TIDMSAPO
RNS Number : 9462Z
South African Property Opps PLC
17 December 2014
17 December 2014
SOUTH AFRICAN PROPERTY OPPORTUNITIES PLC
('SAPRO' or the 'Group')
Final results for the year ended 30 June 2014
South African Property Opportunities plc (AIM: SAPO), an
investment company established to invest in real estate
opportunities in South Africa, announces its final results for the
year ended 30 June 2014.
A copy of the results announcement will be available on the
Company's website at www.saprofund.com
For further information please contact:
Paul Fincham/Robert Naylor +44 (0) 20 7886 2500
Panmure Gordon
Ian Dungate/David Parnell + 44 (0) 1624 692600
Galileo Fund Services Limited
Chairman's Statement
The key positive event for South African Property Opportunities
Plc ("SAPRO" or the "Company") during the year was the cash
receipts from the sale of the largest assets at Longland and
Sandton which together with other receipts allowed distributions to
be made totalling 19 pence per share. A further distribution of 5p
was made in October 2014. The Company has also reduced its bank
debt to zero, in line with strategy.
Despite this progress, the results have again been adversely
affected by the fall in the Rand and by persistently low economic
growth in South Africa.
Performance
Net Asset Value ("NAV") has fallen by 32 pence per share from 69
pence per share to 37 pence per share. The fall reflects
distributions of 19 pence per share and a net loss of 13 pence per
share. The loss of 13 pence per share arises from foreign exchanges
losses (10 pence per share), losses on our sales and holdings of
property (1 penny per share) and costs of 2 pence per share.
EPRA net asset value has fallen from 69 pence per share to 36
pence per share and the primary difference to NAV is that this
number takes into account performance fees that may be paid on
future sales and distributions.
The South African Rand has continued to move adversely against
Sterling, from an exchange rate of ZAR:GBP 15.06 at 30 June 2013 to
ZAR:GBP 18.19 at the year end, a 17.2% fall. The Company does not
hedge currency exposure.
Costs have fallen from GBP1.48 million for the year ended June
2013 to GBP1.02 million in the current year (excluding incentive
payments made on the distributions). On 2(nd) July 2014 the Company
announced a change in management arrangements which had the effect
of an immediate reduction in fixed fees of GBP135,000 per annum.
The Board continues to look for ways to reduce costs, as the
portfolio size falls.
At the balance sheet date cash balances totalled GBP4.6 million.
Since the year end certain sales have taken place with GBP2.3
million being received. Cash balances are currently circa GBP3.2
million.
Debt levels
As at the year end the group (SAPRO and its subsidiaries) has no
bank debt with its final facility of GBP1.4 million relating to
Kindlewood repaid in the year.
Valuations
The value of the remaining assets, and the pricing of recent
further sales from the portfolio, have been impacted by a number of
factors including low demand for development land, continued
difficulty in obtaining planning consents and problems accessing
essential services like power and water. For assets held as at
30(th) June 2014, the fall in value in Rand terms over the year on
a like for like basis was 6%. The Manager's Report provides further
information on the reasons for these declines.
Asset Sales
Further progress on sales of assets was made during the year, as
follows:
-- The sale of Longland announced in November 2012 completed
during the year and the proceeds were received.
-- The sales conditions for Sandton referred to in the
announcement of 14 September 2012 were satisfied and the sales
proceeds for both the Wedgewood and Starleith portions were
received during the year.
-- The final tranche of sales proceeds for the part sale of
Gosforth Park were received during the year, with the sale of the
last remaining development site concluding post year end.
-- The partner's stake for Kyalami was acquired and the entire
asset was sold with sales proceeds being received on a phased
basis.
-- Post year-end the remaining Kindlewood asset has been sold and the proceeds received.
Outlook
The continued falls in value reflect limited demand for
development sites. The Company's strategy is to optimise site value
through active management - particularly through improving planning
and service provision - then to sell. Processes with utilities
providers and Government agencies in South Africa remain
cumbersome. Given that the agreed strategy for the Company is to
dispose of the portfolio, the Board takes a pragmatic approach to
sale opportunities negotiated by the Manager.
I would like to thank my Board colleagues and our investment
manager for their support during the year.
David Hunter
Chairman
16 December 2014
Report of the Investment Manager
Executive Summary
This report is prepared by Bridgehead in its recently appointed
capacity (July 2014) as Investment Manager to SAPRO. During the
full period under review SAPRO was managed by Group Five whose
responsibilities at the time were overseen by SAPRO executive
director Craig McMurray. Mr McMurray is the principal and CEO of
Bridgehead.
The South African macroeconomic environment as a whole together
with the local real estate market endured another lacklustre
performance over the second half of 2013 and into 2014. The
pedestrian rate of economic growth was hampered by political
uncertainty relating to the national elections, a strike hit mining
sector, increasing civil unrest, low business confidence, rising
interest rate cycle, exchange rate volatility and global
uncertainty, especially with the country's major trading
partners.
In June Standard & Poor's downgraded South Africa's
sovereign credit rating to BBB- on account of sluggish economic
growth and reduced tax collection, making it harder for the country
to cut debt and the budget deficit. S&P said it did not believe
the government would "manage to undertake major labour or other
economic reforms that will significantly boost GDP (gross domestic
product) growth".
Against this anaemic background SAPRO continued to drive the
sale of its portfolio of development land and completed properties.
Over the period the property holdings reduced by approximately 17%
on an absolute value basis while planning permissions and
development approvals continued to be progressed on the remainder
of the portfolio. Protracted delays in the ability to secure
planning approvals and zoning rights together with severe shortages
in the availability of bulk services (water and electricity)
impacted negatively on the South African development industry. As a
result a definite downward pressure on land values was recorded for
SAPRO assets exposed to such risks.
On a positive note SAPRO improved its cash liquidity through
sales receipts (property assets and interests in associated
companies) and repaid all its bank debt finance obligations,
allowing it to commence with its first distributions of capital to
investors. Including post balance sheet sales (ZAR 42 million - see
page 8) the portfolio has reduced from a total of 12 properties to
8 properties remaining for sale as at time of reporting.
South African Property Market
Despite the subdued economic growth, South African real estate
sector (income producing portfolios) upheld modest growth for the
first six months in 2014 delivering a total return of 7.4% off the
back of a total return in 2013 of 15.2% (IPD South Africa). The
improved performance was attributed to an improved capital growth
of 3.1% which was underpinned by an increased base rental growth
and a firming in the rental yield. Income returns remained
consistent at 4.2%. Operating costs remain the biggest challenge
for landlords as they faced double digit increases in municipal
rates and taxes. The containment of operating costs is a key
priority for landlords considering they averaged 44.6% as a
percentage of gross rentals as at June 2014 (source: Broll).
The total amount of all buildings completed in South Africa for
the three months to June 2014 is the lowest since the first quarter
of 2005 demonstrating that construction is under extreme pressure.
The decline in construction activity between the first and the
second quarters of 2014 was 16.2% or 50.7% on a seasonally and
annualised basis respectively. This in itself was the biggest
decline since April 2010 and again shows how fragile South African
consumers and business confidence are at present and the
uncertainty in the South African economy at large.
In 2013 the industrial property sector outperformed the retail
and commercial sectors with a total return of 17.1%. The latter
sectors posted returns of 16.8% and 13.6% respectively. While
retail property continued to remain resilient despite subdued
economic growth the continued pressure on household indebtedness is
expected to weigh on retail performance going forward.
The office market stands out as the most vulnerable sector
currently considering the high vacancy rates while the high rate of
speculative office development underway in certain decentralised
urban nodes (as high as 40%) may pose further downside risk to
returns in 2014/15.
As a whole the economic malaise and lack of business confidence
in local government delivery is weighing heavily on market
sentiment, negatively impacting on residual land values and
development activity.
Portfolio Analysis
The following portfolio valuations have been provided by the
third party valuer, Broll, and represent the total portfolio prior
to the adjustments required for IFRS accounting.
Embedded images removed - please refer to the Company's website
www.saprofund.com for the Portfolio Analysis showing the portfolio
mix of the different assets by valuation as at 30 June 2013, 30
June 2014 and 20 November 2014.
Portfolio Sector Analysis
Embedded images removed - please refer to the Company's website
www.saprofund.com for the Portfolio Sector Analysis as at 30 June
2013, 30 June 2014 and 20 November 2014.
Debt Levels and Refinancing Arrangements
The Group's bank debt levels of GBP1.4 million were entirely
repaid during the year.
Valuations
The total value of the portfolio has declined 17% on an absolute
value basis which includes the sale of a number of assets by 12% as
well as a write down in value on certain assets by 5% during the
period.
The remaining assets in the portfolio dropped by 6% during the
year. Vacant land holdings dropping by 9% while SAPRO recorded a
write up of 11% in the value of certain completed properties.
Write downs are all a function of weaker land prices influenced
by the continued deterioration in the national economy, increasing
inflation and interest cycle as well as the delays in electricity
infrastructure delivery by Eskom. African Renaissance and Lenasia
were the hardest hit.
Portfolio Valuation 30-Jun-13 ZAR 445,500,000
----------------------------------- -------------- -----------------
Jul 13 - Jun
Sales completed during period 14 ZAR 53,375,000
----------------------------------- -------------- -----------------
Valuation of remaining properties
at Jun 13 Jun-13 ZAR 392,125,000
----------------------------------- -------------- -----------------
Portfolio Valuation 30-Jun-14 ZAR 368,528,000
----------------------------------- -------------- -----------------
Difference 30-Jun-14 ZAR -23,597,000
----------------------------------- -------------- -----------------
-6%
-------------------------------------------------- -----------------
The following assets were written down;
Asset
--------------------
African Renaissance
(residential)
--------------------
Gosforth Park
--------------------
Emberton
--------------------
Lenasia
--------------------
Imbonini II
--------------------
Kindlewood Phase II
--------------------
The table below represents a year on year comparison of the
portfolio valuation*.
