TIDMSAPO
RNS Number : 3938A
South African Property Opps PLC
28 December 2017
Legal Entity Identifier: 213800MCRBNG3UHI1A31
28 December 2017
SOUTH AFRICAN PROPERTY OPPORTUNITIES PLC
('SAPRO' or the 'Group')
Final results for the year ended 30 June 2017
South African Property Opportunities plc (AIM: SAPO), an
investment company established to invest in real estate
opportunities in South Africa, announces its final results for the
year ended 30 June 2017.
A copy of the results announcement will be available on the
Company's website at www.saprofund.com
For further information please contact:
Paul Fincham/Jonathan Becher +44 (0) 20 7886 2500
Panmure Gordon
Ian Dungate/Suzanne Jones + 44 (0) 1624 692600
Galileo Fund Services Limited
Chairman's Statement
On behalf of the Board, I present the results for South African
Property Opportunities plc ("SAPRO" or "the Company") and its
subsidiaries (the "Group") for the year ended 30 June 2017.
In December 2016 the Company reported that a contract had been
concluded to sell the remaining assets for ZAR 60 million (GBP3.71
million). Of this ZAR 25 million (GBP1.49 million) had already been
received with the remainder due in February (ZAR 11 million
(GBP0.70 million)) and June 2017 (ZAR 24 million (GBP1.52
million)), secured by bank guarantees. As I reported in the interim
accounts, this contract remains in place and binding, but the
Company has been negotiating with the partner at the Brakpan asset
regarding a pre-emption right. As a result the February payment,
which is for the Brakpan asset, has continued to be delayed.
Performance
As at 30 June 2017 the EPRA net asset value per share ("NAV"),
taking into account the contracted sales and distribution costs was
1 pence compared with 11 pence at 30 June 2016. The change in NAV
primarily relates to the two distributions paid during the year
(7.25 pence per Ordinary Share on 27 January 2017 and 2 pence per
Ordinary Share on 23 June 2017). The change in NAV also includes a
currency gain of 1 pence per share, operating expenses of 1 pence
per share and a provision for future costs of 1 pence per share.
The Company does not hedge its South African Rand exposure. The
Company has no bank debt.
Valuation
The portfolio was not revalued externally at 30 June 2017 and
the figures adopted in the accounts are based on the agreed Brakpan
sale price equivalent of ZAR 22 million. However in view of the
difficulty which the Investment Manager has experienced in
enforcing the contract, the scale and timing of the ultimate
receipt is undetermined.
The key efforts of the Investment Manager are focused on
receiving the contracted sums and negotiating the pre-emption
arrangements on the Brakpan asset.
On receipt of the final payment steps will be taken to wind up
the Company. The Board has already served notice where appropriate
under various service agreements.
David Hunter
Chairman
27 December 2017
Report of the Directors
The Directors hereby submit their annual report together with
the audited consolidated financial statements of South African
Property Opportunities plc (the "Company") and its subsidiaries
(the "Group") for the year ended 30 June 2017.
The Company
The Company is incorporated in the Isle of Man under the Isle of
Man Companies Act 2006 and holds a portfolio of property interests
in South Africa.
Currency and debt
The Group does not hedge its exposure in its Rand assets and
liabilities.
Divestment strategy
Following a strategic review the Company intends to dispose of
the Group's portfolio where acceptable returns can be generated and
return excess capital to shareholders.
Results and dividends
The results and position of the Group at the year end are set
out on pages 11 to 30 of the financial statements.
The Company is now operating as a realisation company and the
net asset value includes an estimate of liquidation costs and a
provision for fees and expenses expected to be incurred in
realising the assets. The financial statements have therefore been
prepared on a non-going concern basis.Two distributions were paid
during the year, 7.25 pence per Ordinary Share on 27 January 2017
and 2 pence per Ordinary Share on 23 June 2017 (2016: 5 pence per
Ordinary Share on 16 October 2015).
Directors
The Directors who served during the year and up to the date of
this Report were as follows:
David Hunter - Chairman
John Chapman
Craig McMurray
David Saville
Stephen Coe
Directors and other interests
Save as disclosed in note 22, none of the Directors had any
interest during the year in any material contract for the provision
of services which was significant to the business of the
Company.
Independent auditor
BDO LLP, being eligible, has indicated its willingness to
continue in office.
Corporate governance
Whilst not being required to comply with Corporate Governance
requirements, the Directors recognise the importance of sound
corporate governance. The Directors are responsible for overseeing
the effectiveness of the internal controls of the Company designed
to ensure that proper accounting records are maintained, that the
financial information on which business decisions are made and
which is issued for publication is reliable and that the assets of
the Group are safeguarded.
The Board has established the following committees with specific
areas of responsibility.
Audit Committee
The Audit Committee comprises David Saville (Chairman), David
Hunter and Stephen Coe. The Audit Committee meets at least twice a
year and is responsible for ensuring that the financial performance
of the Group is properly reported on and monitored, including
reviews of the annual and interim financial statements, results
announcements, internal control systems and procedures and
accounting policies.
Nomination Committee
The Nomination Committee comprises David Saville (Chairman) and
David Hunter. The Nomination Committee is responsible for ensuring
that the Board consists of members with the range of skills and
qualities to meet its principal responsibilities in a way which
ensures that the interests of stakeholders are protected and
promoted, and the requirements of the AIM rules are complied
with.
Remuneration Committee
The Remuneration Committee comprises David Saville (Chairman),
David Hunter and Stephen Coe. The Remuneration Committee meets as
required and is responsible for determining and agreeing the
remuneration for all members of the Board. No director can
vote/take part in the discussion of their own remuneration.
Management Engagement Committee
The Management Engagement Committee comprises John Chapman
(Chairman) and David Hunter. The Management Engagement Committee
meets as required and is responsible for reviewing the performance
of the Investment Manager and for ensuring that the Company's
management contract is competitive and reasonable for the Company's
shareholders. It is also responsible for reviewing the performance
of other third party service providers.
On behalf of the Board
Stephen Coe
Director
27 December 2017
Directors' Biographies
The Company has a board of five Directors, all of whom are
independent of the Company's Investment Manager and other service
providers except for Craig McMurray who is an executive director of
the Investment Manager. Details of the Directors are as
follows:
David Hunter - Chairman
David Hunter is a UK-based property fund consultant. For twenty
years up to 2005 he was a leading property fund manager ultimately
responsible for EUR10bn of property assets across Europe for
Arlington Property Investors. David is a fellow of the Royal
Institution of Chartered Surveyors, a former President of the
British Property Federation, and a member of the Bank of England
Property Forum.
John Chapman - Executive Director
John Chapman is a member of the New York State Bar and the CFA
Institute. He is currently a director of a number of other quoted
investment funds.
Craig McMurray - Executive Director
Craig McMurray is the managing director of Bridgehead Real
Estate Fund (Pty) Limited, a private equity real estate investment
company. He is also CEO of Respublica (Pty) Ltd which is a
developer, owner and manager of a national student accommodation
portfolio in South Africa. Respublica Student Living is a joint
venture with Redefine Properties Limited a listed REIT on the
Johannesburg Stock Exchange (JSE). Previously Craig was head of
Credit Projects at Standard Bank of South Africa Limited.
