Acc-Ross Annual Report 2007 final.indd

Transcription

Annual Report 2007
Company Profile
Acc-Ross Holdings
Limited
Acc-Ross is a holding company with two operating divisions:
Accretio, which focuses on resort and leisure developments and
Gardener Ross, with a primary residential development focus. The
Group’s interest lies primarily in resort and leisure developments.
Operating in partnership with its best-of-breed suppliers, Acc-Ross
creates sound property investments that combine recreation,
residence, leisure and tourism.
Contents
Directo
r
Chairm s’ Profiles
a
Chief Ex n’s Statemen
t
2
Profile o ecutive’s Repo
r
f
K
e
y
3
D evelop t
Corpora
5
Indepen te Governanc ments
Notes t
e
o
7
Directo dent Auditor’s Repor t
S
hareho the Financial
rs’ Resp
R
e
p
o
11
r
t
D eclara
onsibilit
Shareh lders’ Diary Statements
o
16
Directo tion by Comp y and Approv
Notice lders’ Analysis
any Sec
al 17
rs’ Repo
o
Consoli
retary
rt
of the C f AGM of the
d
Shareh
18
Consoli ate d Balance
olders
Abridge ompany
d
19
d CV ’s D
Consoli ate d Income Sheet
P
r
ir
o
x
date d S
Statem
e
y
c
t
F
or Appo
o
25
ent
of Chan
tateme
intmen
Adminis rm
ts
26
tration
Consoli ges in Equity nt
date d C
ash Flo
w State
27
ment
28
29
75
75
76
78
79
81
1
Directors’ Profiles
ARTHUR MASHIATSHIDI
Chairman (age 46)
Arthur was appointed Chairman of
Acc-Ross in October 2005, and is currently
Chief Executive Officer of Decorum Capital
Partners (Pty) Ltd. He holds an MBA from the
University of Cape Town’s Graduate School of
Business, a BSc from Wharton, a Certificate
in Information Systems as well as the CEAB
designation. Arthur sits on a number of
boards of both listed and unlisted companies.
WILFRED ROBINSON
Chief Executive Officer (age 51)
Wilfred was appointed Chief Executive Officer
of Acc-Ross Holdings Ltd on 22 June 2006. He
is a chartered accountant whose career has
been in the financial services sector. He has a
number of finance and management related
qualifications. Wilf joined Barclays Bank in
South Africa in 1973 and retired in 2006 from
ABSA, where he was previously CEO of ABSA
Private Bank.
ANDRE WIESE
Projects Director (age 44)
Andre joined the Acc-Ross board in February
2006. He has sixteen years experience in
property sales, development and marketing,
specialising in residential property with a
particular focus on sectional title complexes,
housing and golf estates.
NOLENE OWEN
Financial Director (age 30)
Nolene was appointed to the Acc-Ross board
in December 2005. She holds a B Com
Law degree and is a qualified chartered
accountant. Prior to joining Acc-Ross, Nolene
was a forensic auditor at Deloitte and
the financial accounting manager for the
domestic market at BMW SA.
KHEHLA MTHEMBU
Non-Executive Director (age 52)
Khehla was appointed non-executive director
of Acc-Ross in October 2005.
He holds a BCom degree from the University
of South Africa. In July 2003, he was
appointed as Chief Executive Officer of Old
Mutual Gauteng and in July 2004, was
appointed Head of Public Affairs.
JOMO SONO
Non-Executive Director (age 51)
Jomo was appointed to the board of
Acc-Ross in October 2005. He is a respected,
competent businessman and is renowned
as a talented, internationally acclaimed
soccer player. He is an ambassador for the
South African government to the committee
overseeing the 2010 FIFA Soccer World
Cup™. Jomo holds interests in a variety of
businesses and sits on a number of boards.
2
Acc-Ross Holdings Limited Annual Report 2007
Chairman’s
Statement
T
he period under review has been a momentous one
for Acc-Ross, characterised by a fundamental shift
in management and strategy. Substantial time and
resources have been invested in establishing and
implementing a new group strategy and vision.
FINANCIAL RESULTS
The Group reported satisfactory results, which reflect the
decision to reposition the Group and to implement a
new business model. Sales revenue was R154,9 million from
R189 million (February: 2006). Earnings per share reflect a loss
of 1.76 cents. The adjusted headline earnings figure of 0.62
cents recognises that the disposal of certain investments
were essentially trading income. A reconciliation of the
adjusted headline earnings calculation is set out at the end
of my report.
INVESTMENT CLIMATE
The property market performed neutrally in 2006, compared
with the boom of 2005. Despite the recent slowdown in
the local residential and leisure markets, mainly due to
increasing interest rates, investors are optimistic that the
leisure market will rise in the near-term.
The last quarter of the previous year saw an increase in the
sales of commercial property and the trend seems to be
continuing into the new financial year. On the leisure front,
the market is relatively stable, with a marginal increase
expected in the months to come.
GROUP STRATEGY
During the period under review, the Group underwent
many changes in terms of developing and implementing
its new strategy going forward, importantly following good
governance in the business. The Acc-Ross business model
now focuses on reducing debt, increasing cash flow and
outsourcing to preferred suppliers. Furthermore, streamlining
the Group’s assets and creating the means for generating
annuity income are also part of the current business focus.
Acc-Ross has identified and capitalised on a distinct gap
in the leisure market. Within the greater Gauteng area, for
example, quality alternative destinations are few and far
between. With destinations such as Lizard Point, which is
close to this target market, Acc-Ross will grow the market
in this space. Lizard Point, in particular, will be a long-term
development.
OPERATIONAL HIGHLIGHTS
Success on an operational level is integral for Acc-Ross at
this stage of its growth. The strategic refocus of the Group
has proven an important development during the year,
providing it with a solid foundation for sustainable growth
into the future.
The Group’s development of its property portfolio remained
a key focus during the period under review. Acc-Ross has
commenced with the rights application for Blue Horizon Bay.
The Gardener Ross Golf & Country Estate development was
completed and fully proclaimed in May 2007, including
all infrastructure and the Ernie Els golf course, which is
expected to open by September 2007. Phase 3 stands were
recently launched to the public and only a few phase 2
stands remain unsold.
The environmental approvals and the amendment of the
guide-plan on the Vaal Dam have been completed, with
final township approval being imminent. Acc-Ross expects
to be breaking ground in the first quarter of 2008.
The Group also commenced with the environmental
approval process for Welvergenoegd during 2007 and took
transfer of the property during July 2007. All approvals are
expected to be completed in the next 18 months.
BOARD OF DIRECTORS
I am very pleased with the overall performance of the board
and the Group’s sub-committees for the year under review.
Progress can be attributed to additions to management
and the Board, made in view of improving the overall
performance of the Group.
Jaco Verster and Mathews Phosa resigned from the
Acc-Ross Board of Directors in June and December
respectively. I would like to take this opportunity to thank
3
them for the services they have rendered during their
time at Acc-Ross and wish them success in their future
endeavours.
Chief Executive, Wilfred Robinson, took over the reigns
from Jaco Verster on 22 June 2006. He has implemented
significant structural changes within the Group, providing a
platform for sustainable performance on all our projects, as
well as entrenching key disciplines that are necessary for a
publicly listed entity.
OUTLOOK
2007 was a year of intense activity, focused on repositioning
Acc-Ross Holdings. The Group has a strong presence in the
market and this, combined with our strong management
team and revised business model, puts us on a solid footing
for future growth.
on the Group’s vision and strategy for growing the business
even further.
We will continue to strive to be the market-leader in the local
leisure property sector, offering shareholders, the Board and
staff a strengthened brand, of which to be proud.
APPRECIATION
On behalf of the Board, I would like to extend my thanks
and appreciation to all my colleagues, shareholders,
management, staff and advisors for their continued efforts
and encouragement, and their enthusiasm and involvement
in the Group’s operations. I look forward to equally high
levels of commitment and energy in the year ahead.
Acc-Ross is well positioned in the property market. The
delivery of Lizard Point and sales of the Gardener Ross Golf
& Country Estate will enable us to offer our high quality
property while delivering value to shareholders and offering
even greater value in the years to come.
Furthermore, our focus on project execution will continue
in 2007 and beyond and we will continue concentrating
Headline loss for the year
Profit on disposal of assets and investments – project related
Adjusted headline earnings for the year
Adjusted headline earnings per share (cents)
4
ARTHUR MASHIATSHIDI
Chairman
(19 715 908)
(3 495 007)
26 055 067
14 333 255
6 339 159
10 838 247
0.62
1.75
Chief Executive’s
Report
T
he past year has been one of fundamental change
and re-organisation at Acc-Ross, culminating in the
streamlining of assets and the Group’s restructure,
focusing on the implementation of the new vision
and strategy. We have now established a clear
focus on key competencies, redesigned our business model,
rationalised our portfolio and reduced overheads by large
margins. Some challenges faced in the year under review
produced significant changes within the company. We
have overcome these challenges, greatly preparing us for
the years to come.
FINANCIAL RESULTS
It is pleasing to have achieved these results, especially since
during the previous financial year, the company faced
financial strain brought about by the high volatility of, and
downward pressure on, the share price, and the generally
negative response from the media and market in general.
The Group’s decision to dispose of non-core assets was
fundamental to reducing debt substantially and to further
reducing the need for project funding.
Headline earnings were satisfactory given the cost of
repositioning the Group and cleaning up the portfolio of
projects, with headline loss per share of 1.95 cents. The profits
realised on the disposal of certain developments have been
excluded from headline earnings. This has been applied in
accordance with the guideline issued on headline earnings
as shares in property holding entities were sold, as opposed
to the underlying land/development. If this profit is included,
the company would have reflected adjusted headline
earnings of 0.62 cents per share.
YEAR UNDER REVIEW
Our new business model, focusing predominantly on leisure
and larger residential developments, incorporates three
new areas for value creation: top-structure development;
hotel and commercial. By implementing all three
components, we will create annuity income, as opposed
to our historical strategy of disposing of the developments
once completed. We now have the opportunity to further
generate ongoing income from our projects by selling only
certain components of the development and retaining
the rest of the assets, to generate annuity income for the
Group going forward.
We have followed an outsourced business model, resulting
in a lowering of our monthly overheads, by appointing the
correct and appropriate professional project managers
and teams to manage our developments. In doing this,
Group management can concentrate further on its core
competency of identifying key sites with potential value
to the Group. The new business model encompasses the
expansion of revenue streams, thereby mitigating the need
to bring on a number of new projects each year in order to
grow the company further.
KEY HIGHLIGHTS
Although the year under review was one of strategy,
implementation and consolidation, we are pleased to see
the recovery in the share price from 13 cents to current
levels, recovering a large portion of shareholder value,
as well as positively shifting media and market sentiment
towards the Group. The increase in the understanding of the
leisure property sector within the market, in terms of how to
value a company such as ours, has also driven the increase
in the share price.
We were able to maintain a healthy level of sales through
the Gardener Ross Golf & Country Estate, which has been
our main contributor to the bottom line to date. The
infrastructure and golf course in this development are now
complete, with phase 3 proclaimed during May 2007. Phase
3 stands were recently launched to the market and only a
few phase 2 stands remain unsold.
The securing of the Star Homes Show at Gardener Ross Golf
& Country Estate during November 2007 is expected to be a
catalyst for sales at our development with more than 30 000
people expected to attend the show. This project reinforces
Acc-Ross’ capability to develop first-class residential golf
estates from barren land.
MARKET CONDITIONS & RISK
When considering the context, the development market
differs substantially from the residential property market. As
5
developers, it is essential to have sound advance planning
and prediction of future property market conditions, in order
to successfully secure a niche in the market well before
developments commence. At Acc-Ross, our developments,
on average, take between two to three years from concept
to implementation.
Market conditions have been fairly neutral given that the
fantastic growth in property has levelled out, although sales
activity remains reasonable.
Given the large number of residential developments
currently underway, specifically within urban areas, we
believe that we are managing development risk, by
focusing predominantly on the leisure sector, with a core
focus on supplying products for residential, leisure and the
property investor.
With current perceptions of the property sector being
somewhat negative, risk is mitigated by the fact that presales require low refundable deposits (10%), which are
placed into an attorney trust account, in relation to the
total sale. On transfer, the completed asset has usually
increased in value, thereby reducing the risk for the
purchaser further.
As experienced developers we also have the ability to
phase developments in accordance with market demand,
thus managing a portion of market risk. Historically, property
appreciates over time, balancing out any inherent risk.
CHANGE IN MANAGEMENT
During the year under review, and subsequent to year end,
a change in the management structure was implemented
with a view to strengthening the Group’s performance.
GOVERNANCE AND STRUCTURE
activities that it will embark on, from outright land sale to
securing a portion of existing projects to generate annuity
income.
Our fractional, syndication, sectional-title and outright
ownership models are being established to create a further
revenue generating method for Group income. As part
of our strategy going forward, units will also be made
available to rental pools, thereby creating the opportunity
for shared rental income. Investors, through any of these
wealth creation vehicles, have an opportunity to share
in an income stream which is expected to offset costs
of ownership. Over time, these vehicles will create an
income producing asset, as well as a leisure destination for
personal use.
We foresee that growth within the property sector will
continue well after 2010, encouraging tourism and foreign
investment to our destinations.
As part of our strategy, we will continue to leverage the
professional golfers and other high profile sportsmen and
women who form part of our developments, to facilitate
the initiation of international sporting events on-site. Our
partnerships with these professionals have enhanced, and
will continue to enhance the profile and desirability of our
locations.
APPRECIATION
Through the continued commitment and dedication of our
strong management team and staff, the knowledge and
guidance of the Board, our partners and business advisors,
the Group is well positioned to deliver sustainable growth
and value to its shareholders. I would like to thank my
fellow Board members, staff, suppliers and advisors for their
ongoing support of, and dedication to Acc-Ross and look
forward to the coming year with enthusiasm.
During this financial year, stability has been brought into
the Group. As part of the recovery strategy to entrench the
future sustainability of the Group, a corporate governance
structure, cash flow management strategy and executive
committees have been introduced. Transparency and
accountability measures have also been put in place.
OUTLOOK
Our business generates assets for people. Management is
optimistic about the potential of its assets to create greater
shareholder value, given the variety of income generating
6
WILFRED ROBINSON
Chief Executive Officer
Gardener Ross Golf & Country Estate
number of owner properties has commenced with certain
owners already occupying their homes on the estate. A
number of show houses are being built for The Star Homes
Show due to be held on site during November 2007.
G
ardener Ross Golf & Country Estate situated
in Centurion, Gauteng, comprises an Ernie
Els signature golf course and a housing
development with 1 131 full title stands. The
geographic position of the estate offers
owners the opportunity to enjoy a quiet and secure country
lifestyle, within range of major developing business areas,
including Centurion, Midrand, Sandton and Pretoria. The
land was acquired in 2003 for a purchase consideration of
R15 million.
Gardener Ross has already transferred the majority of Phase
one and a number of Phase two stands to purchasers. Phase
three was proclaimed in May 2007 and all phases of the
development have been completed. Stands are now ready
for transfer on purchase and payment. Construction of a
Gardener Ross, per its projected budgets, projects total
sales of approximately R900 million from all three phases
and a total profit after tax and minority interests from the
entire development upon sale of all stands, of approximately
R110 million.
The development is financed by Investec. The project finance
is a rolling facility, attracting interest at prime less 0.5%
and a profit share of 25% of the pre-tax profit from the
project. Project management for this development is being
undertaken by Devco Africa (Proprietary) Limited, which
owns 10% of the development and has developed, and is
currently developing, numerous property projects throughout
South Africa. The necessary ROD (Record Of Decision) and
Environmental Impact Report approvals were obtained in
2004 and construction commenced in September 2004. The
development is currently ahead of schedule. With all 18 golf
holes having been completed, the course is expected to be
officially opened for play in the near future.
7
Lizard Point
A
cc-Ross now owns 100% of the shareholding
in Eagle Creek Investments 74 (Proprietary)
Limited, which will develop the Lizard Point
Resort Development. The land was acquired
in 2004 for a purchase consideration of
R11,5 million, plus stands to the value of R9 million to be
defined once phase 1 is completed. Professional fees have
been carried by the company to date through funds raised
from bank funding and the sale of debentures.
Lizard Point is a 700-hectare resort development with
6,4 kilometres of water frontage, situated at the mouth of
the Wilge River and on the banks of the Vaal Dam next to
Oranjeville in the Free State.
The project was granted its ROD from the environmental
authorities on 2 November 2005 and the final amendment
to the Guide Plan was promulgated on 19 May 2006. The
company is planning to break ground early next year,
after receipt of the final township development rights,
which have taken much longer than expected, but which
are now expected imminently. The first phase of the
development comprises an 18-hole championship links golf
course, which will be co-designed by Retief Goosen, with
526 Residential One, freehold stands and approximately
800 higher density units. Phase One was officially launched
in August 2005 and pre-sales of approximately R150 million
have been achieved to date.
8
The second phase will comprise a second 18-hole signature
parklands golf course with 315 Residential One, freehold
stands and 621 Residential Two sites. Other products in the
development include boat storage and launching facilities,
a golf driving range, tennis courts, the two club houses
for the golf courses and an island with resort pools and
sundowner bars.
Phases three and four comprise the development of residential
units and the waterfront area, which consists of a commercial
hotel, retail outlets, restaurants, cinemas, entertainment, a
boutique hotel and a timeshare component.
Blue Horizon Bay
A
cc-Ross is the majority shareholder in GR Equity
(Proprietary) Limited. It is the owner of the Blue
Horizon Bay Eco-Estate property of 76 hectares
located on an extremely sought-after area
of coastal land, between Port Elizabeth and
Jeffrey’s Bay. The seaside development will cater to the
holiday market. It will be a low density development, leaving
ample open space to allow small game to roam freely and
allowing for the majority of homes to have uninterrupted
ocean views.
Blue Horizon Bay Eco-Estate is a smaller project but given its
location, it is expected to be a popular holiday destination.
The land was purchased for R550 000 in 2003 and transfer
has been effected. Environmental Impact Assessments have
been initiated and the applications for rights are at an
early stage. The township application is in the process of
formulation. Banks will be approached to finance the project
in the normal manner once the ROD has been granted.
Comprehensive studies of the existing fauna and flora, the
soil conditions and land use have already been done and
will continue to play a critical role in the development.
9
Welvergenoegd
W
elvergenoegd is a planned township
development situated outside Durbanville
in the Cape. Water rights have been
secured for the development through part
funding of the Durbanville water pipeline.
Environmental Impact Assessments have been initiated and
applications for rights are at an early stage. It is anticipated
that the development will commence during 2009 and be
completed within 36 months thereafter. The project is similar
in nature and size to Gardener Ross and estimated profit
before taxation of the entire development over 4 years, is
expected to be over R400 million.
Transfer of the property was effected during July 2007. The
township application is in the process of formulation and
banks will be approached to finance the project in the
normal manner once the ROD has been received.
10
Corporate Governance Report
for the year ended 28 February 2007
T
he Board of Directors is firmly committed to promoting
corporate governance and has implemented
the recommendations as contained in the King
Report on Corporate Governance for South Africa
2002 (“King II”), where appropriate. The Board has
continued implementing various aspects of compliance
with King II during the year as fully detailed below.
1. COMPOSITION OF THE BOARD
Acc-Ross retains a unitary Board structure that consists of
three non-executive directors and three executive members.
The non-executive directors are of such a calibre that their
views carry significant weight in the Board’s decisions. The
Board meetings are also attended by representatives from
the company’s Designated Advisor in accordance with JSE
Listings Requirements for companies listed on the Alternative
Exchange (“AltX”). The directors of the company are set out
on page 2 of the Annual Report.
2. INDEPENDENCE OF THE BOARD
The roles of chairman and chief executive officer are
separated. The Board is chaired by a non-executive director,
Arthur Mashiatshidi. The non-executive directors are not
appointed under service contracts and their remuneration
(see page 57) is not tied to the Group’s financial performance.
Arthur Mashiatshidi, Khehla Mthembu and Jomo Sono
continued to act as independent non-executive directors on
the Board during 2007.
3. APPOINTMENT AND RE-ELECTION OF THE BOARD
During the year, Wilfred Robinson was appointed as chief
executive officer. Due to the required rotation of directors,
Khehla Mthembu and Jomo Sono retire as directors. Khehla
Mthembu, being eligible, offers himself for re-election at the
annual general meeting of shareholders. Curriculum vitae are
set out on page 78. The Board will be considering additional
non-executive appointments during the forthcoming year.
Dr Mathews Phosa resigned during the year due to a potential
conflict of interest. Jaco Verster also resigned from the Board.
No formal procedure exists for appointments to the Board.
In accordance with AltX Listings Requirements, a nomination
committee is not required and the size of the company does
not warrant the establishment of one.
4. ROLE AND FUNCTION OF THE BOARD
The articles of association of the company are the charter
which governs the directors’ roles and responsibilities.
The Board retains full, effective control over the Group,
provides strategic direction and delegates certain powers to
management. The day-to-day management of the Group is
vested in the executive directors.