30 June 2013 30 June 2014 Variance % Variance
----------------- ----------------- ----------------- -----------
ZAR 445,500,000 ZAR 368,528,000 -ZAR 76,972,000 -17,2%
----------------- ----------------- ----------------- -----------
GBP 29,591,891 GBP 20,262,374
----------------- ------------------------------------ -----------
Sales Activity
Properties sold and transferred during the financial year:
Property Sales Amount ** Sales Receipts **
------------- --------------------- ------------------
Acacia Park ZAR 3,050,300 ZAR 2,336,440
------------- --------------------- ------------------
Hughes ZAR 5,300,000 ZAR 5,300,000
------------- --------------------- ------------------
Imbonini 1 ZAR 5,075,000 ZAR 4,896,163
------------- --------------------- ------------------
Kindlewood ZAR 40,550,000 ZAR 33,649,591
------------- --------------------- ------------------
Kyalami ZAR 26,000,000 ZAR 26,000,000
------------- --------------------- ------------------
Longland* ZAR 131,019,163 ZAR 106,628,432
------------- --------------------- ------------------
Starleith* ZAR 19,000,000 ZAR 18,340,741
------------- --------------------- ------------------
Wedgewood* ZAR 106,000,000 ZAR 106,000,000
------------- --------------------- ------------------
TOTAL ZAR 335,994,463 ZAR 303,151,367
------------- --------------------- ------------------
TOTAL GBP GBP 19,893,371 GBP 17,948,816
------------- --------------------- ------------------
*Transactions concluded during the 2013 financial year with
receipts received during 2014.
** The sales amount relates to the total transaction value, the
sales receipts reflects SAPRO's share
Properties sold post balance sheet date:
Property Sales Amount Receipts Future Receipts
--------------- ---------------- --------------- ----------------
Acacia Park ZAR 8,546,000 ZAR 8,546,000 ZAR 0
--------------- ---------------- --------------- ----------------
Gosforth Park ZAR 11,829,120 ZAR 11,829,120 ZAR 0
--------------- ---------------- --------------- ----------------
Imbonini 1 ZAR 1,808,875 ZAR 1,808,875 ZAR 0
--------------- ---------------- --------------- ----------------
Kindlewood ZAR 20,000,000 ZAR 20,000,000 ZAR 0
--------------- ---------------- --------------- ----------------
TOTAL ZAR 42,183,995 ZAR 42,183,995 ZAR 0
--------------- ---------------- --------------- ----------------
TOTAL GBP GBP 2,319,357 GBP 2,319,357 GBP 0
--------------- ---------------- --------------- ----------------
Asset Classification Table
Property Description Primary Use Class Sale Status Sale Status Post Balance Planning
2013 2014 Sheet Events Application
--------------------- ----------------------- ------------ ------------ ------------------ -------------
African Renaissance Commercial/Residential For Sale For Sale For Sale Achieved
--------------------- ----------------------- ------------ ------------ ------------------ -------------
Brakpan Commercial For Sale For Sale For Sale In progress
--------------------- ----------------------- ------------ ------------ ------------------ -------------
Clayville Industrial For Sale For Sale For Sale In progress
--------------------- ----------------------- ------------ ------------ ------------------ -------------
Imbonini Phase Industrial 80% Sold 90% Sold 5 units remaining Achieved
I
--------------------- ----------------------- ------------ ------------ ------------------ -------------
Imbonini Phase Industrial For Sale For Sale For Sale Achieved
II
--------------------- ----------------------- ------------ ------------ ------------------ -------------
Lenasia Commercial For Sale For Sale For Sale In progress
--------------------- ----------------------- ------------ ------------ ------------------ -------------
Emberton Residential /Mixed For Sale For Sale For Sale For Sale
--------------------- ----------------------- ------------ ------------ ------------------ -------------
Driefontein Commercial/Residential For Sale For Sale Conditional Achieved
Sale
--------------------- ----------------------- ------------ ------------ ------------------ -------------
Acacia Park Industrial 86% sold 95% Sold Sold Sold
--------------------- ----------------------- ------------ ------------ ------------------ -------------
Gosforth Park Industrial 90% Sold 90% Sold Sold Sold
--------------------- ----------------------- ------------ ------------ ------------------ -------------
Hughes Industrial Sold Sold Sold Sold
--------------------- ----------------------- ------------ ------------ ------------------ -------------
Kindlewood Residential 44% Sold 83% Sold Sold Sold
--------------------- ----------------------- ------------ ------------ ------------------ -------------
Kyalami Residential For Sale Sold Sold Sold
--------------------- ----------------------- ------------ ------------ ------------------ -------------
Longland Mixed Use Sold Sold Sold Sold
--------------------- ----------------------- ------------ ------------ ------------------ -------------
Starleith Mixed Use Sold Sold Sold Sold
--------------------- ----------------------- ------------ ------------ ------------------ -------------
Wedgewood Mixed Use Sold Sold Sold Sold
--------------------- ----------------------- ------------ ------------ ------------------ -------------
Portfolio Management
African Renaissance
Description: Comprises a 133 hectare vacant development site
which is predominantly residential with approximately 10ha zoned
for 61 000m2 of retail. This land is well located in the East of
Pretoria and has excellent access on and off a national road (N4).
SAPRO is now a 100% owner.
Action taken or underway: Servicing calculations have been
planned for varying options on the site to maintain design
flexibility on the Site Development Plan (SDP) within phasing and
approvals available for prospective buyers.
The retail development scheme remains difficult and is heavily
reliant on the commencement of all the proposed residential
development schemes in the area.
Sales progress: Negotiations and investigations by prospective
developers continue.
Strategy: Phased development options continue to be explored to
alleviate the risk weighted cost of a single project to prospective
developers.
Brakpan
Description: Comprises two vacant stands totalling 6.64
hectares. The rezoning application submitted is based on 25,000
square metres of developable commercial bulk. The site is situated
to the east of Johannesburg. SAPRO holds 50% as at 30 June
2014.
Action taken or underway: A revised traffic impact assessment
has been re-submitted. The remaining application documents are
under preparation for submission in the first quarter of 2015.
Sales progress: Limited meaningful interest to date.
Strategy: Focus remains on obtaining the planning approvals and
removing risk to prospective Buyers.
Clayville
Description: Comprises 49 hectares of vacant land located in
Olifantsfontein north of Johannesburg. SAPRO held 100% as at 30
June 2014.
Action taken or underway: Electricity supply issues continue to
impact the marketability of this property. Three environmental
impact studies have been submitted under the new legislation on all
3 extensions to the land. To date two positive approvals out of the
three submissions have been received. We expect the last
outstanding EIA approval by Q1 2015.
Sales progress:Limited interest to date without improved clarity
on supply of electricity.
Strategy: Gain approvals on three independent extensions to
improve marketability by reducing the electrical capacity
requirement per site.
Emberton
Description: This property is located in Hillcrest, north of
Durban currently operated as a golf driving range. The site is
15,35 hectares and is currently unzoned. A re-zoning application
for a residential estate with limited commercial rights is under
submission. SAPRO holds 100% as at 30 June 2014.
Action taken or underway: Following the planning submission a
decision of the appeal tribunal board is awaited following one
objection. The decision is expected by December 2014.
Sales progress: The property is well located and appealing to
developers with sales negotiations under way with various
parties.
Strategy: Pressure decision by Appeals Tribunal and close out
sale with interested Buyer.
Gosforth Park
Description: Comprises the residual 3.7 hectare portion of an
original 42 hectare proclaimed industrial and commercial site south
east of Johannesburg. SAPRO held 100% as at 30 June 2014.
Action taken or underway: n/a.
Sales progress: Sold post balance sheet date.
Strategy: n/a
Acacia Park
Description: Comprises twenty-two sectional title
mini-industrial units on a serviced stand in Imbonini Phase I.
SAPRO held 100% as at 30 June 2014.
Action taken or underway: n/a
Sales progress: All properties sold post balance sheet date.
Strategy: Awaiting final instalment sale (Feb 15) on last
property.
Imbonini Phase I
Description: Comprises a 36 hectare zoned industrial estate in
Ballito north of Durban. SAPRO holds 100% as at 30 June 2014.
Action taken or underway: No outstanding issues.
Sales progress: The market is extremely slow and the small end
users are struggling to raise the required land
and development financing. Many of the existing purchasers have still not built on their stands.
Strategy: Sales incentives to buyers continue to be explored to
attract buyers at market related values.
Imbonini Phase II
Description: Comprises a 77 hectare site in close proximity to
Imbonini Phase I and currently zoned industrial following our
compliance with the DFA requirements. SAPRO holds 100% as at 30
June 2014.
Action taken or underway: All planning requirements have been
met. The DFA approval was also achieved as per expectation.
Sales progress: The size and valuation of the land parcel limits
its marketability. We continue to market to national developers and
institutional funds, but recent activity further South (Cornubia
hub) has seen significant developable bulk come to market in direct
competition with this site.
Strategy: The approach of dividing the land parcel into smaller
components is now under review and being assessed. Servicing can
then be done on a piece-meal basis which may help affordability. In
parallel, the focus on finding a single purchaser will
continue.
Kindlewood
Description: Comprises two adjoining projects (Kindlewood phases
1 and 2) with a combined area of 5.3 hectares. Phase one comprises
forty-one completed upper income single family homes in a gated
suburban community north of Durban. Thirty four of the forty-one
houses have been sold. Phase 2 is a difficult site due to the
gradient of the land. SAPRO held 89% as at 30 June 2013.
Action taken or underway: Property sold.
Sales progress:Property sold.
Strategy: Sold houses at market value and deeply discounted
Phase 2 site on account of high holding costs and limited buyer
interest to date.
Lenasia
Description: Comprises a 13 hectare commercial development site
in Lenasia, south of Johannesburg. SAPRO holds 100% as at 30 June
2014.
Action taken or underway: The traffic impact issues have been
resolved and we await the positive comments from Johannesburg Roads
Agency (JRA). Thereafter the storm water layouts and traffic
designs will be updated to include conditions stipulated per
council comments. The rezoning application can then be updated for
submission. Approvals are expected around Q4 2015.
Sales progress:Previously interested parties re-engaging on
account of final approvals and improved certainty around supply of
electricity which may take some time to secure.
