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IFA HOTELS AND RESORTS LIMITED - Interim results for the period ended 30 June 2012

Release Date: 28/09/2012 16:26
Code(s): IFH     PDF:  
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Interim results for the period ended 30 June 2012

IFA HOTELS & RESORTS LIMITED
("IFA SA Group")
Registration number 1919/001318/06
Share code: IFH    ISIN: ZAE000075669

CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE PERIOD ENDED 30 JUNE 2012

CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION
                                        Reviewed      Reviewed         Audited
                                         30 June       30 June     31 December
                                            2012          2011            2011
                                           R'000         R'000           R'000
ASSETS
Non-current assets                       464 964       557 159         473 132
Property, plant and equipment            110 325       110 611         111 984
Goodwill                                   2 298         2 298           2 298
Investments in joint venture                                               
Investment in associates                                1 308               
Loans to associates                      324 304       410 152         324 403
Financial assets                           2 416        10 114          11 079
Deferred tax                              25 621        22 676          23 368
Current assets                           234 958       236 082         218 509
Inventories                                  960           920           1 138
Financial assets                          14 095        34 252           9 479
Current tax receivable                                                     
Township properties                      153 785       153 824         157 672
Trade and other receivables               24 954        30 084          27 421
Cash and cash equivalents                 41 165        17 002          22 799

Total assets                             699 921       793 241         691 641
EQUITY AND LIABILITIES
Capital and reserves                    (72 797)        48 435        (56 893)
Issued share capital and
  share premium                           71 892        71 892          71 892
Revaluation reserve                       45 878        45 595          45 878
Accumulated loss                       (190 567)      (69 052)       (174 663)
Non-current liabilities                  737 440       656 156         724 362
Loans from group companies                63 540                       37 069
Loans from shareholders                  417 395       374 833         408 016
Finance lease obligation                     236           404             202
Borrowings                               246 065       270 432         268 335
Deferred tax                              10 203        10 487          10 740
Amount owing to joint venture                                              
Current liabilities                       35 279        88 650          24 172
Other financial liabilities                9 369                            
Current tax payable                          105            42             179
Finance lease obligation                      54            55             175
Deferred revenue                                        1 448               
Trade and other payables                  25 741        18 140          22 072
Advance deposits                                        1 565               
Financial liabilities                                  65 582               
Bank overdraft                                11         1 818           1 746

Total equity and liabilities             699 921       793 241         691 641
Net asset value per share ("NAV")
  (cents)                                (33,36)         22,20         (26,07)
Net tangible asset value per share
  ("NTAV") (cents)                       (34,41)         21,14         (27,13)
Number of shares in issue and used
  for NAV and NTAV calculation       218 210 680   218 210 680     218 210 680

CONDENSED CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME
                                        Reviewed     Unreviewed       Reviewed       Audited
                                        6 months       6 months      12 months     18 months
                                           ended          ended          ended         ended
                                         30 June        30 June        30 June        31 Dec
                                            2012           2011           2011          2011
                                           R'000          R'000          R'000         R'000
Continuing operations
Revenue                                   30 387         27 021         71 486        98 205
Operating profit/(loss)                 (15 762)        (8 474)          (100)     (122 051)
Investment revenue                         6 928            697         29 491        12 407
Loss from equity accounted
  investments                                          (9 066)       (25 876)      (18 919)
Finance costs                            (9 796)       (32 217)       (44 964)      (33 289)
Profit/(loss) before taxation           (18 630)       (49 060)       (41 449)     (161 852)
Taxation                                   2 728         13 979         10 781         9 887
Profit/(loss) for the period from
  continuing operations                 (15 902)       (35 081)       (30 668)     (151 964)
Discontinued operation
Profit/(loss) from discontinued
  operation                                                                        15 685
Profit/(loss) for the period            (15 902)       (35 081)       (30 668)     (136 279)
Other comprehensive income
Gains on property revaluation                                                           
Income tax relating to components
  of other comprehensive income                                                       283
Other comprehensive income for
  the period, net of tax                                                              283
Total comprehensive income for
  the period                            (15 902)       (35 081)       (30 668)     (135 996)
Profit/(loss) attributable to:
Equity holders of the parent            (15 902)       (35 081)       (30 668)     (135 996)
Total comprehensive income
attributable to:
Equity holders of the parent            (15 902)       (35 081)       (30 668)     (135 996)
Basic and diluted (loss)/earnings
  per share ("EPS") (cents)               (7,29)        (16,08)        (14,05)       (62,32)
Notes to the income statement
Basic and diluted headline loss per
  share ("HEPS") (note 1) (cents)         (7,29)        (16,08)        (19,17)       (64,61)

SEGMENTAL ANALYSIS
The IFA SA Group adopted IFRS 8: Operating Segments with effect from 1 July 2009.
IFRS 8 requires operating segments to be identified on the basis of internal reporting
about components of the group that are regularly reviewed by the chief operating decision
maker ("CODM") to allocate resources to the segments and to assess their performance.