The Board of Directors determines the company’s purpose
and values, ensures that the Group complies with codes
of sound business practice and has unrestricted right-ofaccess to all company information, records, documents and
property and independent legal advice when required.
The directors recognise that they are responsible for the
Group’s system of financial and internal controls (see
paragraph 10 below). The executive directors are responsible
for identifying, analysing, reporting and managing Group risk
which forms part of their everyday function. To date, no formal
evaluation of the Board has taken place due to the size of the
company. However, this will continue to be considered as the
Group grows.
In accordance with the AltX Listings Requirements, the
directors of Acc-Ross are required to attend a 4-day,
Directors’ Induction Programme. Certain executive directors
have attended this course and arrangements are being
made for the remaining executive and non-executive
directors to attend.
5. BOARD COMMITTEES
Although the AltX Listings Requirements only provide for the
establishment of an audit committee, the company has
three committees, namely an audit and risk committee,
a remuneration committee and an investment committee.
These committees report to the Board of Directors.
5.1 Audit and Risk Committee
During the year under review, the audit and risk committee
consisted initially of three non-executive members, namely
Dr Mathews Phosa (chairman), Arthur Mashiatshidi and
Jomo Sono and, following Dr Phosa’s resignation, comprised
two non-executive members. The audit and risk committee
also includes a representative from the Designated Advisor
in compliance with the AltX Listing Requirements. King II
recommends that the chairman of the Board should not be
the chairman of the audit committee. Accordingly, pursuant
to the resignation of Dr Phosa, the representative from the
Designated Advisor will act as chairperson, until such time
11
Artist’s impression of the intended
Gatehouse at Lizard Point.
as a new non-executive director is appointed. The audit
committee meets at least twice a year and a representative
of the external auditors is in attendance at the meetings. The
majority of the members of the audit and risk committee are
financially literate. The Board of Directors of Acc-Ross has
unrestricted access to the committee.
of the consolidated annual financial statements). No
share incentive scheme exists, although shares have
been allocated to the directors as a method of long-term
incentivisation, which allocation is subject to shareholder
approval.
5.3 Investment Committee
The combined audit and risk committee mandate provides
for the reviewing of financial information, the effectiveness
of the internal controls, assessment of risk relating to the
business and industry, accounting policies, the code of
ethics, compliance procedures, audit fees and reporting
thereon to the Board. The audit and risk committee has
accepted its responsibilities in terms of this charter.
5.2 Remuneration Committee
The remuneration committee consists of two non-executive
directors, Khehla Mthembu (chairman) and Jomo Sono.
Although a remuneration committee is not an AltX
requirement, this had been established in the interests of
good corporate governance.
The committee meets at least once a year and operates
in accordance with a mandate approved by the Board
of Directors. The committee is responsible for approving
the remuneration of the executive directors (see note 26
12
The investment committee consists of one non-executive
director, three executive directors and a representative from
the Designated Advisor. Arthur Mashiatshidi is the chairman
and the executive directors are Wilfred Robinson, Nolene
Owen and Andre Wiese. Michelle Krastanov represents
the Designated Advisor on the committee. Although an
investment committee is not an AltX requirement, this has
been established in the interests of effective assessment of
investment opportunities, proper and effective reporting to
the Board and good corporate governance.
The committee meets on an ad hoc basis as and when
required. The Board has requested that the investment
committee assess proposed investment opportunities that
the executive management of the company believes should
be presented to the Board of Directors. Once the financial
and other qualitative aspects have been considered, the
investment committee is required to make a recommendation
to the Board of Directors.
6. BOARD AND COMMITTEE MEETINGS
AND ATTENDANCE THEREOF
The Board meets on a regular basis, but at least every three
months. The directors are properly briefed in respect of
special business prior to Board meetings and information is
timeously provided to enable them to give full consideration
to all the issues under discussion. The directors do make
further enquiries where necessary.
All directors, committee members and chairmen are
encouraged to attend the annual general meeting of the
company.
Six Board meetings were held during the financial year
ended 28 February 2007 and one after the year end until the
date of this report. Three audit and risk committee meetings
have been held during the year and two after year end, two
remuneration committee meetings and one after year end,
and two investment committee meetings during the year.
Minutes are kept of all Board and committee meetings.
The attendance of the directors as at 28 February 2007 for
the year under review, taking into account their dates of
appointment and/or resignation, was as follows:
Director/
% of Board meetings
committee member attended
Number of meetings
attended (6)
% of audit and risk
committee meetings
attended
Number of meetings
attended (3)
AM Mashiatshidi
JJ Verster **
W Robinson§
N Owen
A Wiese
KS Mthembu
Dr NM Phosa$
EM Sono
H Friedman#
M Krastanov*
6/6
2/6
5/5
5/6
6/6
5/6
4/4
1/6
3/5
6/6
100%
n/a
n/a
n/a
n/a
n/a
100%
0%
100%
100%
1/1
n/a
n/a
n/a
n/a
n/a
2/2
0/3
2/2
3/3
% of remuneration
Director/
meetings
committee member committee
attended
Number of meetings
attended (2)
% of investment
committee meetings
attended
Number of meetings
attended (2)
AM Mashiatshidi
JJ Verster **
W Robinson§
N Owen
A Wiese
KS Mthembu
Dr NM Phosa$
EM Sono
H Friedman#
M Krastanov*
n/a
n/a
n/a
n/a
n/a
2/2
n/a
2/2
n/a
2/2
100%
50%
100%
100%
100%
n/a
n/a
n/a
n/a
100%
2/2
1/2
2/2
2/2
2/2
n/a
n/a
n/a
n/a
2/2
100%
33%
100%
83%
100%
83%
100%
17%
60%
100%
n/a
n/a
n/a
n/a
n/a
100%
n/a
100%
n/a
100%
# alternate director, attended by invitation until resignation on 09 November 2006
* representing the Designated Advisor
§ appointed on 01 May 2006
$ resigned on 01 August 2006
** resigned on 05 February 2007
13
7. INTERESTS OF DIRECTORS AND OFFICERS
The register of interests of directors in contracts in terms
of Section 234 of the Companies Act, No 61 of 1973 (as
amended), is available to members of the public on
request. The interests (direct and indirect) of directors and
officers in the company’s securities as at 28 February 2007, is
as seen in the table below:
Beneficially Held
Total Shares
Percentage
Direct
Indirect
Direct
Indirect
AM Mashiatshidi
2 500 000
35 014 280
-
-
37 514 280
3.14%
N Owen
2 000 000
-
-
-
2 000 000
0.16%
A Wiese
5 275 000
-
-
-
5 275 000
0.44%
KS Mthembu
2 500 000
-
-
-
2 500 000
0.21%
ME Sono
2 500 000
-
-
-
2 500 000
0.21%
-
4 196 838
4 196 838
0.35%
14 775 000
39 211 118
53 986 118
4.51%
Arcay Client Support (Pty) Ltd
TOTAL
There were no changes to directors’ interests in the share
capital of the company between 28 February 2007 and the
date of posting this annual report.
8. COMPANY SECRETARY
All directors have access to the advice and services of Arcay
Client Support (Proprietary) Limited (“ACS”), which fulfils the
role of company secretary. The Board is of the opinion
that the management of ACS has the requisite attributes,
experience and qualifications to fulfil its commitments
effectively. Subsequent to year end, ACS has taken over
the company secretarial responsibilities for the subsidiaries
in the Group.
9. EXTERNAL AUDITORS AND AUDIT
The auditors of the Group have been changed during the
year to Deloitte & Touche (“Deloitte”). Deloitte performs an
independent and objective audit on the Group’s financial
statements. The financials statements are prepared in terms
of International Financial Reporting Standards (“IFRS”).
Interim reports are not audited. The risk and audit committee
approves the audit fees for the audit. The auditors have
unrestricted access to the risk and audit committee and are
invited to all meetings. The re-appointment of the auditors or
the appointment of new auditors, is recommended by the
risk and audit committee.
14
Non Beneficially Held
-
-
Non-audit services performed by the auditors were
approved by the risk and audit committee. The committee
is of the opinion that this did not impair the independence
of the auditors.
10. ACCOUNTING AND INTERNAL CONTROLS
The Board has established controls and procedures to ensure
the accuracy and integrity of the accounting records and
monitors the Group’s businesses and their performance.
The controls are designed to provide reasonable assurance
that assets are safeguarded from loss or unauthorised
use and that the financial records may be relied upon
for preparing the financial statements. The statement of
directors’ responsibility is set out on page 17.
11. INTERNAL AUDIT
Given the size of the Group, there is no internal audit
process.
12. NON-FINANCIAL MATTERS
Acc-Ross subscribes to the highest ethical standards
and behaviour in the conduct of its business and related
activities, and requires total honesty and integrity from its
directors and employees. Acc-Ross expects its shareholders,
suppliers and partners to subscribe to the same high
ethical standards.
13. COMMUNICATIONS WITH STAKEHOLDERS
The Group is committed to ongoing and effective
communication with stakeholders. It subscribes
to a policy of open and timeous communication in
line with JSE Limited guidelines and sound corporate
governance, and manages these through its investor
relations programme.
The Group upholds and supports the objectives of the
Employment Equity Act and intends implementing initiatives
that provide opportunities for all levels of staff within its
developments as they become established. Acc-Ross will
seek to position itself as an employer of choice, whilst
at the same time, enhancing its participation in making
South Africa more competitive internationally. During the
prior year, all staff members at all levels of employment
were afforded the opportunity to acquire a shareholding
in Acc-Ross.
The Group’s employment policies are designed to
provide equal opportunities, without discrimination, to
all employees.
15. CLOSED PERIOD
A closed period is exercised by the Group’s directors from
the date of the reporting period until the Group’s results are
published on SENS. Additional closed periods are enforced
as required in terms of any corporate activity or when
directors are in possession of price sensitive information. All
the directors are aware of the legislation regulating insider
trading. A record of dealings by directors in the company’s
securities is retained by the Company Secretary at the
registered office of the company.
16. TRANSFER OFFICE
Computershare Investor Services 2004 (Proprietary) Limited
acts as transfer secretary to the company.
14. EMPLOYMENT, DEVELOPMENT AND
EMPLOYMENT EQUITY
The Group continues to promote a culture that provides all
employees with opportunities to advance to their optimal
levels of career development. However, due to the Group’s
small number of employees and a policy of outsourcing its
projects to best-of-breed professionals, opportunities are
currently limited. As the Group moves from land development
to running its leisure developments, it will introduce various
staff forums that will promote employee participation
and consultation.
15
Independent Auditor’s Report to the
Members of Acc-Ross Holdings Limited
W
e have audited the accompanying group
annual financial statements of Acc-Ross
Holdings Limited, which comprise the
directors’ report, the consolidated balance
sheet as at 28 February 2007, and the
consolidated income statement, consolidated statement
of changes in equity and consolidated cash flow statement
for the period then ended, and a summary of significant
accounting policies and other explanatory notes, set out on
page 19 to 74.
MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL
STATEMENTS
Management is responsible for the preparation and fair
presentation of these financial statements in accordance
with International Financial Reporting Standards and the
Companies Act of South Africa. This responsibility includes:
designing, implementing and maintaining internal control
relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether
due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that
are reasonable in the circumstances.
AUDITORS’ RESPONSIBILITY
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in
accordance with International Standards on Auditing. Those
standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable
assurance whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the
financial statements. The procedures selected depend
on the auditor’s judgment, including the assessment of the
risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant
to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of
the entity’s internal control.
16
An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of
accounting estimates made by management, as well
as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
audit opinion.
OPINION
In our opinion, the financial statements present fairly, in all
material respects, the financial position of the Acc-Ross
Holdings Limited group as of 28 February 2007, and of its
financial performance and its cash flows for the period then
ended in accordance with International Financial Reporting
Standards, and the Companies Act of South Africa.
DELOITTE & TOUCHE
Registered Auditors
Per Zuleka Jasper
Partner
27 August 2007
PO Box 11007, Hatfield, 0028
221 Waterkloof Road, Waterkloof, 0181
National Executive: GG Gelink (Chief Executive), AE Swiegers (Chief Operating
Officer), GM Pinnock (Audit); DL Kennedy (Tax), L Geeringh (Consulting), L Bam
(Strategy), CR Beukman (Finance), TJ Brown (Clients & Markets), NT Mtoba
(Chairman of the Board), J Rhynes (Deputy Chairman of the Board)
Regional Leader: T Kalan
A full list of partners and directors is available on request
A member of Deloitte Touche Tohmatsu
Directors’ Responsibilities
and Approval
T
he directors are required by the South African
Companies Act, No 61 of 1973, as amended, to
maintain adequate accounting records and are
responsible for the content and integrity of the
financial statements and related financial information
included in this report. It is their responsibility to ensure that
the financial statements fairly present the state of affairs
of the Group as at the end of the financial year and the
results of its operations and cash flows for the period then
ended, in conformity with International Financial Reporting
Standards. The external auditors are engaged to express an
independent opinion of the financial statements.
The financial statements are prepared in accordance with
International Financial Reporting Standards and are based
upon appropriate accounting policies and are supported
by reasonable and prudent judgements and estimates.
The directors acknowledge that they are ultimately
responsible for the system of internal financial control
established by the Group and place considerable
importance on maintaining a strong control environment.
To enable the directors to meet these responsibilities, the
board sets standards for internal control aimed at reducing
the risk of error or loss in a cost effective manner. The
standards include the proper delegation of responsibilities
within a clearly defined framework, effective accounting
procedures and adequate segregation of duties to ensure
an acceptable level or risk. These controls are monitored
throughout the Group and all employees are required
W ROBINSON
to maintain the highest ethical standards in ensuring
the Group’s business is conducted in a manner that in
all reasonable circumstances is above reproach. The
focus of risk management in the Group is on identifying,
assessing, managing and monitoring all known forms of
risk across the Group. While operating risk cannot be
fully eliminated, the Group endeavours to minimise it by
ensuring that appropriate infrastructure, controls, systems
and ethical behaviour are applied and managed within
predetermined procedures and constraints.
The directors are of the opinion, based on the information
and explanations given by management that the system
of internal control provides reasonable assurance that the
financial records may be relied on for the preparation of
the financial statements. However, any system of internal
financial control can provide only reasonable and not
absolute assurance against material misstatement or loss.
The directors have reviewed the Group’s cash flow forecast
for the year to 28 February 2008 and, in the light of
this review and the current financial position, they are
satisfied that the Group has or has access to adequate
resources to continue in operational existence for the
foreseeable future.
The financial statements set out on pages 19 to 74, which
have been prepared on the going concern basis, were
approved by the board on the date stated below and were
signed on its behalf by:
N OWEN
Johannesburg
27 August 2007
17
Declaration by Company Secretary
T
he Secretary certifies that the Group has lodged
with the Registrar of Companies, all such returns
as are required of a public company, in terms of
section 268 G (d) of the Companies Act, No 61 of
1973, as amended, and that all such returns are true,
correct and up to date to the extent that the Secretary has
been informed.
ARCAY CLIENT SUPPORT (PTY) LIMITED
Registration Number 1998/025284/07
Company Secretary
27 August 2007
18
Directors’ Report
1. BACKGROUND, INCORPORATION AND NATURE OF
BUSINESS
Acc-Ross Holdings Limited (“Acc-Ross“) was registered and
incorporated as a private company in the Republic of
South Africa on 14 January 2000 under the name Arcfin
Trading 45 (Proprietary) Limited. The company changed
its name to Le-Sel Holdings Limited and was converted
to a public company on 04 October 2000. Being a shelf
company, the company was dormant and conducted no
business from incorporation until control was acquired by
the shareholders of Accretio Holdings (Proprietary) Limited
(“Accretio Holdings”) during February 2005. The company
previously had no subsidiaries.
The company first entered into negotiations to acquire
Gardener Ross Holdings Limited (“GRH”) during March
2005, which agreement was signed on 15 August 2005 and
effected on 31 August 2005. The company then changed its
name to Acc-Ross Holdings Limited on 16 November 2005.
Rights/Records of Decision (“ROD’s”) are in place for the two
current projects. The Group has pre-sales, which sales are
recognised on proclamation and transfer of the underlying
stands. Facilities are also in place for Gardener Ross Golf
& Country Estate (Proprietary) Limited (“Gardener Ross
Golf & Country Estate“), which facilities are ring-fenced
in each project and secured by the land and pre-sales of
each project. Once the facility has been approved, the
drawdown of facilities is dependent on a minimum level of
qualified pre-sales being achieved.
3. INTERNATIONAL FINANCIAL REPORTING STANDARDS
AND CHANGE IN ACCOUNTING POLICIES
The company listed on the Alternative Exchange (“AltX’) of
the JSE Limited on 16 February 2006. The results presented
for the year ended 28 February 2007 reflect the first full
year of trading as a listed entity and the second year of
operations as a group.
The accounting policies adopted for purposes of this
report comply with International Financial Reporting
Standards (“IFRS”). These results have been prepared in
terms of accounting policies consistent with the prior year,
with the exception of accounting for borrowing costs,
equity accounting of associates and the reclassification
of projects from Property, Plant and Equipment to
Inventory. Accordingly, the results for the year ended
28 February 2006 have been restated as detailed under
paragraph 4 below.
2. INDUSTRY AND BUSINESS OVERVIEW
4. FINANCIAL RESULTS
Revenue is initially derived from the sale of stands, where,
although lead times in developing projects can be two to
three years, profitability is typically high. Once the stand
sales are completed, Acc-Ross plans to retain certain of the
leisure or commercial assets which have been developed,
such as the leisure golf courses, sport facilities, conference
facilities, club houses, hotels and commercial or retail
interests and rental stocks to ultimately generate annuity
income for the Group.
For the year under review, revenue was primarily generated
by the transfer of the remainder of Phase 1 and a portion
of Phase 2 of Gardener Ross Golf & Country Estate. These
sales declined in relation to the prior year mainly due
to the slow down experienced in the luxury residential
market, higher interest rates and an excess of stock in the
higher end of the market. Phase 2 of Gardener Ross Golf &
Country Estate is also the smallest phase, with fewer stands
available for sale.
Acc-Ross is primarily a developer of leisure resorts and
residential lifestyle estates, whereby land is acquired,
rezoned and developed. Whilst revenue and profits will, for
the first few years, be generated through the sale of stands,
the projects enable Acc-Ross to fund the development of
substantial leisure assets as part of the process. The strategy
of Acc-Ross is to move into top structure development in
conjunction with experienced partners and to become a
leading hotel and leisure company over the next few years.
The operating results and state of affairs of the Group
for the year ended 28 February 2007 are fully set out in
the accompanying financial statements. The net loss for
the Group was R17 116 785 (2006: net profit of R9 758 217),
after taxation of R734 375 (2006: credit of R626 673). Loss
per share is 1.76 cents (2006: earnings per share of 1.5
cents), with a headline loss of R19 715 908 or 1.95 cents
per share compared to headline loss of R3 495 007 or 0.56
cents per share.
19
Cost of sales includes the costs of construction of the
Gardener Ross Golf course on a pro rata basis in relation
to stand sales, which was in line with the original intention
when construction of the golf course commenced in 2003
and is in line with the basis on which the funding and
profit share arrangements with Investec Bank Limited were
concluded. Due to the minority shareholders and profit
share arrangements in Gardener Ross Golf & Country
Estate, the option for the Group to retain this asset is not
commercially viable. The balance of the cost of the golf
course is included in inventory and will have a continuing
effect on cost of sales throughout the project. The golf
course has been completed during the current period and
most of the costs of construction have been accrued.
The Group has early adopted the amendments to IAS
23 Borrowing costs, in terms of which borrowing costs
are required to be capitalised to the underlying projects,
whereas these were previously expensed. This increased
Cost of sales and Inventory and includes the profit share
attributable to Investec Bank Limited.
Income from the disposal of other non-core assets and
developments was the only other source of income and
are disclosed separately as Other gains and losses, as these
sales resulted from the sale of projects through the disposal
of the entity holding the project. This is accordingly adjusted
in the calculation of headline earnings in accordance with
Circular 7 of 2002.
Impairment of goodwill primarily resulted from impairment
of the project known as The Bay, which was sold subsequent
to year end subject to the suspensive conditions being
fulfilled.
Opening balances and comparative results have required
restatement as a result of these and other amendments.
Amounts attributable to minorities relate to the 10%
shareholding in Gardener Ross Golf & Country Estate.
5. ACQUISITIONS, DISPOSALS AND ISSUES OF SHARES
FOR CASH
a. During the year, the company issued 98 000 000 shares at
86.7 cents to the Abalengani group of companies as part
of the settlement of various transactions as announced on
08 March 2006 and as detailed below.
20
Acc-Ross, through its 100% subsidiary GRH, acquired 100%
of Zamien Investments 66 (Proprietary) Limited, which holds
a project currently known as The Bay for a purchase
consideration of R144 803 000 from Abalengani. The
purchase consideration was settled by way of issue of
78 000 000 new shares at an issue price of 86.7 cents per
share, the transfer to Abalengani of 20 stands held by GRH
for R30 million, cash of R30 177 000 and the balance was
settled through the issue of 60 day non-interest bearing
debentures amounting to R10 million, which debentures
were subsequently settled in cash and 60 day convertible
debentures amounting to R7 million, which, if not repaid
within the 60 day period had the option to be converted
into preference shares bearing a coupon rate of 9.25%,
redeemable after 120 days.