David Saville
David Saville is an Isle of Man based property fund manager
currently managing a number of property sector investment vehicles
with investments predominantly in the UK and Australia. From 1992
to 2001 David was the Managing Director of Saville Gordon Estates
Plc, which he was instrumental in repositioning as a FTSE 250
property company specialising in industrial property. David is a
member of the Royal Institution of Chartered Surveyors.
Stephen Coe
Stephen qualified as a Chartered Accountant with Price
Waterhouse in 1990 and remained in audit practice, specialising in
financial services, until 1997. From 1997 to 2003 he was a director
of the Bachmann Group of fiduciary companies and Managing Director
of Bachmann Fund Administration Limited, a specialist third party
fund administration company. From 2003 to 2006 Stephen was a
director with Investec in Guernsey and Managing Director of
Investec Trust (Guernsey) Limited and Investec Administration
Services Limited. He became self employed in August 2006 and is a
director of a number of listed and unlisted investment funds and
offshore companies including Raven Russia Limited, European Real
Estate Investment Trust Limited, Kolar Gold Limited, Trinity
Capital PLC and Weiss Korea Opportunity Fund Ltd. He has been
involved with offshore investment funds and managers since 1990
with significant exposure to property, debt, emerging markets and
private equity investments.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
The Directors have elected to prepare the financial statements
in accordance with International Financial Reporting Standards
("IFRSs") (as adopted by the European Union). The Directors are
also required to prepare the financial statements in accordance
with the rules of the London Stock Exchange for companies trading
securities on the Alternative Investment Market. In preparing those
financial statements it is the Directors' responsibility to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business as explained in note 2.1 to the financial statements,
the Directors do not believe the going concern basis to be
appropriate and, in consequence, these financial statements have
not been prepared on that basis; and
-- prepare financial statements which give a true and fair view
of the state of affairs of the Group and of the profit or loss of
the Group for that period.
The Directors confirm that they have complied with the above
requirements in preparing the financial statements.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the
financial position of the Group. They are also responsible for
safeguarding the assets of the Company and the Group and hence for
taking reasonable steps for the prevention and detection of fraud
and other irregularities.
On behalf of the Board
Stephen Coe
Director
27 December 2017
Independent auditor's report to the members of South African
Property Opportunities plc
Qualified opinion
We have audited the consolidated financial statements of South
African Property Opportunities plc and its subsidiaries (the
'Group') for the year 30 June 2017 which comprise the consolidated
income statement, the consolidated statement of comprehensive
income, the consolidated balance sheet, the consolidated statement
of changes in equity, the consolidated cash flow statement and
notes to the financial statements, including a summary of
significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
In our opinion, except for the effects of the matter described
in the Basis for qualified opinion section, the Group financial
statements:
-- give a true and fair view of the state of the Group's affairs
as at 30 June 2017 and of its profit for the year then ended;
and
-- have been properly prepared in accordance with IFRSs as
adopted by the European Union.
Basis for qualified opinion
During the year the Group entered into a disposal agreement for
a subsidiary which has subsequently been disputed by the purchaser
(note 14). The directors have classified the assets and liabilities
as a disposal group and included the fair value of the assets at
the contracted amount. The net liabilities of the disposal group
total GBP320,000 and a non-controlling interest of negative
GBP940,000 arises. Because of the dispute it is neither possible to
determine if the disposal will complete at either the contracted
amount or at all, nor can it be established if the assets of the
disposal group are recoverable at the values included in the
financial statements. Given the nature of the inventory assets and
the ownership structure we were unable to obtain sufficient
appropriate audit evidence to by performing alternative audit
procedures to ascertain a valuation with material certainty and
consequently, we were unable to determine whether any adjustments
to these amounts were necessary.
In addition to the above a liability and expense of GBP512,000
has been included in the financial statements relating to the
directors' estimate of liquidation costs and a provision for fees
and expenses expected to be incurred in realising the assets. The
provision for future costs without an obligation at the balance
sheet date is not permitted by International Accounting Standard
39. We have not performed any audit procedures on the quantum of
the provision. Accordingly, provisions should be reduced by
GBP512,000 and profit for the year increased by the same
amount.
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
qualified opinion.
Financial statements prepared on a basis other than that of a
going concern
We draw attention to note 2.1 in the financial statements which
indicates that the Group's objective is the orderly realisation of
its assets with a view to returning capital to the shareholders
thereafter, hence the financial statements have been prepared on a
basis other than that of a going concern. Our opinion is not
modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Accounting for disposals of subsidiaries and assets held for
sale
Key audit matter Response
Due to the material effect As part of our audit
in the Group's financial work, we assessed whether
statements and the judgements the disposal of the subsidiaries
in establishing the fair and the related profit
values of assets held for on disposal were properly
sale, this was considered accounted in the financial
as key audit matter. statements. Our audit
work included, but was
As disclosed in note 23 not restricted to the
of the financial statements, following:
the Group sold its holding -- We reviewed the contract documentation for the sale
in and intercompany loan transactions and the accounting entries prepared by
with its principal South management to consider if the treatment proposed and
African subsidiary, SAPSPV disclosed is appropriate.
Holdings RSA (Pty) Limited,
along with all of its subsidiaries. -- We considered whether the conditions for
As explained in note 14 classification as a disposal Group under IFRS 5 have
to the financial statements been met, and have reviewed the appropriateness of
the Group has classified the financial statement disclosures.
its subsidiary, Madison
Park Properties 40 (Pty) -- We note that because of the dispute in relation the
Limited as asset held for held for sale disposal group the evidence was limited
sale. During the year a to us and consequently our audit report is qualified
disposal contract was signed in relation to this.
in relation to this subsidiary
but at the date of this
report the disposal has
not completed and the ability
of the company to enforce
the contract has been disputed
by the purchaser.
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. At the planning stage we set an overall level of
materiality for the financial statements as a whole based on our
understanding of the elements of the financial statements that are
likely to be of greatest significance to users. Importantly,
misstatements below these levels will not necessarily be evaluated
as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial
statements as a whole.
The materiality for the Group financial statements as a whole
was set at GBP40,000 (2016 - GBP100,000). This was determined with
reference to a benchmark of total assets and represents 2% of total
assets. This was considered to be the most appropriate measurement
as the Group is a closed-end fund with the investment objective to
achieve an optimal liquidation of its portfolio of land and other
assets. The reduction in materiality from last year is due to the
decrease in total assets.
We agreed with the Audit Committee that we would report to them
all individual audit differences in excess of GBP1,000. We also
agreed to report differences below this threshold that, in our
view, warranted reporting on qualitative grounds.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the
Group and its environment, including the Group's system of internal
control, and assessing the risks of material misstatement in the
financial statements at the Group level.
In determining the scope of our audit we considered the level of
work to be performed at each component in order to ensure
sufficient assurance was gained to allow us to express an opinion
on the financial statements of the Group as a whole. A full scope
audit was carried out on each component.