The CODM has been identified as the executive directors. Management has determined
the operating segments based on the internal reports. The group has identified eight
reportable segments as follows:

 IFA Hotels                          IFA Zimbali                        IFA Boschendal
 IFA Estates                         IFA SA                             IFA Namibia
 IFA Legends                         Zimbali Rentals

The executive directors evaluate the segment performance based on operating profit
or loss before tax and exceptional items. The following is an analysis of IFA SA Group's
revenue and operating results by reportable segment:

                              IFA Hotels               IFA Zimbali            IFA Boschendal               IFA Estates                IFA SA                   IFA Namibia              IFA Legends              Zimbali Rentals             Eliminations                Consolidated
                        Reviewed      Audited    Reviewed      Audited    Reviewed      Audited      Reviewed      Audited    Reviewed       Audited      Reviewed      Audited    Reviewed      Audited     Reviewed       Audited     Reviewed       Audited      Reviewed       Audited
                        6 months    18 months    6 months    18 months    6 months    18 months      6 months    18 months    6 months     18 months      6 months    18 months    6 months    18 months     6 months     18 months     6 months     18 months      6 months     18 months
                           ended        ended       ended        ended       ended        ended         ended        ended       ended         ended         ended        ended       ended        ended        ended         ended        ended         ended         ended         ended
                         30 June       31 Dec     30 June       31 Dec     30 June       31 Dec       30 June       31 Dec     30 June        31 Dec       30 June       31 Dec     30 June       31 Dec      30 June        31 Dec      30 June        31 Dec       30 June        31 Dec
                            2012         2011        2012         2011        2012         2011          2012         2011        2012          2011          2012         2011        2012         2011         2012          2011         2012          2011          2012          2011
                           R'000        R'000       R'000        R'000       R'000        R'000         R'000        R'000       R'000         R'000         R'000        R'000       R'000        R'000        R'000         R'000        R'000         R'000         R'000         R'000
Revenue from
  external customers       6 413       27 873      19 878       54 772                                2 681       10 204                                             6 681                                 369         1 483                   (6 681)        29 341        94 332
Intersegment revenue                                                                                                     3 336         9 854                                                                               (2 290)       (5 982)         1 046         3 872
EBITDA                     (977)        5 531          54      (3 079)       (199)      (1 763)       (1 162)      (2 511)     (1 638)       (5 002)                    14 952       (330)      (1 006)        (136)         (152)                  (14 401)       (4 388)       (7 431)
EBIT                     (1 200)        4 852     (1 269)      (7 635)     (6 294)    (101 829)       (1 126)      (2 585)    (12 310)     (202 518)                    14 419     (3 957)     (27 767)        (136)         (190)       10 530       182 282      (15 762)     (140 970)
Net profit/(loss)          (925)      (1 442)     (2 424)      (3 062)     (6 820)    (106 227)       (2 559)      (5 848)     (9 773)     (205 610)                    15 685     (3 848)     (26 381)         (83)          (95)       10 530       196 701      (15 902)     (136 279)
Segment assets           195 742      196 840     127 684      125 341      79 428       76 788        37 612       33 477     526 165       537 630                              245 440      248 067        1 989         3 403    (514 137)     (529 906)       699 921       691 641

CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
                                          Reviewed     Unreviewed      Audited
                                           30 June        30 June  31 December
                                              2012           2011         2011
                                             R'000          R'000        R'000
Cash flows from operating activities         1 591       (37 640)     (42 096)
Cash used in operations                      5 812       (23 179)     (18 837)
Interest income                              5 712          4 434       10 090
Finance cost                               (9 796)       (19 637)     (33 290)
Tax (paid)/received                          (137)            742         (59)
Cash flows from investing activities        20 818         52 574       53 951
Expenditure to maintain
operating capacity
Purchase of property,
  plant and equipment                         (66)        (4 073)      (7 439)
Sale of property, plant and equipment           75         67 439       67 439
Expenditure for expansion
Disposal of interest in joint venture                                 32 099
Net movement of loans
  to subsidiaries                                                          
Net movement of loans to
  fellow subsidiaries                       26 471       (12 821)       17 073
Net movement of loans to associate         (9 708)                   (37 126)
Net movement of loans to
  joint venture                                           11 053            
Net movement of financial assets             4 046            600      (8 471)
Purchase of additional
  shares in associate                                    (9 624)      (9 624)
Cash flows from financing activities       (2 308)       (18 187)      (9 240)
Movement of borrowings                    (12 463)       (21 951)     (24 252)
Movement of loan from joint venture                       26 161     (30 112)
Net movement of shareholders' loan          10 242       (22 397)       46 659
Finance lease payments                        (87)                    (1 535)

