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QPG - Quantum Property Group Limited - Unaudited condensed consolidated interim
results for the six months ended 28 February 2011
QUANTUM PROPERTY GROUP LIMITED
Incorporated in the Republic of South Africa
(Registration number 1984/002788/06)
Share code: QPG ISIN: ZAE000125647
("QPG" or "the company" or "the group")
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 28
FEBRUARY 2011
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Unaudited Unaudited Audited
as at as at as at
28 February 28 February 31 August
2011 2010 2010
(R`000) (R`000) (R`000)
Assets
Non-current assets 952 792 899 430 937 402
Investment property and 928 940 899 430 916 774
furniture, fittings and
equipment
Loan receivable 562 - 598
Deferred taxation 23 290 - 20 030
Current assets 103 445 123 623 94 428
Inventories 82 140 98 305 79 953
Accounts receivable 7 849 18 262 2 935
Loan receivable 109 - 101
Cash and cash equivalents 13 347 10 056 11 439
Total assets 1 056 237 1 026 053 1 031 830
Equity and liabilities
Capital and reserves 398 024 411 653 410 679
Non-current liabilities 617 747 154 547 585 933
Long term borrowings 468 341 - 429 687
Loans from related parties 32 896 29 880 31 416
Deferred taxation 116 510 124 667 124 830
Current liabilities 40 466 459 853 35 218
Development loan - 401 875 -
Accounts payable 17 713 12 227 15 632
Deposits 2 263 4 269 2 263
Loans from related parties 20 490 20 415 17 323
Bank overdraft - 21 067 -
Total equity and liabilities 1 056 237 1 026 053 1 031 830
Number of shares in issue 152 944 087 152 147 631 152 944 087
Net asset value and net 260.24 270.56 269.00
tangible asset value per
share (cents)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months 12 months
ended ended ended
28 February 28 February 31 August
2011 2010 2010
(R`000) (R`000) (R`000)
Gross revenue 13 863 2 326 36 160
Cost of sales - - (21 139)
Gross profit 13 863 2 326 15 021
Other income 4 6 1 754
Restraint of trade expensed - (22 800) (22 800)
Operating costs (15 406) (10 350) (24 908)
Operating loss (1 539) (30 818) (30 933)
Depreciation and amortisation (2 210) (235) (2 398)
Interest received 270 260 540
Interest paid (20 756) (60) (20 052)
Loss before taxation (24 235) (30 853) (52 843)
Taxation 11 580 4 125 23 992
Net loss for the period (12 655) (26 728) (28 851)
Weighted average number of 152 944 087 152 147 631 152 214 002
shares in issue
Loss per share (cents) (8.27) (17.57) (18.95)
Headline loss per share (8.27) (17.57) (18.95)
(cents)
Diluted loss per share (8.27) (17.57) (18.95)
(cents)
Diluted headline loss per (8.27) (17.57) (18.95)
share (cents)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
Unaudited Unaudited Audited
Six months Six months 12 months
ended ended ended
28 February 28 February 31 August
2011 2010 2010
(R`000) (R`000) (R`000)
Cash flows from operating (26 271) 365 300 (20 348)
activities
Cash flows from investing (15 122) (51 343) (72 525)
activities
Cash flows from financing 43 301 (320 487) 108 793
activities
Increase in cash and cash 1 908 (6 530) 15 920
equivalents
Cash and cash equivalents at 11 439 (4 481) (4 481)
the beginning of the period
Cash and cash equivalents at 13 347 (11 011) 11 439
the end of the period
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Acquisi-Accumul- Total
capital premium tion ated (R`000)
(R`000) (R`000) reserve loss
(R`000) (R`000)
Balance 1 September 2009 305 46 143 (7 595) 399 527 438 380
Total comprehensive loss - - - (26 (26
for the period 728) 728)
Balance at 28 February 305 46 (7 595) 372 799 411 652
2010 143
Effect of new share issues 8 1 142 - - 1 150
Total comprehensive loss - - - (2 123) (2 123)
for the period
Balance at 31 August 2010 313 47 285 (7 595) 370 676 410 679
Total comprehensive loss - - - (12 (12 655)
for the period 655)
Balance at 28 February 313 47 285 (7 595) 358 021 398 024
2011
COMMENTARY
Introduction
The directors are pleased to present the unaudited condensed consolidated
interim results ("results") for the six months ended 28 February 2011 ("the
interim period") for QPG.
The group`s mixed-use development, `15 on Orange` in Cape Town comprises of the
African Pride 15 on Orange Hotel, a residential component of 12 luxury
penthouses, a boutique retail centre and four levels of parking. The hotel has
in a relatively short time become established as one of the city`s leading
luxury hotels with both the corporate and leisure markets since its opening in
December 2009.
The hotel has received numerous accolades, among them winning the best hotel in
the "best of SA" awards in the House and Leisure magazine. Additionally the
property`s striking architecture and distinctive decor continues to make it
popular with the media and film industries.
Occupancy levels are stable and on target in a challenging trading environment.
The market is significantly overtraded across the board, not only in the luxury
or five star segments. Significant discounting has become a feature of the
market resulting in many travellers on three and four star budgets trading up
without an increase in spend. This has impacted negatively on expected revenue
per available room industry wide.
The directors remain confident of the performance and prospects of the African
Pride 15 on Orange Hotel as the oversupply of beds in the market is expected to
stabilise in the medium term. Ongoing marketing initiatives are planned to allow
the hotel operator to trade optimally which will further cement African Pride 15
on Orange Hotel as a market leader.