Acc-Ross, through its 100% subsidiary Accretio Property
Development (Proprietary) Limited (“Accretio”), acquired
90% of Zamien Investments 6 (Proprietary) Limited, which
holds the development known as Icon@Sandhurst for a
purchase consideration of R37 million from Abalengani.
The purchase consideration was settled by way of issue
of 20 000 000 new shares in Acc-Ross at an issue price of
86.7 cents per share, cash of R2 660 000 and the balance
to be settled through the issue of 60 day debentures
amounting to R17 million, which if not repaid within the 60
day period, had the option to be converted into preference
shares bearing a coupon rate of 9.25%, redeemable after
120 days.
Acc-Ross, through Accretio, acquired 100% of the shares and
loan account claims in Hyde Park House (Proprietary) Limited,
which holds the development known as Icon@Hyde Park for
a purchase consideration of R29 million from Abalengani.
The purchase consideration was settled by way of transfer
of 100% of Seven Seasons Trading 60 (Proprietary) Limited
(“Seven Seasons”) from Tauve Developments (Proprietary)
Limited (“Tauve”), a wholly owned subsidiary of Accretio
and which company holds the Royal Palms development,
to Abalengani.
Acc-Ross, through Accretio, sold 35% of Eagle Creek
Investments 74 (Proprietary) Limited (“Eagle Creek”), which
company holds the Lizard Point development, to Abalengani
for a purchase consideration of R24 337 000 in cash. In
addition, Abalengani is required to procure development
funding for Phase 1 of Lizard Point of R100 million.
Acc-Ross, through Accretio, sold 50% of Comuine Golf
Estate Limitada (“Comuine”), which company holds the
development at Vilanculos in Mozambique, to Abalengani
for a purchase consideration of R1 million, which amount
was required after the listing in order to secure the project.
Abalengani is required to procure development funding of
R90 million for the project.
Accretio sold 100% of Seven Seasons to Abalengani for
a consideration of R35 million and Abalengani was also
required to pay sales commission and a recoupment of
project management fees totalling R11 000 000. In addition,
Abalengani would assume the debt within Seven Seasons of
approximately R16 000 000.
b. In terms of a reversal agreement entered into on 25 August
2007, a number of the agreements in a. above were reversed
ab initio as it subsequently emerged that an agreement
had been presented whereby, prior to the acquisition by
Acc-Ross, a director of Seven Seasons had agreed to an
option on the Manor House for R9 million, subject to certain
conditions precedent. It had been advised that this option
had been cancelled in the prior year, however, as Seven
Seasons was principally acquired for private use of the
Manor House by Abalengani, in good faith and in line
with the revised strategy of the group to focus on leisure
and resort developments, the company reversed the Royal
Palms transaction, the Icon@Hyde Park and Icon@Sandhurst
acquisitions, which were top structure developments, sold its
minority interest in Nondela and extinguished the liabilities
relating to debentures and interest owing to Abalengani.
c. Acc-Ross, through its wholly owned subsidiary, Accretio
Property Developers (Proprietary) Limited (“APD”) acquired
the remaining shares in Lizard Point for a total consideration
of R33 750 000. The purchase was effected through the
acquisition of the entire shareholding of Zamien Investment
67 (Proprietary) Limited and all its sale share claims from
Enani Trust (“Enani”) and Fana Hlongwane (“Hlongwane”)
in terms of two separate agreements.
The purchase consideration of R18 million for the Hlongwane
acquisition was settled through the issue of 77 199 477
shares at 23.3 cents per share after year end, as detailed
in subsequent events below, due to the potential option to
substitute cash in lieu of shares.
The rationale for the acquisition was in line with the Group’s
long-term strategy of owning 100% of its core projects, of
which Lizard Point is one such project.
d. The asset of Redlex 89 (Proprietary) Limited, comprising
the Brooklyn Stone top structure development were sold for
R11.3 million.
e. Seven Seasons was disposed of for a purchase consideration
of between R7.5 million and R9 million, depending on the
timing of the settlement of the purchase price, to the Taute
Family Trust (related party) due to numerous potential legal
problems with the entity as mentioned earlier, as well as the
project potential only being approximately 17 stands. M
Taute is a director of Seven Seasons.
f. As announced on 19 December 2006, Acc-Ross, through
its wholly owned subsidiary, Zamien Investments 66
(Proprietary) Limited (“the seller”), announced the disposal
of the development known as The Bay for a total purchase
consideration of R195 550 000, through a number of
agreements dated 14 December 2006 and an addendum
dated 27 December 2006, subject to certain conditions
precedent, one of which was written confirmation from banks
of grant of loan funding to the purchaser of R95 550 000 by
no later than 14 February 2007. Shareholders are referred to
subsequent events detailed below.
g. The company issued 7 500 000 shares at 17.5 cents and
16 550 000 shares at 25.7 cents per share for cash to the
general public during the financial year for the extinguishing
of outstanding debts.
An amount of R15 750 000 payable to Enani was settled by
way of set-off of an amount of R3 750 000 being an amount
owed by Xeedan Property Investment (Proprietary) Limited
to Acc-Ross, and an amount of R12 000 000 via the issue to
Enani Trust or its nominee of 60 000 000 shares. The payment
included a settlement of dispute between the parties.
21
6. DIRECTOR CHANGES
During the year under review the following director changes
occurred.
Director
Date appointed
Date resigned
JJ Verster
28 February 2005
05 February 2007
AB Mashiatshidi*
07 October 2005
KS Mthembu*
07 October 2005
EM Sono*
07 October 2005
Dr NM Phosa*
07 October 2005
N Owen
06 December 2005
A Wiese
28 February 2006
W Robinson
22 June 2006
24 July 2006
* Non-executive
7. INTEREST IN SUBSIDIARIES
Name of subsidiary
Net (loss) / income after tax Net (loss) / income after tax
28/02/07
Restated 28/02/06
Accretio Holdings (Pty) Ltd
South Africa
(2 342 073)
Gardener Ross Holdings Ltd
South Africa
(30 341 241)
4 810 080
Accretio Property Development (Pty) Ltd
South Africa
13 390 609
(4 074 268)
Accretio Investments (Pty) Ltd
South Africa
Tauve Developments (Pty) Ltd
South Africa
6 508 211
(50 064)
Eagle Creek Investments 74 (Pty) Ltd
South Africa
(1 365 362)
(107 738)
GR Equity (Pty) Ltd
South Africa
(18 811)
(7 883)
Northern Jungle Trading 17 (Pty) Ltd
South Africa
(113 410)
(3 167 232)
Redlex 89 (Pty) Ltd
South Africa
(4 196 785)
(3 478 391)
Seven Seasons Trading 60 (Pty) Ltd
South Africa
(63 817)
Comuine Golf Estate Limitada
22
Country of
Incorporation
Mozambique
(2 280)
(202 065)
-
92 034
-
-
22 044 021
33 936 695
Gardener Ross Golf & Country Estate (Pty) Ltd
South Africa
Chestnut Hill Investments 111 (Pty) Ltd
South Africa
South Africa
Zeranza 50 (Pty) Ltd
South Africa
(10 635)
Gardener Ross Holdings Nominees (Pty) Ltd
South Africa
519 829
-
Acc-Ross Networks (Pty) Ltd
South Africa
(15 878)
-
Zamien Investments 66 (Pty) Ltd
South Africa
(82 445)
-
South Africa
(500)
-
(231 536)
-
(809 253)
(40)
(541)
8. COMPANY SECRETARY
14. GOING CONCERN
9. AUDITORS
The financial statements have been prepared on the
basis of accounting policies applicable to a going
concern. This basis presumes that funds will be available
to finance future operations and that the realisation of
assets and settlement of liabilities, contingent obligations
and commitments will occur in the ordinary course of
business.
The company secretary remained unchanged during the
period under review. Refer to inside back cover for the
details of the company secretary.
Deloitte & Touche acted as the company’s auditors for
the year ended review and will continue in office in
accordance with section 270(2) of the Companies Act,
1973, as amended.
10. SHARE CAPITAL
We draw attention to the fact that at 28 February 2007, the
Group had accumulated losses of R8 583 287 (2006: Profit
of R9 278 274).
The authorised and issued share capital of the company
as at 28 February 2007 is set out in note 10 to the annual
financial statements. As at 28 February 2007, there were
1 122 430 034 issued ordinary shares and 877 569 966
unissued ordinary shares.
The ability of the Group to continued as a going concern is
dependent on a number of factors. The most significant of
these is that the directors continued to procure funding for
the ongoing operations for the company.
11. DIVIDEND
15. NON-CURRENT ASSETS
In line with the results achieved, the directors have decided
not to declare a dividend for the year under review.
12. LITIGATION
There is no major litigation pending against the company
or its subsidiaries, other than a motion against GRH, which
matter is being defended as the company has been
advised that the applicant has no locus standi.
13. SHARE INCENTIVE SCHEME
20 000 000 Ordinary shares with a par value of R0,0001
each were allocated to employees during the prior
year. 16 000 000 of these were already accounted for
in the prior year with an amount or R8 800 000 being
recognised through profit and loss. An adjustment of
R2 200 000 was made to profit and loss to account for the
remaining 2 200 000 shares incorrectly omitted from the
original share allocations. The actual issue has not taken
place to date.
Share issues to employees were measured at the fair
value of the equity instrument on grant date which
was determined by using the market value of shares on
that date.
No further share issues to staff and directors occurred
during the financial year ended 28 February 2007.
Group projects were reclassified during the current year
from Property, plant and equipment to Inventory / Freehold
land. As a result of this re-classification Property, plant and
equipment decreased materially from the prior period with
a corresponding increase in Inventory.
Non-current assets of Inventory / Freehold land and stands
represent non-current inventory and un-proclaimed stands
held by the company for resale, but will only realise over
a period exceeding 12 months. The decline from the
prior year relates to the proclamation of Phases 2 and
3 of Gardener Ross Golf & Country Estate, which has in
turn resulted in an increase in current freehold land and
proclaimed stands.
16. NON-CURRENT LIABILITIES
Non-current borrowings primarily comprise the GRH
cumulative redeemable preference shares of R53 million
(2006: R46 million), amounts due to funders, such as
Investec Bank Limited, ABSA Bank Limited and Nedcor, as
well as debentures issued in Lizard Point which will convert
to stands on proclamation of Phase 1 of Lizard Point.
17. SUBSEQUENT EVENTS
Prior to year end Acc-Ross entered into an agreement for
the disposal of The Bay at Hartebeespoort for R195 550 000.
The transaction was unanimously supported at a meeting
23
of shareholders on 28 May 2007. The only unfulfilled
suspensive condition is the delivery of bank guarantees. This
transaction will only be recorded once all the suspensive
conditions have been met and transfer of the land has
taken place.
In terms of an agreement entered into effective 11
December 2006, the Group acquired the remaining 50%
of Zamien Investments 67 (Proprietary) Limited, holding a
minority interest in Eagle Creek Investments 74 (Proprietary)
Limited (Lizard Point) from Fana Hlongwane. The purchase
consideration was settled through the issue of 77 199 477
shares at 23.3 cents per share during March 2007.
Phase 3 of Gardener Ross Golf & Country Estate, comprising
412 stands, was proclaimed during May 2007.
On 21 May 2007 the company bought the 20% minority
shareholding in Acc-Ross Networks (Proprietary) Limited for
a purchase consideration of R135 101.
The company issued 60 000 000 shares at 50 cents for cash
to the general public on 28 May 2007, which proceeds were
applied mainly to settle the remaining liability owing on the
land at Welvergenoegd outside Durbanville. The balance
was injected into Gardener Ross Golf & Country Estate.
On 30 May 2007 the Group disposed of its 25% shareholding
in Accretio Bond Originators (Proprietary) Limited to
E. Verster, a related party, for R340 000
During May 2007, Gardener Ross Holdings Nominees
(Proprietary) Limited sold 4 703 291 cumulative redeemable
preference shares in GRH to Jansk International Limited for
R5 883 817 (cum div). An amount of R2 990 116 was paid by
way of cession of the JCM Trust loan.
24
On 4 June 2007 the company bought 7,5% minority
shareholding in GR Equity (Proprietary) Limited which houses
the project known as Blue Horizon Bay for a purchase
consideration of R300 000, payable on 31 July 2007.
On 27 June 2007, Accretio Investments (Proprietary)
Limited sold its 24,5% shareholding in Two Ships Trading 193
(Proprietary) Limited to the Taute Family Trust for R425 000.
In terms of original land sale agreement for the acquisition
of land for the Lizard Point development, the seller, Mr.
Reyneke would retain approximately 4 500 sqm of land,
with the original farm house thereon. Subsequent to year
end, agreement was amended and this portion of land
been acquired for a purchase consideration of R9 million,
to be settled in stands, pre-selected by Mr. Reyneke, upon
proclamation of Phase 1 of the development.
18. SEPARATE FINANCIAL STATEMENTS
The financial result, position and cash flow of the holding
company is not presented separately in these annual financial
statements. These financial statements include only the
consolidated results, position and cash flow of the Group.
19. FUTURE PROSPECTS
Acc-Ross continues to be approached with numerous high
quality projects and is evaluating ways to take advantage of
such opportunities in future, now that the Group has disposed
of its non core projects, has designed a new business model
and has improved the Group’s liquidity position as a result of
the sale of The Bay. In the short term it will continue with its
current key projects, which will ultimately lead to the Group
holding various leisure assets at key locations from which
annuity income can be generated. The retained portfolio of
projects is world class and is expected to create sustainable
revenue streams into the future.
Consolidated Balance Sheet
as at 28 February 2007
Notes
Assets
28/02/07
Restated
28/02/06
R
R
Non-current assets
Property, plant and equipment
4
994 588
1 219 802
Inventory / Freehold land and stands
5
94 536 260
196 643 322
Goodwill
6
157 772 084
108 634 094
Investments at amortised cost
8
-
6 240 025
8
5 239 443
4 698 202
20
9 946 689
9 777 650
268 489 064
327 213 095
Loans and receivables at amortised cost
Deferred tax assets
Total non-current assets
Current assets
5
368 321 418
31 936 089
8
16 378 170
9 651 385
Trade and other receivables
9
35 004 251
46 393 805
Cash and cash equivalents
29
1 638 036
11 191 531
421 341 875
99 172 810
Non-current assets held for sale
21
25
-
Total current assets
421 341 900
99 172 810
Total assets
689 830 964
426 385 905
280 600 194
167 043 256
Equity and Liabilities
Capital and reserves
Issued capital, share premium and share-based payment reserve
10
Accumulated (loss) / profit
(8 583 287)
Equity attributable to equity holders of the parent
Minority interest
Total equity
9 278 274
272 016 907
176 321 530
1 980 657
1 123 493
273 997 564
177 445 023
Non-current liabilities
Borrowings
11
205 482 440
133 005 835
Finance lease obligation
12
454 537
597 039
Deferred tax liabilities
20
Total non-current liabilities
41 149 512
19 815 967
247 086 489
153 418 841
Current liabilities
Trade and other payables
13
45 417 992
34 738 733
Borrowings
11
74 396 014
28 914 204
12
137 504
109 261
Current tax payable
20
16 860 125
13 127 473
Provisions
14
31 935 276
18 632 370
Total current liabilities
168 746 911
95 522 041
Total liabilities
415 833 400
248 940 882
Total equity and liabilities
689 830 964
426 385 905
25
Consolidated Income Statement
Year ended
Notes 28/02/07
R
Restated
Year ended
28/02/06
R
Revenue
15
154 890 863
189 027 031
Cost of sales
16
(140 178 401)
(157 894 533)
14 712 462
31 132 498
Gross profit
Other gains and losses
17
30 616 354
16 765 541
Investment revenue
18
806 364
351 752
Marketing and sales expenses
Occupancy expenses
Other expenses
(10 705 793)
(5 000 964)
(571 036)
(390 804)
(37 395 305)
(23 964 250)
Finance costs
19
(13 845 456)
(9 762 229)
(Loss) / Profit before tax
22
(16 382 410)
9 131 544
Income tax (expense) / income
20
(734 375)
626 673
(17 116 785)
9 758 217
(17 861 561)
9 278 274
(Loss) / Profit for the year
Attributable to:
Ordinary shareholders of the parent
Minority interest
744 776
479 943
(Loss) / Earnings per share
26
Basic (cents per share)
23
(1,76)
1,50
Diluted (cents per share)
23
(1,76)
1,24
Consolidated Statement of
Changes in Equity
Attributable to
Balance at 1 March 2005
Loss for the year as previously
reported
Share
capital
Share
premium
Retained
earnings
equity holders
of the parent
Minority
interest
Total
R
R
R
R
R
R
47 714
-
-
(5 254 463)
47 799
-
-
1 600
8 798 400
-
8 800 000
-
8 800 000
Issue of ordinary shares in
settlement of liabilities
38 207
157 011 960
-
157 050 167
-
157 050 167
2 715 628
-
2 715 900
-
2 715 900
(2 191 367)
-
(2 191 367)
-
(2 191 367)
272
(3 468 453)
85
Issue of ordinary shares for
directors and staff
Issue of ordinary shares for cash
(3 468 453)
47 714
(8 722 916)
Share issue costs
-
Acquired from minorities
-
-
87 793
166 334 621
400
620 442
88 193
166 955 063
-
-
16 550
98 824 452
-
98 841 002
-
98 841 002
7 500
18 704 317
-
18 711 817
-
18 711 817
(3 995 881)
-
(3 995 881)
-
(3 995 881)
as previously reported
Effect of changes in accounting
policies and correction of errors
(refer note 33)
Restated balance at
1 March 2006
Loss for the year
Issue of ordinary shares in
settlement of liabilities
Issue of ordinary shares for cash
Share issue costs
-
Acquired from minorities
-
-
112 243
280 487 951
Balance at
28 February 2007
-
-
6 122 209
6 122 209
162 953 961
867 831
163 821 792
12 746 727
13 367 569
255 662
13 623 231
9 278 274
176 321 530
1 123 493
177 445 023
(3 468 453)
(17 861 561)
(8 583 287)
(17 861 561)
744 776
(17 116 785)
-
112 388
112 388
272 016 907
1 980 657
273 997 564
27
Consolidated Cash Flow Statement
Notes
Cash flows from operating activities
Year ended
28/02/07
Restated
Year ended
28/02/06
R
R
(17 116 785)
Minorities
9 758 217
112 388
(474 675)
(734 375)
626 673
Income tax expense
20
Finance cost
19
Investment revenue
18
Gain on sale of property, plant and equipment
17
(25 381)
Gain on disposal of business
17
(23 219 489)
Gain on disposal of other financial assets
17
13 845 456
(806 364)
-
9 762 229
(351 752)
(16 765 541)
Depreciation
4
226 761
96 132
Impairments
22
24 200 720
4 597 161
17
104 447
Fair value adjustments
Net foreign exchange loss
-
Gain on sale of subsidiary
Expense in respect of equity-settled share-based payments to staff and directors
(7 475 931)
25
(10 888 553)
(3 037 188)
11 000 000
15 211 256
Movements in working capital:
Decrease / (Increase) in trade and other receivables
9
5 191 576
(5 489 407)
Increase in inventory / Freehold land and stands
5
(89 475 267)
(49 400 397)
Increase / (Decrease) in trade and other payables
13
25 959 762
(21 981 722)
Increase in provisions
14
13 302 906
18 632 370
(55 909 576)
(43 027 900)
(13 845 456)
(9 762 229)
Cash used in operations
Interest paid
19
Income taxes paid
20
Net cash used in operating activities
(69 755 032)
(52 790 129)
Cash flows from investing activities
Interest received
18
806 364
351 752
Loans and receivables obtained
8
231 974
4 813 701
Additions to property, plant and equipment
4
(113 600)
(1 240 316)
Proceeds from disposal of property, plant and equipment
Payments for investments acquired
137 434
8
-
Acquisition of subsidiaries
27
100
Disposal of subsidiaries
28
Net cash generated by investing activities
(1 295)
(6 240 000)
10 782 289
-
1 060 977
8 467 426
Proceeds from issues of equity shares
18 711 817
2 715 900
Payment for share issue costs
(3 995 881)
(2 191 367)
Cash flows from financing activities
Movement in finance lease obligations
Proceeds from borrowings
(114 259)
11
Net cash generated by financing activities
Net (decrease) / increase in cash and cash equivalents
28
706 300
44 538 883
52 449 434
59 140 560
53 680 267
(9 553 495)
9 357 564
Cash and cash equivalents at the beginning of year
29
11 191 531
1 833 967
Cash and cash equivalents at the end of year
29
1 638 036
11 191 531
Notes to the Consolidated
Financial Statements
1. ADOPTION OF NEW AND REVISED STANDARDS
These results have been prepared in terms of accounting
policies consistent with the prior year, with the exception
of accounting for borrowing costs, equity accounting of
associates and the reclassification of projects from Property,
plant and equipment to Inventory / Freehold land and
stands.