Strategy: Exploring the sale of a first phase utilising the
available electrical supply however, town planning issues need to
be overcome relating to the prior proclamation of the site. Our
focus thus remains on securing electricity and site access to
retain interested parties and uphold purchase price at market
values.
Lilianton/Driefontain
Description: Comprises 11.0 hectares of vacant development land
(mainly residential with future plans to rezone a portion for
commercial rights) east of Johannesburg. SAPRO holds 100% as at 30
June 2014.
Action taken or underway: We have completed all approvals for
the site, yet have held back on proclamation of the site to avoid
rates and taxes costs.
Sales progress:Prospective buyers are committing to smaller
density projects, as such a phased sale structure is under
consideration.
Strategy: Pursue sub-division into smaller land parcels allowing
marketing to a wider developer audience.
Conclusion
SAPRO has significantly improved its portfolio ownership and
control structures through the discontinuation of most of its
development partnerships by way of buy outs or sell outs. With the
settlement of all debt finance liabilities as well as restructuring
the Group fixed cost contracts the company has improved liquidity
of assets and is better positioned to realise the remainder of its
portfolio.
Outstanding planning approvals on 3 properties (Brakpan,
Clayville and Lenasia) that will continue to impact significantly
on sales success constituted around 22% of portfolio value as at 30
June 2014. Albeit that the numerous sales are currently under
negotiation the major challenge for continued momentum on progress
and achieving value in 2015 will be the extent to which there is an
improvement in both market conditions and local government service
delivery.
Bridgehead Real Estate Fund (Pty) Ltd
Investment Manager
16 December 2014
Report of the Directors
The Directors hereby submit their annual report together with
the audited consolidated financial statements of South African
Property Opportunities plc (the "Company") and its subsidiaries
(the "Group") for the year ended 30 June 2014.
The Company
The Company is incorporated in the Isle of Man and holds a
portfolio of property interests in South Africa.
Currency and debt
The Group does not hedge its exposure in its Rand assets and
liabilities. Debt facilities are typically secured on individual
properties and are Rand denominated.
Divestment strategy
Following a strategic review the Company intends to dispose of
the Group's portfolio where acceptable returns can be generated and
return excess capital to shareholders.
Results and dividends
The results and position of the Group at the year end are set
out on pages 18 to 42 of the financial statements.
Two distributions were paid during the year, 10 pence per
Ordinary Share on 9 August 2013 and 9 pence per Ordinary Share on
23 April 2014 (2013 GBPnil). A further distribution of 5 pence per
Ordinary Share was paid on 31 October 2014.
Directors
The Directors who served during the year and up to the date of
this Report were as follows:
David Hunter - Chairman
John Chapman
Craig McMurray
David Saville
Stephen Coe
Directors and other interests
Save as disclosed above and as detailed in note 8, none of the
Directors had any interest during the year in any material contract
for the provision of services which was significant to the business
of the Company.
Independent auditor
BDO LLP, being eligible, has indicated its willingness to
continue in office.
Corporate governance
The Directors recognise the importance of sound corporate
governance. The Directors are responsible for overseeing the
effectiveness of the internal controls of the Company designed to
ensure that proper accounting records are maintained, that the
financial information on which business decisions are made and
which is issued for publication is reliable and that the assets of
the Group are safeguarded.
The Board has established the following committees with specific
areas of responsibility.
Audit Committee
The Audit Committee comprises David Saville (Chairman), David
Hunter and Stephen Coe. The Audit Committee meets at least twice a
year and is responsible for ensuring that the financial performance
of the Group is properly reported on and monitored, including
reviews of the annual and interim financial statements, results
announcements, internal control systems and procedures and
accounting policies.
Nomination Committee
The Nomination Committee comprises David Saville (Chairman) and
David Hunter. The Nomination Committee is responsible for ensuring
that the Board consists of members with the range of skills and
qualities to meet its principal responsibilities in a way which
ensures that the interests of stakeholders are protected and
promoted, and the requirements of the AIM rules are complied
with.
Remuneration Committee
The Remuneration Committee comprises David Saville (Chairman),
David Hunter and Stephen Coe. The Remuneration Committee meets as
required and is responsible for determining and agreeing the
remuneration for all members of the Board.
Management Engagement Committee
The Management Engagement Committee comprises John Chapman
(Chairman) and David Hunter. The Management Engagement Committee
meets as required and is responsible for reviewing the performance
of the Investment Manager and for ensuring that the Company's
management contract is competitive and reasonable for the Company's
shareholders. It is also responsible for reviewing the performance
of other third party service providers.
On behalf of the Board
Stephen Coe
Director
16 December 2014
Directors' Biographies
The Company has a board of five Directors, all of whom are
independent of the Company's Investment Manager and other service
providers except for Craig McMurray who is an executive director of
the Investment Manager. Details of the Directors are as
follows:
David Hunter - Chairman
David Hunter is a UK-based property fund consultant. For twenty
years up to 2005 he was a leading property fund manager ultimately
responsible for EUR10bn of property assets across Europe for
Arlington Property Investors. David is a fellow of the Royal
Institution of Chartered Surveyors, a former President of the
British Property Federation, and a member of the Bank of England
Property Forum.
John Chapman
John Chapman is a member of the New York State Bar and the CFA
Institute. He is currently a director of a number of other quoted
investment funds.
Craig McMurray
Craig McMurray is the managing director of Bridgehead Capital
Management (Pty) Limited, a real estate company managing commercial
property in South Africa including Bridgehead Real Estate Fund
Limited. Previously Craig was head of Credit Projects at Standard
Bank of South Africa Limited.
David Saville
David Saville is an Isle of Man based property fund manager
currently managing a number of property sector investment vehicles
with investments predominantly in the UK and Australia. From 1992
to 2001 David was the Managing Director of Saville Gordon Estates
Plc, which he was instrumental in repositioning as a FTSE 250
property company specialising in industrial property. David is a
member of the Royal Institution of Chartered Surveyors.
Stephen Coe
Stephen qualified as a Chartered Accountant with Price
Waterhouse in 1990 and remained in audit practice, specialising in
financial services, until 1997. From 1997 to 2003 he was a director
of the Bachmann Group of fiduciary companies and Managing Director
of Bachmann Fund Administration Limited, a specialist third party
fund administration company. From 2003 to 2006 Stephen was a
director with Investec in Guernsey and Managing Director of
Investec Trust (Guernsey) Limited and Investec Administration
Services Limited. He became self employed in August 2006 and is a
director of a number of listed and unlisted investment funds and
offshore companies including Raven Russia Limited, European Real
Estate Investment Trust Limited, Kolar Gold Limited, Trinity
Capital PLC and Weiss Korea Opportunity Fund Ltd. (and serves as
Chairman of the Audit Committee for these companies). He has been
involved with offshore investment funds and managers since 1990
with significant exposure to property, debt, emerging markets and
private equity investments.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
The Directors have elected to prepare the financial statements
in accordance with International Financial Reporting Standards
("IFRSs") (as adopted by the European Union). In preparing those
financial statements it is the Directors' responsibility to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business; and
-- prepare financial statements which give a true and fair view
of the state of affairs of the Group and of the profit or loss of
the Group for that period.
The Directors confirm that they have complied with the above
requirements in preparing the financial statements.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the
financial position of the Group. They are also responsible for
safeguarding the assets of the Company and the Group and hence for
taking reasonable steps for the prevention and detection of fraud
and other irregularities.
On behalf of the Board
Stephen Coe
Director
16 December 2014
Independent auditor's report to the members of South African
Property Opportunities plc
We have audited the financial statements of South African
Property Opportunities plc for the year ended 30 June 2014 which
comprise the consolidated income statement, the consolidated
statement of comprehensive income, the consolidated balance sheet,
the consolidated statement of changes in equity, the consolidated
cash flow statement and the related notes. The financial reporting
framework that has been applied in their preparation is applicable
law and International Financial Reporting Standards ('IFRSs') as
adopted by the European Union.
This report is made solely to the Company's members as a body,
in accordance with the terms of our engagement letter. Our audit
work has been undertaken so that we might state to the Company's
members those matters we are required to state to them in an
auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company, and the Company's members as a body
for our audit work, for this report, or for the opinion we have
formed.
Respective responsibilities of directors and auditor
As explained more fully in the statement of directors'
responsibilities, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable
Isle of Man company law and International Standards on Auditing (UK
and Ireland). Those standards require us to comply with the
Financial Reporting Council's (FRC's) Ethical Standards for
Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the company's circumstances and have been
consistently applied and adequately disclosed; the reasonableness
of significant accounting estimates made by the directors; and the
overall presentation of the financial statements and to identify
any information that is apparently materially incorrect based on,
or materially inconsistent with, the knowledge acquired by us in
the course of performing the audit. If we become aware of any
apparent misstatements or inconsistencies we consider the
implications for our report.
Opinion on the financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the group's affairs
as at 30 June 2014 and of its loss for the year then ended; and
-- have been properly prepared in accordance with IFRSs as adopted by the European Union.