Despite concerns relating to the current oversupply of beds in the Cape Town
market the outlook for tourism is very encouraging. International tourism
arrivals for 2010 registered a year-on-year growth of 15.1 percent, with more
than eight million foreign tourist arrivals to the country. Figures released by
the Minister for Tourism, Martinus van Schalkwyk show foreign tourist arrivals
to South Africa growing by 9.3 percent in January 2011, compared to the same
period in 2010.
Cape Town`s position as a destination of choice for foreign tourists was further
entrenched by being named by the world`s most popular travel website as the
number one destination to visit in the TripAdvisor Travellers` Choice 2011
awards.
Profile
QPG is a property development and investment company. QPG intends to build a
quality, sustainable portfolio with diversified revenue streams. `15 on Orange`
is a landmark integrated development in Cape Town and is the initial development
undertaken by QPG.
QPG derives ongoing income from the leasing and operation of the 15 on Orange
Hotel which is managed by Protea Hospitality Group under the superior deluxe
African Pride brand. Further rental revenue is derived from retail tenants and
parking.
Directorate
The following changes in directorate occurred during the period under review:
Clifford Jason Kupritz resigned as a director with effect from 20 January 2011;
Chaim Cohen vacated his position as a director with effect from 3 February 2011;
Ian Levitt resigned as a director with effect from 7 February 2011;
Mark Raymond Taitz resigned as a director with effect from 7 February 2011. Mark
continues to assist the company as a consultant until the end of May 2011;
Tessa Margot Wolpe was appointed as a non-executive director with effect from 7
February 2011;
Gary Neil Shaff was appointed as Chief Executive Officer of the company with
effect from 7 February 2011; and
Barak Seelim Cohen vacated his position as a director with effect from 9
February 2011.
The priority of the board is to ensure stability and focus on the core business
of QPG.
Prospects
QPG is pursuing investment and development opportunities across a multitude of
property disciplines.
Joint Ventures and segment reporting
QPG owns a 50% share in 15 on Orange (Proprietary) Limited, via its wholly owned
subsidiary A Million Up Investments 105 (Proprietary) Limited ("AMU"). 15 on
Orange (Proprietary) Limited is the hotel business operating company that
operates the African Pride 15 on Orange Hotel, which commenced trading in
December 2009. The group`s proportionate share of 15 on Orange (Proprietary)
Limited`s assets, liabilities, income, expenses and cash flows have been
proportionately consolidated with similar items in the consolidated financial
statements on a line-by-line basis.
QPG does not have separately identifiable segments and therefore no segmental
report has been prepared.
Basis of preparation and accounting policies
The accounting policies applied in the preparation of these results, which are
based on reasonable judgments and estimates, are in accordance with
International Financial Reporting Standards ("IFRS") (other than for the
acquisition of AMU as detailed below) and are consistent with those applied in
the annual financial statements for the year ended 31 August 2010. The results
as set out in this report have been prepared in terms of IAS 34 - Interim
Financial Reporting, the Companies Act, 1973 (Act 61 of 1973), as amended ("the
Companies Act"), and the Listings Requirements of JSE Limited.
The consolidation of AMU, a wholly owned subsidiary which in turns owns `15 on
Orange` does not fall into the scope of the provisions of IFRS 3 "Business
Combinations" as QPG on its own did not constitute a sustainable business prior
to the acquisition of AMU. Pursuant to the AMU acquisition, a parent and
subsidiary relationship exists between QPG and AMU and the consolidated accounts
are presented in accordance with IAS 27 and the Companies Act. The consolidation
has as a result been prepared on a similar basis to a reverse-acquisition but
without recognising goodwill.
The results have not been audited or reviewed by the company`s auditors Grant
Thornton Inc.
Employee Benefits
Unaudited Unaudited Audited
Six months Six months 12 months
ended ended ended
28 February 28 February 31 August
2011 2010 2010
(R`000) (R`000) (R`000)
Restraints of trade
- Paid 40 000 40 000 40 000
- Expensed during the period - (22 800) (22 800)
- Expensed during prior (40 000) (17 200) (17 200)
periods
- - -
Restraints of trade were entered into with strategic management, all of whom
were executive directors at the time. The restraints were effective from 13
October 2008 and were written off over a period of 12 months. The amount written
off at the end of each reporting period was reduced by the amount repayable by
each of the directors at that point in time in terms of their restraint
agreements.
Subsequent events
Since the end of the interim period up to and including the date of this report,
the following events have occurred:
The Management Agreement between QPG and Bonheur 92 General Trading
(Proprietary) Limited has been cancelled.
The Company`s registered address has changed to Postal Address: P O Box 12215,
Mill Street, 8010, and Physical address: 15 On Orange Hotel, Corner Grey`s Pass
and Orange Street, Cape Town, 8001.
The board of directors is not aware of any other material matters or
circumstances arising since the end of the interim period and up to the date of
this report.
Dividend policy
No dividend has been declared for the period.
Going concern
These results have been prepared on a going concern basis. This basis presumes
that funds will be available to finance future operations and the realisation of
assets and settlement of liabilities, contingent obligations and commitments
will occur in the ordinary course of business and obligations will be fulfilled
as and when they fall due.
The directors believe the company and the group will continue as a going concern
in the year ahead and have prepared these results on this basis.
BY ORDER OF THE BOARD
Gary Neil Shaff
Executive director
31 May 2011
Directors: GN Shaff, PM Shaff*, TM Wolpe*, BH Sneech*
*non-executive independent
Registered office: 15 on Orange Hotel, Corner Grey`s Pass and Orange Street,
Cape Town, 8001
Company secretary: Corporate and Merchant Administrators (Proprietary) Limited
Transfer secretaries: Computershare Investor Services (Proprietary) Limited, 70
Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)
Designated adviser: Merchantec Capital
Date: 31/05/2011 17:38:02 Supplied by www.sharenet.co.za
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