We tailored the extent of the work to be performed at each
component based on our assessment of the risk of material
misstatement at each component. BDO LLP reviewed the working papers
of the subsidiary auditor (a BDO member firm) to enable sufficient
appropriate audit evidence to be obtained on the subsidiaries held
in South Africa.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. As
described in the Basis for qualified opinion section above, we were
unable to obtain sufficient appropriate audit evidence regarding
the assets of the disposal group and consequently we are unable to
determine whether adjustments to the assets of the disposal group,
the profit for the year and retained earnings might be necessary.
Accordingly, we are unable to conclude whether or not the other
information is materially misstated with respect to this matter. As
also as described in the Basis for qualified opinion section above,
the Group has recognised provision for liquidation costs and fees
and expenses expected to be incurred in realising the assets. We
have concluded that the other information is materially misstated
for the same reason with respect to these matters.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the parent
company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the audit of the financial
statements
This report is made solely to the company's members, as a body,
in accordance with section 80C of the Isle of Man Companies Act
2006. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and the
company's members as a body, for our audit work, for this report,
or for the opinions we have formed.
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Geraint Jones
For and on behalf of BDO LLP
Chartered Accountants
London
United Kingdom
Date: 27 December 2017
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Consolidated Income Statement
Year ended Year ended
30 June 2017 30 June 2016
Note GBP'000 GBP'000
----------------------------------------------------------------------------- ----- --------------- ---------------
Revenue - rental income 9 13
Revenue - sale of inventory - 288
----------------------------------------------------------------------------- ----- --------------- ---------------
Total revenue 9 301
Total cost of sales 5 (31) (2,241)
Gross loss (22) (1,940)
Investment management fees 6 (200) (200)
Performance fees 6 (44) (80)
Other administration fees and expenses 7 (475) (545)
Directors incentive payments 7 (115) (62)
Provisions 8 (512) -
----------------------------------------------------------------------------- ----- --------------- ---------------
Administrative expenses (1,346) (887)
----------------------------------------------------------------------------- ----- --------------- ---------------
Operating loss (1,368) (2,827)
Finance income 4 13
Foreign exchange gain/(loss) 3 3,456 (920)
Net finance income/(expense) 3,460 (907)
----------------------------------------------------------------------------- ----- --------------- ---------------
Impairment of assets held for sale 14 (120) -
Profit on disposal of subsidiary undertakings 23 2,207 1,764
Profit/(loss) before income tax 4,179 (1,970)
Income tax expense 9 - -
----------------------------------------------------------------------------- ----- --------------- ---------------
Profit/(loss) for the year 4,179 (1,970)
----------------------------------------------------------------------------- ----- --------------- ---------------
Attributable to:
- Owners of the Parent 3,925 (1,764)
- Non-controlling interests 18 254 (206)
----------------------------------------------------------------------------- ----- --------------- ---------------
4,179 (1,970)
----------------------------------------------------------------------------- ----- --------------- ---------------
Basic and diluted profit/(loss) per share (pence) attributable to the owners
of the Parent
during the year 10 6.30 (2.83)
----------------------------------------------------------------------------- ----- --------------- ---------------
Consolidated Statement of Comprehensive Income
Year ended Year ended
30 June 2017 30 June 2016
Note GBP'000 GBP'000
------------------------------------------------------------------------------- ----- -------------- --------------
Profit/(loss) for the year 4,179 (1,970)
Other comprehensive income
Items reclassified to profit or loss
Accumulated foreign exchange differences arising on subsidiary operations
reclassified from
equity to profit or loss 23 (1,812) (1,743)
Items that may subsequently be reclassified to profit or loss
Currency translation differences (2,734) 250
------------------------------------------------------------------------------- ----- -------------- --------------
Other comprehensive expense for the year (4,546) (1,493)
Total comprehensive expense for the year (367) (3,463)
------------------------------------------------------------------------------- ----- -------------- --------------
Total comprehensive expense attributable to:
- Owners of the Parent (462) (3,263)
- Non-controlling interests 95 (200)
------------------------------------------------------------------------------- ----- -------------- --------------
(367) (3,463)
------------------------------------------------------------------------------- ----- -------------- --------------
Consolidated Balance Sheet
As at 30 June 2017 As at 30 June 2016
Note GBP'000 GBP'000
------------------------------------------------------------ ----- ------------------- -------------------
Assets
Current assets
Inventories 11 - 3,187
Trade and other receivables 12 266 2,552
Cash at bank 13 548 1,788
------------------------------------------------------------ ----- ------------------- -------------------
814 7,527
------------------------------------------------------------ ----- ------------------- -------------------
Assets of disposal group classified as held for sale 14.1 1,284 -
------------------------------------------------------------ ----- ------------------- -------------------
Total current assets 2,098 7,527
------------------------------------------------------------ ----- ------------------- -------------------
Total assets 2,098 7,527
------------------------------------------------------------ ----- ------------------- -------------------
Equity
Capital and reserves attributable to owners of the Parent:
Issued share capital 15 623 623
Foreign currency translation reserve 16 360 4,747
Retained earnings 16 (198) 1,639
------------------------------------------------------------ ----- ------------------- -------------------
785 7,009
Non-controlling interests 18 (940) (1,035)
Total equity (155) 5,974
------------------------------------------------------------ ----- ------------------- -------------------
Liabilities
Current liabilities
Loans from third parties 19 - 1,280
Trade and other payables 20 137 273
Provisions 8 512 -
------------------------------------------------------------ ----- ------------------- -------------------
649 1,553
------------------------------------------------------------ ----- ------------------- -------------------
Liabilities of disposal group classified as held for sale 14.2 1,604 -
------------------------------------------------------------ ----- ------------------- -------------------
Total current liabilities 2,253 1,553
------------------------------------------------------------ ----- ------------------- -------------------
Total liabilities 2,253 1,553
------------------------------------------------------------ ----- ------------------- -------------------
Total equity and liabilities 2,098 7,527
------------------------------------------------------------ ----- ------------------- -------------------
The financial statements were approved and authorised for issue
by the Board of Directors on 27 December 2017 and signed on its
behalf by:
David Hunter Stephen Coe
Director Director
Consolidated Statement of Changes in Equity
Attributable to owners
of the parent
-----------------------------------------------
Share Foreign Retained Total Non-controlling Total
capital currency earnings/ interests
translation (deficit)
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- ------------- ----------- -------- ---------------- --------
Balance at 1
July 2015 623 6,246 6,518 13,387 (835) 12,552
-------------------------- --------- ------------- ----------- -------- ---------------- --------
Comprehensive
income/(expense)
Loss for the
year - - (1,764) (1,764) (206) (1,970)
Other comprehensive
income
Accumulated
foreign exchange
differences
arising on subsidiary
operations reclassified
from equity
to profit and
loss - (1,743) - (1,743) - (1,743)
Foreign exchange
translation
differences - 244 - 244 6 250