In the current year, the Group has adopted all of the new
and revised Standards and Interpretations issued by the
International Accounting Standards Board (“IASB”) and the
International Financial Reporting Interpretations Committee
of the IASB that are relevant to its operations. The adoption
of these new and revised Standards and Interpretations has
resulted in changes to the Group’s accounting policies in
the following areas that have affected the amounts and / or
disclosures reported for the current and prior years:
IAS 23 Borrowing costs
The option of immediately recognising as an expense
borrowing costs that relate to assets that take a substantial
period of time to get ready for use or sale, has been
removed. An entity is therefore required to capitalise
borrowing costs as part of the cost of such assets. The
only exceptions are the capitalisation of borrowing costs
relating to assets measured at fair value, and inventories
that are manufactured or produced in large quantities on a
repetitive basis, even if they take a substantial period of time
to get ready for use or sale.
The revised Standard applies to borrowing costs relating
to qualifying assets for which the commencement date
for capitalisation is on or after 1 January 2009. However,
early adoption is permitted and encouraged. In light of
these changes the Group decided to adopt the revised
standard in 2007 which resulted in a restatement of results
retrospectively.
IFRS 8 Operating Segments
This Standard required an entity to report financial and
descriptive information about its reportable segments,
which are operating segments or aggregations of operating
segments that meet specified criteria. Operating segments
are components of an entity about which separate financial
information is available that is evaluated regularly by the
chief operating decision maker in deciding how to allocate
resources and in assessing performance. The amount
reported for each segment item is the measure reported to
the chief operating decision made for these purposes.
The Standard applies to annual periods beginning on or
after 1 January 2009. However, early adoption is permitted
and encouraged. The Group adopted the standard
in 2007.
In addition, the Group adopted the following revised
accounting Standards and Interpretations which had no
material impact on the results:
• IFRS 4 Insurance contracts – Amendment for financial
guarantee contracts;
• IFRS 6 Exploration for and Evaluation of Mineral Assets;
• IAS 19 Employee benefits – Option to recognise actuarial
gains and losses in full, outside profit or loss, in a
statement of changes in equity;
• IAS 39 Financial Instruments Recognition and
Measurement – Amendment for hedges of forecast
Intra-group transactions;
Measurement – Amendment for fair value option;
Measurement – Amendment for financial guarantee
contracts;
• IFRIC 4 Determining whether an arrangement contains
a Lease;
• IFRIC 5 Rights to Interests arising from
Decommissioning, Restoration and Environmental
Rehabilitation Funds;
• IFRIC 6 Liabilities arising from participating in a Specific
Market – Waste Electrical and Electronic Equipment;
and
• IFRIC 7 Applying the Restatement Approach under
IAS 29 Financial Reporting in Hyperinflationary
Economies.
At the date of authorisation of these financial statements,
the following Standards and Interpretations were is issue but
not yet effective:
IFRS 7 Financial Instruments: Disclosures
The Standard was issued in August 2005 and is effective for
annual periods beginning on or after 1 January 2007. The
Standard adds new disclosures about financial instruments
to those required by IAS 32 Financial Instruments: Disclosures
and Presentation and replaces disclosures required by IAS
30 Disclosures in the Financial Statements of Banks and
Similar Financial Institutions.
IAS 1 Presentation of Financial Statements
The Standard was amended in conjunction with the release
of IFRS 7 in that it imposes additional requirements for
disclosure of the entity’s objectives, policies and processes
for managing capital, quantitative data about what the
entity regards as capital, whether the entity has complied
with any capital requirements and if it has not complied,
the consequences of such non-compliance. The standard
is effective for annual periods beginning on or after
1 January 2007.
29
IFRIC 8 Scope of IFRS 2
The Interpretation was issued in January 2006 and is effective
for annual periods beginning on or after 1 May 2006. The
Interpretation clarifies that IFRS2 Share-based Payments
applies to arrangements where an entity makes share-based
payments for apparently nil or inadequate consideration. If
the identifiable consideration given appears to be less than
the fair value of the equity instruments granted or liability
incurred, it could indicate that other consideration has
been or will be received.
IFRIC 9 Reassessment of Embedded Derivatives
This Interpretation was issued in March 2006 and is effective
for annual periods beginning on or after 1 June 2006. This
Interpretation addresses whether IAS39 requires that an
entity should assess whether any embedded derivatives
contained in a contract are required to be separated
from the host contract and accounted for as stand-alone
derivatives when it first becomes a party to a hybrid
contract or continuously throughout the life of the contract.
The Interpretation also address whether a first-time adopter
of IFRS should make this assessment on the basis of the
conditions that existed when the entity first became a party
to the contract, or those prevailing when the entity adopts
IFRS for the first time.
IFRIC 10 Interim Financial Reporting and Impairment
This Interpretation is effective for annual periods beginning
on or after 1 November 2006. The Interpretation clarifies that
an entity shall not reverse an impairment loss recognised
in a previous interim period in respect of goodwill or an
investment in either an equity instrument or a financial asset
carried at cost.
IFRIC 11 IFRS 2: Group and Treasury Share Transactions
This Interpretation became effective for annual periods
beginning on or after 1 March 2007 and concludes that
when an entity receives services as consideration for rights
to its own equity instruments, the transaction should be
accounted for as equity-settled in terms of IFRS2 Sharebased payments. This is regardless of whether the entity
chooses or is required to purchase equity instruments to
satisfy its obligation, the entity or its shareholder(s) grants
the right, or the transaction is settled by the entity or by its
shareholder(s).
Where a subsidiary grants rights to equity instruments of
its parents to its employees the subsidiary has incurred a
liability to transfer cash or other assets of the entity to its
employees and the subsidiary accounts for the transaction
as a cash-settled share-based payment transaction.
IFRIC 12 Service Concession Arrangements
This Interpretation is effective for annual periods beginning
on or after 1 January 2007 and applies to private sector
operators involved in the provision of public sector
infrastructure assets and services and states that for
arrangements falling within its scope (essentially those
where the infrastructure assets are not controlled by the
operator), the infrastructure assets are not recognised as
Property, plant and equipment of the operator.
IFRIC 13 Customer Loyalty Programmes
This Interpretation addresses accounting by entities that
grant loyalty award credits to customers who buy other
goods or services and is effective for annual periods
beginning on or after 1 July 2007. Specifically it explains
how such entities should account for their obligations to
provide free or discounted goods or services to customers
who redeem award credits.
IFRIC 14 IAS 19: The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction
This Interpretation addresses the interaction between a
minimum funding requirement and the limit placed by
paragraph 58 of IAS19 on the measurement of the defined
benefit asset or liability. This Interpretation is effective for
annual periods beginning on or after 1 January 2008.
The directors anticipate that the adoption of these
Standards and Interpretations in future periods will have no
material impact on the financial statements of the group.
2. SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
The financial statements have been prepared in
accordance with International Financial Reporting
Standards and the Companies Act of South Africa.
Basis of preparation
Where the parent grants rights to its equity instruments to
employees of its subsidiary, assuming the transaction is
accounted for as an equity-settled share-based payment
transaction in the consolidated financial statements, the
subsidiary should measure the services received using the
requirements for equity-settled transactions in IFRS2 and
should recognise a corresponding increase in equity as a
contribution from the parent.
30
The financial statements have been prepared on the
historical cost basis, except for the measurement of certain
non-current assets and financial instruments at fair value or
amortised cost and incorporate the principal accounting
policies set out below.
These accounting policies are consistent with the previous
year, except for the changes set out in note 1 above.
Basis of consolidation
The consolidated financial statements incorporate the
financial statements of the company and entities controlled
by the company (its subsidiaries). Control is achieved where
the company has the power to govern the financial and
operating policies of an entity so as to obtain benefits from
its activities.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated income statement
from the effective date of acquisition or up to the effective
date of disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies
into line with those used by other members of the group. All
Intra-group transactions, balances, income and expenses
are eliminated in full on consolidation.
Minority interests in the net assets (excluding goodwill) of
consolidated subsidiaries are identified separately from
the group’s equity therein. Minority interests consist of the
amount of those interests at the date of the original business
combination and the minority’s share of changes in equity
since the date of the combination. Losses applicable
to the minority in excess of the minority’s interest in the
subsidiary’s equity are allocated against the interests of the
group except to the extent that the minority has a binding
obligation and is able to make an additional investment to
cover the losses.
Business combinations
Acquisitions of subsidiaries and businesses are accounted
for using the purchase method. The cost of the business
combination is measured as the aggregate of the fair values
(at the date of exchange) of assets given, liabilities incurred
or assumed, and equity instruments issued by the group in
exchange for control of the acquiree, plus any costs directly
attributable to the business combination. The acquiree’s
identifiable assets, liabilities and contingent liabilities that
meet the conditions for recognition under IFRS 3 Business
combinations are recognised at the fair values at the
acquisition date, except for non-current assets that are
classified as held for sale in accordance with IFRS 5 Noncurrent assets held for sale and discontinued operations,
which are recognised and measured at fair value less costs
to sell.
Goodwill arising on acquisition is recognised as an asset and
initially measured at cost, being the excess of the cost of the
business combination over the group’s interest in the net fair
value of the identifiable assets, liabilities and contingent
liabilities recognised. If, after reassessment, the group’s
interest in the net fair value of the acquiree’s identifiable
assets, liabilities and contingent liabilities exceeds the cost
of the business combination, the excess is recognised
immediately in profit of loss.
The interest of minority shareholders in the acquiree is initially
measured at the minority’s proportion of the net fair value of
the assets, liabilities and contingent liabilities recognised.
Investments in associates
An associate is an entity over which the group has significant
influence but is not a subsidiary. Significant influence is the
power to participate in the financial and operating policy
decisions of the investee but is not control or joint control
over those policies.
The results and assets and liabilities of associates are
incorporated in these financial statements using the equity
methods of accounting, except when the investment is
classified as held for sale, in which case it is accounted for
in accordance with IFRS 5 Non-current assets held for sale
and discontinued operations. Under the equity method,
investments in associates are carried in the consolidated
balance sheet at cost as adjusted for post-acquisition
changes in the group’s share of the net assets of the
associate, less any impairment in the value of the individual
investments. Losses of an associate in excess of the group’s
interest in that associate are not recognised, unless the
group has incurred a legal or constructive obligation or
made payments on behalf of the associate.
Any excess of the cost of acquisition over the group’s share
of the net fair value of the identifiable assets, liabilities and
contingent liabilities of the associate is recognised at the
date of acquisition as goodwill. The goodwill is included
within the carrying amount of the investment and is assessed
for impairment as part of the investment. Any excess of
the group’s share of the net fair value of the identifiable
assets, liabilities and contingent liabilities over the cost of
acquisition, after reassessment, is recognised immediately
in profit or loss.
Where a group entity transacts with an associate of the
group, profits and losses are eliminated to the extent of the
group’s interest in the relevant associate.
Goodwill
Goodwill arising on the acquisition of a subsidiary represents
the excess of the cost of acquisition over the group’s interest
in the net fair value of the identifiable assets, liabilities and
contingent liabilities of the subsidiary recognised at the
date of acquisition. Goodwill is initially recognised as an
asset at cost and is subsequently measured at cost less any
accumulated impairment losses.
31
Goodwill arising on the acquisition of an associate is
described under “Investments in associates” above.
estimated future cash receipts through the expected life of
the financial asset to that asset’s net carrying amount.
For the purpose of impairment testing, goodwill is allocated
to each of the group’s cash-generating units expected
to benefit from the synergies of the combination. Cashgenerating units to which goodwill has been allocated are
tested for impairment annually, or more frequently when
there is an indication that the unit may be impaired. If
the recoverable amount of the cash-generating unit is
less than the carrying amount of the unit, the impairment
loss is allocated first to reduce the carrying amount of any
goodwill allocated to the unit and then to the other assets of
the unit pro rata on the basis of the carrying amount of each
asset in the unit. An impairment loss recognised for goodwill
is not reversed in a subsequent period. On disposal of a
subsidiary the attributable amount of goodwill is included in
the determination of the profit or loss on disposal.
Leases as lessee
Non-current assets and disposal groups are classified as
held for sale if the carrying amount will be recovered
principally through a sale transaction rather than through
continuing use. This condition is regarded as met only when
the sale is highly probable and the asset is available for
immediate sale in its present condition. Management must
be committed to the sale, which should be expected to
qualify for recognition as a completed sale within one year
from the date of classification.
Assets held under finance leases are initially recognised as
assets of the group at their fair value at the inception of
the lease or, if lower, at the present value of the minimum
lease payments. The corresponding liability to the lessor
is included in the balance sheet as a finance lease
obligation.
Lease payments are apportioned between finance charges
and reduction of the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the
liability. Finance charges are charged directly to profit or
loss, unless they are directly attributable to qualifying assets,
in which case they are capitalised in accordance with the
group’s general policy on borrowing costs. Contingent
rentals are recognised as expenses in the periods in which
they are incurred.
Non-current assets classified as held for sale are measured
at the lower of their previous carrying amount and fair value
less costs to sell.
Operating lease payments are recognised as an expense
on a straight-line basis over the lease term, except where
another systematic basis is more representative of the time
pattern in which economic benefits from the leased asset
are consumed. Contingent rentals arising under operating
leases are recognised as an expense in the period in which
they are incurred.
Revenue recognition
Foreign currencies
Revenue is measured at the fair value of the consideration
received or receivable. Revenue from the sale of goods is
recognised when all the following conditions are satisfied:
The individual financial statements of each group entity
are presented in the currency of the primary economic
environment in which the entity operates (its functional
currency). In preparing the financial statements of the
individual entities, transactions in currencies other than the
entity’s functional currency are recorded at the rates of
exchange prevailing at the dates of the transactions. At
each balance sheet date, monetary items denominated
in foreign currencies are retranslated at the rates prevailing
at the balance sheet date. Non-monetary items carried at
fair value that are denominated in foreign currencies are
retranslated at the rates prevailing at the date when the
fair value was determined. Non-monetary items that are
measured in terms of historical cost in a foreign currency are
not retranslated.
• The group has transferred to the buyer the significant risks
and rewards of ownership of the goods;
• The group retains neither continuing managerial
involvement to the degree usually associated with
ownership nor effective control over the goods sold;
• The amount of revenue can be measured reliably;
• It is probable that the economic benefits associated with
the transaction will flow to the group; and
• The costs incurred or to be incurred in respect of the
transaction can be measured reliably.
Interest revenue is accrued on a time basis, by reference
to the principal outstanding and at the effective interest
rate applicable, which is the rate that exactly discounts
32
Leases are classified as finance leases whenever the terms
of the lease transfer substantially all of the risks and rewards
of ownership to the lessee. All other leases are classified as
operating leases.
Exchange differences are recognised in profit of loss in the
period in which they arise.
Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get
ready for their intended use or sale, are added to the cost
of those assets, until such time as the assets are substantially
ready for their intended use or sale. Investment income
earned on the temporary investment of specific borrowings
pending their expenditure on qualifying assets is deducted
from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit of loss in
the period in which they are incurred.
Share-based payments
Equity-settled share-based payments to employees and
others providing similar services are measured at the fair
value of the equity instrument at the grant date. Further
details on how the fair value of equity-settled share-based
transactions has been determined are detailed in note 25.
The fair value determined at the grant date of the equitysettled share-based payments is expensed on a straight-line
basis over the vesting period, if applicable.
Equity-settled share-based payment transactions with other
parties are measured at the fair value of the goods and
services received, except where the fair value cannot be
estimated reliably, in which case they are measured at the
fair value of the equity instruments granted, measured at
the date the entity obtains the goods or the counterparty
renders the service.
Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from profit as reported in the
income statement because it excludes items of income or
expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible.
The group’s liability for current tax is calculated using tax
rates applicable at the balance sheet date.
Deferred tax
Deferred tax is recognised on differences between the
carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the
computation of taxable profit, and are accounted for
using the balance sheet liability method. Deferred tax
liabilities are generally recognised for all taxable temporary
differences, and deferred tax assets are generally recognised
for all deductible temporary difference to the extent that it
is probable that taxable profits will be available against
which those deductible temporary differences can be
utilised. Such assets and liabilities are not recognised if the
temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither the
taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences associated with investments in subsidiaries,
except where the group is able to control the reversal of the
temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred
tax assets arising from deductible temporary differences
associated with such investments and interests are only
recognised to the extent that it is probable that there will be
sufficient taxable profits against which to utilise the benefits
of the temporary differences and they are expected to
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at
each balance sheet date and reduced to the extent that
it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the period in which the
liability is settled or the asset realised, based on tax rates and
tax laws that have been enacted or substantively enacted
by the balance sheet date. The measurement of deferred
tax liabilities and assets reflects the tax consequences that
would follow from the manner in which the group expects,
at the reporting date, to recover or settle the carrying
amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes
levied by the same taxation authority and the group intends
to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax are recognised as an expense or
income in profit or loss, except when they relate to items
credited or debited directly to equity, in which case the
tax is also recognised directly in equity, or where they arise
from the initial accounting for a business combination. In
the case of a business combination, the tax effect is taken
into account in calculation goodwill or in determining the
excess of the acquirer’s interest in the net fair value of the
acquiree’s identifiable assets, liabilities and contingent
liabilities over cost.
33
Property, plant and equipment held for use in the production
or supply of Inventory / Freehold land and stands, or for
administration purposes, are stated in the balance sheet at
their cost less any subsequent accumulated depreciation
and subsequent accumulated impairment losses. Any
revaluation increase arising on the revaluation of such
asset is credited in equity to the properties revaluation
reserve, except to the extent that it reverses a revaluation
decrease for the same asset previously recognised in profit
or loss, in which case the increase is credited to profit or
loss to the extent of the decrease previously charged. A
decrease in the carrying amount arising on the revaluation
of such asset is charged to profit or loss to the extent that
it exceeds the balance, if, any, held in the properties
revaluation reserve relating to a previous revaluation of
that asset.
Depreciation on revalued assets is charged to profit or
loss. On the subsequent sale or retirement of a revalued
asset, the attributable revaluation surplus remaining in
the properties revaluation reserve is transferred directly to
retained earnings. No transfer is made from the revaluation
reserve to retained earnings except when an asset is
derecognised.
Properties in the course of construction are carried at
cost, less any recognised impairment loss. Cost includes
professional fees and, for qualifying assets, borrowing costs
capitalised.
Fixtures and equipment are stated at cost less accumulated
depreciation and any accumulated impairments losses.
Depreciation is charged so as to write off the cost or
valuation of assets, other than land and properties under
construction, over their estimated useful lives, using the
straight-line method. The estimated useful lives, residual
values and depreciation method are reviewed at each year
end, with the effect of any changes in estimate accounted
for on a prospective basis.
Assets held under finance leases are depreciated over the
expected useful lives on the same basis as owned assets or,
where shorter, the term of the relevant lease.
The gain or loss arising on the disposal or retirement of an
item of property, plant and equipment is determined as the
difference between the sales proceeds and the carrying
amount of the asset and is recognised in profit or loss.
Inventories are stated at the lower of cost and net realisable
value. Costs, including an appropriate portion of fixed and
34
variable overhead expenses, are assigned to inventories
held by the method most appropriate to the particular
class of inventory. Net realisable value represents the
estimated selling price for inventories less all estimated costs
of completion and costs necessary to make the sale.
In the determination of the value of Inventory / Freehold
land and stands, project costs are allocated to each
underlying stand. When stands are proclaimed, it is
available for sale and are therefore classified as current
Inventory / Freehold land and stands. The costs associated
with any unproclaimed stands are classified as non-current
Inventory / Freehold land and stands, if less than net
realisable value.
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the group reviews the carrying
amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have
suffered and impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss. Where it is not
possible to estimate the recoverable amount of an individual
asset, the group estimates the recoverable amount of the
cash-generating unit to which the asset belongs. Where
a reasonable and consistent basis of allocation can be
identified, corporate assets are also allocated to individual
cash-generating units.
Recoverable amount is the higher of fair value less costs
to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks
specific to the asset for which the estimates of future cash
flows have not been adjusted.
If the recoverable amount of any asset or cash-generating
unit is estimated to be less that its carrying amount, the
carrying amount of the asset or cash-generating unit is
reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss, unless the relevant
asset is carried at a revalued amount, in which case the
impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the
carrying amount of the asset or cash-generating unit is
increased to the revised estimate of its recoverable amount,
but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had
no impairment loss been recognised for the asset or cashgenerating unit in prior years. A reversal of an impairment
loss is recognised immediately in profit or loss, unless the
relevant asset is carried at a revalued amount, in which case
the reversal of the impairment loss is treated as a revaluation
increase.
income over the relevant period. The effective interest rate
is the rate that exactly discounts estimated future cash
receipts through the excepted life of the financial asset, or,
where appropriate, a shorter period.
