waves Properties 2 (Pty) Limited, a property
holding company incorporated in South Africa, for P3,029 (ZAR 43,752). There was goodwill of P3,025 (ZAR 43,692) as a
result of this transaction.
The Group's share of the results of its principal associates, all of which are unlisted, and its aggregate assets
(including goodwill) and liabilities, is as follows:
Name Assets Liabilities Revenues Profit/(Loss)
P'000 P'000 P'000 P'000
2009
Imbonini Park (Pty) Limited 2,545 (2,545) 1,859 (68)
Longland Investments (Pty) Limited 6,659 (77) 75 54
Imbonini Park (Phase 2) (Pty) Limited 2,870 (2,745) 6 (305)
Blue Waves Properties 2 (Pty) Limited 1,141 (1,141) - (3)
13,215 (6,508) 1,940 (322)
2008
Imbonini Park (Pty) Limited 2,516 (2,454) 7 31
Longland Investments (Pty) Limited 5,434 (216) 85 87
Imbonini Park (Phase 2) (Pty) Limited 221 (32) - -
8,171 (2,702) 92 118
Loans due from associates
2009 2008
P'000 P'000
Loans due from associates 8,465 1,249
The loans due from associates are as follows:
Name Term Interest Rate 30 June 2009
P'000
Imbonini Park (Pty) Limited * 15% 2,065
Imbonini Park (Pty) Limited * 0% 28
Imbonini Park Phase 2 (Pty) Limited ** South African Prime +2.5% (capped at 16%) 5,411
Imbonini Park Phase 2 (Pty) Limited *** 0% 39
Blue Waves Properties 2 (Pty) Ltd **** South African Prime 922
8,465
* repayable after the senior debt funding provided by Investec Bank Limited has been repaid in full (note 19)
** repayment date is 4 years + 1 day following the receipt of the Recordal from the Development Facilitation Act, 1995
(DFA) Tribunal approving the planning application
*** repayable as and when the directors of Imbonini Park Phase 2 (Pty) Limited resolve that repayment shall be effected,
provided there are sufficient cash reserves available to do so and proportionately to each shareholder
**** repayable at the discretion of the directors of Blue Waves
The fair value of these loans approximate their carrying value at 30 June 2009.
10 Intangible assets
Group
2009 2008
Goodwill P'000 P'000
Start of the year 31 -
Additions 1,177 34
Exchange differences 168 (3)
End of the year 1,376 31
The contingent liability of P1,177,142 (ZAR 17,000,000) in relation to the purchase of shares in Living 4 U Developments
(Pty) Ltd, which was included in the 2008 annual report, was settled during the year and has increased goodwill
accordingly.
11 Inventories
Group
2009 2008
P'000 P'000
At start of year 24,531 4,231
Cost of land acquired and costs capitalised 15,706 22,524
Foreign exchange gain/(loss) 8,252 (2,224)
At end of year 48,489 24,531
During the year, the Group acquired land and capitalised costs of P15,705,562 (ZAR 226,815,012) (2008: P22,524,249 (ZAR
329,859,975)), in order to develop it for future re-sale, and accordingly it was classified as inventory. Borrowing costs
of P285,478 (ZAR 4,122,792) (2008: Pnil) have been included in the capitalised costs.
Security
At 30 June 2009, there are two first rank mortgages on the above inventory securing the bank loans (see note 19 for
details).
12 Trade and other receivables
Group
2009 2008
P'000 P'000
Loan to third party * - 137
Interest on loan to associate (see note 9.2) - 241
Prepayments 76 34
VAT receivable 793 2,111
Other receivables 820 281
Trade and other receivables 1,689 2,804
* the third party became an associate during the year (see note 9.2)
Included in the VAT receivable balance is P429,811 (ZAR 5,466,291) (30 June 2008: Pnil) which on receipt must be paid
directly over to Investec Bank as part of the terms of the first rank mortgage (see note 19 for details).
Company
2009 2008
P'000 P'000
Loan due from SAPSPV Holdings RSA (Pty) Limited 42,142 28,595
Prepayments 34 34
Other receivables 9 11
Trade and other receivables 43 45
The loan from the Company to SAPSPV Holdings RSA (Pty) Limited bears interest at the Prime Rate (up to 30 June 2007 at the
Repurchase Rate) as published by the Reserve Bank of South Africa from the date of the advance to the date of repayment,
which interest shall be compounded monthly in arrears on the last working day of each month.