Total comprehensive
expense for
the year - (1,499) (1,764) (3,263) (200) (3,463)
-------------------------- --------- ------------- ----------- -------- ---------------- --------
Transactions
with owners
Distributions
paid - - (3,115) (3,115) - (3,115)
Total transactions
with owners - - (3,115) (3,115) - (3,115)
-------------------------- --------- ------------- ----------- -------- ---------------- --------
Balance at 30
June 2016 623 4,747 1,639 7,009 (1,035) 5,974
-------------------------- --------- ------------- ----------- -------- ---------------- --------
Balance at 1
July 2016 623 4,747 1,639 7,009 (1,035) 5,974
-------------------------- --------- ------------- ----------- -------- ---------------- --------
Comprehensive
income/(expense)
Profit for the
year - - 3,925 3,925 254 4,179
Other comprehensive
income
Accumulated
foreign exchange
differences
arising on subsidiary
operations reclassified
from equity
to profit and
loss - (1,812) - (1,812) - (1,812)
Foreign exchange
translation
differences - (2,575) - (2,575) (159) (2,734)
-------------------------- --------- ------------- ----------- -------- ---------------- --------
Total comprehensive
expense for
the year - (4,387) 3,925 (462) 95 (367)
-------------------------- --------- ------------- ----------- -------- ---------------- --------
Transactions
with owners
Distributions
paid - - (5,762) (5,762) - (5,762)
-------------------------- --------- ------------- ----------- -------- ---------------- --------
Total transactions
with owners - - (5,762) (5,762) - (5,762)
-------------------------- --------- ------------- ----------- -------- ---------------- --------
Balance at 30
June 2017 623 360 (198) 785 (940) (155)
-------------------------- --------- ------------- ----------- -------- ---------------- --------
Consolidated Cash Flow Statement
Year ended Year ended
30 June 2017 30 June 2016
Note GBP'000 GBP'000
-------------------------------------------------------- ------- -------------- --------------
Cash flows from operating activities
Profit/(loss) for the year before tax 4,179 (1,970)
Adjustments for:
Interest income (4) (13)
Profit on sale of subsidiary 23 (2,207) (1,764)
Foreign exchange loss 3 (3,456) 920
Operating loss before changes in working capital (1,488) (2,827)
Decrease in inventory - 2,098
Decrease in trade and other receivables 1 979
Increase in trade and other payables 627 83
-------------------------------------------------------- ------- -------------- --------------
Cash (used in)/generated from operations (860) 333
Interest received 4 13
Net cash (used in)/generated from operating activities (856) 346
-------------------------------------------------------- ------- -------------- --------------
Cash flows from investing activities
Net cash on disposal of subsidiaries 12, 23 5,318 1,399
Movement in cash restricted by bank guarantees - 42
-------------------------------------------------------- ------- --------------
Net cash generated from investing activities 5,318 1,441
-------------------------------------------------------- ------- -------------- --------------
Cash flows from financing activities
Distributions paid 15 (5,762) (3,115)
-------------------------------------------------------- ------- -------------- --------------
Net cash used in financing activities (5,762) (3,115)
-------------------------------------------------------- ------- -------------- --------------
Net decrease in cash and cash equivalents (1,300) (1,328)
Cash and cash equivalents at beginning of the year 1,788 3,096
Foreign exchange losses on cash and cash equivalents 60 20
-------------------------------------------------------- ------- -------------- --------------
Cash and cash equivalents at end of the year 13 548 1,788
-------------------------------------------------------- ------- -------------- --------------
Notes to the Financial Statements
1 General information
South African Property Opportunities plc (the "Company") was
incorporated and registered in the Isle of Man under the Isle of
Man Companies Acts 1931 to 2004 on 27 June 2006 as a public limited
company with registered number 117001C. On 7 January 2011 with the
approval of Shareholders in general meeting, the Company was
re-registered as a company under the Isle of Man Companies Act 2006
with registered number 006491v. South African Property
Opportunities plc and its subsidiaries' (the "Group") investment
objective is the orderly realisation of a portfolio of real estate
assets in South Africa and the subsequent return of capital to the
shareholders.
The Company's property activities were managed by Group Five
Property Developments (Pty) Limited ("Group Five"). Bridgehead Real
Estate Fund (Pty) Ltd ("Bridgehead") was appointed as the
replacement investment manager with effect from 1 July 2014. The
Company's administration is delegated to Galileo Fund Services
Limited (the "Administrator"). The registered office of the Company
is Millennium House, 46 Athol Street, Douglas, Isle of Man, IM1
1JB.
Pursuant to a prospectus dated 20 October 2006 there was an
authorisation to place up to 50 million shares. Following the close
of the placing on 26 October 2006, 30 million shares were issued at
a price of 100p per share.
The shares of the Company were admitted to trading on the AIM
Market of the London Stock Exchange ("AIM") on 26 October 2006 when
dealings also commenced. On the same date the shares of the Company
were admitted to the Official List of the Channel Islands Stock
Exchange (the "CISX").
As a result of a further fundraising in May 2007, 32,292,810
shares were issued at a price of 106p per share, which were
admitted to trading on AIM on 22 May 2007.
The Company's agents and its Investment Manager perform all
functions, other than those carried out by the Board's executive
and non-executive directors. The Group has two executive
directors.
Financial year end
The financial year end of the Company is 30 June in each
year.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all years presented unless otherwise
stated.
2.1 Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union. The financial statements have been prepared on
a non-going concern basis, with assets stated at realisable amounts
and provisions of the estimated liquidation costs.
a) New and amended standards adopted by the Group
There were no new standards or interpretations effective for the
first time for periods beginning on or after 1 July 2016. None of
the amendments to standards that are effective from that date had a
significant effect on the Group's financial statements.
Future changes in accounting policies
IASB (International Accounting Standards Board) and IFRIC
(International Financial Reporting Interpretations Committee) have
issued the following standards and interpretations with an
effective date after the date of these financial statements which
will or may have an effect on the Group's future financial
statements. These standards have not been early adopted by the
Group and an assessment of the impact on the future financial
statements of the Group has yet to be carried out.
New/Revised International Financial Effective
Reporting Standards (IAS/IFRS) in date
issue but not yet effective (accounting
periods
commencing
on or after)
------------------------------------------- --------------
IAS 7 Statement of Cash Flows 1 January
2017
The amendment improves information
provided to users of financial statements
about an entity's financing activities
IFRS 9 Financial Instruments 1 January
This standard supersedes all previous 2018
versions of IFRS 9 and brings together
the classification and measurement,
impairment and hedge accounting phases
of the IASBs project to replace IAS
39 Financial Instruments: Recognition
and Measurement.
IFRS 15 Revenue from Contracts with 1 January
Customers 2018
IFRS 15 establishes the principles
that an entity shall apply to report
useful information to users of financial
statements about the nature, amount,
timing, and uncertainty of revenue
and cash flows arising from a contract
with a customer.
------------------------------------------- --------------
The directors consider that the adoption of the above
new/revised standards is not expected to have a material effect on
the Group's financial statements.
2.2 Significant accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year are discussed below.
(a) Impairment
As described in note 14, the Group has presented the assets and
liabilities of Madison Park Properties 40 (Pty) Limited as held for
sale. To determine the impairment of asset held for sale, the Group
estimates the consideration on the sale as the fair value of the
assets and liabilities of Madison Park Properties 40 (Pty) Limited.