Provisions
Provisions are recognised when the group has a present
obligation (legal or constructive) as a result of a past event,
it is probable that the group will be required to settle the
obligation, and a reliable estimate can be made of the
amount of the obligation.
The amount recognised as a provision is the best estimate of
the consideration required to settle the present obligation
at the balance sheet date, taking into account the risks and
uncertainties surrounding the obligation.
Short-term employee benefits
The cost of short-term employee benefits, (those payable
within 12 months after the service is rendered, such as paid
vacation leave and sick leave, bonuses, and non-monetary
benefits such as medical care), are recognised in the period
in which the service is rendered and are not discounted.
The expected cost of compensated absences is recognised
as an expense as the employee render service that increase
their entitlement or, in the case of non-accumulating
absences, when the absence occurs.
The expected cost of profit sharing and bonus payments
is recognised as an expense when there is a legal or
constructive obligation to make such payments as a result
of past performance.
Financial assets
Investments are recognised and derecognised on a trade
date where the purchase or sale of an investment is under
a contract whose terms require delivery of the investment
within the timeframe established by the market concerned,
and are initially measured at fair value, net of transaction
costs.
Financial assets are classified into the following specified
categories:
• Held-to-maturity investments;
• Available-for-sale financial assets; and
• Loans and receivables.
The classification depends on the nature and purpose of
the financial assets and is determined at the time of initial
recognition.
The effective interest method is a method of calculating the
amortised cost of a financial asset and of allocating interest
Trade receivables, loans and other receivables that have
fixed or determinable payments that are not quoted in an
active market are classified as loans and receivables. Loans
and receivables are measured at amortised cost using
the effective interest method less any impairment. Interest
income is recognised by applying the effective interest rate,
except for short-term receivables where the recognition of
interest would be immaterial.
Financial assets are assessed for indicators of impairment
at each balance sheet date. Financial assets are impaired
where there is objective evidence that, as a result of one
or more events that occurred after the initial recognition
of the financial asset, the estimated future cash flows of
the investment have been impacted. For financial assets
carried at amortised cost, the amount of the impairment
is the difference between the asset’s carrying amount and
the present value of estimated future cash flows, discounted
at the original effective interest rate.
The carrying amount of the financial asset is reduced by
the impairment loss directly for all financial assets with the
exception of trade receivables where the carrying amount
is reduced through the use of an allowance account. When
a trade receivable is uncollectible, it is written off against
the allowance account. Subsequent recoveries of amounts
previously written off are credited against the allowance
account. Changes in the carrying amount of the allowance
account are recognised in profit or loss.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to
an event occurring after the impairment was recognised, the
previously recognised impairment loss is reversed through
profit or loss to the extent that the carrying amount of the
investment at the date the impairment is reversed does not
exceed what the amortised cost would have been had the
impairment not been recognised.
Financial liabilities and equity instruments issued by the group
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of
the contractual arrangement.
An equity instrument is any contract that evidences a
residual interest in the assets of an entity after deducting
all of its liabilities. Equity instruments are recorded at the
proceeds received, net of direct issue costs.
35
Financial liabilities, including borrowings, are initially measure
at fair value, net of transaction costs. Financial liabilities
are subsequently measured at amortised cost using the
effective interest method, with interest expense recognised
on an effective yield basis.
all meet the definition of inventory as defined by IAS 2:
Inventory. These estimated costs are assessed annually
and are developed with reference to the work done by
engineers and other experts.
Deferred tax
The effective interest method is a method of calculating
the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated
future cash payments through the excepted life of the
financial liability, or, where appropriate, a shorter period.
Cash equivalents are short term, highly liquid investments
that are readily convertible to known amounts of cash and
are subject to insignificant risk in change in value.
A deferred tax asset is only raised if it is probable that future
taxable income will be generated by a company. A period
of three years is considered in making this assessment.
Key sources of estimation uncertainty include:
Impairment of goodwill
Determining whether goodwill is impaired requires an
estimation of the value in use of cash generating units
to which goodwill has been allocated. The value in use
calculation requires the group to estimate the future cash
flows expected to arise from the cash generating unit and a
suitable discount rate in order to calculate present value.
Cash and cash equivalents are measured at fair value.
3. SIGNIFICANT JUDGEMENTS AND KEY SOURCES OF
ESTIMATION UNCERTAINTY
In preparing the financial statements, management is
required to make estimates and assumptions that effect
the amounts represented in the financial statements and
related disclosures. Use of available information and the
application of judgment are inherent in the formation of
estimates. Actual results in the future could differ from
these estimates which may be material to the financial
statements.
The estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if
the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current
and future periods.
Significant judgements include:
Classification of Inventory / Freehold land and stands between
non-current and current
In the determination of the value of Inventory / Freehold land
and stands, project costs are allocated to each underlying
stand. When stands are proclaimed, it is available for sale
and are therefore classified as current Inventory / Freehold
land and stands. The costs (or not realisable value, if lower)
associated with any unproclaimed stands are classified as
non-current Inventory / Freehold land and stands.
Cost of sales
Cost of sales was calculated with reference to the total
estimated costs to complete a development. These costs
36
The carrying amount of goodwill at the balance sheet date
was R157 772 084 (2006: R108 634 094) after impairment
losses on Tauve Developments of R2 520 278 and The Bay of
R17 334 500. Management used the fair value less cost to
sell to determine the recoverable amount of goodwill and
identifying assets that may have been impaired.
Fair value adjustment of debentures
Management used the average market price of debentures
in arms length transactions between knowledgeable, willing
parties after year-end, to determine the fair value of issued
debentures.
Useful lives of property, plant and equipment
Depreciation is provided on all property, plant and
equipment other than freehold land, to write down the cost,
less residual value, by equal instalments over their useful lives
as follows:
Item
Useful life
Land
Indefinite
Furniture and fixtures
10 years
Motor vehicles
5 years
Office equipment
10 years
IT equipment
3 years
The group reviews the estimated useful lives of property, plant
and equipment at the end of each annual reporting period.
Inventory carried at Net Realisable Value
The net realisable value of inventory represents the estimated
selling price in the current market at balance sheet date.
The group provides for the amount, which the cost of
inventory is higher than the net realisable value multiplied
by the units of stock on hand at the balance sheet date. No
such provision was required in the current or prior years.
4. PROPERTY, PLANT AND EQUIPMENT
Furniture
and fixtures
Motor
vehicles
Office
equipment
IT equipment
Other
Total
R
R
R
R
R
R
Carrying amount at
1 March 2005
75 618
-
-
-
-
75 618
Cost
75 618
-
-
-
-
75 618
-
-
-
-
-
-
Accumulated depreciation
Additions
276 833
434 816
311 865
216 802
-
1 240 316
Depreciation expense
Carrying amount at
1 March 2006
(19 614)
(27 048)
(5 941)
(43 529)
-
(96 132)
332 837
407 768
305 924
173 273
-
1 219 802
Cost
352 451
434 816
311 865
216 802
-
1 315 934
(19 614)
(27 048)
(5 941)
(43 529)
-
(96 132)
27 235
-
17 315
-
69 050
113 600
Disposals
Depreciation eliminated on
disposals of assets
(71 153)
-
-
(101 154)
-
(172 307)
7 815
-
-
52 439
-
60 254
Carrying amount at
28 February 2007
(32 651)
(82 963)
(28 821)
(69 689)
(12 637)
(226 761)
264 083
324 805
294 418
54 869
56 413
994 588
Additions
Cost
308 533
434 816
329 180
115 648
69 050
1 257 227
(44 450)
(110 011)
(34 762)
(60 779)
(12 637)
(262 639)
Carrying amount of assets subject to finance leases
Restated
28/02/07
28/02/06
R
R
Office equipment
289 752
304 494
Motor vehicles
324 805
407 768
Total
614 557
712 262
A register containing the information required by paragraph 22(3) of Schedule 4 of the Companies Act is available for
inspection at the registered office of the company.
Impairments
During the period, the group carried out a review of the recoverable amounts of its property, plant and equipment. The
recoverable amount has been determined on the basis of the assets’ fair value less cost to sell. Fair value less cost to sell
was determined based on a market related price in an arm’s length transaction between knowledgeable, willing parties.
An impairment of R105 942 (2006: Rnil) was recognised.
37
5. INVENTORY / FREEHOLD LAND AND STANDS
Current
Non-current
28/02/07
Restated
28/02/06
28/02/07
Restated
28/02/06
R
R
R
R
Stand 1479, Silver Lakes Ext 2, Pretoria
Purchase price
-
600 000
-
-
Disposals included in Cost of Sales
-
(600 000)
-
-
-
-
-
-
5 800 000
5 800 000
-
-
Brooklyn Stone – Stand 670 Portion 2, Stand 679 Portion
0, Stand 680 Portion 0 and Stand 681 Portion 0, Brooklyn,
Pretoria
Purchase price
Capitalised expenditure
12 811 965
9 034 242
-
-
Impairment losses
(4 597 161)
(4 597 161)
-
-
Disposals included in Cost of Sales
(14 014 804)
-
-
-
-
10 237 081
-
-
Purchase price
-
-
11 550 000
11 550 000
-
-
32 009 215
22 997 471
Original goodwill allocated to the purchase price1
-
-
47 752 555
-
-
-
91 311 770
34 547 471
Purchase price
-
-
550 000
550 000
-
-
928 675
869 765
-
-
1 478 675
1 419 765
Purchase price
-
-
480 000
-
-
-
1 103 026
-
-
-
1 583 026
-
8 144 631
1 346 689
72 438
9 971 921
158 000 520
12 255 129
68 858
90 827 817
49 317 857
8 086 190
21 493
59 876 348
215 463 008
21 699 008
162 789
160 676 086
100 000 000
-
-
-
8 055 410
-
-
-
152 858 410
-
-
-
368 321 418
31 936 089
94 536 260
196 643 322
Lizard Point – Portions of Farm 1777, Vaaldam Settlement
Blue Horizon Bay – Farm 477, Klein Buffelsfontein
Zeranza – Erf 687 of portion 332 of the Farm
Knopjeslaagte 385
Gardener Ross Golf & Country Estate – Portion 332 of Farm
Knopjeslaagte 385
Purchase price
Capitalised expenditure net of releases to Cost of Sales
Original goodwill allocated to the purchase price net of releases
to Cost of Sales1
The Bay – Portion 166 De Rust 478 and Portion 2 De Rust 478
Purchase price
Original goodwill allocated to the purchase price1
Total inventory / Freehold land and stands
44 803 000
1. In terms of IFRS3 Business Combinations any excess purchase consideration must be allocated to the individual cash generating units.
38
5. INVENTORY / FREEHOLD LAND AND STANDS (CONTINUED)
Carrying value of inventory / freehold land and stands pledged as security
28/02/07
Restated
28/02/06
R
R
Brooklyn Stone – Stand 670 Portion 2, Stand 679 Portion 0, Stand 680 Portion 0 and Stand 681
Portion 0, Brooklyn, Pretoria
The property was pledged as security for the first bond holder, Imperial Bank and the second
bond holders, Mr. P. Venter and Mr. M. Urin.
-
10 237 081
Lizard Point – Portions of Farm 1777, Vaaldam Settlement
A first bond was registered over the property as security for the Investec Bank Limited facility
and a second bond was registered over the property as security for the 100 secured, noninterest bearing convertible linked debentures of R330 000 each. Each debenture is linked to
a stand number and shall convert into an Agreement of Sale for the linked stand.
91 311 770
34 547 471
Blue Horizon Bay – Farm 477, Klein Buffelsfontein
The property is pledged as security for the first bond holder, Nedbank Limited.
1 478 675
1 419 765
Zeranza – Erf 687 of portion 332 of the Farm Knopjeslaagte 385
The property is pledged as security for the first bond holder, ABSA Bank Limited.
1 583 026
-
Gardener Ross Golf & Country Estate – Portion 332 of Farm Knopjeslaagte 385
The land is pledged as security under mortgage bonds B113095/2004 and B118999/2005 for
non-current borrowings with Investec Bank Limited.
215 625 797
182 375 094
The Bay – Portion 166 De Rust 478 and Portion 2 De Rust 478
The property is pledged as security for the first bond holder, Investec Bank Limited.
152 858 410
-
462 857 678
228 579 411
Total
The development known as Lizard Point on Farm 1777, Vaaldam Settlement was valued on 1 April 2007. The valuation was
performed by independent valuer, Mr AL van Graan of Lock Stock & Barrel Valuers CC. The latter is not connected to the
company. The property was valued at R600 000 000 (2006: R50 000 000).
Farm 477, Klein Buffelsfontein was last valued on 5 October 2005. The valuation was performed by independent valuer, Mr AD
Visser (N.DIP (Prop Val) MIV (SA)), of Val-Co Valuers and Property Consultants, which is not connected to the company. The
property was valued at R2 000 000. The director’s valuation of this property is R2 000 000.
Portion 332 of Farm Knopjeslaagte 385 was last valued on 31 August 2005. The valuation was performed by independent
valuers, Mr W Kolver (Reg no 4352/0) of Professional Associated Valuers and Mr AD Visser (Reg no 3629/4) of Val-Co Valuers
and Property Consultants. These valuers are not connected to the company. The property was valued at R235 000 000. The
director’s valuation of this property is R215 837 768.
The development known as The Bay on Portion 166 De Rust 478 and Portion 2 De Rust 478 was valued on 1 May 2007. The
valuation was performed by independent valuer, Mr AL van Graan of Lock Stock & Barrel Valuers CC. The latter is not
connected to the company. The property was valued at R196 000 000.
The valuations were performed using the discounted cash flow approach, based on estimated costs and income figures
and the necessary assumptions. Based on these valuations, inventories were impaired where necessary. Where the fair
value less cost to sell exceeds the carrying amount, inventories are not revalued as it effectively forms stock for later sale to
customers.
39
6. GOODWILL
Carrying amount at beginning of year
Additional amounts recognised from business combinations occurring during the year not
allocated to cash generating units
De-recognition on disposal / impairment of an investment
Impairment of goodwill in The Bay
Impairment of goodwill in Tauve Developments
Carrying amount at end of year
28/02/07
Restated
28/02/06
R
R
108 634 094
-
72 992 768
108 634 094
(4 000 000)
-
(17 334 500)
-
(2 520 278)
157 772 084
108 634 094
During the financial year, the group assessed the recoverable amount of goodwill, and determined that goodwill
associated with certain of the group’s projects was impaired. The recoverable amount was assessed by reference to the
cash-generating unit’s value in an arm’s length transaction between knowledgeable, willing parties or by reference to a
third party valuation that was obtained.
The remaining goodwill relates to shareholdings in:
Restated
28/02/06
28/02/07
R
4 598 221
441
441
-
4 000 000
48 644
48 644
19 999 900
19 999 900
14 999 900
14 999 900
17 256 126
17 256 126
47 730 862
47 730 862
Carrying amount at end of year
40
R
2 077 942
55 658 269
-
157 772 084
108 634 094
7. SUBSIDIARIES
Details of the company’s subsidiaries at 28 February 2007 are as follows:
Name of subsidiary
Acc-Ross Networks (Pty) Ltd
Accretio Investments (Pty) Ltd
GR Equity (Pty) Ltd
Northern Jungle Trading 17 (Pty) Ltd
Redlex 89 (Pty) Ltd
Gardener Ross Holdings Nominees (Pty) Ltd
Zeranza 50 (Pty) Ltd
Nature of
business
Advertising
Investment
holding
Investment
holding
Investment
holding
Investment
holding
Property
development
Property
development
Investment
holding
Property
development
Property
development
Investment
holding
Property
development
Investment
holding
Property
development
Investment
holding
Property
development
Property
development
Property
development
Proportion of Proportion
voting power of ownership
held
interest
Held by
Acc-Ross Holdings Ltd
80%
80%
100%
100%
100%
100%
100%
100%
Accretio Property
Development (Pty) Ltd
Accretio Property
Accretio Property
Accretio Property
Accretio Property
Accretio Property
100%
100%
100%
100%
80%
80%
100%
100%
50%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
90%
90%
Eagle Creek Investments 257
(Pty) Ltd
100%
100%
60%
60%
All these companies are incorporated in South Africa, with the exception of Comuine Golf Estate Limitada, which is
incorporated in Mozambique.
41
8. OTHER FINANCIAL ASSETS
Current
Restated
28/02/06
28/02/07
R
Restated
28/02/06
28/02/07
Unlisted shares in Mastertrade 288 (Pty) Ltd
-
-
-
R
4 000 000
Unlisted shares in Peel Pickering & Associates (Pty) Ltd
-
-
-
2 240 000
Unlisted shares in Two Ships Trading 193 (Pty) Ltd
-
-
-
25
Total Held-to-maturity investments carried at amortised cost
-
-
-
6 240 025
Seven Seasons Trading 60 (Pty) Ltd
The loan is unsecured, interest free with no fixed terms of
repayment.
1 063 336
-
-
-
Intercol International Consultants CC
repayment.
-
753 500
-
-
Royal Oak Development and Construction (Pty) Ltd
repayment.
7 059 623
7 059 623
-
-
-
-
5 239 443
4 698 202
Gardener Ross International Finance (Pty) Ltd
repayment.
1 065 211
1 622 211
-
-
D Els
repayment.
-
74 522
-
-
7 100 000
-
-
-
Nondela Golf Estate (Pty) Ltd
repayment
-
140 000
-
-
Two Ships Trading (Pty) Ltd
repayment
-
1 529
-
-
Accretio Bond Originators (Pty) Ltd
repayment
90 000
-
-
-
16 378 170
9 651 385
5 239 443
4 698 202
Gardener Ross International Finance (Pty) Ltd /Devco Africa
(Pty) Ltd
The loan is unsecured and accrues interest at the same rate as
the rate at which Investec Bank Ltd charges interest. The loan,
together with interest thereon will be due and payable on or
before the date upon which the company makes its first dividend
payment to its shareholders.
Taute Family Trust
The loan is unsecured. If the Taute Family Trust pays the purchase
price within 6 months an amount of R7 100 000 is payable.
Otherwise the purchase price will be increased in tranches
over time.
Total loans and receivables carried at amortised cost
Refer to note 26 for additional disclosures for related parties.
42
Non-current
R
R
9. TRADE AND OTHER RECEIVABLES
Trade receivables
Prepayments
28/02/07
Restated
28/02/06
R
R
223 789
31 349 879
5 170 809
5 550 484
Deposits
-
2 331 803
Advance of purchase price for property
6 250 000
6 250 000
Value Added Tax receivable
4 690 950
-
Abalengani Supplies (Pty) Ltd
9 141 708
-
Amounts receivable for shares issued for cash
9 526 995
911 639
35 004 251
46 393 805
Total
The amount due by Abalengani Supplies (Pty) Ltd materialised as a result of the purchase and sale of various projects from/
to the Abalengani group, including the project known as The Bay.
10. ISSUED CAPITAL
Share capital
Share premium
28/02/07
Restated
28/02/06
28/02/07
Restated
28/02/06
R
R
R
R
200 000
200 000
-
Balance at beginning of year
86 193
47 714
155 957 063
-
Issue of shares in settlement of liabilities
16 550
38 207
98 824 452
155 432 802
7 500
272
18 704 317
2 715 628
-
-
(3 995 881)
(2 191 367)
110 243
86 193
269 489 951
2 000
-
10 998 000
-
-
2 000
-
10 998 000
2 000
2 000
10 998 000
10 998 000
112 243
88 193
280 487 951
166 955 063
28/02/07
Restated
28/02/06
Authorised
2 000 000 000 Ordinary shares with a par value of R0,0001 each.
Each share carries one vote per share and carries the right to
dividends.
-
Issued
Issue of shares for cash
Share issue costs
Balance at end of year
155 957 063
Contracted for but not issued (note 25)
Issue of shares to staff and directors
Total
Reconciliation of number of shares issued
Subdivision of shares
Issue of shares
881 930 034
47 714 100
-
429 426 900
240 500 000
404 789 034
1 122 430 034
881 930 034
Unissued ordinary shares are under the control of the directors in terms of a resolution of members passed at the last annual
general meeting. This authority remains in force until the next annual general meeting.
43
11. BORROWINGS
Unsecured – at amortised cost
Cumulative redeemable preference shares
The company is obliged to redeem the preference shares at
par together with a premium of R0,033 per preference share on
1 March 2008.
Restated
28/02/06
28/02/07
Restated
28/02/06
R
R
R
R
53 394 798
-
G van Rensburg
repayment.
-
JCM Trust
The loan is unsecured, bears interest at 18% per annum with no
fixed terms of repayment.
JF de Beer
The loan is unsecured, bears interest at 18% per annum with no
fixed terms of repayment.
DJ Verster
The loan is unsecured and interest free. The loan will be repaid
once the underlying projects start generating cash flows.
JJ Verster
The loan is unsecured and interest free. The loan will be repaid
once the underlying projects start generating cash flows
Devco Africa (Pty) Ltd
repayment.