This loan is repayable as and when the directors of SAPSPV Holdings RSA (Pty) Limited resolve that repayment shall be
effected, provided there are sufficient cash reserves available to do so and that prior approval has been obtained from the
Exchange Control Division of the South African Reserve Bank but in no case later than 30 June 2013.
The fair value of the loan approximates its fair value at 30 June 2009.
13 Cash at bank and attorneys
Group
2009 2008
P'000 P'000
Bank balances 1,321 918
Bank deposit balances 13,651 20,046
Deposits with attorneys - 6,305
Cash at bank and attorneys 14,972 27,269
Included within the P13,650,500 bank deposit balances figure is an amount of P1,800,108 (ZAR 22,893,585) (30 June 2008:
P6,864,873 (ZAR 109,100,000)) represented by bank guarantees retained by the bank under fixed deposit (detailed below).
This is the only figure excluded from the above balances for analysing the movements of cash and cash equivalents in the
cash flow statement.
Bank guarantees
The indirect subsidiary Crimson King Properties 378 (Pty) Ltd ("Crimson") had a contingent liability (see note 22) to
contribute up to P176,916 (ZAR 2,250,000) in connection with bulk services that are being installed by a consortium of the
owners of three adjacent properties including that owned by Crimson.
The indirect subsidiary Royal Albatross Properties 313 (Pty) Limited has a contingent liability of P1,230,045 (ZAR
15,643,585) in connection with its senior debt obligations.
The subsidiary SAPSPV Holdings RSA (Pty) Ltd has a contingent liability of P393,147 (ZAR 5,000,000) in connection with
senior debt obligations of its associate Imbonini Park (Pty) Ltd.
Company
2009 2008
P'000 P'000
Bank balances 144 67
Bank deposit balances 11,800 12,907
Cash and cash equivalents 11,944 12,974
14 Share capital
Ordinary Shares of 1p each As at 30 June 2008 & 2009 Number As at 30 June 2008 & 2009 P'000
Authorised 150,000,000 1,500
Issued 62,292,810 623
The holders of Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one vote
per share at meetings of the Company.
15 Share premium
Company and the Group 2009P'000 2008P'000
As at beginning and end of year 61,943 61,943
16 Net asset value per share
Group
2009 2008
Net assets attributable to equity holders of the Company (P'000) 70,181 58,434
Shares in issue (in thousands) 62,293 62,293
NAV per share P1.13 P0.94
The NAV per share is calculated by dividing the net assets attributable to equity holders of the Group by the number of
ordinary shares in issue.
17 Loans from third parties
Group
2009 2008
P'000 P'000
Loans from third parties 4,520 2,521
The loans from third parties are as follows:
Name Interest Rate 30 June 2009
P'000
Abbeydale Investment Holdings (Pty) Ltd * 0% 1,333
Sable Holdings Limited * 0% 889
Abbeydale Investment Holdings (Pty) Ltd ** 0% 690
Homa Adama Trust *** Prime Rate plus 3% 1,369
Justin Nash **** 0% 236
Other 0% 3
4,520
* in relation to their combined ownership of 25% of Crimson King Properties 378 (Pty) Limited and the Gosforth Business
Estate development.
** in relation to its 50% interest in Madison Park Properties 36 (Pty) Ltd and the Waltloo Industrial Park development
*** in relation to its 50% interest in Madison Park Properties 40 (Pty) Ltd and the Brakpan development
**** in relation to his prospective interest in Madison Park Properties 34 (Pty) Ltd and the Kyalami Residential Estate
development
All of the above loans are unsecured and carry no fixed terms of repayment.
The fair value of these loans approximate their carrying value at 30 June 2009.
18 Trade and other payables
Group
2009 2008
P'000 P'000
Other payables 676 362
676 362
Company
2009 2008
P'000 P'000
Other payables 342 266
342 266
19 Borrowings
Current liabilities
Group Group
30 June 2009 30 June 2008
P'000 P'000
Secured bank loans 6,242 -
Terms and debt repayment schedule:
Bank Effective interest rate Final Maturity date 30 June 2009
30 June 2009 P'000
Investec Bank South African Prime Rate minus 0.85% March 2010 5,020
Imperial Bank South African Prime Rate minus 1.25% * February 2009 1,222
6,242
* from February 2009 to September 2009 new terms were being negotiated and the loan was considered to be repayable on
demand. In September 2009 the loan facility was extended to September 2010 at a rate of FNB's Prime Interest Rate.
