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Reviewed provisional results for the year ended 31 December 2012
SHERBOURNE CAPITAL LIMITED
Incorporated in the Republic of South Africa
(Registration number 2006/030759/06)
Formerly IFCA Technologies
Share code: SHB
("SHB " or ''the company'')
REVIEWED PROVISIONAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2012
The reviewed results of SHB for the year ended 31 December 2012 are
presented below:
Condensed Consolidated Statement of Financial Position
Reviewed Audited
31-Dec-12 31-Dec-11
R’000 R’000
Assets
Non-Current Assets 120 19
Property, plant and equipment 120 19
Current Assets 9 261 1 664
Trade and other receivables 9 261 957
Cash and cash equivalents - 707
Total Assets 9 381 1 683
Equity and Liabilities
Equity 8 404 (23 932)
Share capital 73 436 56 660
Accumulated loss (65 032) (80 592)
Liabilities
Current Liabilities 977 20 929
Trade and other payables 974 20 929
Bank Overdraft 3 -
Liabilities of disposal groups - 4 686
Total Equity and Liabilities 9 381 1,683
Condensed Consolidated Statement of Comprehensive Income
Reviewed Audited
Year ended Year ended
31-Dec-12 31-Dec-11
R’000 R’000
Other income 18 578 -
Operating expenses (7 703) (32 087)
Operating profit/(loss) 10 875 (32 087)
Investment revenue - -
Finance costs (2) (2)
Profit on disposal of subsidiary 4 687 -
Profit/(loss) before taxation 15 560 (32 089)
Taxation - (84)
Profit/ (loss) from continuing operations 15 560 (32 173)
Loss from discontinued operations - (4 270)
Profit/(loss) for the year 15 560 (36 443)
Attributable to:
Equity holders of the parent
From continuing operations 15 560 (32 173)
From discontinued operations - (4 270)
Profit /(loss) for the year 15 560 (36 443)
Other comprehensive income - -
Total comprehensive income/(loss) 15 560 (36 443)
Earnings per share (cents)
Basic from continuing operations (cents) 2.91 (19.79)
Diluted basic from continuing operations (cents) 2.91 (19.79)
Basic from all operations (cents) 2.91 (22.42)
Diluted basic from all operations (cents) 2.91 (22.42)
Weighted average number of shares in issue (`000) 533 957 162 540
Total number of shares in issue (`000) 781 875 301 875
Condensed Consolidated Statement of Changes in Equity
Share Accumulated
Figures in Rand capital Share Premium loss Total equity
R,000 R,000 R,000 R,000
Balance at 1 January 2011 115 43 071 (44 149) (963)
Total comprehensive loss for the year - - (36 443) (36 443)
Issue of shares 187 13 287 - 13 474
Balance at 1 January 2012 302 56 358 (80 592) (23 932)
Total comprehensive income for the year - - 15 560 15 560
Issue of shares 480 16 296 - 16 776
Balance at 31 December 2012 782 72 654 (65 032) 8 404
Condensed Consolidated Statement of Cash Flows
Reviewed Audited
Year ended Year ended
Figures in Rand 31-Dec-12 31-Dec-11
R’000 R’000
Net cash outflow from operating activities (17 376) (12 924)
Cash (outflow)/inflow from investing activities (110) 79
Cash inflow from financing activities 16 776 13 475
Total cash movement for the year (710) 630
Cash at the beginning of the year 707 77
Total cash at end of the year (3) 707
Commentary
Basis of presentation and accounting policies
Nolands Inc., the groups independent auditor, has reviewed the provisional financial statements contained in this
provisional report and has expressed an unmodified conclusion on the provisional financial statements. The
review report is available for inspection at the Company’s registered office. The Group reviewed provisional
results for the year ended 31 December 2012 have been prepared using the accounting policies applied by the
Group in its 31 December 2011 annual report which are in accordance with International Financial Reporting
Standards, IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee, the South African Companies Act, 2008 (Act 71 of 2008), as amended, and the JSE Listings
Requirements.