BDO LLP
Chartered Accountants
London
United Kingdom
16 December 2014
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Consolidated Income Statement
Year ended Year ended
30 June 2014 30 June 2013
Note GBP'000 GBP'000
----------------------------------------------------------------------------- ----- --------------- ---------------
Revenue - rental income 122 635
Revenue - sale of inventory 13,236 13,172
----------------------------------------------------------------------------- ----- --------------- ---------------
Total revenue 13,358 13,807
Total cost of sales 6 (14,373) (13,910)
Gross loss (1,015) (103)
Investment management fees 7 (265) (429)
Reversal of accrued performance fees from prior period 7 96 57
Other administration fees and expenses 8 (847) (1,107)
Directors incentive payments 8 (237) -
----------------------------------------------------------------------------- ----- --------------- ---------------
Administrative expenses (1,253) (1,479)
----------------------------------------------------------------------------- ----- --------------- ---------------
Operating loss (2,268) (1,582)
Finance income 38 42
Gain on cessation of loan 4 29
Foreign exchange loss 3 (7,686) (8,710)
Finance costs (48) (308)
----------------------------------------------------------------------------- ----- --------------- ---------------
Net finance expense (7,692) (8,947)
----------------------------------------------------------------------------- ----- --------------- ---------------
Re-measurement loss on acquisition of associate - (1,492)
Reversal of impairment of loans due from associates - 232
Reversal of impairment of investment in associate 11 - 572
Profit on sale of associate 11 994 -
Share of profit of associates 11 - 164
Loss before income tax (8,966) (11,053)
Income tax expense 9 - (224)
----------------------------------------------------------------------------- ----- --------------- ---------------
Loss for the year (8,966) (11,277)
----------------------------------------------------------------------------- ----- --------------- ---------------
Attributable to:
- Owners of the Parent (9,444) (11,684)
- Non-controlling interests 478 407
----------------------------------------------------------------------------- ----- --------------- ---------------
(8,966) (11,277)
----------------------------------------------------------------------------- ----- --------------- ---------------
Basic and diluted loss per share (pence) for loss attributable to the owners
of the Parent
during the year 10 (15.16) (18.76)
----------------------------------------------------------------------------- ----- --------------- ---------------
Consolidated Statement of Comprehensive Income
Year ended Year ended
30 June 2014 30 June 2013
Note GBP'000 GBP'000
---------------------------------------------------------------- ------ -------------- --------------
Loss for the year (8,966) (11,277)
Other comprehensive income
Items that may subsequently be reclassified to profit and loss
Currency translation differences 1,806 1,140
------------------------------------------------------------------------ -------------- --------------
Other comprehensive income for the year 1,806 1,140
Total comprehensive expense for the year (7,160) (10,137)
------------------------------------------------------------------------ -------------- --------------
Total comprehensive expense attributable to:
- Owners of the Parent (7,804) (10,811)
- Non-controlling interests 644 674
------------------------------------------------------------------------ -------------- --------------
(7,160) (10,137)
----------------------------------------------------------------------- -------------- --------------
Consolidated Balance Sheet
As at 30 June 2014 As at 30 June 2013
Note GBP'000 GBP'000
------------------------------------------------------------ ----- ------------------- -------------------
Assets
Non-current assets
Intangible assets 12 779 1,162
Investments in associates 11 - 5,968
779 7,130
------------------------------------------------------------ ----- ------------------- -------------------
Current assets
Inventories 13 18,590 37,181
Trade and other receivables 14 230 1,063
Cash at bank 15 4,596 2,068
------------------------------------------------------------ ----- ------------------- -------------------
23,416 40,312
------------------------------------------------------------ ----- ------------------- -------------------
Total assets 24,195 47,442
------------------------------------------------------------ ----- ------------------- -------------------
Equity
Capital and reserves attributable to owners of the Parent:
Issued share capital 16 623 623
Foreign currency translation reserve 6,349 4,709
Retained earnings 16,366 37,646
------------------------------------------------------------ ----- ------------------- -------------------
23,338 42,978
Non-controlling interests (782) (977)
Total equity 22,556 42,001
------------------------------------------------------------ ----- ------------------- -------------------
Liabilities
Current liabilities
Loans from third parties 18 1,411 2,920
Trade and other payables 19 228 830
Current tax liabilities - 283
Borrowings 20 - 1,408
------------------------------------------------------------ ----- -------------------
1,639 5,441
------------------------------------------------------------ ----- ------------------- -------------------
Total liabilities 1,639 5,441
------------------------------------------------------------ ----- ------------------- -------------------
Total equity and liabilities 24,195 47,442
------------------------------------------------------------ ----- ------------------- -------------------
The financial statements were approved and authorised for issue
by the Board of Directors on 16 December 2014 and signed on its
behalf by:
David Hunter Stephen Coe
Director Director
Consolidated Statement of Changes in Equity
Attributable to owners of the parent
-----------------------------------------------------------------
Share capital Foreign currency Retained Total Non-controlling Total
translation earnings/ interests
reserve (deficit)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------------- ------------------ ------------------ --------- ------------------ -----------
Balance at 1 July
2012 623 3,836 50,034 54,493 (2,023) 52,470
------------------ -------------- ------------------ ------------------ --------- ------------------ -----------
Comprehensive
income/(expense)
Loss for the year - - (11,684) (11,684) 407 (11,277)
Other
comprehensive
income
Foreign exchange
translation
differences - 873 - 873 267 1,140
------------------ -------------- ------------------ ------------------ --------- ------------------ -----------
Total
comprehensive
income/(expense)
for the year - 873 (11,684) (10,811) 674 (10,137)
------------------ -------------- ------------------ ------------------ --------- ------------------ -----------
Transactions with
owners
Change in
ownership
reserve - - (704) (704) - (704)
Acquisition of
shares from
non-controlling
interest - - - - 372 372
------------------ -------------- ------------------ ------------------ --------- ------------------ -----------
Total
transactions
with owners - - (704) (704) 372 (332)
------------------ -------------- ------------------ ------------------ --------- ------------------ -----------
Balance at 30
June 2013 623 4,709 37,646 42,978 (977) 42,001
------------------ -------------- ------------------ ------------------ --------- ------------------ -----------
Balance at 1 July
2013 623 4,709 37,646 42,978 (977) 42,001
------------------ -------------- ------------------ ------------------ --------- ------------------ -----------
Comprehensive
income/(expense)
Loss for the year - - (9,444) (9,444) 478 (8,966)
Other
comprehensive
income
Foreign exchange
translation
differences - 1,640 - 1,640 166 1,806
Total
comprehensive
income/(expense)
for the year - 1,640 (9,444) (7,804) 644 (7,160)
------------------ -------------- ------------------ ------------------ --------- ------------------ -----------
Transactions with
owners
Distributions
paid - - (11,836) (11,836) - (11,836)
Dividend paid to
non-controlling
interest - - - - (449) (449)
Total
transactions
with owners - - (11,836) (11,836) (449) (12,285)
------------------ -------------- ------------------ ------------------ --------- ------------------ -----------
Balance at 30
June 2014 623 6,349 16,366 23,338 (782) 22,556
------------------ -------------- ------------------ ------------------ --------- ------------------ -----------
Consolidated Cash Flow Statement
Year ended Year ended
30 June 2014 30 June 2013
Note GBP'000 GBP'000
------------------------------------------------------ ----- -------------- --------------
Cash flows from operating activities
Loss for the year before tax (8,966) (11,053)
Adjustments for:
Interest income (38) (42)
Interest expense 48 308
Gain on cessation of loan (4) -
Reversal of impairment of loans due from associates - (232)
Reversal of impairment of investment in associate 11 - (572)
Profit on sale of associate 11 (994) -
Share of profit of associates 11 - (164)
Impairment of goodwill 12 197
Re-measurement loss on acquisition of associate - 1,492
Foreign exchange loss 3 7,686 8,710
Operating loss before changes in working capital (2,071) (1,553)
Decrease in inventory 13,123 12,464
Decrease/(increase) in trade and other receivables 477 (70)
Decrease in trade and other payables (279) (1,653)
------------------------------------------------------ ----- -------------- --------------
Cash generated from operations 11,250 9,188
Interest paid (48) (306)
Interest received 38 42
Tax (paid)/received (252) 86
Net cash generated from operating activities 10,988 9,010
------------------------------------------------------ ----- -------------- --------------
Cash flows from investing activities
Repayment of loans by associates - 96
Proceeds on disposal of associate 11 6,313 -
Cash acquired on business combination - 217
Movement in cash restricted by bank guarantees (1) (2)
------------------------------------------------------ ----- --------------
Net cash generated from investing activities 6,312 311
------------------------------------------------------ ----- -------------- --------------
Cash flows from financing activities
Repayment of loans from third parties 18 (1,084) (2,302)
Change in ownership interest in subsidiaries - (332)
Repayment of bank loans (1,255) (5,006)
Dividend paid to non-controlling interests (449) -
Distributions paid 16 (11,836) -
------------------------------------------------------ ----- -------------- --------------
Net cash used in financing activities (14,624) (7,640)
------------------------------------------------------ ----- -------------- --------------
Net increase in cash and cash equivalents 2,676 1,681
Cash and cash equivalents at beginning of the year 2,012 523
Foreign exchange losses on cash and cash equivalents (139) (192)
------------------------------------------------------ ----- -------------- --------------
Cash and cash equivalents at end of the year 15 4,549 2,012
------------------------------------------------------ ----- -------------- --------------
Notes to the Financial Statements
1 General information
South African Property Opportunities plc (the "Company") was
incorporated and registered in the Isle of Man under the Isle of
Man Companies Acts 1931 to 2004 on 27 June 2006 as a public limited
company with registered number 117001C. On 7 January 2011 with the
approval of Shareholders in general meeting, the Company was
re-registered as a company under the Isle of Man Companies Act 2006
with registered number 006491v. South African Property
Opportunities plc and its subsidiaries' (the "Group") investment
objective is to achieve capital growth from the development and
subsequent sale of a portfolio of real estate assets in South
Africa.
The Company's property activities were managed by Group Five
Property Developments (Pty) Limited ("Group Five"). Bridgehead Real
Estate Fund (Pty) Ltd ("Bridgehead") was appointed as the
replacement investment manager with effect from 1 July 2014. The
Company's administration is delegated to Galileo Fund Services
Limited (the "Administrator"). The registered office of the Company
is Millennium House, 46 Athol Street, Douglas, Isle of Man, IM1
1JB.
Pursuant to a prospectus dated 20 October 2006 there was an
authorisation to place up to 50 million shares. Following the close
of the placing on 26 October 2006, 30 million shares were issued at
a price of 100p per share.
The shares of the Company were admitted to trading on the AIM
Market of the London Stock Exchange ("AIM") on 26 October 2006 when
dealings also commenced. On the same date the shares of the Company
were admitted to the Official List of the Channel Islands Stock
Exchange (the "CISX").
As a result of a further fundraising in May 2007, 32,292,810
shares were issued at a price of 106p per share, which were
admitted to trading on AIM on 22 May 2007.
The Company's agents and its Investment Manager perform all
functions, other than those carried out by the Board's executive
and non-executive directors. The Group has two executive
directors.
Financial year end
The financial year end of the Company is 30 June in each
year.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all years presented unless otherwise
stated.