The fair value of the borrowings approximate their carrying value at 30 June 2009.
20 Contingent liabilities and commitments
As at 30 June 2009 the Group has the following contingent liabilities and commitments:
- contingent liabilities which have corresponding bank guarantees are detailed separately in note 13.
- the indirect subsidiary Wonderwall Investments 18 (Pty) Ltd has a contingent liability to advance up to P348,401 (ZAR
4,430,932) being the balance under a Mezzanine Loan Agreement with Living 4 U Developments (Pty) Ltd to finance the African
Renaissance development.
- the indirect subsidiary Business Venture Investments No 1269 (Pty) Limited ("BVI 1269") has a contingent liability to
issue 100 Preference Shares to its minority shareholders. The Preference Shares entitle their owners to the first ZAR 22m
of any and all dividends declared by BVI 1269. BVI 1269 shall not declare any dividends to Ordinary Shareholders until the
ZAR 22m has been declared and paid in respect of the Preference Shareholders.
- The Investment Manager agreement between the Group and its Investment Manager provides for a performance fee if the Net
Asset Value of the Group, as defined in the agreement, exceeds a specified hurdle. Subsequent to the balance sheet date the
Group has received a claim from its Investment Manager for payment of P5.083m based on their own calculation that the
hurdle has been achieved. The Directors, having engaged an independent accountant to look at the Investment Manager's
calculation, are of the opinion that the specified hurdle has not in fact been achieved and have therefore not made any
accrual for payment of the performance fee as at 30 June 2009.
21 Related party transactions
Parties are considered to be related if one party has the ability to control the other party or to exercise significant
influence over the other party in making financial or operational decisions.
The Investment Manager, Proteus Property Partners Limited, is a related party by virtue of its ability to make operational
decisions for the Company. Fees for the year ended 30 June 2009 are disclosed in note 5.
Brian Padgett is a director of Group's subsidiaries in South Africa, the Investment Manager and of Silex Management Limited
(Silex), a company that has provided administration services to the majority of the Group's South African subsidiaries. He
is also a shareholder in Principle Capital Holdings S.A. the ultimate parent company of the majority shareholder in the
Investment Manager. Fees invoiced by Silex for the year ended 30 June 2009 are P394,000 (30 June 2008: P387,000).
During the year Abbeydale Investment Holdings (Pty) Ltd invoiced Crimson King Properties 378 (Pty) Ltd P214,899 (ZAR
2,733,068) in relation to building work.
22 Post balance sheet events
The indirect subsidiary Crimson King Properties 378 (Pty) Ltd ("Crimson") had a contingent liability to contribute up to
P176,916 (ZAR 2,250,000) at the balance sheet date (see note 13). On completion of works in August 2009, the guarantee was
released.
The Starleith Development was announced on 11 August 2009. Contracts were exchanged for P1.5m (ZAR 18.6m) representing a
50% stake to acquire the 0.4521 hectare Starleith development site in the heart of Sandton, Johannesburg's Central
Business District. The aggregate land acquisition cost for the 0.4521 hectare site is ZAR 37.2m, of which SAPRO's share is
ZAR 18.6m (P1.5m). The site is adjacent to the Company's existing Sandton Development.
The Record of Decision has been issued on Imbonini phase 2 meaning full planning rights are now in place pending township
proclamation.
On 30 September 2009 the Company terminated its arrangements with Silex, which provided administration services to the
majority of the subsidiary companies. GMG Trust Company (SA) (Pty) Limited were appointed to provide the administration
services from 1 October 2009.
On 20 October 2009 the Investment Manager was given notice of termination of its contract which will expire on 19 October
2010. The executive directors will work closely with the Board and replacement arrangements will be put in place to manage
the Company's projects going forward.
Post year end sale of 6 out of a total of 41 completed units within the first phase of the Kindlewood development, an
inventory asset on the balance sheet, for a total of ZAR18.9m (P1.5m) plus VAT.
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