Wrap Text
Reviewed provisional results for the year ended 31 December 2013
SHERBOURNE CAPITAL LIMITED
Incorporated in the Republic of South Africa
(Registration number 2006/030759/06)
Share code: SHB
("SHB " or ''the company'')
Reviewed provisional results for the year ended 31 December 2013
Condensed Statement of Financial Position Reviewed Reviewed
Figures in Rand 31-Dec-13 31-Dec-12
R'000 R'000
Assets
Non-Current Assets 3 000 120
Property, plant and equipment - 120
Loans 3 000 -
Current Assets 2 357 9 261
Trade and other receivables 1 357 9 261
Loans 1 000 -
Total Assets 5 357 9 381
Equity and Liabilities
Equity 4 524 8 404
Share capital 73 436 73 436
Accumulated loss -68 912 -65 032
Current Liabilities 833 977
Trade and other payables 830 974
Bank Overdraft 3 3
Total Equity and Liabilities 5 357 9 381
Condensed statement of comprehensive income
Figures in Rand Reviewed Reviewed
31-Dec-13 31-Dec-12
R'000 R'000
Other income - 18 578
Operating expenses -3 880 -7 703
Operating profit/ (loss) -3 880 10 875
Investment revenue -
Finance costs - -2
Profit on disposal of subsidiary - 4 687
Profit/(loss) before taxation -3 880 15 560
Taxation -
Profit /(loss) from continuing operations -3 880 15 560
Profit /(loss) from discontinued operations - -
Profit/(loss) for the year -3 880 15 560
Attributable to:
Equity holders of the parent
From continuing operations -3 880 15 560
From discontinued operations - -
Total comprehensive (loss)/ income -3 880 15 560
Earnings per share (cents)
Basic from continuing operations (cents) -0,50 2,91
Diluted basic from continuing operations (cents) -0,50 2,91
Basic from all operations (cents) -0,50 2,91
Diluted basic from all operations (cents) -0,50 2,91
Weighted average number of shares in issue ('000) 781 875 533 957
Condensed statement of changes in equity
Figures in Rand Share capital Share Premium Accumulated Total equity
loss
R'000 R'000 R'000 R'000
Balance at January 01, 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 December 31, 2012 782 72 654 -65 032 8 404
Total comprehensive income/ (loss) for the year - - -3 880 -3 880
Balance at December 31, 2013 782 72 654 -68 912 4 524
Condensed statement of cash flows Reviewed Reviewed
Figures in Rand 31-Dec-13 31-Dec-12
R'000 R'000
Net cash from operating activities 4 000 -17 376
Cash flows from investing activities -4 000 -110
Cash flows from financing activities - 16 776
Total cash movement for the year - -710
Cash at the beginning of the year -3 707
Total cash at end of the year -3 -3
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 a modified conclusion on the provisional financial statements. The review
report is available for inspection at the Company’s registered office. The Group’s reviewed provisional results for
the year ended 31 December 2013 have been prepared using the accounting policies applied by the Group in its 31
December 2012 reviewed report which are in accordance with the framework concepts and the measurement and
recognition requirements of International Financial Reporting Standards, the information required as per IAS 34
Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and the Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council , 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 2013 have been reviewed by the Company's auditors, Nolands Inc.
and their modified review report is available for inspection at the registered 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 had historically incurred operating losses. 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 2013 reflect a loss of 0.50 cents per
share compared with (31 December 2012: profit of 2.91 cents per share) based on 781 875 000 weighted average
shares in issue (31 December 2012: 533 957 192).
The Directors embarked on cost cutting exercises during the course of 2013 to coincide with the company’s new
vision and restructuring and are pleased to report that operating expenses have decreased to R3.8 million, for the
year ended 2013, compared with R7.7 million, for the year ended 2012. Further details pertaining to the
restructuring are contained under future prospects and subsequent events.
The loans of R4 million consist of a loan of R3 million to the vendors of Applemint and a loan of R1 million to ICC
Africa Holdings Limited. The payment of R3 million relates to the impending investments (as detailed in the SENS
announcement, 22 April 2013) which are currently subject to shareholder approval and forms the basis for the
continued listing of the Company. Upon said shareholder approval for the acquisitions, the loan will be converted
to investments in subsidiaries. The R1 million loan has subsequently been repaid in 2014.
Debtors decreased from R9.3 million for the year ended 31 December 2012 to R1.4 million for the year ended 31
December 2013. Debtors consisted primarily of funds due for shares placements, with payments being received in
the latter part of 2013 following the June 2013 Altx approval for the first acquisition.
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 Reviewed
31-Dec-13 31-Dec-12
R'000 R'000
Continuing operations
Basic (loss)/ profit -3 880 15 560
Profit on sale of subsidiary - -4 686
Headline (loss) / profit -3 880 10 874
Continuing and discontinued operations
(Loss) / profit attributable to parent shareholders -3 880 15 560
Profit on sale of subsidiary - -4 686
Headline (loss) / profit -3 880 10 874
Earnings per share (cents)
Basic from continuing operations (cents) -0,50 2,91
Diluted basic from continuing operations (cents) -0,50 2,91
Basic from all operations (cents) -0,50 2,91
Diluted basic from all operations (cents) -0,50 2,91
Headline earnings per share from continuing operations (cents) -0,50 2,04
Diluted headline earnings per share from continuing operations (cents) -0,50 2,04
Headline earnings per share from all operations (cents) -0,50 2,04
Diluted headline earnings per share from all operations (cents) -0,50 2,04
Weighted average number of shares in issue (`000) 781 875 533 957
Total number of shares in issue (`000) 781 875 781 875
It should be noted that Sherbourne will be issuing new ordinary shares in 2014, for the acquisition of three new
assets, subject to shareholder approval. The number of shares to be issued was not included in the Diluted
earnings per share calculation as it has an anti- dilutive effect. The shares to be issued, for the acquisitions, are as
follows:
Detail Amount
Applemint Properties 116 (Pty) Ltd 70,000,000
Emergent Properties Limited 50,000,000
Siabex (Pty) Ltd 12,500,000
Total 132,500,000
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 2013.
Share capital
No shares were issued during the year under review. No shares have been issued subsequent to the year end.
Litigation
There is no litigation pending against the Company.
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 loss of R3.8m during the year under review, in comparison to the R15.6m profit achieved by
the group for the year ended 31 December 2012.
The group did not generate 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 group achieved a net loss before taxation of R3.8m
for the year, which equates to the operating expenses.
During the year and subsequent to the reporting period, the directors continued to significantly reduce the
company’s operating expenses and 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. 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 meet 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.
Status of Listing
Due to the unexpected delays the company experienced as well as the subsequent acquisitions of EMG and Siabex,
the JSE decided to review the overall listing of the Company during 2013 / 2014 and decided that the company
needed to re–obtain AltX Advisory Committee approval.
The Directors are pleased to report that the AltX Advisory Committee voted in favour of the continued listing of
the Company and have subsequently recommended to the JSE issuer services that the company be eligible to
continue in the process to ensure its successful re-listing on the AltX, which is subject to the Company receiving
shareholder approval for its proposed acquisitions. The circular to shareholders has been updated with the
December 2013 Reviewed Results as contained in this SENS announcement and is expected to be sent to
Shareholders in due course.
The Company wishes to thank its shareholders for their patience and continued support during this time.
By order of the Board
CW Clarke
Non- Executive Chairman
13 May 2014
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: 13/05/2014 04:00:00 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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