2.1 Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union. The financial statements have been prepared
under the historical cost convention. The preparation of financial
statements in conformity with IFRS requires the use of certain
critical accounting estimates (see note 2.2). It also requires
management to exercise its judgement in the process of applying the
Group's accounting policies.
These financial statements have been prepared on a going concern
basis, which assumes that the Group will be able to meet its
liabilities as and when they fall due for the foreseeable future.
See note 2.2 for further information.
Future changes in accounting policies
IASB (International Accounting Standards Board) and IFRIC
(International Financial Reporting Interpretations Committee) have
issued the following standards and interpretations with an
effective date after the date of these financial statements. These
standards have not been early adopted by the Group and the
directors do not expect that the adoption of the standards listed
below will have a material impact on the future financial
statements of the Group.
New/Revised International Financial Reporting Effective date
Standards (IAS/IFRS) (accounting periods
commencing on
or after)
---------------------------------------------------------- ---------------------
IFRS 9 Financial Instruments (2009) *
IFRS 9 introduces new requirements for classifying
and measuring financial assets.
IFRS 10 Consolidated Financial Statements 1 January 2014
Requires a parent to present consolidated financial
statements as those of a single economic entity.
IFRS 11 Joint Arrangements 1 January 2014
Replaces IAS 31 Interests in Joint Ventures.
IFRS 12 Disclosure of Interests in Other Entities 1 January 2014
Requires the extensive disclosure of information
that enables users of financial statements to
evaluate the nature of, and risks associated with,
interests in other entities and the effects of
those interests on its financial position, financial
performance and cash flows.
IFRS 13 Fair Value Measurement 1 July 2014
Annual improvements 2010-2012 Cycle: Amendments
to clarify the measurement requirements for those 1 July 2014
short-term receivables and payables.
Annual improvements 2011-2013 Cycle: Amendments
to clarify that the portfolio exception applies
to all contracts within the scope of, and accounted
for in accordance with, IAS 39 or IFRS 9.
IAS 27 Separate Financial Statements (2011) 1 January 2014
Amended version of IAS 27 which now only deals
with the requirements for separate financial statements.
IAS 28 Investments in Associates and Joint Ventures 1 January 2014
(2011)
This Standard supersedes IAS 28 Investments in
Associates.
IAS 36 Impairment of assets 1 January 2014
Amended version of IAS 36 to address the recoverable
amount of impaired assets if that amount is based
on fair value less costs of disposal.
---------------------------------------------------------- ---------------------
*Effective date deferred pending finalisation of the impairment
and classification and measurement requirements.
2.2 Critical accounting estimates and assumptions
Management makes estimates and assumptions concerning the
future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amount of assets and liabilities within
the next financial year are addressed below.
(a) Going concern
These financial statements have been prepared on a going concern
basis, which assumes that the Group will be able to meet its
liabilities as and when they fall due for the foreseeable
future.
The Directors have prepared forecasts that indicate that the
Group will be able to meet its financial obligations from existing
cash resources and the projected sales proceeds from sale of
inventory.
(b) Estimated impairment of inventory, investment in associates and loans to associates
The Group obtains third party semi-annual valuations performed
by Broll (Broll represent CBRE under the terms of a network
agreement whereby Broll represent CBRE in those sub-Saharan markets
where CBRE do not have a presence of their own. Together with South
Africa this includes Nigeria and Ghana). These are used in
conjunction with the strategic plan for each development in order
to determine any impairment of inventory, investments in associates
and loans to associates.
The determination of valuations of inventory requires the use of
estimates such as future cash flows from developments along with
discount rates applicable to those assets, or estimates such as a
comparison of the inventory against similar assets. These estimates
are based on local market conditions existing at the date of the
statement of financial position.
The continuing volatility in the global financial system is
reflected in the turbulence in real estate markets across the
world. The resulting low level of transaction volumes continued
this year. The third party valuers have used their market knowledge
and professional judgement and have not relied solely on historical
transaction comparables. In these circumstances, there is a greater
degree of uncertainty than exists in a more active market in
estimating the market values of inventory.
During the year there were impairment charges in relation to
inventory (see note 13).
(c) Estimated impairment of goodwill
The Group tests annually for whether goodwill has suffered any
impairment, in accordance with the accounting policy stated in note
2.7. The recoverable amount of the cash generating unit has been
determined using fair value less cost to sell. This calculation
requires the use of estimates, see note 12 for further details.
2.3 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ("the functional
currency"). The consolidated financial statements are presented in
Pound Sterling, which is the Company's functional and the Group's
presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the
consolidated income statement.
(c) Group companies
The results and financial position of all the Group entities
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
(i) assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet;
(ii) income and expenses for each income statement are
translated at average exchange rates; and
(iii) all resulting exchange differences are recognised as a
separate component of equity.
On consolidation, exchange differences arising from the
translation of the net investment in foreign operations are taken
to other comprehensive income. When a foreign operation is
partially disposed or sold, exchange differences that were recorded
in equity are recognised in the income statement as part of the
gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
2.4 Revenue and expense recognition
Revenue comprises the fair value of the consideration received
or receivable for the sale of inventory in the ordinary course of
the Group's activities and rental income received or receivable in
relation to operating leases. Revenue is shown net of value added
tax.
The Group recognises revenue from the sale of inventory on the
transfer of the risks and rewards of ownership, which is when all
the contractual conditions of sale have been met.
Operating lease income in respect of rents is recognised in the
income statement on a straight-line basis over the period of the
lease and relates to leases in which a significant portion of the
risks and rewards of ownership are retained by the Group, as
lessor, and are classified as operating leases.
Interest income is recognised in the financial statements on a
time-proportionate basis using the effective interest method.
Interest expense for borrowings is recognised in the financial
statements using the effective interest method.
The effective interest method is a method of calculating the
amortised cost of a financial asset or financial liability and of
allocating the interest income or interest expense over the
period.
Expenses are accounted for on an accruals basis.
2.5 Basis of consolidation
Subsidiaries
Subsidiaries are all entities (including special purpose
entities) over which the Group has the power to govern the
financial and operating policies generally accompanying a
shareholding of more than one half of the voting rights. The
existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether
the Group controls another entity. The Group also assesses
existence of control where it does not have more than 50% of the
voting power but is able to govern the financial and operating
policies by virtue of de-facto control. De-facto control may arise
in circumstances where the size of the Group's voting rights
relative to the size and dispersion of holdings of other
shareholders give the Group the power to govern the financial and
operating policies, etc.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are deconsolidated from
the date that control ceases.
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The Group recognises any non-controlling interest
in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of acquiree's identifiable net
assets.
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value of non-controlling
interest over the net identifiable assets acquired and liabilities
assumed. If this consideration is lower than the fair value of the
net assets of the subsidiary acquired, the difference is recognised
in profit or loss.
Transactions and non-controlling interests
The Group treats transactions with non-controlling interests
that do not result in a loss of control as transactions with equity
owners of the Group.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised
gains/losses arising from intra-group transactions, are eliminated
in preparing the consolidated financial statements.
Associates
Associates are those entities in which the Group has a
significant influence, but no control, generally accompanying a
shareholding of between 20 per cent. and 50 per cent. of the voting
rights. Associates are accounted for using the equity method of
accounting and are initially recognised at cost. The Group's
investment in associates includes goodwill identified on
acquisition, net of any accumulated impairment loss. The
consolidated financial statements include the Group's share of its
associates' profits or losses, after adjustments to align the
accounting policies with those of the Group, from the date that
significant influence commences until the date that significant
influence ceases. When the Group's share of losses exceeds its
interest in an associate, the carrying amount of that interest
(including any long-term investment) is reduced to nil and the
recognition of further losses is discontinued except to the extent
that the Group has an obligation or has made payments on behalf of
the associate.
Unrealised gains on transactions between the Group and its
associates are eliminated to the extent of the Group's interest in
the associates. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset
transferred. Accounting policies of the associates have been
changed where necessary to ensure consistency with the policies
adopted by the Group.
2.6 Operating segments
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker is the person or group that
allocates resources to and assesses the performance of the
operating segments of an entity. The Group has determined that its
chief operating decision-maker is the Board of the Company.
The Board reviews the Group's internal reporting in order to
assess performance and allocate resources. Based on this internal
reporting to the Board, it has been determined that there is only
one operating segment, property development in the Republic of
South Africa.
2.7 Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition
over the fair value of the Group's share of the identifiable net
assets (including intangible assets) of the acquired
subsidiary.
Goodwill is carried at cost less accumulated impairment losses.
Goodwill impairment reviews are undertaken annually or more
frequently if events or changes in circumstances indicate a
potential impairment. The carrying value of goodwill is compared to
the recoverable amount, which is the higher of value in use and the
fair value less costs to sell. Any impairment is recognised
immediately as an expense and is subsequently not reversed.
2.8 Financial assets and financial liabilities
The Group classifies its financial assets in the following
categories: at fair value through profit or loss, loans and
receivables, and available for sale. The classification depends on
the purpose for which the financial assets were acquired. The Board
determine the classification of its financial assets at initial
recognition.
At 30 June 2014 and 2013 the Group did not have any financial
assets at fair value through profit or loss or available for sale.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities
greater than 12 months after the balance sheet date which are
classified as non-current assets. The Group's loans and receivables
comprise 'trade and other receivables' and 'cash at bank' in the
balance sheet (notes 14 and 15).
The Group classifies its financial liabilities in the following
categories: at fair value through profit or loss and other
liabilities. At 30 June 2014 and 2013 the Group did not have any
financial liabilities at fair value through profit or loss. Other
liabilities comprise 'loans from third parties', 'trade and other
payables' and 'borrowings' in the balance sheet (notes 18, 19 and
20).
2.9 Inventories
Land and buildings that are being developed for future sale are
classified as inventory and recorded at cost on initial
recognition. Building costs and borrowing costs in relation to
inventory are capitalised. Land and building for development is
subsequently carried at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary
course of business less selling expenses.
2.10 Loans and receivables
Loans and receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment. A provision for
impairment is established when there is objective evidence that the
Group will not be able to collect all amounts due according to the
original terms of the receivables.