The assets of the disposal group have been valued based on the
contractual disposal proceeds. Liabilities are recorded at
amortised cost. The payments and completion of the disposal have
been delayed and the Investment Manager is experiencing
difficulties in enforcing the contract. Because of the dispute it
is neither possible to determine if the disposal will complete at
either the contracted amount or at all, nor can it be established
if the assets of the disposal group are recoverable at the values
included in the financial statements.
(b) Provision for ongoing costs and liquidation costs
As described in note 8, the Company is now operating as a
realisation company. The Group estimated a total provision of
GBP511,643 of ongoing expenses and liquidation fees to be incurred
in realising the Group's remaining assets. The critical accounting
estimate and judgement relate to the amount accrued and timing of
the remaining assets from 1 July 2017 to 31 March 2018.
2.3 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ("the functional
currency"). The consolidated financial statements are presented in
Pound Sterling, which is the Company's functional and the Group's
presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the company
income statement.
(c) Group companies
The results and financial position of all the Group entities
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
(i) assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet;
(ii) income and expenses for each income statement are
translated at average exchange rates; and
(iii) all resulting exchange differences are recognised as a
separate component of equity.
On consolidation, exchange differences arising from the
translation of the net investment in foreign operations are taken
to other comprehensive income. When a foreign operation is disposed
of, exchange differences that were recorded in equity are
recognised in the income statement as part of the gain or loss on
sale. On the partial disposal of a subsidiary that includes a
foreign operation, the proportionate share of the cumulative amount
of exchange differences recognised in other comprehensive income is
re-attributed to the non-controlling interests. In any other
partial disposal of a foreign operation, the proportionate share of
the cumulative exchange differences recognised in other
comprehensive income is reclassified to profit and loss.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
2.4 Revenue and expense recognition
Revenue comprises the fair value of the consideration received
or receivable for the sale of inventory in the ordinary course of
the Group's activities and rental income received or receivable in
relation to operating leases. Revenue is shown net of value added
tax.
The Group recognises revenue from the sale of inventory on the
transfer of the risks and rewards of ownership, which is when all
the contractual conditions of sale have been met.
Operating lease income in respect of rents is recognised in the
income statement on a straight-line basis over the period of the
lease and relates to leases in which a significant portion of the
risks and rewards of ownership are retained by the Group, as
lessor, and are classified as operating leases.
Interest income is recognised in the financial statements on a
time-proportionate basis using the effective interest method.
The effective interest method is a method of calculating the
amortised cost of a financial asset or financial liability and of
allocating the interest income or interest expense over the
period.
Expenses are accounted for on an accruals basis.
2.5 Basis of consolidation
Subsidiaries
Where the company has control over an investee, it is classified
as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
De-facto control exists in situations where the company has the
practical ability to direct the relevant activities of the investee
without holding the majority of the voting rights. In determining
whether de-facto control exists, the company considers all relevant
facts and circumstances including the size of the company's voting
rights relative to both the size and dispersion of other parties
who hold voting rights, substantive potential voting rights held by
the company and by other parties, other contractual arrangements
and historic patterns in voting attendance.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group and continue to be included
until control is lost or ceases.
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value of non-controlling
interest over the net identifiable assets acquired and liabilities
assumed. If this consideration is lower than the fair value of the
net assets of the subsidiary acquired, the difference is recognised
in profit or loss.
Transactions and non-controlling interests
The Group treats transactions with non-controlling interests
that do not result in a loss of control as transactions with equity
owners of the Group.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised
gains/losses arising from intra-group transactions, are eliminated
in preparing the consolidated financial statements.
2.6 Operating segments
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker is the person or group that
allocates resources to and assesses the performance of the
operating segments of an entity. The Group has determined that its
chief operating decision-maker is the Board of the Company.
The Board reviews the Group's internal reporting in order to
assess performance and allocate resources. Based on this internal
reporting to the Board, it has been determined that there is only
one operating segment, property development in the Republic of
South Africa.
2.7 Financial assets and financial liabilities
The Group classifies its financial assets in the following
categories: at fair value through profit or loss, loans and
receivables, and available for sale. The classification depends on
the purpose for which the financial assets were acquired. The Board
determine the classification of its financial assets at initial
recognition. At 30 June 2016 the Group did not have any financial
assets at fair value through profit or loss or available for
sale.
Trade and other payables
Trade and other payables are recognised initially at fair value
and subsequently at amortised cost using the effective interest
method.
2.8 Inventories
Land and buildings that are being developed for future sale are
classified as inventory and recorded at cost on initial
recognition. Building costs and borrowing costs in relation to
inventory are capitalised. Land and building for development is
subsequently carried at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary
course of business less selling expenses.
2.9 Assets Held for Sale and Disposal Groups
Assets and disposal groups are classified as held for sale when
it is established that management have a committed plan to sell
which is unlikely to be significantly changed or withdrawn, the
assets are available for immediate sale with an active programme
initiated to locate a buyer and are being marketed at a reasonable
price in relation to fair value with a sale being highly probable
within 12 months of classification.
Assets or disposal groups classified as held for sale are
measured at the lower of carrying amount and fair value less costs
to sell. Any resulting impairment loss is recognised in profit or
loss. Once classified as held for sale, these assets are not
depreciated and are disclosed separately on the face of the balance
sheet within current assets.
2.10 Taxation
The Company is resident for taxation purposes in the Isle of Man
and is subject to income tax at a rate of zero per cent. The Group
is liable for tax in the Republic of South Africa on the activities
of its subsidiaries.
The tax expense represents the sum of the tax currently payable,
which is based on taxable profits for the year. The Group's
liability is calculated using tax rates enacted or substantively
enacted at the balance sheet date.
Deferred tax is recognised using the balance sheet method,
providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. Deferred tax is not recognised
for the following temporary differences: the initial recognition of
assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit,
and differences relating to investments in subsidiaries and jointly
controlled entities to the extent that they probably will not
reverse in the foreseeable future. Deferred tax is measured at the
tax rates that are expected to be applied to the temporary
differences when they reverse, based on the laws that have been
enacted or substantively enacted by the reporting date.
A deferred tax asset is recognised to the extent that it is
probable that future taxable profits will be available against
which temporary differences can be utilised. Deferred tax assets
are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be
realised.
2.11 Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds.
2.12 Distributions
Distributions are recognised as a liability in the year in which
they are declared and approved.
3 Risk management in respect of financial instruments
The Group's activities expose it to a variety of financial
risks: market risk (including foreign currency risk and interest
rate risk), credit risk and liquidity risk. The financial risks
relate to the following financial instruments: loans and
receivables and other liabilities as detailed in note 2.7.
Foreign currency risk
Foreign currency risk is the risk that the value of financial
instruments will fluctuate due to changes in foreign exchange
rates. The Group's operations are conducted in jurisdictions which
generate revenue, expenses, assets and liabilities in currencies
other than Pound Sterling ("the functional currency of the
Company"). As a result the Group is subject to the effects of
exchange rate fluctuations with respect to these currencies. The
currency giving rise to this risk is the South African Rand.