M Taute
repayment.
Accretio Property Brokers (Pty) Ltd
repayment.
Total unsecured borrowings
Non-current
28/02/07
Loans payable
L Burger
repayment.
Cannistraro Investments 165 (Pty) Ltd
repayment.
44
Current
-
-
46 007 747
-
-
-
-
-
-
-
-
-
-
100 000
100 000
1 200 000
1 000 000
2 000 000
2 859 168
3 100 390
2 171 575
-
-
-
600 000
600 000
2 186 701
3 116 658
-
-
-
-
-
-
-
2 286 701
49 224 405
8 000
500 000
51 918
56 913 884
550 831
11 122 796
11. BORROWINGS (CONTINUED)
Current
Non-current
28/02/07
Restated
28/02/06
28/02/07
Restated
28/02/06
R
R
R
R
Secured – at amortised cost
Debentures
1 Debenture, representing a fairway stand in Gardener Ross Golf
& Country Estate or is redeemable for R650 000 cash.
100 Secured interest free convertible linked debentures of
R330 000 each. Secured by first bond over portions of Farm
1777 Vaaldam Settlement. The debentures are convertible on
proclamation of the development.
Bank loans
Imperial Bank
The loan bears interest at 11% per annum The loan is secured
by a first bond over property known as Stands 670, 680 and 681,
Brooklyn, Pretoria. The loan was repaid during the current year.
Nedbank Limited
The loan is secured bearing interest at bank overdraft rate less
1.85% per annum repayable in monthly instalments of R3 514 on
the first of every month. Secured by a first bond over property
known as Farm 477, Klein Buffelsfontein.
-
34 290 910
-
-
317 521
327 292
75 646 185
49 163 228
-
3 624 287
-
7 573
7 801
Investec Bank Limited
The loan is secured by a first mortgage bond over the property
known as Portion 332 of Farm Knopjeslaagte 385 as well as all
the rights title and interest in and to present and future claims
against the South African Revenue Services for Value Added Tax.
The loan bears interest at the prime bank overdraft rate less 0.5%
and is for a maximum period of 24 months commencing on the
date upon which the capital or part thereof is advanced. No
capital repayments are made until then. The total approved
loan amount is R110 000 000.
-
-
known as portions of Farm 1777, Vaaldam Settlement. The loan
bears interest at the prime bank overdraft rate less 1% and is for
a maximum period of 38 months commencing on the date upon
which the capital or part thereof is advanced. No capital repayments are made until then. The total approved loan amount is
R140 000 000.
-
-
The loan bears interest at the prime bank overdraft rate less 1%
and is for a maximum period of 12 months commencing on the
date upon which the capital or part thereof is advanced.
33 745 877
29 041 406
-
11 510 132
-
-
-
45
11. BORROWINGS (CONTINUED)
Secured – at amortised cost (continued)
Bank loans (continued)
known as Portion 166 De Rust 478 and Portion 2 De Rust 478. The
loan bears interest at the prime bank overdraft rate less 1% and
is for a maximum period of 36 months commencing on the date
upon which the capital or part thereof is advanced. The total
approved loan amount is R68 000 000.
Current
Non-current
28/02/07
Restated
28/02/06
28/02/07
Restated
28/02/06
R
R
R
R
5 000 000
-
62 853 039
-
ABSA Bank Limited
The loan is secured by a first bond over the property known as Erf
41 Peach Tree. The loan bears interest at prime less 1,5%.
-
-
1 591 711
-
Loans payable
Bridging Advances (Pty) Ltd
The loan was secured, bears interest at 13% per annum and
is repayable by 5 March 2006. Secured by 10 debentures in
Gardener Ross Golf & Country Estate (Pty) Ltd.
-
7 000 000
-
-
P Venter
The full loan plus interest was repayable on or before 31 August
2006. The loan is secured with a second bond over property.
-
3 089 140
-
-
M Urin
The full loan plus interest was repayable on or before 31 August
2006. The loan is secured with a second bond over property.
-
3 089 140
-
-
964 425
981 040
-
-
17 482 130
17 791 408
203 195 739
83 781 430
74 396 014
28 914 204
205 482 440
133 005 835
Noble House Trust
The loan is secured bears interest at the prime bank overdraft
rate plus 4% and is repayable in monthly instalments of R200 000.
Total secured borrowings
Total borrowings
Refer to note 26 for additional disclosures for related parties.
12. FINANCE LEASE OBLIGATION
Finance leases relate to office equipment and motor vehicles with lease terms of five years. The group’s obligations under
finance leases are secured by the lessor’s title to the leased assets. The average effective interest rate is 18,32%.
Current
28/02/07
Restated
28/02/06
28/02/07
Restated
28/02/06
R
R
R
R
Minimum lease payments due
215 726
192 205
555 177
761 638
Within one year
215 726
192 205
215 726
192 205
In second to fifth year
Less: Future finance charges
Present value of minimum lease payments
46
Non-current
-
-
339 451
569 433
78 222
82 944
100 640
164 599
137 504
109 261
454 537
597 039
13. TRADE AND OTHER PAYABLES
Restated
28/02/06
28/02/07
R
Trade payables
R
13 401 055
Amounts received in advance
1 236 840
-
-
2 918 179
1 616 210
3 793 842
Value Added Tax payable
Accruals
12 018 670
Other
29 163 887
16 008 042
Total
45 417 992
34 738 733
14. PROVISIONS
Provision for
Annual leave
Provision
for Investec
Bank Ltd
profit share
Provision for
Advertising
Total
provisions
-
-
-
-
44 277
18 310 835
277 258
18 632 370
44 277
18 310 835
277 258
18 632 370
Utilised for the year
(34 517)
Raised for the year
51 200
13 563 481
-
13 614 681
60 960
31 874 316
-
31 935 276
Raised for the year
Restated balance at 28 February 2007
-
(277 258)
(311 775)
The Provision for Investec Bank Limited profit share is calculated based on the terms of the share participation agreement
with Investec Bank Limited for funding provided for the Gardener Ross Golf & Country Estate.
15. REVENUE
Sale of Brooklyn Stone
28/02/07
Restated
28/02/06
R
R
11 293 736
-
-
1 200 000
143 591 929
187 827 031
5 198
-
154 890 863
189 027 031
28/02/07
Restated
28/02/06
R
R
Sale of Stand 1479 Silver Lakes
Sale of stands in Gardener Ross Golf & Country Estate
Sale of advertising space on webpage
Total
16. COST OF SALES
Cost for Brooklyn Stone sold
Cost of Stand 1479 Silver Lakes
Cost of stands sold in Gardener Ross Golf & Country Estate
Original goodwill allocated to the purchase price of Gardener Ross Golf & Country Estate
realised through cost of sales
Cost of advertising space on webpage
Total
14 014 804
-
-
600 000
107 540 137
134 076 015
18 623 186
23 218 518
274
-
140 178 401
157 894 533
47
17. OTHER GAINS AND LOSSES
Gain on the disposal of Royal Palms
28/02/07
Restated
28/02/06
R
R
7 475 931
-
Gain on the disposal of shares in Lizard Point
24 349 108
-
Loss on the disposal of Comuine Golf Estate Limitada
(1 000 000)
-
Gain on the disposal of Nondela Drakensburg Estate
(Loss) / gain on the disposal of debentures in Gardener Ross Golf & Country Estate
2 000 000
(2 325 757)
Gain on disposal of property, plant and equipment
Net foreign exchange loss
Other
Total
16 764 041
25 381
-
(104 447)
-
196 138
1 500
30 616 354
16 765 541
18. INVESTMENT REVENUE
28/02/07
Restated
28/02/06
R
R
Interest revenue
Bank deposits
264 646
89 950
Other loans and receivables
541 718
261 802
806 364
351 752
Total
19. FINANCE COSTS
Interest on bank balances
Interest on other loans and payables
Interest on obligations under finance leases
Dividends on cumulative redeemable preference shares classified as financial liabilities
Total interest expense
Less: amounts included in the cost of qualifying assets
Restated
28/02/07
28/02/06
R
R
21 746
38 417
26 896 365
20 739 768
74 253
20 356
7 281 109
5 236 520
34 273 473
26 035 061
(20 428 017)
(16 272 832)
13 845 456
9 762 229
The amounts included in the cost of qualifying assets related to finance costs directly attributed to the project or
development. A weighted average capitalisation rate on funds borrowed is not used.
48
20. INCOME TAXES
Income tax recognised in profit or loss
28/02/07
Restated
28/02/06
R
R
Tax expense / (income) comprises:
Current tax expense
1 929 815
10 696 687
Capital gains expense
4 469 631
2 430 786
(5 665 071)
(13 754 146)
Deferred tax income relating to the origination and reversal of temporary differences
Total tax expense / (income)
734 375
(626 673)
The total charge for the year can be reconciled to the accounting profit as follows:
Restated
28/02/06
28/02/07
R
(Loss) / Profit from operations
R
(16 382 410)
9 131 544
Income tax (income) / expense calculated at 29%
(4 750 899)
2 648 148
Effect of revenue that is exempt from taxation
(8 331 028)
(12 997 316)
Effect of expenses that are not deductible in determining taxable profit
50 878
5 094 374
Impairment losses on goodwill that are not deductible
5 788 609
-
Effect of unused tax losses not recognised as deferred tax assets
6 556 064
4 556 731
-
71 390
1 420 751
-
Effect of changes in tax laws on deferred tax balances
Reversal of prior year deferred tax assets
Income tax expense / (income) recognised in profit or loss
Unused tax losses not recognised as deferred tax assets
734 375
22 607 117
(626 673)
15 712 866
Current tax liabilities
Balance at beginning of the period
28/02/07
Restated
28/02/06
R
R
13 127 473
-
Income tax payable
1 929 815
10 696 687
Capital gains tax payable
4 469 631
2 430 786
Tax offset against Value Added Tax payable
Balance at end of the period
(2 666 794)
16 860 125
13 127 473
49
20. INCOME TAXES (CONTINUED)
Deferred tax balances
Tax losses
Income
received in
advance
Provisions
Prepaid
expenses
Opening balance
1 March 2005
2 589 606
-
Charged to income
4 885 107
20 537 159
(3 445 011)
-
(188 231)
Changes in tax rate
and tax laws charged
to income
Acquisitions / disposals
Opening balance
1 March 2006
Charged to income
Reversal of deferred
tax assets charged to
income
Deferred tax due
to capitalisation of
goodwill to Inventory/
Freehold land and
stands
Acquisitions / disposals
Closing balance
28 February 2007
(86 309)
5 646 944
-
-
-
7 388 404
20 537 159
2 013 702
3 810 409
5 672 739
(1 545 843)
(1 420 751)
-
-
-
-
(307 543)
26 209 898
467 859
9 470 519
Tax
allowances
-
(1 336 064)
Property
plant and
equipment
Inventory
(4 894 713) (1 199 792)
(10 603 781)
-
163 157
-
-
-
3 793 089
(4 963)
39 993
(25 934 508)
(1 336 064) (15 335 337) (23 301 218)
(192 538)
5 349 155
-
-
-
-
-
-
319 068
-
Total
2 142 045
13 825 536
-
(71 390)
-
(25 934 508)
(4 963) (10 038 317)
(5 993 692)
(14 408)
-
7 085 822
-
(1 420 751)
(13 848 232)
-
(13 848 232)
(12 992 870)
-
(12 981 345)
(1 209 534) (9 986 182) (56 136 012)
(19 371) (31 202 823)
Restated
28/02/07
28/02/06
R
Deferred tax assets
R
9 946 689
9 777 650
(41 149 512)
(19 815 967)
(31 202 823) (10 038 317)
21. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE
Investments held for sale
The group intends to dispose of its shareholding in the operating premises of the group. A search
is underway for a buyer. No impairment loss was recognised on reclassification as held for sale
on the reporting date.
50
28/02/07
Restated
28/02/06
R
R
25
-
25
-
22. (LOSS) / PROFIT FOR THE YEAR
(Loss) / Profit for the year has been arrived at after charging (crediting):
28/02/07
Restated
28/02/06
R
R
Impairment losses/(gains) on:
Impairment gains on debentures
-
(3 037 188)
Impairment loss on Brooklyn Stone
-
4 597 161
Impairment loss on property, plant and equipment
105 942
-
17 334 500
-
Impairment of goodwill in Tauve Developments
2 520 278
-
Impairment of investment in Peel Pickering & Associates
2 240 000
-
Impairment of investment in Comuine Golf Estate Limitada: Vilancoulos
2 000 000
-
24 200 720
1 559 973
399 625
80 780
1 387 862
3 116 469
343 640
188 625
Impairment of goodwill in The Bay
Secretarial services
Employee costs
Auditors’ remunerations
Other administration expenses
6 687 923
3 121 103
-
11 000 000
2 446 993
855 268
354 407
282 210
Share-based payments to staff and directors
Consulting expenses
Operating lease charges
Project expenses
(4 894)
2 624 319
226 761
96 132
23. EARNINGS PER SHARE
Basic earnings per share
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are
as follows:
28/02/07
R
Restated
28/02/06
R
Profit / (loss) for the year attributable to equity holders of the parent
(17 861 561)
9 278 274
Earnings used in the calculation of basic earnings per share
(17 861 561)
9 278 274
Weighted average number of ordinary shares for the purposes of basic earnings per share
Basic (loss) / earnings per share
Profit / (loss) for the year attributable to equity holders of the parent
1 012 689 261
618 708 037
(1,76)
1,50
(17 861 561)
9 278 274
24 200 720
1 559 973
(26 055 067)
(14 333 255)
(19 715 908)
(3 495 007)
(1,95)
(0,56)
Adjustments for:
Impairments (note 22)
Profit on disposal of assets and investments
Headline loss for the year
Headline loss per share
51
23. EARNINGS PER SHARE (CONTINUED)
Diluted earnings per share
The earnings and weighted average number of ordinary shares used in the calculation of diluted earnings per share are
as follows:
Restated
28/02/06
28/02/07
R
Profit for the year attributable to equity holders of the parent
R
(17 861 561)
After tax effect of share-based payments to staff and directors
(Loss)/earnings used in the calculation of basic earnings per share
Weighted average number of ordinary shares for the purposes of basic earnings per share
(17 861 561)
9 278 274
(1 562 000)
7 716 274
1 012 689 261
618 708 037
Issues to staff and directors
-
4 000 000
Issued in settlement of other financial liabilities
-
-
Weighted average number of ordinary shares used in the calculation of diluted earnings per share 1 012 689 261
622 708 037
Shares deemed to be issued in respect of:
Diluted (loss)/earnings per share
Profit/(loss) for the year attributable to equity holders of the parent
(1,76)
1,24
(17 861 561)
9 278 274
Adjustments for:
Impairments (note 22)
Profit on disposal of assets and investments
24 200 720
1 559 973
(26 055 067)
(14 333 255)
After tax effect of share-based payments to staff and directors
Diluted Headline loss for the year
Diluted Headline loss per share
-
(1 562 000)
(19 715 908)
(5 057 008)
(1,95)
(0,81)
Impact of changes in accounting policies and other adjustments
Changes in the group’s accounting policies have had an impact on results reported for prior years and therefore also impact
on the amounts reported for earnings per share.
The following table summarises that impact on both basic and diluted earnings per share:
Restated
Basic EPS
Cents per
share
Restated
Diluted EPS
Cents per
share
Changes in accounting policies:
Capitalisation of borrowing costs
(2.19)
(2.19)
Equity accounting for associates
(0.43)
(0.43)
2.76
2.74
Share based payments to staff and directors
(0.25)
(0.50)
Recognition of accruals
(0.40)
(0.40)
1.56
1.55
Correction of errors:
Consolidation entries
Measurement of inventory
52
Accounting entries previously incorrectly raised
1.01
0.87
Total impact
2.06
1.64
24. FINANCIAL INSTRUMENTS
Capital risk management
The group manages its capital to ensure that entities in the group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the debt and equity balance.
The capital structure of the group consist of debt, which includes borrowings, cash and cash equivalents and equity
attributable to equity holders of the parent comprising issued capital and retained earnings respectively.
The group’s audit and risk committee are responsible for the capital structure review and control of risks. The group’s overall
strategy remains unchanged from 2006.
Foreign currency risk management
The group seldom undertakes transactions denominated in foreign currencies.
fluctuations is low.
Hence, exposure to exchange rate
Interest rate risk management
The group is exposed to interest rate risk as entities in the group borrow funds at both fixed and floating interest rates. The risk
is managed by the group by maintaining an appropriate mix between interest free, fixed and floating rate borrowings.
The group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management
section of this note.
If interest rates had been 50 basis points higher / lower and all other variables were held constant, the group’s profit for the
year ended 28 February 2007 would increase / decrease by R226 708. This is attributable to the group’s exposure to interest
rates on variable rate borrowings.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the group.
This risk is mitigated in that stands are sold and registration cannot occur unless the counterparty provides a guarantee or
collateral of some sort.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate model
for the management of the group’s funding and liquidity requirements. The group manages liquidity risk by maintaining
adequate reserves, banking facilities and borrowing facilities by continuously monitoring forecast and actual cash flows and
matching the maturity profiles of financial assets and liabilities.
53
24. FINANCIAL INSTRUMENTS (CONTINUED)
Liquidity risk management (continued)
The following table details the group’s remaining contractual maturity for its financial assets and liabilities.
28/02/07
Current
interest rate
Due in less
than a year
Due in one to Due in two to Due in three Due after five
two years
three years to four years
years
Non-interest bearing
Seven Seasons Trading (Pty) Ltd
-
1 063 336
-
-
-
-
-
7 059 623
-
-
-
-
-
1 065 211
-
-
-
-
Taute Family Trust
-
7 100 000
-
-
-
-
Accretio Bond Originators (Pty) Ltd
-
90 000
-
-
-
-
-
35 004 251
-
-
-
-
DJ Verster
-
-
-
-
(100 000)
-
JJ Verster
-
(600 000)
-
-
(2 186 701)
-
-
(8 000)
-
-
-
-
-
(51 918)
-
-
-
-
Convertible linked debentures
-
-
-
-
-
-
-
-
Royal Oak Development and
Construction (Pty) Ltd
Gardener Ross International
Finance (Pty) Ltd
(45 417 992)
(745 877)
-
(33 000 000)
-
Finance lease liability
18.3%
(215 726)
(215 726)
(123 725)
Variable interest rate
instruments
GRIF / Devco Africa (Pty) Ltd
Cumulative redeemable
preference shares
12,0%
5 239 443
9%
(53 394 798)
Nedbank Limited
10,65%
12,0%
11,5%
11,5%
(11 510 133)
11,5%
(5 000 000)
ABSA
11,5%
-
-
-
-
-
-
-
-
(317 521)
-
-
-
-
(75 646 185)
-
-
-
-
(29 041 406)
-
-
-
-
-
-
(7 573)
-
(62 853 039)
(26 529)
(26 529)
(26 529)
(1 512 125)
Fixed interest rate instruments
JCM Trust
18,0%
(2 859 168)
-
-
-
-
Noble House Trust
16,5%
(964 425)
-
-
-
-
(63 407 869)
54
(168 846 283)
(33 150 254)
(2 313 230)
(1 512 125)
28/02/06
Current
interest rate
Due in less
than a year
Due in one to Due in two to Due in three Due after five
two years
three years to four years
years
Non-interest bearing
Intercol International Consultants
(Pty) Ltd
Royal Oak Development and
Construction (Pty) Ltd
Gardener Ross International
Finance (Pty) Ltd
-
753 500
-
-
-
-
-
7 059 623
-
-
-
-
-
1 622 211
-
-
-
-
D Els
-
74 522
-
-
-
-
Nondela Mountain Estate (Pty) Ltd
-
140 000
-
-
-
-
Two Ships Trading (Pty) Ltd
-
1 529
-
-
-
-
-
46 393 805
-
-
-
-
L Burger
-
-
-
-
(1 200 000)
-
G van Rensburg
Cannistraro Investments 165
(Pty) Ltd
-
-
-
-
(1 000 000)
-
-
-
-
DJ Verster
-
-
-
-
(100 000)
JJ Verster
-
(600 000)
-
-
-
(3 116 658)
M Taute
-
(500 000)
-
-
-
-
-
(550 831)
-
-
-
-
Convertible linked debentures
-
-
-
(2 000 000)
-
(34 738 733)
-
(1 290 910)
-
-
(33 000 000)
-
-
-
16,8%
(192 205)
(215 726)
(215 726)
(137 981)
-
Variable interest rate
instruments
Cumulative redeemable
preference shares
10,5%
18,75%
4 698 202
-
Imperial Bank Limited
9,5%
(3 624 287)
Nedbank Limited
9,15%
(7 801)
10,5%
-
(46 007 747)
(7 573)
(49 163 229)
-
-
-
-
-
-
-
-
-
-
-
-
-
(319 719)
-
Fixed interest rate instruments
JCM Trust
18%
(600 000)
(600 000)
(600 000)
(600 000)
JF de Beer
Bridging Advances (Pty) Ltd
18%
(600 000)
(600 000)
(600 000)
(371 575)
13%
(7 000 000)
-
-
-
-
P Venter
-
(3 089 140)
-
-
-
-
M Urin
-
(3 089 140)
-
-
-
-
Noble House Trust
15%
(981 041)
3 170 214
(96 594 275)
(3 026 355)
(700 390)
-
(36 309 556)
(3 917 048)
Fair value risk management
The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the
financial statements approximate their fair values.