Review opinion
The results for the year ended 31 December 2012 have been reviewed by the Company's
auditors, Nolands Inc, and their modified review report is available for inspection at the office of the
Company, the address of which is detailed below.
The review report included an emphasis of matter paragraph referring to the going concern note in the
provisional financial information. The company has incurred significant operating losses in the current and
preceding financial year. The ability of the company to fund these operational costs moving forward is
largely dependent on the ability of the directors to arrange for alternative sources of funding and the
realisation of the income from potential investment opportunities as more fully described in the note
pertaining to going concern.
These conditions, along with the matters set forth in the notes to the accompanying provisional financial
information, indicate the existence of a material uncertainty which may cast significant doubt about the
company’s ability to continue as a going concern.
Financial overview
The Directors wish to report that the results for the year ended 31 December 2012 reflect a profit of 2.91 cents per
share compared with (31 December 2011: headline loss of 22.42 cents per share) based on 533 957 192 weighted
average shares in issue (31 December 2011: 162 539 901).
The Directors embarked on cost cutting exercises during the course of 2012 to coincide with the company’s new
vision and restructuring and are pleased to report that operating expenses have decreased to R7.7 million, for the
year ended 2012, compared with R32 million, for the year ended 2011. Further details pertaining to the
restructuring are contained under future prospects and subsequent events.
Other income is mainly represented by the reversal of a provision of R16m raised in 2011, which represents the full
capital raising commission of 2% on the USD 100m facility secured from Equity Partners. It has come to the
attention of the Board during recent months, that the facility was not that which was originally represented and
this facility will not be utilized going forward. Full disclosure will be contained in Annual Report of the company.
Earnings per share
The calculation of basic and headline earnings per share is based on the following attributable profits and weighted
average number of shares:
Reviewed Audited
Year ended Year ended
31-Dec-12 31-Dec-11
R’000 R’000
Continuing operations
Basic profit/(loss) 15 560 (32 173)
Profit on sale of subsidiary (4 686) -
Headline profit/(loss) 10 874 (32 173)
Continuing and discontinued operations
Profit/(loss) attributable to parent shareholders 15 560 (36 443)
Impairment of intangible assets - 43
Loss on sale of tangible assets - 2 519
Profit on sale of subsidiary (4 686) -
Headline profit/(loss) 10 874 (33 881)
Earnings per share (cents)
Basic from continuing operations (cents) 2.91 (19.79)
Diluted basic from continuing operations (cents) 2.91 (19.79)
Basic from all operations (cents) 2.91 (22.42)
Diluted basic from all operations (cents) 2.91 (22.42)
Headline earnings per share from continuing operations (cents) 2.04 (19.79)
Diluted headline earnings per share from continuing operations (cents) 2.04 (19.79)
Headline earnings per share from all operations (cents) 2.04 (20.84)
Diluted headline profit/(loss) per share from all operations (cents) 2.04 (20.84)
Weighted average number of shares in issue (`000) 533 957 162 540
Total number of shares in issue (`000) 781 875 301 875
Segmental analysis
The Company does not operate in distinct operating segments and accordingly, no segmental analysis
has been prepared.
Dividends
No dividends were paid or declared for the year ended 31 December 2012.
Share capital
A total of 480,000,000 shares were issued during the period under review. The shares were issued under
the Company's general authority to issue shares, which authority was resolved at the Company's Annual
General Meeting.
Litigation
There is no litigation pending against the Company.
Directors
The following changes to the board of directors have taken place during the year under review.
Directors Appointed Resigned
AW Bruens 16 January 2012 27 September 2012
NP Doyle - 27 July 2012
C Whittle 27 July 2012 -
Future prospects and Subsequent events
Shareholders are referred to the quarterly update SENS, dated 22 October 2013, which refers to the three
acquisitions which were made during the course of 2013. The Directors are pleased to report that the Company
has successfully acquired, subject to shareholder approval, 100% of the shareholding in:
• Applemint Properties 116 (Pty) (Applemint)
• Emergent Properties Group Limited (EMG)
• Siabex (Pty) Ltd (Siabex)
The above is in line with the new vision and restructuring which the Company has undergone. The Directors
continue to consider possible opportunities and will keep shareholders updated with any future developments in
this regard.
