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Interim Condensed Consolidated Unaudited Financial Statements for the Six Months to 31 August 2015
Tradehold Limited
(Registration number: 1970/009054/06)
("Tradehold" or "the Group" or "the group")
Incorporated in the Republic of South Africa
JSE Share code: TDH ISIN: ZAE000152658
Interim condensed consolidated unaudited financial
statements for the six months to 31 August 2015
Although listed on the JSE, by far the greater part of Tradehold's operating
assets is outside South Africa - mostly in the UK but also in Africa outside
South Africa. For this reason the company reports its results in pound
sterling. Its assets are in property and, to a lesser extent, in financial
services. It holds its property assets in the UK through a 95% interest in
the Moorgarth group, the dominant component of the business, and in Africa
through a 100% holding in Tradehold Africa. Its financial services interests
are vested in companies in the UK and in South Africa. In the UK it has,
through the Reward group, an interest of 70% in the two main operating
Reward companies, Reward Capital and Reward Invoice Finance, while in South
Africa it wholly-owns the multi-faceted Mettle Investments.
FINANCIAL PERFORMANCE
In the six months to August 2015, Tradehold continued its growth from the
previous financial year end by increasing total assets by 45% from œ207.5
million to œ300.8 million. The value of its investment properties increased
from œ120.5 million to œ179.4 million. This was boosted by the acquisition
in March this year of a portfolio of commercial property assets to the value
of œ40.85 million mostly in Namibia but also in Botswana, Zambia, Mozambique
and the UK from the Collins Group of KwaZulu-Natal. The Collins group and
its affiliates used the proceeds to subscribe for shares in Tradehold.
Through the transaction Tradehold also gained access to the resources and
property expertise of the Collins Group in certain African countries. Net
asset value per share increased by 6% to 82.9 pence per share in the six
month period.
Tradehold reported revenue growth of 21% from œ10.1 million to œ12.2 million
against the corresponding period last year. On this income it achieved an
operating profit which at œ9.1 million was 73% higher than in the
corresponding period. Total profit for the six months stood at œ7.8 million
(2014: œ3.9 million).
BUSINESS ENVIRONMENT
In the period under review, the UK experienced robust economic growth, low
inflation and improving labour market conditions. Consumer confidence was at
its highest level since 2008, also because of rising household disposable
income. In July retail sales had increased for 28 consecutive months which
led to a lively demand for retail space. Central London led the way in the
demand for office space resulting in rental increases across the city. The
demand for investment property rose accordingly. The high cost of City
properties has, however, also stimulated interest in regional areas,
particularly in office and industrial sectors.
In Africa, the economies of Namibia and Mozambique performed well and we are
developing in those countries with confidence. However, we are at present
proceeding with caution in Zambia where the economy has been severely
disrupted by a power-supply crisis, reduced agricultural output due to
drought and dramatically lower commodity prices.
PROPERTY
Moorgarth
In June this year Moorgarth made its biggest acquisition to date when,
through a new vehicle, Inception Reading Sarl, it acquired the Broad Street
Mall in Reading for œ65.4 million in a joint venture with its South African
joint venture partner Texton Property Fund Ltd. The value of Moorgarth's
total portfolio, which now consists of 30 properties, stands at œ159.5
million if its share of the Broad Street Mall is included. It produced
turnover of œ6.7 million for the period compared to œ5.8 million for the
corresponding six months on which it earned an operating profit of œ2.4
million (2014: œ2.1 million).
Aside from acquiring Reading, the company focused on maximising the income
from its existing assets. Seven of its properties are at present being
redeveloped or refurbished while substantial lettings have been concluded
particularly in the group's regional shopping centre in Greater Manchester
where development work is continuing. The Boutique Workplace Company,
Moorgarth's serviced office business, has continued to operate successfully.
It has agreed terms to acquire a rival operator.