Total cash movement for the period          20 101        (3 253)        2 615
Cash at the beginning of the period         21 053         18 437       18 438
Total cash at end of the period             41 154         15 184       21 053

BASIS OF PREPARATION AND ACCOUNTING POLICIES

The condensed consolidated financial statements as set out in this report have been prepared in
accordance with the framework concepts and the measurement and recognition requirements
of IFRS and the AC 500 standards as issued by the Accounting Practices Board and containing
the information required by IAS 34: Interim Financial Reporting, the Companies Act of South
Africa and the JSE Listings (Listings Requirements).

These condensed consolidated interim financial results for the six months ended 30 June 2012 ("the period"),
have been reviewed by the group's auditors, BDO South Africa Incorporated, and have been prepared on the 
historical cost basis, except for the measurement of revaluations of land and buildings.  			
The unmodified review report is available for inspection at IFA Hotels & Resorts Limited's registered office.			


The preperation of these interim results were done under the supervision of the Company's Financial Director,
C J Schutte CA (SA).

The board acknowledges its responsibility for the preparation of the interim condensed
consolidated financial statements in accordance with IAS 34, the Companies Act of South
Africa and the JSE Listings Requirements.

The accounting policies applied conform with IFRS and are consistent with those followed
in the preparation of the annual financial statements for the year ended 31 December 2011.

NOTES TO THE FINANCIAL RESULTS
                                                              Reviewed     Unreviewed        Audited
                                                              6 months       6 months      18 months
                                                                 ended          ended          ended
                                                               30 June        30 June    31 December
                                                                  2012           2011           2011
                                                                 R'000          R'000          R'000
1. Basic and diluted earnings and headline earnings
   per ordinary share
   The earnings and weighted average number of
   ordinary shares used in the calculation of basic
   and diluted earnings and headline earnings per
   ordinary share are as follows:
   Headline and diluted headline loss per share
    ("HEPS") (cents)                                            (7,29)        (16,08)        (64,61)
   Reconciliation of total earnings to headline earnings
   attributable to equity holders of the parent.
   Earnings attributable to ordinary shareholders             (15 902)       (35 081)      (135 996)
   Less profit on disposal of joint venture                                                      
   Add tax effect                                                                                
   Less IAS 16 (profit)/loss on disposal of property,                                            
   plant and equipment
   Add tax effect                                                                                
   Add impairment of share of associate                                                      6 176
   Add impairment of goodwill                                                                    
   Add loss/(less profit) on disposal of JV or associate                                  (15 513)
   Add/(less) tax effect                                                                     4 344
   Headline loss                                              (15 902)       (35 081)      (140 989)
   Number of shares
    in issue                                              218 210 680    218 210 680    218 210 680
    for EPS and HEPS calculation                          218 210 680    218 210 680    218 210 680
2. Capital expenditure commitments
   Contracted                                                                  3 214          3 214
   Approved but not contracted                                                                   
                                                                               3 214          3 214
3. Operating lease commitments                                     329            134            377
4. Investments and loans
   Investment in associate companies                                           1 308              
   Loans to associate companies                                324 303        410 152        324 403
   Other unlisted investments                                    2 416         10 114          2 400
                                                               326 719        421 574        326 803
   Directors' valuation of unlisted investments
    unlisted associate companies                              324 303        411 460        324 403
    other unlisted investments                                  2 416         10 114          2 400
                                                               326 719        421 574        326 803

5.  Related party transactions
    During the reporting period, companies in the group entered into various transactions.
    These transactions were entered into in the ordinary course of business and under terms
    that are no less favourable than those arranged with independent third parties. All
    related party transactions and outstanding balances are eliminated in preparation of the
    consolidated financial statements of the group. All transactions with joint ventures and the
    associates are concluded on an arm's length basis.

6.  Post balance sheet events
    The directors are not aware of any significant matter or circumstance arising since the end
    of the reporting period not otherwise dealt with in this report or the financial results which
    materially affect the financial position of IFA SA Group or the results of its operations to the
    date of this report.

CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY

                           Share       Share Revaluation      Accumulated
                         capital     premium     reserve    profit/(loss)       Total
Audited                    R'000       R'000       R'000            R'000       R'000
Balance at 1 July 2010     2 182      69 710      45 595         (38 384)      79 103
Total comprehensive
  income for the period                            283        (136 279)   (135 996)
Balance at
  31 December 2011         2 182      69 710      45 878        (174 663)    (56 893)
Balance at
  1 January 2012           2 182      69 710      45 878        (174 663)    (56 893)
Total comprehensive
  income for the period                                       (15 902)    (15 902)
Balance at 30 June 2012    2 182      69 710      45 878        (190 567)    (72 797)

COMMENTS
IFA Hotels & Resorts KSCC ("IFA H&R Kuwait") holds the majority interest in IFA Hotels &
Resorts Limited with an 85% shareholding. The IFA SA Group comprises:

IFA Hotels & Resorts (South Africa) (Pty) Limited ("IFA Hotels")
IFA Hotels and Tongaat Hulett Developments' joint venture ("TIFAZ") developed the Zimbali
Coastal Resort and includes an estate agency which markets the joint venture's real estate and
that of other owners in Zimbali. The slower than expected economic recovery has resulted in a
more cautious approach to the development of the Zimbali Lakes and the Westbrook projects.

IFA Zimbali Lodge (Pty) Limited ("IFA Zimbali")
IFA Zimbali is the owner of the Fairmont Zimbali Lodge. The traditional hotel operation has
been extended to include a vacation club offering.

IFA Boschendal Investments (Pty) Limited ("IFA Boschendal")
IFA Boschendal held a 37,33% stake in the Boschendal Estate ("Boschendal"), a 2 240 hectare
property near Franschhoek in the Western Cape. Subsequent to the reporting period the
group has disposed of its interest in and loans to Boschendal for R80 million to Canombys
Limited as announced on 20 July 2012.

IFA Hotels and Resorts 8 (Pty) Limited ("IFA Estates")
IFA Estates has the sole mandate to sell the Fairmont Zimbali Hotel & Resorts development
("Fairmont Zimbali") and the Zimbali Vacation Club, both situated in the Zimbali Coastal
Resort.

IFA Hotels and Resorts Limited ("IFA SA")
IFA SA is the holding company of the IFA SA Group, is listed on the JSE and fulfils a "head
office" function.

IFA Legends Investments (Pty) Limited ("IFA Legends")
IFA Legends partnered with IFA H&R Kuwait and LGSR Investments (Pty) Limited in the Legend
Golf & Safari Resort and Entabeni Game Reserve ("Legends").

Zimbali Rentals (Pty) Limited ("Zimbali Rentals")
Zimbali Rentals offers a professional service to Zimbali owners renting their properties to
guests wishing to experience the unique beauty and qualities of Zimbali.

FINANCIAL REVIEW
IFA HOTELS  Limited revenue from real estate sales in the Zimbali Coastal Resort has been
partially offset by improved commission income from estate agency operations.

IFA ZIMBALI  Sale of Zimbali Vacation Club weeks have continued to compliment the hotel
operation's performance.

IFA ESTATES  Limited demand for the traditional private residence club and hotel
condominium sales had resulted in lower commission earnings; this has, however, been
partially offset by commissions from the sale of Zimbali Vacation Club weeks.

IFA BOSCHENDAL  Operational and debt service funding provided to Boschendal resulted
in a further, but moderate impairment provision. In light of the sale of our interests this will not
impact on future operations.

IFA SA  Impairments to intercompany loans, which reverse on consolidation, resulted in the
loss reported for this entity.

IFA LEGENDS  IFA Legend's 20% share in associate Legends has been accounted for in
terms of IAS 28 and therefore is not included in IFA SA's total after tax loss for the period.
Appropriate impairment provisions have been made against the loan to Legends.

ZIMBALI RENTALS  The slower than expected economic recovery continues to impact on
leisure travel resulting in lower holiday rentals and therefore commissions earned.

PROSPECTS
Having made the required provisions to recognise the long-term nature of land bank
developments, successfully operated the Zimbali Vacation Club for a year and now disposed
of our interest in Boschendal, we remain confident that the Group is well placed to meet its
challenges.

DIVIDEND
No dividend has been declared for the period.

BOARD CHANGE
WP Witthuhn resigned on 31 January 2012.

APPRECIATION
The directors would like to thank management and staff for their ongoing hard work and
dedication during the period, as well as shareholders, customers and suppliers for their
continued invaluable support.

For and behalf of the board
TJM Al-Bahar                                                      WJ Burger
Chairman                                            Chief Executive Officer

CORPORATE INFORMATION

Directors
TJM Al-Bahar (Chairman)*, EAA Al-Essa*, WJ Burger (Chief Executive Officer), WP Witthuhn
(resigned 31 January 2012), PGR de Sylva, GE Larson*, KM El-Marsafy*, VM Nkosi*, CJ Schutte
*Non-executive

28 September 2012
Zimbali, Durban, KwaZulu-Natal

Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
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