Going concern
The group reported a net profit before taxation of R15.6m during the period under review, in comparison
to the R32m loss suffered by the group for the year ended 31 December 2012. The net asset position of the group
was restored at the reporting date with assets exceeding liabilities by R8.4m in comparison to the shortfall of
R24m reported at 31 December 2011.
The group has not generated revenue for the last two financial years. The reason for such is that the
company changed its investment strategy and for the last two years has been seeking preferable investment
opportunities that will result in maximizing returns to its shareholders. The profits reported for the current
year originate primarily from two sources, being the relinquishment of a raising fee of R16.3m accrued for in
the 2011 annual financial statements and a profit on disposal of a subsidiary of R4.7m.
Upon adjusting these isolated transactions, the group is left with a revised net loss before taxation of
R7.7m for the year, which equates to the operating expenses.
During the year and subsequent to the reporting period, the directors significantly reduced the company’s
operating expenses and through the collection of a significant portion of the company’s trade receivables,
is confident that the company currently has adequate resources to fund these operating costs however it is
vital that either the investment opportunities referred to above materialise (refer to “Future prospects
subsequent events” paragraph) or alternatively the directors find alternative sources of finance in the
short-term.
The success of these investment opportunities is however dependent on the following factors:
• Shareholder approval
• Raising of the finance needed for the development of the top structures
Following shareholder approval Sherbourne will own 100% of the shares in the investee companies listed above
and operating costs of the holding company will be funded via management fees paid by these subsidiaries.
Sherbourne realised that there was a need for student accommodation throughout the country and was provided
with strategically located pieces of property for such developments. The vision is to develop these properties into
“Student Villages” where students are provided with safe, affordable accommodation, close to the establishments
where they are studying together with the development of ancillary services such as fast food outlets, ATM’s and
coffee shops for the students and surrounding neighbourhoods.
The acquisition of EMG allows Sherbourne to gain access to overseas funding, primarily structured for
infrastructure development, as well as a significant local funding line through a major commercial bank. EMG has
the rights to a number of property developments, specifically focused on student accommodation and data
centres. EMG will be providing the funding arm for the top-structure building finance for the Applemint and Siabex
projects.
As Sherbourne is purchasing the land and constructing the additions on said land, the Net Asset Value for
shareholders will increase every year. Each student will be paying a monthly rental to stay in the “Student Village”
and this, along with rental income from the ancillary services, should provide Shareholders with strong annuity
earnings per share.
As these deals are largely dependent on shareholder approval and the raising of finance together with the need
for the company to continue to meets its operating expenses from existing cash resources as they fall due, these
conditions give rise to a material uncertainty which may cast significant doubt about the company’s ability
to continue as a going concern and, therefore that it may be unable to realise its assets and discharge
its liabilities in the normal course of business.
The Board of Directors of the company are confident that, especially in view of the restructured operational
overheads, as well as the significant progress achieved with the developments as mentioned above, the company
has positioned itself strongly, not only to fund its ongoing operations but also to fund the property developments
which will provide the platform to strong earnings and cash growth.
The financial statements are prepared on the basis of accounting policies applicable to a going concern.
This basis presumes that the company will continue to receive the support of its holding company and
that the realisation of assets and settlement of liabilities will occur in the ordinary course of business.
By order of the Board
CW Clarke
Non- Executive Chairman
17 December 2013
Sandton
Directors:
CW Clarke (Chairman)*, KB Motshabi*, MW Palmer*,
C Whittle* (*Independent non-executive)
Registered office
th
10 Floor, 41 Stanley Avenue, Milpark, South Africa
Transfer office
Link Market Services (Pty) Ltd, P.O. Box 4844, Johannesburg, 2000, South Africa
Company Secretary
Statucor (Pty) Ltd, 22 Wellington Road, Parktown, 2193, South Africa
Designated Adviser
Bridge Capital Advisors (Pty) Ltd, 27 Fricker Road, Illovo, 2196, South Africa
Date: 17/12/2013 12:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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