55
25. SHARE-BASED PAYMENTS
The company entered into Equity-settled share-based payment transactions during the prior year. These were issued on and
vested upon the listing of the company on the Alternative Exchange of the JSE, which occurred on 16 February 2006.
The goods or services and equity were measured at the fair value of the goods or services received which were based on
the fair value on measurement date in an arm’s length transaction between knowledgeable, willing parties. 382 073 134
Ordinary shares with a par value of R0,0001 were issued to vendors during the prior year as settlement for the purchase price
of various subsidiaries and investments. An amount of R2 539 976 were recognised through profit and loss for items that did
not qualify to be recognised as assets.
20 000 000 Ordinary shares with a par value of R0,0001 each were issued to employees during the prior year. 16 000 000 of
these were already accounted for in the prior year with an amount or R8 800 000 being recognised through profit and loss.
An adjustment of R2 200 000 was made to profit and loss to account for the remaining 2 200 000 shares incorrectly omitted
from the original share allocations. Share issues to employees were measured at the fair value of the equity instrument on
grant date which was determined by using the market value of shares on that date.
No further share issues to staff and directors occurred during the financial year ending 28 February 2007.
26. RELATED PARTY TRANSACTIONS
Related parties
Relationships
Shareholders of parent
Current and previous key management members and entities
As per share register
N Owen
JJ Verster
AB Mashiatshidi
SK Mthembu
NM Phosa
ME Sono
CP Pretorius
A Wiese
A Venter
W Robinson
MJ Krastanov
JF de Beer
Previous key management members and entities of subsidiaries, M Taute
associates and joint ventures
Related parties of previous and current key management
DJ Verster (close family of JJ Verster)
JCM Trust (controlled by JF de Beer)
Taute Family Trust (controlled by M Taute)
Accretio Property Brokers (Pty) Ltd (controlled by A Wiese and
JJ Verster)
Noble House Trust (controlled by AB Mashiatshidi)
Transactions between the company and its subsidiaries, which are related parties of the company, have been eliminated
on consolidation and are not disclosed in this note. Details of transactions between the group and other related parties are
disclosed below.
Trading transactions
During the year, group entities did not enter into trading transactions with related parties that are not members of
the group.
56
26. RELATED PARTY TRANSACTIONS (CONTINUED)
Loans to / (from) related parties
28/02/07
Restated
28/02/06
R
R
Loans to / (from) current and / or previous members of key management and entities
and / or their related parties
N Owen
-
A Wiese
(415)
(910)
-
W Robinson
(1 616)
-
(8 000)
-
5 239 443
Taute Family Trust
7 100 000
(500 000)
-
(2 171 575)
JF de Beer
JJ Verster
(2 786 701)
Noble House Trust
4 698 202
(3 716 658)
(964 425)
(981 041)
JCM Trust
(2 859 168)
(3 100 390)
DJ Verster
(100 000)
(100 000)
(51 918)
(550 831)
Loans to / (from) shareholders
Abalengani Supplies (Pty) Ltd
9 141 708
(1 000 000)
Compensation of key management personnel
The remuneration of directors and key executives is determined by the remuneration committee having regard to the
performance of individuals and market trends.
2007
Fees
Salaries and commission
Shares
Total
R
R
R
R
Executive
W Robinson
-
1 037 768
-
1 037 768
A Wiese
-
1 311 408
-
1 311 408
N Owen
-
612 449
-
612 449
JJ Verster
-
641 289
-
641 289
118 413
-
-
118 413
KS Mthembu
93 412
-
-
93 412
ME Sono
76 720
-
-
76 720
MN Phosa
42 420
-
-
42 420
330 965
3 602 914
-
3 933 879
A Wiese
990 000
408 284
1 100 000
2 498 284
N Owen
-
159 442
1 100 000
1 259 442
JJ Verster
-
953 725
1 375 000
2 328 725
AB Mashiatshidi
1 841
-
1 375 000
1 376 841
KS Mthembu
1 381
-
1 375 000
1 376 381
ME Sono
1 381
-
1 375 000
1 376 381
MN Phosa
1 381
-
1 375 000
1 376 381
995 984
1 521 451
9 075 000
11 592 435
Non-executive
AB Mashiatshidi
2006
Executive
Non-executive
57
27. ACQUISITION OF SUBSIDIARIES
Restated
28/02/06
28/02/07
Fair value of assets acquired
Inventory / Freehold land
R
R
144 803 000
170 662 910
Goodwill
-
52 255 926
Other non-current assets
-
19 163 288
2
39 796 573
100
10 782 289
Cash
Outside shareholders
Borrowings
Deferred tax assets/liabilities
(100 000 000)
(242 390 717)
(12 992 870)
(25 934 508)
Total net assets acquired
(1 118 140)
-
(52 585 184)
31 810 232
(29 367 563)
Consideration paid
Cash
Equity – Ordinary shares in the holding company
-
-
104 803 000
27 010 605
104 803 000
27 010 605
-
-
Net cash outflow on acquisition
Cash consideration paid
Cash acquired
100
10 782 289
100
10 782 289
Refer to paragraph 5 of the Directors’ Report for details of these aquisitions.
28. DISPOSAL OF SUBSIDIARIES
Book value of net assets sold
Deferred tax assets/liabilities
Borrowings
Cash
28/02/07
Restated
28/02/06
R
R
(11 525)
3 531 186
-
(67 968)
-
(3 428 919)
-
1 295
-
24 069
-
Cash
-
-
Debt
7 500 000
-
7 500 000
-
Total net assets disposed
Consideration received
Net cash outflow on disposal
Cash consideration received
Cash disposed
Refer to paragraph 5 of the Directors’ Report for details of these disposals.
58
-
-
1 295
-
1 295
-
29. CASH AND CASH EQUIVALENTS
For the purposes of the cash flow statement, cash and cash equivalents include cash on hand and in banks, net of
outstanding bank overdrafts.
Restated
28/02/06
28/02/07
R
Cash and bank balances
Total
R
1 638 036
11 191 531
1 638 036
11 191 531
30. COMMITMENTS FOR EXPENDITURE
Restated
28/02/06
28/02/07
R
Commitments for the acquisition of property plant and equipment
R
21 750 000
Guarantees
35 250 000
-
25 000 000
21 750 000
60 250 000
R13 500 000 of the prior year balance relates to Portion 47 of Farm Ganse Vallei 444, Plettenburg Bay. The company that
houses this project was sold during the current period under review, and therefore the commitment does not exist for the
group at the year end.
R21 750 000 relates to Farm Welvergenoegd 138, Western Cape Province which have not yet been registered in the name
of the company. This outstanding amount was paid on 31 May 2007. Registration of the property was finalised during July
2007.
At 28 February 2006 the group was obliged to provide a bank guarantee into the Comuine Golf Estate Limitada fund which
formed part of the contract conditions stipulated by CPI and the Mozambique Government. However, this contract has
lapsed during the current year under review, and the commitment is no longer outstanding.
31. SEGMENT REPORT
Operating segments
For management purposes, the group is organised into seven operating segments, namely:
• Gardener Ross Golf & Country Estate
• Lizard Point
• The Bay
• Welvergenoegd
• Blue Horizon Bay
• Brooklyn Stone
• Zeranza
However, only the first 3 segments meet the quantitative thresholds as prescribed by IFRS 8 Operating segments.
Because the operating segments exhibit similar long-term financial performance and economic characteristics, have
the same products, processes, customers, distribution lines and regulatory environments, all the operating segments are
aggregated into a single operating segment.
These operating segments derive their revenues from the sale of freehold land in various stages of development.
The Group also sells advertising space on its webpage and the webpages of its projects. This segment is disclosed separately.
59
32. SEGMENT REPORT (CONTINUED)
2007
Sale of
Advertising
freehold land on web-page
R
R
Segment revenue
154 885 665
5 198
154 890 863
Segment loss before taxation
(16 366 532)
(15 878)
(16 382 410)
Other gains
Investment income
Depreciation of segment assets
Impairment losses recognised in profit or loss
30 616 354
-
806 284
80
30 616 354
806 364
(226 761)
-
(226 761)
(24 200 720)
-
(24 200 720)
Finance cost
(13 845 456)
Segment assets (adjusted for deferred tax assets)
679 741 537
142 738
9 946 689
-
9 946 689
144 803 102
-
144 803 102
Deferred tax assets
Acquisition of segment assets
Segment liabilities (adjusted for deferred tax and current tax liabilities)
(357 665 248)
-
(158 515)
(13 845 456)
679 884 275
(357 823 763)
(41 149 512)
-
(41 149 512)
Current tax payable
(16 860 125)
-
(16 860 125)
2006
Sale of
Advertising
freehold land on web-page
R
Segment revenue
Segment profit before taxation
R
Group
R
189 027 031
-
189 027 031
9 131 544
-
9 131 544
16 765 541
-
16 765 541
Investment income
351 752
-
351 752
Depreciation of segment assets
(96 132)
-
(96 132)
(4 597 161)
-
(4 597 161)
(9 762 229)
-
Other gains
Impairment losses recognised in profit or loss
Finance cost
Segment assets (adjusted for deferred tax assets)
Deferred tax assets
Acquisition of segment assets
Segment liabilities (adjusted for deferred tax and current tax liabilities)
60
R
Group
416 608 255
-
(9 762 229)
416 608 255
9 777 650
-
9 777 650
292 660 986
-
292 660 986
(215 997 442)
-
(215 997 442)
(19 815 967)
-
(19 815 967)
Current tax payable
(13 127 473)
-
(13 127 473)
33. PRIOR PERIOD ADJUSTMENTS
The group early adopted the changes per IAS 23 Borrowing costs. This standard is effective for annual periods beginning
on or after 1 January 2009. Early application is permitted. In terms of this standard, all borrowing costs that are directly
attributable to the acquisition, construction or production of a qualifying asset form part of the cost of that asset. Other
borrowing costs are recognised as an expense.
The effects on the Consolidated Income statement for the year ended 28 February 2006 were as follows:
Revenue
Previously
reported
Reclassifications
R
R
197 003 515
Cost of sales
(131 790 196)
Gross profit
65 213 319
Investment revenue
Occupancy expenses
Other expenses
Capitalisation
Equity
Restated after Borrowing
of borrowing
accounting
cost and associates
cost
for associates2
2006
R
(16 764 041)
180 239 474
(28 193 216)
-
(159 983 412)
(16 764 041) (28 193 216)
-
20 256 062
-
-
R
-
1 500
16 764 041
-
-
16 765 541
567 727
-
-
-
567 727
8 175
-
-
(9 289 003)
(380 358)
(37 842 651)
(8 175)
Finance cost
(27 259 696)
-
(Loss) / Profit before taxation
(8 989 162)
-
R
-
-
(380 358)
4 859 500
-
(32 991 326)
9 832 390
-
(17 427 306)
(13 501 326)
-
(22 490 488)
-
(68 754)
-
(8 722 916)
-
(13 570 080)
-
(3 468 453)
-
(13 570 080)
Minority interest
(5 254 463)
-
Basic EPS (cents)
(0,56)
-
(2,19)
(0,43)
(3,18)
Diluted EPS (cents)
(0,40)
-
(2,19)
(0,43)
(3,02)
Basic HEPS (cents)
(2,16)
2,32
2,98
0,43
3,57
Diluted HEPS (cents)
(1,56)
1,63
2,10
0,31
2,52
266 246
(9 280 828)
197 492
(22 292 996)
Attributable to:
-
(2 687 112)
(19 725 645)
2 687 112
(2 567 351)
2. In terms of IAS28 Investments in Associates all investments in associates over which the investor has significant influence must be accounted for
using the equity method.
61
33. PRIOR PERIOD ADJUSTMENTS (CONTINUED)
The effects on the Consolidated Balance sheet at 28 February 2006 were as follows:
Previously
reported
Reclassify
R
R
Capitalisation
Equity
of borrowing accounting for
cost
associates2
R
R
Restated after
Borrowing cost and
associates
R
Assets
Non-current assets
177 481 212
-
Goodwill
82 757 902
25 240 025
14 275 265
Deferred tax assets
-
(176 582 255)
-
196 643 322
-
(15 163 748)
-
(9 577 063)
9 088 208
-
898 957
-
196 643 322
(2 687 112)
64 907 042
-
-
25 240 025
-
-
4 698 202
-
9 019 454
(68 754)
299 754 404
(4 408 464)
(68 754)
32 840 757
(4 897 319)
(13 501 326)
47 742 978
(2 687 112)
301 407 002
Current assets
Total assets
74 522
11 192 086
(970 676)
9 577 063
(1 000)
-
14 442 112
-
-
46 772 302
-
-
9 651 585
-
-
11 191 086
91 850 343
3 708 068
(13 501 326)
391 604 747
8 116 532
(13 570 080)
(2 687 112)
82 057 085
383 464 087
2. In terms of IAS28 Investments in Associates all investments in associates over which the investor has significant influence must be accounted for
using the equity method.
62
Previously
reported
Reclassify
R
R
Capitalisation
Equity
of borrowing accounting
cost
for associates
R
R
Restated after
Borrowing cost and
associates
R
Issued capital, share premium and
share-based payment reserve
Equity attributable to equity holders
of the parent
Minority interest
Total equity
166 422 414
(3 468 453)
-
-
-
166 422 414
-
(13 570 080)
(2 687 112)
(19 725 645)
162 953 961
-
(13 570 080)
(2 687 112)
146 696 769
867 831
-
163 821 792
-
-
95 705 949
42 757 293
-
-
(13 570 080)
(2 687 112)
867 831
147 564 600
Borrowings
138 463 242
294 147
-
-
-
294 147
10 726 518
9 088 208
-
-
19 814 726
106 726 614
51 845 501
-
-
158 572 115
Current liabilities
48 517 234
(16 319 186)
-
-
32 198 048
Borrowings
67 973 597
(39 060 593)
-
-
28 913 004
-
-
109 261
-
-
3 494 530
-
-
12 612 529
-
-
77 327 372
-
235 899 487
Current tax payable
Provisions
109 261
4 456 249
-
(961 719)
12 612 529
121 056 341
(43 728 969)
Total liabilities
227 782 955
8 116 532
391 604 747
8 116 532
(13 570 080)
(2 687 112)
383 464 087
63
Restated after
Borrowing cost
Share based
Convert
and associates payments to staff
preference
Year ended
and directors
shares to
28/02/06
(refer to note 25) ordinary shares
R
Revenue
R
R
Correct
reconciling
differences to
the Fixed asset
register
Finance lease
previously not
recorded
R
R
180 239 474
-
-
-
-
Cost of sales
(159 983 412)
-
-
-
-
Gross profit
20 256 062
-
-
-
-
16 765 541
-
-
-
-
567 727
-
-
-
-
(9 280 828)
-
-
-
-
(380 358)
-
-
-
-
-
16 343
-
-
Investment revenue
Occupancy expenses
Other expenses
(32 991 326)
Finance cost
(17 427 306)
(22 490 488)
197 492
(2 200 000)
(2 200 000)
638 000
7 377
(5 766)
-
16 343
-
1 746
(2 986)
1 611
(22 292 996)
(1 562 000)
-
18 089
(1 375)
(19 725 645)
(1 562 000)
-
18 089
(1 375)
-
-
-
Attributable to:
Ordinary shareholders of the
parent
Minority interest
64
(2 567 351)
-
Basic EPS (cents)
(3,18)
(0,25)
-
-
-
Diluted EPS (cents)
(3,02)
(0,50)
-
-
-
Basic HEPS (cents)
3,57
0,25
-
-
-
Diluted HEPS (cents)
2,52
0,36
-
-
-
Accruals for
success fee and
stamp duties
previously not
raised
Debenture
amortisation
Method of
calculating
inventory
R
R
R
-
-
Consolidation
corrections
Accounting
entries
previously
incorrectly
raised
Restated
28/02/06
R
R
R
-
-
8 787 557
189 027 031
(1 640 742)
-
3 729 621
-
-
(1 640 742)
-
3 729 621
-
8 787 557
31 132 498
-
-
-
-
-
16 765 541
-
-
-
-
351 752
-
-
-
-
-
-
-
7 346 389
4 702 469
(2)
(23 964 250)
-
-
7 670 842
1
(9 762 229)
8 787 555
(845 500)
(2 486 242)
(215 975)
4 279 865
(10 446)
(1)
-
(157 894 533)
(5 000 964)
(390 804)
-
11 076 010
16 426 755
-
760 078
1 133 823
(2 486 242)
-
11 836 088
17 560 578
6 686 075
9 758 217
(2 322 168)
-
9 667 552
17 560 578
5 643 243
9 278 274
(164 074)
-
2 168 536
-
1 042 832
479 943
(0,40)
-
1,56
2,76
1,01
1,50
(0,40)
-
1,55
2,74
0,87
1,24
0,40
-
(0,38)
(2,27)
(1,36)
0,56
0,28
-
(0,26)
(1,60)
(0,96)
0,81
-
(2 101 480)
9 131 544
626 673
65
Restated after
Share based
Convert
Borrowing cost payments to staff
preference
and associates
and directors
shares to
Year ended
R
R
R
Correct
reconciling
differences to
the Fixed asset
register
Finance lease
previously not
recorded
R
R
Assets
Non-current assets
Inventory / Freehold land and
stands
898 957
-
-
16 342
304 503
196 643 322
-
-
-
-
Goodwill
64 907 042
-
-
-
-
25 240 025
-
-
-
-
4 698 202
-
-
-
-
Loans and receivables at
amortised cost
Deferred tax assets
Current assets
Inventory / Freehold land and
stands
9 019 454
638 000
-
-
-
301 407 002
638 000
-
16 342
304 503
14 442 112
-
-
-
-
46 772 302
-
-
-
-
9 651 585
-
-
-
-
Loans and receivables at
amortised cost
Total assets
66
11 191 086
-
-
-
-
82 057 085
-
-
-
-
383 464 087
638 000
-
16 342
304 503
Accruals for
success fee and
stamp duties
previously not
raised
Debenture
amortisation
Method of
calculating
inventory
R
R
R
Consolidation
corrections
Accounting
entries
previously
incorrectly
raised
Restated
28/02/06
R
R
R
-
-
-
-
-
1 219 802
-
-
-
-
-
196 643 322
-
-
895 776
42 831 276
-
108 634 094
-
-
-
(19 000 000)
-
6 240 025
-
-
-
-
4 698 202
-
-
5 819 652
221
(5 699 677)
9 777 650
-
-
6 715 428
23 831 497
(5 699 677)
327 213 095
16 174 122
-
1 940 047
(7 036 362)
-
6 416 170
31 936 089
-
-
-
-
(378 497)
46 393 805
-
-
-
-
(200)
9 651 385
-
445
-
11 191 531
1 940 047
-
(7 036 362)
-
16 174 122
445
6 037 473
99 172 810
1 940 047
(7 036 362)
22 889 550
23 831 942
337 796
426 385 905
67
Restated after
Share based
Convert
Borrowing cost payments to staff
preference
and associates
and directors
shares to
Year ended
R
R
R
Correct
reconciling
differences to
the Fixed asset
register
Finance lease
previously not
recorded
R
R
Issued capital, share premium
and share-based payment
reserve
166 422 414
2 200 000
(19 725 645)
(1 562 000)
Equity attributable to equity
holders of the parent
146 696 769
638 000
867 831
-
147 564 600
638 000
138 463 242
-
1 579 158
-
-
294 147
-
-
-
302 892
Minority interest
Total equity
(1 579 158)
(1 579 158)
(1 579 158)
-
-
18 089
(1 375)
18 089
(1 375)
18 089
(1 375)
Borrowings
19 814 726
-
-
(1 747)
2 986
158 572 115
-
1 579 158
(1 747)
305 878
32 198 048
-
-
-
-
Borrowings
28 913 004
-
-
-
-
Current liabilities
109 261
-
-
-
-
3 494 530
-
-
-
-
12 612 529
-
-
-
-
Current tax payable
Provisions
68
77 327 372
-
-
Total liabilities
235 899 487
-
1 579 158
383 464 087
638 000
-
-
-
(1 747)
305 878
16 342
304 503
Accruals for
success fee and
stamp duties
previously not
raised
Debenture
amortisation
Method of
calculating
inventory
R
R
R
-
Restated for the
Consolidation
corrections
Accounting
entries
previously
incorrectly
raised
R
R
R
Year ended
28/02/06
-
-
-
(2 322 168)
-
9 667 552
23 575 170
(371 349)
9 278 274
(2 322 168)
-
9 667 552
23 575 170
(371 349)
176 321 530
(164 074)
-
-
255 662
(2 486 242)
-
9 667 552
23 830 832
(207 275)
177 445 023
-
-
(203)
133 005 835
-
-
-
-
-
-
-
-
-
(7 036 362)
(7 036 362)
164 074
2
167 043 256
1 123 493
597 039
19 815 967
(201)
153 418 841
(1 885 514)
34 738 733
4 426 289
-
-
-
-
-
1 200
-
-
-
-
-
109 261
-
-
7 202 157
-
2 430 786
13 127 473
-
-
6 019 841
-
-
18 632 370
-
4 426 289
(90)
-
-
28 914 204
13 221 998
1 110
545 272
95 522 041
4 426 289
(7 036 362)
13 221 998
1 110
545 071
248 940 882
1 940 047
(7 036 362)
22 889 550
23 831 942
337 796
426 385 905
69
34. ADJUSTMENTS TO SENS ANNOUNCEMENT
The following adjustments have been made to the income statement for the year ended 28 February 2007 and the Balance
sheet at that date, since the SENS announcement:
Revenue
Per SENS
Reclassify
Effect of
Prior year
corrections
R
R
R
Corrections
Restated
28/02/07
R
R
154 890 863
-
-
-
154 890 863
Cost of sales
(140 178 401)
-
-
-
(140 178 401)
Gross profit
14 712 462
-
-
-
14 712 462
28 376 351
2 240 000
-
3
30 616 354
806 364
-
-
-
806 364
-
-
998
-
-
Investment revenue
Occupancy expenses
Other expenses
Finance cost
(10 706 791)
(571 033)
(35 155 410)
(2 240 000)
-
(3)
105
(10 705 793)
(571 036)
(37 395 305)
(13 845 456)
-
-
-
(13 845 456)
(16 383 513)
-
-
1 103
(16 382 410)
(734 376)
-
-
1
(734 375)
(17 117 889)
-
-
1 104
(17 116 785)
(17 862 665)
-
-
1 104
(17 861 561)