Tradehold Africa
The company's focus since the start of the reporting period has been on
three countries - Namibia, Mozambique and Zambia. In Namibia, work is
progressing on a number of retail developments in various parts of the
country: the second phase of the Rundu Mall in the north of the country is
nearing completion; construction has started on the Dunes Mall in Walvis
Bay; land is being secured for a large mall in Oshakati, also in the north,
while agreement has been reached for the acquisition of a retail property
anchored by Shoprite in Gobabis in the east together with the adjacent land
for the development of a retail mall.
Good progress has been made with the Cognis residential development in
Maputo in Mozambique, and the first phase is to be handed to the US Embassy
and the American oil and gas exploration company Anadarko at the end of
February next year. The second phase is to be completed by October 2016.
Investigation into the development of a regional shopping and office complex
in Beira in the north is underway.
FINANCIAL SERVICES
Reward
Of the two main operating Reward companies, Reward Capital focuses on short-
term, asset-backed loans to small and medium-sized businesses while Reward
Invoice Finance provides invoice-discounting facilities to similar
businesses. Despite a number of new entrants in the short-term secured
lending market, Reward Capital continued to see strong deal flow with no
decline in the quality of potential loans. The effective withdrawal of bank
overdrafts to SMEs means that such businesses will continue to need short-
term funding.
The two businesses produced a combined turnover of œ3.1 million (2014: œ2.4
million) on which they generated a pre-tax profit of œ1.4 million (2014:
œ1.2 million). The increased turnover, primarily interest income, reflected
the growth in the Reward loan book by 44% from œ19.5 million at the previous
financial year-end to œ28.2 million.
Mettle
Mettle Investments, which was acquired by Tradehold in March 2014 as an
extension of its financial services portfolio, offers a range of products
and services such as debtor and SME finance; incremental housing finance and
corporate finance advisory service. During the year it established Mettle
Solar, which rents out solar photovoltaic systems. It is in the process of
finalising the acquisition of 50% of Sustainable Power Solutions, an
engineering company involved in all Mettle Solar's projects. During the
review period it also increased its holding in Lendcor by 49.9% and now owns,
directly and indirectly, an effective 64.9% of that company.
In the six months to end August Mettle generated a net after-tax profit of
œ378 783.
COMMENTS ON THE RESULTS
The non-core UBS AG shares were all disposed of during the period, resulting
in a gain of œ1.9 million:
Unaudited Audited
6 months 12 months
to to
(œ'million) 31/08/15 28/02/15
Fair-value adjustment of UBS AG shares - (0.9)
Gain on disposal of UBS AG shares 1.9 -
The Moorgarth joint venture with Texton Property Fund Ltd for the
acquisition of the Broad Street Mall in Reading, has been classified as a
joint venture under IFRS 11 and accounted for under the equity method.
DIVIDEND
The board has decided not to declare an interim dividend.
SHARE ISSUE
On 15 June 2015 Tradehold issued 3 200 000 shares to the former shareholders
of Mettle, in settlement of the deferred consideration owing by it in terms
of the Mettle acquisition in 2014.
On 28 August 2015 Tradehold issued 26 327 171 shares to various subscribers
related to the Collins group and its affiliates, in settlement of the
consideration for the acquisition of the commercial property portfolio of
the Collins group and its affiliates, and a further 2 579 854 shares are
expected to be issued before the financial year end in settlement of the
deferred consideration owing in terms of this acquisition. The assets
acquired comprise investment properties valued at œ40,85 million and an
interest in a property fund valued at œ5.6 million.
DEVELOPMENTS AFTER THE END OF THE REPORTING PERIOD
Moorgarth is in negotiations to acquire a complementary business to its
serviced office operation.
OUTLOOK
Should the markets in which it operates remain stable, the board expects
Tradehold to continue growing in the second half. A number of substantial
projects, especially in Africa, have been initiated in the period under
review which bode well for the future. We already have a solid base from
which to grow, especially in Namibia, where we have become a major property
owner and developer. In the UK, Moorgarth is growing in stature as a real
estate owner and asset manager by extending its base not only geographically
but also in terms of the services it offers in a property context.