Significant financial difficulties of the counterparty,
probability that the counterparty will enter bankruptcy or
financial reorganisation, and default in payments are considered
indicators that the amount to be received is impaired. Once a
financial asset or a group of similar financial assets has been
written down as a result of an impairment loss, interest income is
recognised using the rate of interest used to discount the future
cash flows for the purpose of measuring the impairment loss.
2.11 Cash and cash equivalents
Cash and cash equivalents comprise cash deposited with banks and
other short-term highly liquid investments with original maturities
of three months or less.
2.12 Trade and other payables
Trade and other payables are recognised initially at fair value
and subsequently at amortised cost using the effective interest
method.
2.13 Taxation
The Company is resident for taxation purposes in the Isle of Man
and is subject to income tax at a rate of zero per cent. The Group
is liable for tax in the Republic of South Africa on the activities
of its subsidiaries and associates.
The tax expense represents the sum of the tax currently payable,
which is based on taxable profits for the year. The Group's
liability is calculated using tax rates enacted or substantially
enacted at the balance sheet date.
Deferred tax is recognised using the balance sheet method,
providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. Deferred tax is not recognised
for the following temporary differences: the initial recognition of
assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit,
and differences relating to investments in subsidiaries and jointly
controlled entities to the extent that they probably will not
reverse in the foreseeable future. Deferred tax is measured at the
tax rates that are expected to be applied to the temporary
differences when they reverse, based on the laws that have been
enacted or substantively enacted by the reporting date.
A deferred tax asset is recognised to the extent that it is
probable that future taxable profits will be available against
which temporary differences can be utilised. Deferred tax assets
are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be
realised.
2.14 Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently stated at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the
income statement over the period of the borrowings using the
effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the
extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw-down
occurs. To the extent there is no evidence that it is probable that
some or all of the facility will be drawn down, the fee is
capitalised as a pre-payment for liquidity services and amortised
over the period of the facility to which it relates.
Borrowing costs directly attributable to assets in the course of
construction are capitalised.
2.15 Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds.
2.16 Distributions
Distributions are recognised as a liability in the year in which
they are declared and approved.
3 Risk management in respect of financial instruments
The Group's activities expose it to a variety of financial
risks: market risk (including foreign currency risk and interest
rate risk), credit risk and liquidity risk. The financial risks
relate to the following financial instruments: loans and
receivables and other liabilities as detailed in note 2.8.
Foreign currency risk
Foreign currency risk is the risk that the value of financial
instruments will fluctuate due to changes in foreign exchange
rates. The Group's operations are conducted in jurisdictions which
generate revenue, expenses, assets and liabilities in currencies
other than Pound Sterling ("the functional currency of the
Company"). As a result the Group is subject to the effects of
exchange rate fluctuations with respect to these currencies. The
currency giving rise to this risk is the South African Rand.
The Group's policy is not to enter into any currency hedging
transactions.
The table below summarises the Group's exposure to foreign
currency risk in respect of its financial instruments:
30 June 2014 Monetary Assets Monetary Liabilities Total
GBP'000 GBP'000 GBP'000
-------------------- ---------------- --------------------- --------
South African Rand 3,657 (1,565) 2,092
3,657 (1,565) 2,092
-------------------- ---------------- --------------------- --------
30 June 2013 Monetary Assets Monetary Liabilities Total
GBP'000 GBP'000 GBP'000
-------------------- ---------------- --------------------- --------
South African Rand 3,060 (5,065) (2,005)
3,060 (5,065) (2,005)
-------------------- ---------------- --------------------- --------
At 30 June 2014, had the Pound strengthened/weakened by 5 per
cent. against the South African Rand, with all other variables held
constant, the impact on equity of the above financial instruments
would be a decrease/increase of GBP100,000 (30 June 2013: 5 per
cent. currency movement, increase/decrease GBP95,000).
Included in the income statement is a foreign exchange loss of
GBP7,685,769 (2013: loss GBP8,709,948) which includes a loss of
GBP7,633,008 (2013: loss GBP8,677,949) arising on the translation
of the loan from the Company to its direct subsidiary, SAPSPV
Holdings RSA (Pty) Limited; a loan which is denominated in South
African Rand. On consolidation, the corresponding foreign exchange
gain (2013: gain) arising on translation of this loan in SAPSPV
Holdings RSA (Pty) Limited from the functional currency of South
African Rand to the presentation currency of Pound Sterling is
included in the foreign currency translation reserve within
equity.
Credit risk
Credit risk is the risk that a counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Group.
The carrying amounts of financial assets best represent the
maximum credit risk exposure at the balance sheet date. This
relates also to financial assets carried at amortised cost.
At the reporting date, the Group's financial assets exposed to
credit risk amounted to the following:
30 June 2014 30 June 2013
GBP'000 GBP'000
----------------------------- ------------- -------------
Trade and other receivables 207 1,032
Cash at bank 4,596 2,068
----------------------------- ------------- -------------
4,803 3,100
----------------------------- ------------- -------------
The Group manages its credit risk by monitoring the
creditworthiness of counterparties regularly. Cash transactions and
balances are limited to high-credit-quality financial institutions.
Loans due from associates related to project investments in
land.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its obligations as they fall due. The Group currently manages
its liquidity risk by maintaining sufficient cash and banking
facilities as indicated by its cashflow forecasts. The Group's
liquidity position is monitored by the Board of Directors (see note
2.2(a)).
The residual undiscounted contractual maturities of financial
liabilities are as follows:
30 June 2014 Less than 1 month 1-3 months 3 months to 1 1-5 years Over 5 years No stated
year maturity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------------ ----------- ------------------ ---------- ------------- ------------------
Financial
liabilities
Loans from third
parties - - - - - 1,411
Trade and other
payables 25 - 203 - - -
25 - 203 - - 1,411
------------------ ------------------ ----------- ------------------ ---------- ------------- ------------------
30 June 2013 Less than 1 month 1-3 months 3 months to 1 1-5 years Over 5 years No stated
year maturity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------------- ------------ ----------------- ---------- ------------- -----------------
Financial
liabilities
Loans from third
parties - - - - - 2,920
Trade and other - - 830 - - -
payables
Borrowings - - 1,408 - - -
------------------ ------------------- ------------ ----------------- ---------- ------------- -----------------
- - 2,238 - - 2,920
------------------- ------------------------------- ----------------- ---------- ------------- -----------------
Interest rate risk
Interest rate risk is the risk that the value of financial
instruments will fluctuate due to changes in market interest rates.
The Group is exposed to interest rate risk from the cash held in
interest bearing accounts at floating rates or short term deposits
of one month or less, on loans due from associates, loans from
third parties and on borrowings. The Company's Board of Directors
monitor and review the interest rate fluctuations on a continuous
basis and act accordingly.
During the year ended 30 June 2014 should interest rates have
decreased by 100 basis points, with all other variables held
constant, the shareholders' equity and profit for the year would
have been GBPnil (2013: 100 basis points, GBPnil).
Capital risk management
The Company's primary objective when managing its capital base
is to safeguard its ability to continue as a going concern whilst
disposing of the Group's portfolio where acceptable returns can be
generated and returning excess capital to shareholders.
Capital comprises share capital (see note 16) and reserves.
No changes were made in respect of the objectives, policies or
processes in respect of capital management during the years ended
30 June 2013 and 2014.
4 Segment Information
The entity is domiciled in the Isle of Man. All of the reported
revenue, GBP13,357,708 (2013: GBP13,807,207) arises in South
Africa.
The total of non-current assets other than financial instruments
is GBP778,822 (2013: GBP7,130,047) and all of these are located in
South Africa.
Revenues of GBP1,539,393 (ZAR: 26,000,000), GBP6,383,400 (ZAR
116,100,000) and GBP2,089,313 (ZAR 38,000,000) were derived from
single external customers and were attributable to the Kyalami
development, the Wedgewood development and the Starleith
development respectively (30 June 2013: GBP10,579,170 (ZAR
146,626,243) attributable to the Gosforth development).
5 Operating leases
The Group leases out certain parts of its inventory under
operating leases whilst it is in the process of seeking a buyer.
The future minimum lease payments receivable by the Group under
non-cancellable leases are as follows:
Year ended Year ended
30 June 2014 30 June 2013
GBP'000 GBP'000
---------------------------- -------------- --------------
Less than one year 83 106
Between one and five years - 100
More than five years - -
---------------------------- -------------- --------------
83 206
---------------------------- -------------- --------------
6 Cost of sales
Year ended Year ended
30 June 2014 30 June 2013
GBP'000 GBP'000
----------------------------------- -------------- --------------
Cost of inventory sold 12,510 12,269
Property expenses 730 679
----------------------------------- -------------- --------------
13,240 12,948
Impairment of inventory (note 13) 936 962
Impairment of goodwill (note 12) 197 -
----------------------------------- -------------- --------------
Total cost of sales 14,373 13,910
----------------------------------- -------------- --------------
7 Investment Manager's fees
Annual fees
Group Five was entitled to a management fee of GBP500,000 per
annum payable monthly in arrears. This fee was reduced to
GBP290,000 per annum from 18 March 2013. Management fees for the
year ended 30 June 2014 paid to Group Five were GBP265,324 (ZAR
4,481,258) (30 June 2013: GBP429,175 (ZAR 5,948,333)). The Group
entered into a termination deed on 1 July 2014 with Group Five
under which the Group has agreed to pay Group Five a termination
fee of GBP76,975 (ZAR 1.4 million) in lieu of notice.
During the year, pursuant to the investment management
agreements Group Five was also entitled to recharge to the Group
any costs and disbursements reasonably incurred by it in the
performance of their duties, including costs of travel save to the
extent that such costs are staff costs or other internal costs of
the Investment Manager.
Bridgehead was appointed as the replacement investment manager
with effect from 1 July 2014 and is entitled to an annual
management fee of GBP175,000 per annum.
Sales fee
Group Five was entitled to a sales fee of up to 3 per cent. of
the gross proceeds on disposal of the Group's projects (such fee is
net of external brokerage costs incurred). This fee was eliminated
under the new investment management agreement dated 18 March 2013.