-
-
-
Attributable to:
Minority interest
70
744 776
744 776
Per SENS
Reclassify
R
R
Equity
accounting
for associates Corrections
R
Restated
28/02/07
R
R
Assets
Non-current assets
Goodwill
Deferred tax assets
994 589
97 166 864
(2 630 604)
94 536 260
157 772 084
-
-
-
5 239 443
-
-
5 239 443
(1 228 903)
-
-
9 946 689
2 471
268 489 064
-
-
368 321 418
-
-
-
994 588
-
-
269 793 989
1 379 936
365 690 830
2 630 588
-
(1)
2 472
160 456 944
11 175 592
(2 687 332)
(2 687 332)
Current assets
35 437 293
(433 043)
-
1
35 004 251
21 617 613
(5 239 443)
-
-
16 378 170
433 043
-
-
1 638 036
-
-
-
25
-
1
421 341 900
2 472
689 830 964
-
280 600 194
Total assets
Issued capital, share premium and share-based
payment reserve
Minority interest
Total equity
1 204 993
25
423 950 754
(2 608 855)
693 744 743
(1 228 919)
280 600 194
(5 898 528)
-
(2 687 332)
-
-
(2 687 332)
2 573
274 701 666
-
(2 687 332)
2 573
1 980 656
-
276 682 322
-
-
(8 583 287)
272 016 907
1
1 980 657
2 574
273 997 564
-
-
205 482 440
(2 687 332)
Borrowings
258 877 238
454 537
(53 394 798)
-
-
454 537
42 378 431
(1 228 919)
-
-
-
41 149 512
301 710 206
(54 623 717)
-
-
247 086 489
Current liabilities
45 417 992
-
-
-
45 417 992
Borrowings
21 001 217
53 394 798
-
(1)
74 396 014
Current tax payable
Provisions
137 504
16 860 126
31 935 376
-
-
(1)
(100)
137 504
16 860 125
31 935 276
115 352 215
53 394 798
-
693 744 743
(1 228 919)
(2 687 332)
(102) 168 746 911
2 472
689 830 964
71
34. ADJUSTMENTS TO SENS ANNOUNCEMENT (CONTINUED)
The following adjustments have been made to the income statement for the year ended 28 February 2006 and the Balance
sheet at that date, since the SENS announcement:
Revenue
Per SENS
Reclassify
Equity
accounting
for associates
R
R
R
189 027 031
Cost of sales
(162 491 694)
Gross profit
26 535 337
Investment revenue
Occupancy expenses
-
Correct
opening
retained
income
Restated
28/02/06
R
R
-
-
189 027 031
(4 597 161)
-
-
(157 894 533)
(4 597 161)
-
-
31 132 498
16 765 541
-
-
-
16 765 541
351 752
-
-
-
351 752
-
-
2
(5 000 966)
(380 358)
(10 443)
-
(22 416 148)
(1 549 530)
-
Finance cost
(6 725 082)
(3 037 188)
-
41
9 130 076
-
-
1 468
Other expenses
(3)
1 428
(5 000 964)
(390 804)
(23 964 250)
(9 762 229)
9 131 544
626 672
-
-
1
626 673
9 756 748
-
-
1 469
9 758 217
11 964 137
-
(2 687 332)
1 469
9 278 274
Minority interest
(2 207 389)
-
2 687 332
-
479 943
Attributable to:
72
Per SENS
Reclassify
Equity
accounting
for associates
R
R
R
Correct
opening
retained
income
Restated
28/02/06
R
R
Assets
Non-current assets
1 219 803
-
140 347 209
56 296 113
Goodwill
107 318 951
4 000 000
10 240 025
(4 000 000)
Deferred tax assets
11 276 918
270 402 906
-
1 219 802
-
196 643 322
2 475
108 634 094
-
-
6 240 025
4 698 202
-
-
4 698 202
(1 499 268)
-
-
9 777 650
2 474
327 213 095
-
31 936 089
59 495 047
-
(1)
(2 687 332)
(2 687 332)
Current assets
88 232 202
(56 296 113)
-
48 818 736
(2 423 926)
-
13 708 058
(4 056 673)
-
-
9 651 385
3 909 281
7 282 250
-
-
11 191 531
154 668 277
Total assets
425 071 183
(55 494 462)
4 000 585
(2 687 332)
(1 005)
(1 005)
1 469
46 393 805
99 172 810
426 385 905
73
Per SENS
Reclassify
Equity
accounting
for associates
R
R
R
Correct
opening
retained
income
Restated
28/02/06
R
R
Issued capital, share premium and share-based
payment reserve
Minority interest
Total equity
167 043 256
-
-
167 043 256
11 964 137
-
(2 687 332)
-
1 469
9 278 274
179 007 393
-
(2 687 332)
1 469
176 321 530
1 123 492
-
1
1 123 493
180 130 885
-
1 470
177 445 023
86 398 089
46 607 746
-
-
133 005 835
597 039
-
-
-
597 039
(2 687 332)
Borrowings
-
(1)
108 310 364
45 108 478
-
(1) 153 418 841
30 820 552
3 918 181
-
-
34 738 733
Borrowings
73 880 423
(44 966 219)
-
-
28 914 204
-
-
109 261
-
1
13 127 473
-
(1)
18 632 370
-
95 522 041
21 315 236
(1 499 268)
19 815 967
Current liabilities
109 261
Current tax payable
13 187 327
Provisions
18 632 371
136 629 934
74
(59 855)
(41 107 893)
Total liabilities
244 940 298
4 000 585
425 071 183
4 000 585
(2 687 332)
(1) 248 940 882
1 469
426 385 905
Shareholders’ Diary
NEXT FINANCIAL YEAR-END
28 FEBRUARY 2008
• Interim results
• Next Annual General Meeting
November 2007
04 October 2007
Shareholders’ Analysis
SHAREHOLDERS HOLDING MORE THAN 5%
Shareholder
No. of Shares
% Holding
Nedcor Securities (Broker Proprietary)
322 452 770
28.83%
Quattro Trust
279 571 434
25.00%
Jansk International Limited
125 468 569
11.22%
Total
727 492 773
65.05%
CATEGORIES OF SHAREHOLDERS
Shareholder
Public
No. of
shareholders No. of Shares 28/02/07
1 843
376 162 261
33.63%
5
14 775 000
1.32%
Non-Public
Directors and Associates
Strategic Holders (more than 10%)
Total
SHAREHOLDERS ANALYSIS AND INFORMATION
Type of shareholder
Individuals
3
727 492 773
65.05%
1 851
1 118 430 034
100.00%
No. of
Shareholders No. of Shares
1 722
199 087 172
Nominees and Trusts
48
328 807 175
Close Corporations
34
2 654 519
Companies, Financial Institutions, Other Institutions
47
587 881 168
1 851
1 118 430 034
Total
Size of Shareholding
No. of
Shareholders No. of Shares
1 – 25 000
878
10 216 707
25 001 – 100 000
632
34 714 215
100 001 – 500 000
272
62 414 839
500 001 – 1 000 000
26
19 682 495
1 000 001 – 5 000 000
28
62 232 521
5 000 001 and over
15
929 169 257
1 851
1 118 430 034
Total
75
Notice of Annual General Meeting
of the Shareholders of the Company
N
otice is hereby given that the annual general
meeting of shareholders of the company will be
held in the boardroom, Arcay House, Number
3 Anerley Road, Parktown, Johannesburg, at
10:00 on 04 October 2007 to consider, and
if deemed fit, to pass, with or without modifications, the
following ordinary resolutions:
DIRECTORS
ORDINARY RESOLUTION NUMBER 1 – ANNUAL FINANCIAL
STATEMENTS
ORDINARY RESOLUTION NUMBER 6 – GENERAL
AUTHORITY TO ALLOT AND ISSUE SHARES FOR CASH
“RESOLVED THAT the annual financial statements of the
company and its subsidiaries for the year ended 28 February
2007, together with the directors’ and auditor’s reports
thereon be received, considered and adopted.”
ORDINARY RESOLUTION NUMBER 2 – DIRECTOR
RETIREMENT AND RE-ELECTION
“RESOLVED THAT: Mr EM Sono’s retirement be accepted
and Mr KS Mthembu who retires in accordance with the
provisions of the company’s articles of association, but
being eligible, offers himself for re-election, be and hereby is
re-elected as a non-executive director of the company.”
Mr Mthembu’s curriculum vitae is available on page 78.
ORDINARY RESOLUTION NUMBER 3 – AUDITORS
APPOINTMENT AND REMUNERATION
“RESOLVED THAT the appointment of Deloitte & Touche as
the auditors of the company be and hereby is approved
and that the directors be and are hereby authorised to
determine the remuneration of the auditors.”
ORDINARY RESOLUTION NUMBER 4 – DIRECTORS
REMUNERATION
“RESOLVED THAT the directors’ remuneration for the past
financial year be approved.”
ORDINARY RESOLUTION NUMBER 5 – PLACING
UNISSUED SHARES UNDER CONTROL OF DIRECTORS
“RESOLVED THAT the authorised, but unissued ordinary
shares in the capital of the company be placed under
the control of the directors of the company until the next
annual general meeting of the company and that the
directors be and are hereby authorised and empowered
to allot, issue and otherwise dispose of such shares, on such
terms and conditions and at such times as the directors
in their discretion deem fit, subject to the Section 221 and
222 of the Companies Act 61 of 1973 and the JSE Listings
Requirements.”
76
AB Mashiatshidi (Chairman)*
W Robinson (Chief Executive Officer)
N Owen
A Wiese
KS Mthembu*
EM Sono*
* Non-executive
“RESOLVED THAT subject to the approval of 75% of the
members present in person and by proxy, and entitled to vote
at the meeting, the directors of the company be and hereby
are authorised, by way of general authority, to allot and issue
all or any of the authorised but unissued shares in the capital
of the company as they in their discretion deem fit, subject to
the following limitations:
• the shares which are the subject of the issue for cash must
be of a class already in issue, or where this is not the case,
must be limited to such equity securities or rights that are
convertible into a class already in issue;
• this authority shall not endure beyond the next annual
general meeting of the company nor shall it endure
beyond 15 months from the date of this meeting;
• there will be no restrictions in regard to the persons to
whom the shares may be issued, provided that such
shares are to be issued to public shareholders (as defined
by the JSE Limited (“JSE”) in its listing requirements) and not
to related parties;
• upon any issue of shares which, together with prior issues
during any financial year, will constitute 5% or more of
the number of shares of the class in issue, the company
shall by way of an announcement on Securities Exchange
News Service (“SENS”), give full details thereof, including
the effect on the net asset value of the company and
earnings per share;
• the aggregate issue of a class of shares already in issue
in any financial year will not exceed 15% of the number
of that class of shares (including securities which are
compulsorily convertible into shares of that class); and
• the maximum discount at which shares may be issued
is 10% of the weighted average traded price of the
company’s shares over the 30 business days prior to the
date that the price of the issue is determined or agreed
by the directors of the applicant.”
VOTING AND PROXIES
Certificated shareholders and dematerialised shareholders with
“own name” registration
If you are unable to attend the annual general meeting of
Acc-Ross shareholders to be held at 10:00 on 04 October
2007, at Arcay House, Number 3 Anerley Road, Parktown,
Johannesburg and wish to be represented thereat, you should
complete and return the attached form of proxy in accordance
with the instructions contained therein and lodge it with, or post
it to, the transfer secretaries, namely Computershare Investor
Services 2004 (Pty) Ltd, 70 Marshall Street, Johannesburg, 2001
(P O Box 61051, Marshalltown, 2107) so as to be received by
them by no later than 10:00 on 02 October 2007.
Dematerialised shareholders, other than those with “own
name” registration
If you hold dematerialised shares in Acc-Ross through a CSDP or
broker and do not have an “own name” registration, you must
timeously advise your CSDP or broker of your intention to attend
and vote at the annual general meeting or be represented
by proxy thereat in order for your CSDP or broker to provide
you with the necessary authorisation to do so, or should you
not wish to attend the annual general meeting in person, you
must timeously provide your CSDP or broker with your voting
instruction in order for the CSDP or broker to vote in accordance
with your instruction at the annual general meeting.
Each shareholder, whether present in person or represented
by proxy, is entitled to attend and vote at the annual general
meeting. On a show of hands every shareholder who is
present in person or by proxy shall have one vote, and, on a
poll, every shareholder present in person or by proxy shall have
one vote for each share held by him/her.
A form of proxy (white) which sets out the relevant instructions
for use is attached for those members who wish to be
represented at the annual general meeting of members. Duly
completed forms of proxy must be lodged with the transfer
secretaries of the company to be received by not later than
10:00 on 02 October 2007.
By order of the Board
ARCAY CLIENT SUPPORT (PTY) LTD
(Registration Number 1998/025284/07)
Company Secretary
27 August 2007
77
Abridged Curriculum Vitae
Director Appointments
KHEHLA MTHEMBU
(Ordinary Resolution 2)
Khehla was appointed non-executive director of
Acc-Ross in October 2005. He holds a BCom degree from
the University of South Africa. In July 2003, he was appointed
as Chief Executive Officer of Old Mutual Gauteng and in
July 2004, was appointed Head of Public Affairs.
78
Proxy Form
for use by certificated and own name dematerialised shareholders only
For use by certificated and “own name” registered dematerialised shareholders of the company (“shareholders”) at the
Annual General Meeting of Acc-Ross to be held at 10:00 on 04 October 2007 at Arcay House, Number 3 Anerley Road,
Parktown, Johannesburg (“the annual general meeting”).
I/We (please print) ______________________________________________________________________________________________________
of (address) _____________________________________________________________________________________________________________
being the holder/s of ____________________________ ordinary shares of R0.0001 each in Acc-Ross, appoint (see note 1):
1. _______________________________________________ or failing him,
2. _______________________________________________ or failing him,
3. the chairperson of the annual general meeting,
as my/our proxy to act for me/us and on my/our behalf at the annual general meeting which will be held for the purpose
of considering, and if deemed fit, passing, with or without modification, the resolutions to be proposed thereat and at any
adjournment thereof; and to vote for and/or against the resolutions and/or abstain from voting in respect of the ordinary
shares registered in my/our name/s, in accordance with the following instructions (see note 2):
Number of votes
For
Against
Abstain
Ordinary Resolution Number 1 – Adoption of annual financial statements
Ordinary Resolution Number 2 – Directors retirement and re-election (KS Mthembu)
Ordinary Resolution Number 3 – Auditor’s appointment and remuneration
Ordinary Resolution Number 4 – Director’s remuneration
Ordinary Resolution Number 5 – Placing unissued shares under control of directors
Ordinary Resolution Number 6 – General authority to issue shares for cash
Signed at _______________________________ on ______________________________________ 2007
Signature _________________________________________________________________________
Assisted by me (where applicable)
Name ___________________________________ Capacity _______________________________ Signature ___________________________
79
1. CERTIFICATED SHAREHOLDERS AND DEMATERIALISED SHAREHOLDERS WITH “OWN NAME” REGISTRATION
If you are a certificated shareholder or have dematerialised your shares with “own name” registration and you are
unable to attend the annual general meeting of Acc-Ross shareholders to be held at 10:00 on 04 October 2007 at the
registered office of the company at Arcay House, Number 3 Anerley Road, Parktown, Johannesburg, 2193 and wish to
be represented thereat, you must complete and return this form of proxy in accordance with the instructions contained
herein and lodge it with, or post it to, the transfer secretaries, namely Computershare Investor Services 2004 (Pty) Ltd, 70
Marshall Street, Johannesburg, 2001 (P O Box 61051, Marshalltown, 2107), so as to be received by them no later than 10:00 on
02 October 2007.
2. DEMATERIALISED SHAREHOLDERS OTHER THAN THOSE WITH “OWN NAME” REGISTRATION
If you hold dematerialised shares in Acc-Ross through a CSDP or broker other than with an “own name” registration, you must
timeously advise your CSDP or broker of your intention to attend and vote at the annual general meeting or be represented
by proxy thereat, in order for your CSDP or broker to provide you with the necessary authorisation to do so, or should you
not wish to attend the annual general meeting in person, you must timeously provide your CSDP or broker with your voting
instruction in order for the CSDP or broker to vote in accordance with your instruction at the annual general meeting.
NOTES
1. Each member is entitled to appoint one or more proxies (who need not be a member of the company) to attend, speak
and, on a poll, vote in place of that member at the annual general meeting.
2. A member may insert the name of a proxy or the names of two alternative proxies of the member’s choice in the space
provided, with or without deleting “the chairman of the annual general meeting”. The person whose name stands first
on the form of proxy and who is present at the annual general meeting will be entitled to act as proxy to the exclusion of
those whose names follow.
3. A member’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by
that member in the appropriate box/es provided. Failure to comply with the above will be deemed to authorise the
chairperson of the annual general meeting, if he/she is the authorised proxy, to vote in favour of the ordinary resolutions
at the annual general meeting, or any other proxy to vote or to abstain from voting at the annual general meeting as
he/she deems fit, in respect of all the member’s votes exercisable thereat.
4. A member or his/her proxy is not obliged to vote in respect of all the ordinary shares held or represented by him/her
but the total number of votes for or against the resolutions and in respect of which any abstention is recorded may not
exceed the total number of votes to which the member holder or his/her proxy is entitled.
5. Forms of proxy must be lodged with the transfer secretaries, of the company by not later than 10:00 on 02 October
2007.
6. The completion and lodging of this form of proxy will not preclude the relevant member from attending the annual
general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof,
should such member wish to do so.
7. Any alterations or corrections to this form of proxy must be initialled by the signatory/ies.
8. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity
must be attached to this form of proxy unless previously recorded by the company’s transfer office or waived by the
chairperson of the annual general meeting.
9. The chairperson of the annual general meeting may reject or accept any proxy form which is completed and/or received
other than in accordance with these instructions and notes, provided that he/she is satisfied as to the manner in which
a member wishes to vote.
80
Administration
ADMINISTRATION
Acc-Ross Holdings Limited
(Registration number 2000/000059/06)
COMPANY SECRETARY AND REGISTERED OFFICE
Arcay Client Support (Pty) Ltd
Arcay House II
Number 3 Anerley Road
Parktown 2193
PO Box 62397
Marshalltown, 2107
Tel +27 11 480 8500
Fax +27 11 480 8556
TRANSFER SECRETARIES
Computershare Investor Services 2004 (Pty) Ltd
70 Marshall Street
Johannesburg, 2001
PO Box 61051
Marshalltown, 2107
DESIGNATED ADVISOR
Arcay Moela Sponsors (Pty) Ltd
Arcay House II
Number 3 Anerley Road
Parktown, 2193
PO Box 62397
Marshalltown, 2107
AUDITORS
Deloitte & Touche
221 Waterkloof Road
Waterkloof
PO Box 11007
Hatfield 0028
Pretoria
81
Investor Relations –Arcay Financial Communications (Pty) Ltd • Design –Profit Partnership Corporation (Pty) Ltd

Acc-Ross Annual Report 2007 final.indd

Transcription

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UGL Rail Ballarat Pty Ltd EA 2013-2015

Animal Supplies (Wholesale) Pty Ltd

2011 - The Couchiching Conservancy