The Group's policy is not to enter into any currency hedging
transactions. The table below summarises the Group's exposure to
foreign currency risk in respect of its financial instruments:
30 June 2017 Monetary Monetary Total
Assets Liabilities
GBP'000 GBP'000 GBP'000
-------------------- --------- ------------- --------
South African Rand 260 (1,643) (1,383)
260 (1,643) (1,383)
-------------------- --------- ------------- --------
30 June 2016 Monetary Monetary Total
Assets Liabilities
GBP'000 GBP'000 GBP'000
-------------------- --------- ------------- --------
South African Rand 3,582 (1,473) 2,109
3,582 (1,473) 2,109
-------------------- --------- ------------- --------
At 30 June 2017, had the Pound strengthened/weakened by 10 per
cent. against the South African Rand, with all other variables held
constant, the impact on equity of the above financial instruments
would be an increase of GBP126,000 or a decrease of GBP154,000 (30
June 2016: 15 per cent. currency movement, decrease of GBP275,000
or an increase of GBP372,000).
Included in the income statement is a foreign exchange gain of
GBP3,456,408 (2016: loss GBP920,318) which includes a gain of
GBP3,438,467 (2016: loss GBP914,454) arising on the translation of
the loan from the Company to its direct subsidiary, SAPSPV Holdings
RSA (Pty) Limited; a loan which is denominated in South African
Rand. On consolidation, the corresponding foreign exchange loss
(2016: gain) arising on translation of this loan in SAPSPV Holdings
RSA (Pty) Limited from the functional currency of South African
Rand to the presentation currency of Pound Sterling is included in
the foreign currency translation reserve within equity.
Credit risk
Credit risk is the risk that a counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Group.
The carrying amounts of financial assets best represent the
maximum credit risk exposure at the balance sheet date. This
relates also to financial assets carried at amortised cost.
At the reporting date, the Group's financial assets exposed to
credit risk amounted to the following:
30 June 2017 30 June 2016
GBP'000 GBP'000
---------------------------------------- ------------- -------------
Trade and other receivables 258 2,534
Cash at bank 548 1,788
Assets of disposal group held for sale 1 -
807 4,322
---------------------------------------- ------------- -------------
The Group manages its credit risk by monitoring the
creditworthiness of counterparties regularly. Cash transactions and
balances are limited to high-credit-quality financial institutions.
Trade and other receivables balance at 30 June 2017 principally
comprise escrow accounts relating to the disposal of the Group's
subsidiary.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its obligations as they fall due. The Group currently manages
its liquidity risk by maintaining sufficient cash and banking
facilities as indicated by its cashflow forecasts. The Group's
liquidity position is monitored by the Board of Directors.
The residual undiscounted contractual maturities of financial
liabilities are as follows:
30 June 2017 Less than 1 month 1-3 months 3 months to 1 1-5 years Over 5 years No stated
year maturity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------------ ----------- ------------------ ---------- ------------- ------------------
Financial
liabilities
Trade and other
payables 67 17 53 - - -
Provisions - 127 285 - - 100
Liabilities of
disposal group
classified as
held for sale - 2 4 - - 1,598
67 146 342 - - 1,698
------------------ ------------------ ----------- ------------------ ---------- ------------- ------------------
30 June 2016 Less than 1 month 1-3 months 3 months to 1 1-5 years Over 5 years No stated
year maturity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------------ ----------- ------------------ ---------- ------------- ------------------
Financial
liabilities
Loans from third
parties - - - - - 1,280
Trade and other
payables 36 - 237 - - -
36 - 237 - - 1,280
------------------ ------------------ ----------- ------------------ ---------- ------------- ------------------
Interest rate risk
Interest rate risk is the risk that the value of financial
instruments will fluctuate due to changes in market interest rates.
The Group is exposed to interest rate risk from the cash held in
interest bearing accounts at floating rates or short term deposits
of one month or less and on loans from third parties. The Company's
Board of Directors monitor and review the interest rate
fluctuations on a continuous basis and act accordingly.
During the year ended 30 June 2017 should interest rates have
decreased by 100 basis points, with all other variables held
constant, the shareholders' equity and loss for the year would have
been GBP4,000 lower (2016: 100 basis points, GBP13,000 lower).
Capital risk management
The Company's primary objective when managing its capital base
is to safeguard its ability to continue as a going concern whilst
disposing of the Group's portfolio where acceptable returns can be
generated and returning excess capital to shareholders.
Capital comprises share capital (see note 15) and reserves.
No changes were made in respect of the objectives, policies or
processes in respect of capital management during the years ended
30 June 2016 and 2017.
4 Segment Information
The entity is domiciled in the Isle of Man. All of the reported
revenue, GBP9,093 (2016: GBP300,787) arises in South Africa.
Revenues of GBP6,832 (ZAR 122,110) and GBP2,261 (ZAR 40,413)
were derived from single external customers and were attributable
to the Imbonini phase 2 development and the Lenasia development
respectively (30 June 2016: GBP150,754 (ZAR 3,232,427) and
GBP137,438 (ZAR 2,946,900) were derived from single external
customers and were attributable to the Imbonini phase 1
development).
5 Cost of sales
Year ended Year ended
30 June 2017 30 June 2016
GBP'000 GBP'000
------------------------------------- -------------- --------------
Cost of inventories sold - 211
Property expenses 30 140
------------------------------------- -------------- --------------
30 351
Impairment of inventories (note 11) 1 1,890
Total cost of sales 31 2,241
------------------------------------- -------------- --------------
6 Investment Manager's fees
Annual fees
Bridgehead was appointed as the replacement investment manager
with effect from 1 July 2014 and is entitled to an annual
management fee of GBP175,000 per annum (excluding VAT). Management
fees for the year ended 30 June 2017 paid to Bridgehead amounted to
GBP199,500 (30 June 2016: GBP199,500) including VAT.
Performance fees
Bridgehead is entitled to a performance fee of 1.5% of the net
proceeds received by the Group following the sale of an asset under
the investment management agreement dated 1 July 2014. Performance
fees for the year ended 30 June 2017 amounted to GBP43,543 (ZAR
735,000) (30 June 2016: GBP79,799 (ZAR 1,603,441)).
The Group entered into a termination deed on 1 July 2014 with
Group Five under which the Group has agreed to pay Group Five a fee
of 0.5% of the net proceeds received by the Group following the
sale of an asset until 1 January 2016. This is settled by
Bridgehead out its 1.5% performance fee.
7 Other administration fees and expenses
Year ended Year ended
30 June 2017 30 June 2016
GBP'000 GBP'000
---------------------------------- -------------- --------------
Audit 46 58
Directors' remuneration and fees 151 151
Directors' insurance cover 14 16
Professional fees 82 45
Other expenses 182 275
---------------------------------- -------------- --------------
Administration fees and expenses 475 545
---------------------------------- -------------- --------------
Included within other administration fees and expenses are the
following:
Directors' remuneration
The maximum amount of basic remuneration payable by the Company
by way of fees to the Non-executive Directors permitted under the
Articles of Association is GBP200,000 per annum. All Directors are
each entitled to receive reimbursement of any expenses incurred in
relation to their appointment. The Chairman was entitled to receive
an annual fee of GBP40,000, Stephen Coe was entitled to an annual
fee of GBP35,000 and David Saville was entitled to an annual fee of
GBP15,000.