Strengthening its presence in the Central London market was in our view an
important step in achieving this.
Although not the primary focus of the business, we have much faith in the
long-term viability of the two Reward businesses, while Mettle not only
extends the range of financial services but through Mettle Solar opens up
new avenues for growth.
This general forecast has not been reviewed nor reported on by the group's
auditors.
ACCOUNTING POLICY
The consolidated interim financial information is prepared in accordance
with the requirements of the JSE Limited Listings Requirements for interim
reports, and the requirements of the Companies Act, 2008 (Act No 71 of 2008).
The JSE Listings Requirements require interim reports to be prepared in
accordance with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards ("IFRS") and the
SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by the Financial Reporting
Standards Council and to also, as a minimum, contain the information
required by IAS 34 Interim Financial Reporting. The accounting policies
applied in the preparation of the consolidated interim financial statements,
are in terms of International Financial Reporting Standards and are
consistent with those accounting policies applied in the preparation of the
previous consolidated annual financial statements, except for the adoption
of the following new standards, amendments to publicised standards and
interpretations that became effective for the current reporting period
beginning on 1 March 2015:
Amendments to IAS 19, 'Employee Benefits'
The amendment provides for the further distinction between contributions
that are linked to service only in the period in which they arise and those
linked to service in more than one period. It allows contributions linked to
service which do not vary with the length of employee service, to be
deducted from the cost of benefits earned in the period that the service is
provided, while contributions linked to service which do vary with the
length of employee service, must be spread over the service period. The
benefit of employee contributions linked to the length of service must be
recognised in profit or loss over the employee's working life.
Annual Improvements 2010-12 cycle
IFRS 8 Operating segments: this amendment requires the disclosure of
management judgements when aggregating operating segments, and a
reconciliation of segment assets to entity's assets.
IFRS 13 Fair value measurements: this amendment clarifies that entities are
still permitted to measure short-term receivables and payables at invoice
amounts where the impact of not discounting is immaterial.
IAS 16 Property, plant and equipment, and IAS 38 Intangible assets: these
amendments clarify the treatment of the gross carrying amount and the
accumulated depreciation when an entity uses the revaluation model.
IAS 24 Related party disclosures: this amendment includes as a related party
an entity that provides key management personnel services to the reporting
entity or its parent.
Annual Improvements 2011-13 cycle
IFRS 1 First time adoption of IFRS: this amendment clarifies that a first-
time adopter can use either the old or new version of a standard, if the new
version is not yet mandatory.
IFRS 3 Business combinations: this amendment clarifies that the standard
does not apply to the accounting for the formation of any joint arrangement
under IFRS 11 in the financial statements of the joint arrangement itself.
IFRS 13 Fair value measurement: this amendment clarifies that the permitted
measurement of the fair value of a group of financial assets and financial
liabilities on a net basis, applies to all contracts within the scope of IAS
39 or IFRS 9.
IAS 40 Investment property: this amendment clarifies that IFRS 3 should be
applied to determine if an acquisition of an investment property is a
business combination.
PREPARATION OF FINANCIAL RESULTS
The preparation of the financial results was supervised by the group
financial director, Karen Nordier BAcc, BCompt Hons, CA(SA). The condensed
consolidated interim results for the six months ended 31 August 2015 have
not been audited or independently reviewed by the group's external auditors,
PricewaterhouseCoopers Inc.
REPORTING CURRENCY
As the operations of most of Tradehold's subsidiaries are conducted in pound
sterling, the company reports its results in this currency.