These fees were payable on sale and were considered when
determining the net realisable value of inventory in prior periods
(see note 13). Sales fees payable for the year ended 30 June 2014
payable to Group Five amounted to GBP345,909 (ZAR 5,842,326) (30
June 2013: GBP214,735 (ZAR 2,976,202)).
Bridgehead is not entitled to a sales fee under the investment
management agreement dated 1 July 2014.
Performance fees
The Group accrued a performance fee due to Group Five based upon
the market value of the portfolio which only became payable on the
eventual sale of these assets so long as the sales values were
better than certain agreed benchmarks. Under the new investment
management agreement with Group Five dated 18 March 2013 the
performance fee is now calculated based on 1.5% on the net proceeds
of the sale of each asset. The reduction in performance fees
considered in the assessment of the net realisable value of
inventory for the year ended 30 June 2014 amounted to GBP95,807
(ZAR 1,618,154) (30 June 2013: reduction GBP57,265 (ZAR
793,692)).
The Group entered into a termination deed on 1 July 2014 with
Group Five under which the Group has agreed to pay Group Five a fee
of 0.5% of the net proceeds received by the Group following the
sale of an asset until 1 January 2016.
Bridgehead is entitled to a performance fee of 1.5% of the net
proceeds received by the Group following the sale of an asset under
the investment management agreement dated 1 July 2014.
8 Other administration fees and expenses
Year ended Year ended
30 June 2014 30 June 2013
GBP'000 GBP'000
---------------------------------- -------------- --------------
Audit - current year 115 105
Audit - prior years (1) 33
Directors' remuneration and fees 171 218
Directors' insurance cover 30 37
Professional fees 74 169
Other expenses 458 545
---------------------------------- -------------- --------------
Administration fees and expenses 847 1,107
---------------------------------- -------------- --------------
Included within other administration fees and expenses are the
following:
Directors' remuneration
The maximum amount of basic remuneration payable by the Company
by way of fees to the Non-executive Directors permitted under the
Articles of Association is GBP200,000 per annum. All Directors are
each entitled to receive reimbursement of any expenses incurred in
relation to their appointment. The Non-executive Directors
(excluding the Chairman) were entitled to receive an annual fee of
GBP40,000 each and the Chairman GBP75,000. From 1 July 2012 David
Saville reduced his annual fee from GBP40,000 to GBP20,000. From 1
April 2013 the Chairman reduced his annual fee to GBP40,000,
Stephen Coe reduced his annual fee to GBP35,000 and David Saville
reduced his annual fee to GBP15,000.
Executive Directors' fees
The Executive Directors received annual basic salaries of
GBP40,000. From 1 April 2013 John Chapman reduced his annual basic
salary to GBP30,000. From 1 July 2014 Craig McMurray has reduced
his annual basic salary to GBP20,000 per annum. Pursuant to the
terms of their service agreements, Craig McMurray and John Chapman
are entitled to incentive payments of, respectively, 1.5 per cent.
and 0.5 per cent. of all sums distributed to shareholders. Their
services agreements also provide for payments of the same
percentages, following termination of their employment, for
distributions paid or payable from cash generated during their
employment. Total incentive fees for the year ended 30 June 2014
amounted to GBP236,713.
All directors' remuneration and fees
Total fees and basic remuneration (including VAT where
applicable) paid to the Directors for the year ended 30 June 2014
amounted to GBP171,000 (30 June 2013: GBP218,250) and was split as
below. Directors' insurance cover amounted to GBP30,213 (30 June
2013: GBP37,161).
Year ended Year ended Year ended Year ended
30 June 2014 30 June 2014 30 June 2014 30 June 2013
Basic fee/salary Incentive fees Total Basic fee/salary
GBP'000 GBP'000 GBP'000 GBP'000
---------------- ----------------- --------------- -------------- -----------------
David Hunter 48 - 48 79
David Saville 18 - 18 23
Stephen Coe 35 - 35 39
101 - 101 141
---------------- ----------------- --------------- -------------- -----------------
John Chapman 30 59 89 37
Craig McMurray 40 178 218 40
---------------- ----------------- --------------- -------------- -----------------
70 237 307 77
---------------- ----------------- --------------- -------------- -----------------
171 237 408 218
---------------- ----------------- --------------- -------------- -----------------
9 Income tax expense
Year ended Year ended
30 June 2014 30 June 2013
GBP'000 GBP'000
------------- --------------- --------------
Current tax - 224
------------- --------------- --------------
The tax on the Group's profit before tax is higher than the
standard rate of income tax in the Isle of Man of zero per cent.
The differences are explained below:
Year ended Year ended
30 June 2014 30 June 2013
GBP'000 GBP'000
------------------------------------------------------------------------- -------------- --------------
Loss before tax (8,966) (11,053)
------------------------------------------------------------------------- -------------- --------------
Tax calculated at domestic tax rates applicable in the Isle of Man (0%) - -
Effect of higher tax rates in South Africa (28%) - 224
------------------------------------------------------------------------- -------------- --------------
Tax credit/(expense) - 224
------------------------------------------------------------------------- -------------- --------------
There are tax losses carried forward in the underlying
subsidiaries of GBP21,165,067 (ZAR: 384,946,000) (30 June 2013:
GBP31,060,925 (ZAR: 467,616,000)). There is no expiry date for the
carrying forward of these losses. Tax losses are not carried as
deferred tax assets in the consolidated balance sheet until the
losses have been approved by the South African Revenue Service and
the realisation of the related tax benefit through future taxable
profits is probable.
10 Basic and diluted loss per share
Basic loss per share is calculated by dividing the loss
attributable to equity holders of the Group by the weighted average
number of shares in issue during the year.
Year ended Year ended
30 June 2014 30 June 2013
-------------------------------------------------------------- -------------- --------------
Loss attributable to equity holders of the Company (GBP'000) (9,444) (11,684)
Weighted average number of shares in issue (thousands) 62,293 62,293
-------------------------------------------------------------- -------------- --------------
Basic loss per share (pence per share) (15.16) (18.76)
-------------------------------------------------------------- -------------- --------------
The Company has no dilutive potential ordinary shares; the
diluted earnings per share is the same as the basic earnings per
share.
11 Investments in associates
30 June 2014 30 June 2013
GBP'000 GBP'000
--------------------------------------------------- ------------- -------------
Start of the year 5,968 6,208
Exchange differences (649) (976)
Reversal of impairment of investment in associate - 572
Share of profit of associates - 164
Profit on sale of associate 994 -
Disposal of associate (6,313) -
--------------------------------------------------- ------------- -------------
End of the year - 5,968
--------------------------------------------------- ------------- -------------
The Group's share of the results of its associates, all of which
are unlisted, and its aggregated assets (including goodwill) and
liabilities, is as follows:
30 June 2014 Percentage of Assets Liabilities Revenues Profit/(Loss)
Name shares held GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------------- -------- ------------ --------- --------------
Longland Investments (Pty) Limited 0% - - - -
----------------------------------- -------------- -------- ------------ --------- --------------
30 June 2013 Percentage of Assets Liabilities Revenues Profit
Name shares held GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ -------------- -------- ------------ --------- --------
Longland Investments (Pty) Limited 49.22% 6,725 757 1,393 164
------------------------------------ -------------- -------- ------------ --------- --------
12 Intangible assets
30 June 2014 30 June 2013
GBP'000 GBP'000
---------------------- ------------- -------------
Goodwill
Start of the year 1,162 1,364
Impairment (197) -
Exchange differences (186) (202)
---------------------- ------------- -------------
End of the year 779 1,162
---------------------- ------------- -------------
The above goodwill relates entirely to the Group's investment in
the shares of Living 4 U Developments (Pty) Ltd (the African
Renaissance development). The recoverable amount of this cash
generating unit has been determined using fair value less cost to
sell. The recoverable amount has been assessed as GBP778,822 (ZAR
14,165,068) and therefore the goodwill has been impaired by
GBP197,398 (ZAR 3,334,000). The key assumption used to determine
the fair value less cost to sell is the third party valuation of
the land held and is valued at GBP5,278,263 (ZAR 96,000,000) at 30
June 2014.
13 Inventories
Current assets
30 June 2014 30 June 2013
GBP'000 GBP'000
----------------------------------- ------------- -------------
Start of the year 37,181 49,120
Costs capitalised 324 766
Acquired via business combination - 7,389
Impairment (936) (962)
Cost of inventory sold (12,510) (12,269)
Exchange differences (5,469) (6,863)
End of the year 18,590 37,181
----------------------------------- ------------- -------------
During the year, the Group capitalised costs of GBP323,519 (ZAR
5,464,155) (30 June 2013: GBP766,000 (ZAR 10,618,000)), in order to
develop these assets for future re-sale, and accordingly they were
classified as inventory. Borrowing costs of GBPnil (ZAR nil) (30
June 2013: GBPnil (ZAR nil)) have been included in the capitalised
costs.
At 30 June 2014 the net realisable values of Brakpan,
Driefontein, Emberton, Gosforth Park, Kindlewood, Lenasia, Imbonini
and Imbonini phase 2 were lower than cost, therefore, their
inventory values have been impaired to a value of GBP13,979,393
(ZAR 254,254,412) (30 June 2013: Brakpan, Driefontein, Emberton,
Gosforth, Kindlewood, Kyalami, Lenasia, Imbonini and Imbonini phase
2 were impaired to a value of GBP21,963,104 (ZAR 330,650,145)). Net
realisable value has been assessed using valuations determined by
Broll less estimated selling expenses.
The Directors consider all inventories to be current in nature.
It is not possible to determine with accuracy when specific
inventory will be realised, as this will be subject to a number of
issues such as availability of finance for purchasers and delays
due to obtaining permits.
Security
At 30 June 2014, there are no mortgages secured over the
inventory held by the Group (30 June 2013: one first rank mortgage
secured over the inventory held by Kindlewood GBP4,071,791 (ZAR
61,300,000)) (See note 20).
14 Trade and other receivables
30 June 2014 30 June 2013
GBP'000 GBP'000
----------------------------- ------------- -------------
Prepayments 23 31
VAT receivable 2 223
Trade receivables 69 744
Other receivables 136 65
----------------------------- ------------- -------------
Trade and other receivables 230 1,063
----------------------------- ------------- -------------
The fair value of trade and other receivables approximates their
carrying value.