Executive Directors' fees
John Chapman was entitled to an annual basic salary of GBP30,000
and Craig McMurray was entitled to an annual basic salary of
GBP20,000. Pursuant to the terms of their service agreements, Craig
McMurray and John Chapman are entitled to incentive payments of,
respectively, 1.5 per cent. and 0.5 per cent. of all sums
distributed to shareholders. Their services agreements also provide
for payments of the same percentages, following termination of
their employment, for distributions paid or payable from cash
generated during their employment. Total incentive fees for the
year ended 30 June 2017 amounted to GBP115,242 (30 June 2016:
GBP62,293).
All directors' remuneration and fees
Total fees and basic remuneration (including VAT where
applicable) paid to the Directors for the year ended 30 June 2017
amounted to GBP151,000 (30 June 2016: GBP151,000) and was split as
below. Directors' insurance cover amounted to GBP13,890 (30 June
2016: GBP16,007).
Year ended 30 June 2017 Year ended 30 June 2016
Basic fee/salary Incentive fees Total Basic fee/salary Incentive fees Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ----------------- --------------- -------- ----------------- --------------- --------
David Hunter 48 - 48 48 - 48
David Saville 18 - 18 18 - 18
Stephen Coe 35 - 35 35 - 35
101 - 101 101 - 101
---------------- ----------------- --------------- -------- ----------------- --------------- --------
John Chapman 30 29 59 30 15 45
Craig McMurray 20 86 106 20 47 67
---------------- ----------------- --------------- -------- ----------------- --------------- --------
50 115 165 50 62 112
---------------- ----------------- --------------- -------- ----------------- --------------- --------
151 115 266 151 62 213
---------------- ----------------- --------------- -------- ----------------- --------------- --------
8 Provisions
The Company is now operating as a realisation company. The
calculation of the net asset value now includes an estimate of
liquidation costs and a provision for fees and expenses expected to
be incurred in realising the assets. As at 30 June 2017 these
provisions amounted to GBP511,643.
9 Income tax expense
Year ended Year ended
30 June 2017 30 June 2016
GBP'000 GBP'000
------------ -------------- --------------
Current tax - -
------------ -------------- --------------
The tax on the Group's profit before tax is higher than the
standard rate of income tax in the Isle of Man of zero per cent.
The differences are explained below:
Year ended Year ended
30 June 2017 30 June 2016
GBP'000 GBP'000
------------------------------------------------------------------------- -------------- --------------
Profit/(loss) before tax 4,179 (1,970)
------------------------------------------------------------------------- -------------- --------------
Tax calculated at domestic tax rates applicable in the Isle of Man (0%) - -
Effect of higher tax rates in South Africa (28%) - -
------------------------------------------------------------------------- -------------- --------------
Tax expense - -
------------------------------------------------------------------------- -------------- --------------
10 Basic and diluted profit/(loss) per share
Basic profit/(loss) per share is calculated by dividing the
profit/(loss) attributable to equity holders of the Group by the
weighted average number of shares in issue during the year.
Year ended Year ended
30 June 2017 30 June 2016
----------------------------------------------------------------------- -------------- --------------
Profit/(loss) attributable to equity holders of the Company (GBP'000) 3,925 (1,764)
Weighted average number of shares in issue (thousands) 62,293 62,293
----------------------------------------------------------------------- -------------- --------------
Basic profit/(loss) per share (pence per share) 6.30 (2.83)
----------------------------------------------------------------------- -------------- --------------
The Company has no dilutive potential ordinary shares; the
diluted earnings per share is the same as the basic earnings per
share.
11 Inventories
Current assets
30 June 2017 30 June 2016
GBP'000 GBP'000
-------------------------------------------- ------------- -------------
Start of the year 3,187 5,642
Costs capitalised 1 3
Impairment (1) (1,890)
Cost of inventories sold - (211)
Transfer to assets held for sale (note 14) (1,283)
Disposal via sale of subsidiary (2,423) -
Exchange differences 519 (357)
End of the year - 3,187
-------------------------------------------- ------------- -------------
During the year, the Group capitalised costs of GBP902 (ZAR
16,119) (30 June 2016: GBP3,117 (ZAR 66,829)), in order to develop
these assets for future re-sale, and accordingly they were
classified as inventory. These costs were impaired prior to
disposal.
As at 30 June 2017 all developments had been sold or been
reclassified as assets held for sale. At 30 June 2016 the net
realisable values of all the developments were lower than cost,
therefore, their inventory values were impaired to a value of
GBP3,187,027 (ZAR 62,727,698)). Net realisable value was assessed
using valuations determined by Broll (adjusted to match the sale
contract) less estimated selling expenses.
12 Trade and other receivables
30 June 2017 30 June 2016
GBP'000 GBP'000
------------------------------------------------------------------------ ------------- -------------
Prepayments 8 18
VAT receivable 4 20
Trade receivables - 15
Proceeds due from sale of inventory and sale of subsidiary (note 23) * 254 2,490
Other receivables - 9
------------------------------------------------------------------------ ------------- -------------
Trade and other receivables 266 2,552
------------------------------------------------------------------------ ------------- -------------
* the comparative balance relates to the sale of the Emberton
development where one final amount of ZAR 9 million (GBP0.48
million) was received in August 2016 and the sale of the African
Renaissance development where one final amount of ZAR 40 million
(GBP2.38 million) was received in December 2016.
The fair value of trade and other receivables approximates their
carrying value.
13 Cash and cash equivalents
30 June 2017 30 June 2016
GBP'000 GBP'000
--------------- ------------- -------------
Bank balances 548 1,788
Cash at bank 548 1,788
--------------- ------------- -------------
14 Disposal Group Classified as Held for Sale
14.1 Assets of Disposal Group
The assets and liabilities of Madison Park Properties 40 (Pty)
Limited (owning the assets of the Brakpan Project) have been
presented as held for sale.
30 June 2017 30 June 2016
GBP'000 GBP'000
----------------------------------------------------------------- ------------- -------------
Inventories 1,283 -
Trade and other receivables 1 -
----------------------------------------------------------------- ------------- -------------
Total 1,284 -
----------------------------------------------------------------- ------------- -------------
Of which fair value measurements use:
- Quoted prices in active markets for identical assets (Level 1) - -
- Significant other observable inputs (Level 2) - -
- Significant unobservable inputs (Level 3) 1,284 -
----------------------------------------------------------------- ------------- -------------
14.2 Liabilities of Disposal Group
30 June 2017 30 June 2016
GBP'000 GBP'000
----------------------------------------------------------------- ------------- -------------
Loans from third parties 1,480 -
Trade and other payables 124 -
----------------------------------------------------------------- ------------- -------------
Total 1,604 -
----------------------------------------------------------------- ------------- -------------
Of which fair value measurements use:
- Quoted prices in active markets for identical assets (Level 1) - -
- Significant other observable inputs (Level 2) - -
- Significant unobservable inputs (Level 3) 1,604 -
----------------------------------------------------------------- ------------- -------------
The assets of the disposal group have been valued based on the
contractual disposal proceeds. Liabilities are recorded at
amortised cost. The payments and completion of the disposal have
been delayed and the Investment Manager is experiencing
difficulties in enforcing the contract.
15 Share capital
Ordinary Shares of 1p each As at 30 June As at 30 June
2016 & 2017 2016 & 2017
Number GBP'000
---------------------------- -------------- --------------
Authorised 150,000,000 1,500
Issued 62,292,810 623
---------------------------- -------------- --------------
The holders of Ordinary Shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of the Company.
Two distributions were paid during the year, 7.25 pence per
Ordinary Share on 27 January 2017 and 2 pence per Ordinary Share on
23 June 2017 (2016: 5 pence per Ordinary Share on 16 October
2015).
16 Reserves
The following describes the nature and purpose of each reserve
within equity:
Reserve Description and purpose
Foreign currency translation reserve Gains/losses arising on retranslating the net assets of overseas operations
into the presentation
currency.
Retained earnings All other net gains and losses and transactions with owners (e.g.dividends)
not recognised
elsewhere
17 Net asset value ("NAV") per share
30 June 2017 30 June 2016
-------------------------------------------------------------------- ------------- -------------
Net assets attributable to equity holders of the Company (GBP'000) 785 7,009
Shares in issue (in thousands) 62,293 62,293
-------------------------------------------------------------------- ------------- -------------
NAV per share (GBP) 0.01 0.11
-------------------------------------------------------------------- ------------- -------------
The NAV per share is calculated by dividing the net assets
attributable to equity holders of the Group by the number of
ordinary shares in issue.
The Group publishes an adjusted NAV that is calculated in
accordance with the guidelines of the European Public Real Estate
Association ("EPRA"). The primary difference between EPRA and IFRS
is that, in general, under IFRS the Group's development properties
are classified as inventory and held at cost while EPRA permits the
incorporation of open market valuations. In order to produce the
EPRA numbers the Group has retained Broll's Johannesburg office to
conduct annual valuations. The EPRA numbers incorporate the
directors' valuation and are net of tax.
The below figures also take into consideration any profit share
agreements with development partners, commission due on sale of
properties (see note 6) and incentive fees due to the Executive
Directors (see note 7).
EPRA NAV 30 June 2017 30 June 2016
-------------------------------------------------------------------- ------------- -------------
Net assets attributable to equity holders of the Company (GBP'000) 785 6,869
Shares in issue (in thousands) 62,293 62,293
-------------------------------------------------------------------- ------------- -------------
EPRA NAV per share (GBP) 0.01 0.11
-------------------------------------------------------------------- ------------- -------------
18 Non-controlling interests
Subsidiary Country of Percentage of Assets Liabilities Profit/(loss) Accumulated NCI
incorporation shares held allocated to NCI 30 June 2017
year ended 30
June 2017
GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------------ ----------------- -------- ------------ ----------------- ----------------
Madison Park
Properties 40
(Pty) Limited South Africa 50% 1,294 (3,173) 254 (940)
------------------ ------------------ ----------------- -------- ------------ ----------------- ----------------
The subsidiary received funding of ZAR 265,000 (GBP15,358)
during the year ended 30 June 2017 to meet its ongoing commitments
and has been presented as held for sale at the year end (see note
14).
19 Loans from third parties
30 June 2017 30 June 2016
GBP'000 GBP'000
--------------------------------------------------- ------------- -------------
Start of the year 1,280 1,319
Transfer to liabilities held for sale (note 14.2) (1,480) -
Exchange differences 200 (39)
--------------------------------------------------- ------------- -------------
End of the year - 1,280
--------------------------------------------------- ------------- -------------
20 Trade and other payables
30 June 2017 30 June 2016
GBP'000 GBP'000
-------------------------- ------------- -------------
Trade payables 1 39
Management fees payable 17 -
Performance fees payable 3 37
Other payables 116 197
-------------------------- ------------- -------------
Trade and other payables 137 273
-------------------------- ------------- -------------
The fair value of trade and other payables approximates their
carrying value.
21 Contingent liabilities and commitments
As at 30 June 2017 the Group had no contingent liabilities or
commitments.
22 Related party transactions
Parties are considered to be related if one party has the
ability to control the other party or to exercise significant
influence over the other party in making financial or operational
decisions. Key management is made up of the Board of Directors who
are therefore considered to be related parties and the transactions
were made at arm's length. Fees in relation to the Directors are
disclosed in note 7.
The investment manager, Bridgehead Real Estate Fund (Pty) Ltd,
is a company managed by Craig McMurray, an Executive Director of
the Company. Fees in relation to Bridgehead are disclosed in note 6
and fees in relation to the Executive Directors are disclosed in
note 7.
The principal subsidiary undertakings within the Group as at 30
June 2017 are:
Development property Country of incorporation Percentage of shares held *
------------------------------------ ---------------------- -------------------------- ----------------------------
Crimson King Properties 378 (Pty)
Limited Gosforth Park South Africa 100%
Business Venture Investments No
1187 (Pty) Limited Inactive South Africa 100%
Madison Park Properties 40 (Pty)
Limited ** Brakpan South Africa 50%
------------------------------------ ---------------------- -------------------------- ----------------------------
* this also represents the percentage of ordinary share capital and voting rights held - 2017
** the Group controls the company by means of direct control of
the board
23 Profit on disposal of subsidiary
During the year the Group disposed of its holding in and
intercompany loan with its principal South African subsidiary,
SAPSPV Holdings RSA (Pty) Limited, along with all of its
subsidiaries (except for three detailed in note 22) for total
consideration of ZAR 49,330,536 (GBP2,922,319). This resulted in a
net gain on disposal of GBP2,206,943 as follows:
GBP'000
--------------------------------------------------------------------------------------------- ------------
Inventory (note 11) 2,423
Trade and other receivables 56
Cash and cash equivalents 206
Trade and other payables (192)
Intercompany loan (18,324)
Total identifiable net liabilities (15,831)
Intercompany loan 18,324
--------------------------------------------------------------------------------------------- ------------
Total interest 2,493
Additional costs on disposal 34
Total consideration (2,922)
--------------------------------------------------------------------------------------------- ------------
Profit on disposal (395)
Accumulated foreign exchange differences arising on subsidiary operations reclassified from
equity to profit and loss (1,812)
--------------------------------------------------------------------------------------------- ------------
Net gain on disposal (2,207)
--------------------------------------------------------------------------------------------- ------------
Although transfer of title did not take place until 1 July 2017,
the Company has recognised the disposal of these entities in the
period due to the loss of effective control.
24 Post balance sheet events
Since the year end, both Crimson King Properties 378 (Pty)
Limited and Business Venture Investments No 1187 (Pty) Limited have
been liquidated.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKODDOBDDOBB
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