15 Cash at bank
30 June 2014 30 June 2013
GBP'000 GBP'000
----------------------- ------------- -------------
Bank balances 4,549 2,012
Bank deposit balances 47 56
----------------------- ------------- -------------
Cash at bank 4,596 2,068
----------------------- ------------- -------------
Included within the bank deposit balances figure is an amount of
GBP47,381 (ZAR 861,759) (30 June 2013: GBP55,621 (ZAR 837,370))
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 subsidiary SAPSPV Holdings RSA (Pty) Ltd has a contingent
liability of GBP47,381 (ZAR 861,759) (30 June 2013: GBP55,575 (ZAR
836,671)) in connection with senior debt obligations of its
subsidiary Imbonini Park (Pty) Ltd.
16 Share capital
Ordinary Shares of 1p each As at 30 June As at 30 June
2013 & 2014 2013 & 2014
Number GBP'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.
Preference shares As at 30 June As at 30 June
2013 & 2014 2013 & 2014
Number GBP'000
------------------ -------------- -------------------
Issued 100 -
------------------ -------------- -------------------
Business Venture Investments No 1269 (Pty) Limited (the
Wedgewood development) has issued preference shares ZAR 100 to its
minority holders. The holders of the preference shares are entitled
to the first ZAR 22,000,000 (GBP1,209,602) in dividends declared by
Business Venture Investments No 1269 (Pty) Limited. A dividend of
ZAR 7,588,039 (GBP449,268) was declared and paid during the year
ended 30 June 2014.
Two distributions were paid during the year, 10 pence per
Ordinary Share on 9 August 2013 and 9 pence per Ordinary Share on
23 April 2014 (2013 GBPnil).
17 Net asset value ("NAV") per share
30 June 2014 30 June 2013
-------------------------------------------------------------------- ------------- -------------
Net assets attributable to equity holders of the Company (GBP'000) 23,338 42,978
Shares in issue (in thousands) 62,293 62,293
-------------------------------------------------------------------- ------------- -------------
NAV per share (GBP) 0.37 0.69
-------------------------------------------------------------------- ------------- -------------
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.
The Group publishes an adjusted NAV that is calculated in
accordance with the guidelines of the European Public Real Estate
Association ("EPRA"). The primary difference between EPRA and IFRS
is that, in general, under IFRS the Group's development properties
are classified as inventory and held at cost while EPRA permits the
incorporation of open market valuations. In order to produce the
EPRA numbers the Group has retained Broll's Johannesburg office to
conduct semi-annual valuations. The EPRA numbers incorporate the
Broll valuations and are net of tax.
The below figures also take into consideration any profit share
agreements with development partners, commission due on sale of
properties (see note 7) and incentive fees due to the Executive
Directors (see note 8).
EPRA NAV 30 June 2014 30 June 2013
-------------------------------------------------------------------- ------------- -------------
Net assets attributable to equity holders of the Company (GBP'000) 22,559 42,946
Shares in issue (in thousands) 62,293 62,293
-------------------------------------------------------------------- ------------- -------------
EPRA NAV per share (GBP) 0.36 0.69
-------------------------------------------------------------------- ------------- -------------
18 Loans from third parties
30 June 2014 30 June 2013
GBP'000 GBP'000
-------------------------------------- ------------- -------------
Start of the year 2,920 5,913
Payment of loans from third parties (1,084) (2,302)
Interest (included in finance costs) - 2
Exchange differences (425) (693)
-------------------------------------- ------------- -------------
End of the year 1,411 2,920
-------------------------------------- ------------- -------------
The loans from third parties are as follows:
Name Interest Rate 30 June 2014
GBP'000
------------------------------------------ --------------- -------------
Homa Adama Trust * - 1,385
Barrow Construction (Pty) Limited ** - 10
Group Five Construction (Pty) Limited ** - 10
Other - 6
1,411
---------------------------------------------------------- -------------
* in relation to its 50 per cent. interest in subsidiary
company, Madison Park Properties 40 (Pty) Limited, and the Brakpan
development.
** in relation to its 25 per cent. interest in subsidiary
company, Breeze Court 31 (Pty) Limited, and the Starleith
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.
19 Trade and other payables
30 June 2014 30 June 2013
GBP'000 GBP'000
-------------------------- ------------- -------------
Trade payables 64 629
Performance fees payable - 107
Other payables 164 94
-------------------------- ------------- -------------
Trade and other payables 228 830
-------------------------- ------------- -------------
The fair value of trade and other payables approximates their
carrying value.
20 Borrowings
Current liabilities
30 June 2014 30 June 2013
GBP'000 GBP'000
-------------------- -------------- -------------
Secured bank loans - 1,408
-------------------- -------------- -------------
Terms and debt repayment schedule
Bank Effective interest rate Final Maturity date 30 June 2014 30 June 2013
30 June 2014 GBP'000 GBP'000
---------------- -------------------------- --------------------- -------------- -------------
Investec Bank* South African Prime Rate 31 March 2014 - 1,408
- 1,408
-------------------------------------------------------------------------------- -------------
* relates to the Kindlewood development, a mortgage bond had
been registered over the Kindlewood property.
The fair value of the borrowings approximate their carrying
value.
21 Contingent liabilities and commitments
As at 30 June 2014 the Group has contingent liabilities which
have corresponding bank guarantees. See note 15 for further
details.
22 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 former investment manager, Group Five Property Developments
(Pty) Limited, and the Directors of the Company are considered to
be related parties by virtue of their ability to make operational
decisions for the Group. Fees in relation to Group Five are
disclosed in note 7 and fees in relation to the Directors are
disclosed in note 8.
Group Five Property Developments (Pty) Limited is a related
party to Group Five Construction (Pty) Limited, which is a partner
in the Wedgewood and Starleith developments. There is a loan in
respect of the Starleith development which is disclosed in note
18.
The replacement investment manager, Bridgehead Real Estate Fund
(Pty) Ltd, is a company managed by Craig McMurray, an Executive
Director of the Company. Fees in relation to Bridgehead are
disclosed in note 7 and fees in relation to the Executive Directors
are disclosed in note 8.
Related party transactions with associates are disclosed in note
11.
The principal subsidiary undertakings within the Group as at 30
June 2014 are:-
Development property Country of incorporation Percentage of shares held *
------------------------------------ ---------------------- -------------------------- ----------------------------
Breeze Court Investments 31 (Pty)
Limited ** Starleith South Africa 50%
Business Venture Investments No
1172 (Pty) Limited Driefontein South Africa 100%
Business Venture Investments No
1268 (Pty) Limited Emberton South Africa 100%
Business Venture Investments No
1269 (Pty) Limited Wedgewood South Africa 79%
Crimson King Properties 378 (Pty)
Limited Gosforth Park South Africa 100%
Living 4 U Developments (Pty)
Limited African Renaissance South Africa 100%
Madison Park Properties 33 (Pty)
Limited Lenasia South Africa 100%
Madison Park Properties 34 (Pty)
Limited Kyalami South Africa 100%
Madison Park Properties 36 (Pty)
Limited ** Waltloo South Africa 50%
Madison Park Properties 40 (Pty)
Limited ** Brakpan South Africa 50%
Royal Albatross Properties 313
(Pty) Limited Kindlewood South Africa 89%
SAPSPV Clayville Property
Investments (Pty) Limited Clayville South Africa 100%
Imbonini Park (Pty) Ltd Imbonini phase 1 South Africa 100%
Imbonini Park Phase 2 (Pty) Ltd Imbonini phase 2 South Africa 100%
8 Mile Investments 504 (Pty)
Limited n/a South Africa 100%
Breeze Court Investments 35 (Pty)
Limited n/a South Africa 100%
Business Venture Investments No
1180 (Pty) Limited n/a South Africa 100%
Business Venture Investments No
1191 (Pty) Limited n/a South Africa 100%
Business Venture Investments No
1205 (Pty) Limited n/a South Africa 100%
Business Venture Investments No
1239 (Pty) Limited n/a South Africa 100%
Business Venture Investments No
1270 (Pty) Limited n/a South Africa 100%
Crane's Crest Investments 28 (Pty)
Limited n/a South Africa 100%
SAPSPV Imbonini Property
Investments (Pty) Limited n/a South Africa 100%
SAPSPV Holdings RSA (Pty) Limited n/a South Africa 100%
Wonderwall Investments 18 (Pty)
Limited n/a South Africa 100%
Business Venture Investments No
1187 (Pty) Limited Inactive South Africa 100%
------------------------------------ ---------------------- -------------------------- ----------------------------
* this also represents the percentage of ordinary share capital and voting rights held - 2014
** the Group controls the company by means of direct control of
the board
The following companies were deregistered during the year and
therefore no longer form part of the Group:
Development property Country of incorporation Percentage of shares held
-------------------------------------- ---------------------- -------------------------- --------------------------
Breeze Court Investments 34 (Pty)
Limited n/a South Africa 100%
Business Venture Investments No 1152
(Pty) Limited n/a South Africa 100%
Business Venture Investments No 1189
(Pty) Limited n/a South Africa 100%
Business Venture Investments No 1238
(Pty) Limited n/a South Africa 100%
Dream World Investments 551 (Pty)
Limited n/a South Africa 100%
Business Venture Investments No 1237
(Pty) Limited Inactive South Africa 100%
-------------------------------------- ---------------------- -------------------------- --------------------------
23 Post balance sheet events
A return of capital of 5 pence per Ordinary Share was made to
shareholders in October 2014. Total funds returned to shareholders
was GBP3,114,641.
The Company has concluded a sale for the remaining six completed
houses as well as the vacant development land constituting all the
assets of the Kindlewood Project and the net proceeds of ZAR 20
million (GBP1.1m) have been received.
The Company has also concluded the sale of the last remaining
development site at Gosforth Park and the net proceeds of ZAR 11.8
million (GBP0.6m) have been received.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR QKADDABDDKBD
SA Property Opps (LSE:SAPO)
Historical Stock Chart
From May 2024 to Jun 2024
SA Property Opps (LSE:SAPO)
Historical Stock Chart
From Jun 2023 to Jun 2024