H R W Troskie K L Nordier
Acting Chairman Director
Malta
5 November 2015
STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
(œ'000) 31/08/15 31/08/14 28/02/15
Revenue 12 206 10 052 20 731
Other operating income 4 085 - 1 637
Profit on disposal of investment
properties - 905 1 359
Net gain from fair value adjustment
on investment property 628 1 685 2 156
Loss on disposal and scrapping
of PPE (excluding buildings) - - (134)
Employee benefit expenses (1 317) - (4 155)
Lease expenses (297) - (613)
Depreciation, impairment and amortisation (158) (193) (372)
Other operating costs (7 548) (6 158) (8 597)
Trading profit 7 599 6 291 12 012
Gain/(loss) on disposal/(purchase)
of investments - - 1 117
Impairment of goodwill - - (1 288)
Gain on disposal of financial assets 1 919
Fair value (loss)/gain through
profit or loss (372) (1 008) (886)
Operating profit 9 146 5 283 10 955
Finance income 1 868 87 809
Finance cost (2 846) (377) (2 289)
Profit from joint venture 80 - -
Profit from associated companies 159 72 165
Profit before taxation 8 407 5 065 9 640
Taxation 404 277 605
Profit for the year before
non-controlling interest 8 003 4 788 9 035
Other comprehensive income
Items that may be subsequently
reclassified to profit or loss
Net fair value loss on hedging
instruments entered into for
cash flow hedges - - (549)
Currency translation differences (4 170) (76) (161)
Total comprehensive income for the year 3 833 4 712 8 325
Profit attributable to:
Owners of the parent 7 818 3 955 7 832
Non-controlling interest 185 833 1 203
8 003 4 788 9 035
Total comprehensive income attributable to:
Owners of the parent 3 648 3 879 7 259
Non-controlling interest 185 833 1 066
3 833 4 712 8 325
Earnings per share (pence): basic
- basic 4.2 2.7 5.1
- headline earnings (as required by IFRS) 3.9 1.2 3.3
- core headline earnings
(as defined by entity) 3.1 3.4 5.4
Number of shares for calculation
of earnings per share ('000) 185 412 144 315 153 143
Earnings per share (pence): diluted
- diluted 4.2 2.6 5.0
- headline earnings (as required by IFRS) 3.8 1.2 3.3
- core headline earnings
(as defined by entity) 3.1 3.3 5.4
Number of shares for calculation
of diluted earnings per share ('000) 187 222 149 518 155 341
STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
(œ'000) 31/08/15 31/08/14 28/02/15
Non-current assets 208 730 105 833 133 399
Property, plant and equipment 5 207 5 476 5 186
Investment properties 179 397 92 640 120 552
Goodwill 3 562 3 996 2 306
Investment in joint venture 13 458 - -
Investments in associates 2 483 99 1 544
Deferred taxation 124 164 261
Trade and other receivables 352 1 604 1 645
Loans receivable 4 147 1 854 1 905
Current assets 92 092 58 848 74 137
Financial assets 6 217 6 883 7 271
Loans receivable 1 580 58 -
Loans to associates 125 - 550
Trade and other receivables 40 359 26 162 31 968
Taxation - 351 -
Cash and cash equivalents 43 811 25 394 34 348
Total assets 300 822 164 681 207 536
Equity 154 084 117 076 122 328
Ordinary shareholders' equity 153 933 115 956 122 244
Non-controlling interest 151 1 120 84
Non-current liabilities 105 330 28 038 63 901
Preference share capital 30 716 51 34 753
Long-term borrowings 62 882 20 554 19 792
Derivative financial instruments 6 325 - 2 314
Deferred revenue 5 198 5 158 4 818
Contingent consideration 83 2 143 2 064
Deferred taxation 126 132 160
Current liabilities 41 408 19 567 21 308
Short-term borrowings 27 000 10 983 12 529
Deferred consideration 1 779 2 473 -
Taxation 530 653 -
Bank overdrafts - - 206
Other current liabilities 12 099 5 458 8 573
Total equity and liabilities 300 822 164 681 207 537
STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
(œ'000) 31/08/15 31/08/14 28/02/15
Balance at beginning of the period 122 328 99 939 99 939
Issue of ordinary shares 25 644 13 177 13 614
Transactions with owner of the entity 264 (470) (624)
Distribution to minorities - - (883)
Disposal of subsidiary - - (280)
Acquisition of subsidiaries - 145 211
Contingent consideration recognised
directly in equity - - 2 453
Deferred consideration recognised
directly in equity 2 513 - -
Dividends distributed to shareholders (498) (427) (427)
Profit for the year 8 003 4 788 9 035
Other comprehensive income for the year (4 170) (76) (710)
Balance at the end of the period 154 084 117 076 122 328
STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
(œ'000) 31/08/15 31/08/14 28/02/15
Cash flows from operating activities 1 999 3 848 9 034
Cash flows utilised in
investing activities (25 517) (15 700) (52 001)
Acquisition of investment properties (18 663) (20 612) (50 723)
Acquisition of property,
plant and equipment (179) (213) (389)
Business combinations 2 933 579 625
Proceeds on disposal of investment
properties 1 650 8 668 10 044
Proceeds on disposal of property,
plant and equipment - - 39
Net proceeds on disposal of investment 9 191 - (181)
Dividends received from associates 687 - 95
Loans advanced to joint venture (13 378) - -
Loans repaid by/(advanced to)
associate undertaking 863 - (396)
Borrowings repaid - 82 -
Loans and advances - issued (35 615) (21 574) (55 461)
Loans and advances - repaid 26 994 17 370 44 346
Cash flows from financing activities 33 300 12 049 52 118
Proceeds from borrowings 33 300 1 412 7 549
Repayment of borrowings - - (1 095)
Proceeds from ordinary share issue - 11 323 11 276
Share buy-back from minority shareholder - - (187)
Proceeds from preference share issue - - 35 674
Redemption of preference shares - (216) (216)
Dividends to non-controlling interests - (470) (883)
Net increase in cash and cash
equivalents 9 782 197 9 151
Effect of changes in exchange rate (113) 5 (201)
Cash and cash equivalents at
beginning of the year 34 142 25 192 25 192
Cash and cash equivalents at
end of the year 43 811 25 394 34 142
Cash and cash equivalents consists of:
Cash and cash equivalents 43 811 25 394 34 348
Bank overdrafts - - (206)
43 811 25 394 34 142
NON CASH TRANSACTION
During the period under review the following non cash transactions took
place:
- Purchase of the Collins group property portfolio
Refer to note 12 for detail of the transaction
- Tradehold Limited share issues
On 15 June 2015 3,200,000 Tradehold Limited shares were issued to the former
Mettle Investments (Pty) Limited shareholders in settlement of the deferred
purchase consideration.
SEGMENTAL ANALYSIS
(œ'000) Trading
Revenue profit/(loss)
Six months to 31 August 2015 (unaudited)
Property
- retail 4 502 2 745
- commercial 430 151
- offices 1 064 493
- leisure 1 738 276
- residential 276 137
- other 225 -
Short-term lending 3 971 2 537
Treasury - 1 260
Other (describe)
Other (describe)
12 206 7 599
Six months to 31 August 2014 (unaudited)
Property
- retail 3 569 3 825
- commercial 304 108
- offices 399 572
- leisure 1 553 139
- residential - -
- other - (46)
Short-term lending 4 227 1 997
Treasury - (304)
10 052 6 291
Twelve months to 28 February 2015 (audited)
Property
- retail 6 900 5 447
- commercial 611 1 187
- offices 1 330 1 278
- leisure 3 057 111
- residential 87 209
- other 260 -
Short-term lending 8 486 4 456
Treasury - (676)
20 731 12 012
SUPPLEMENTARY INFORMATION
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
(œ'000) 31/08/15 31/08/14 28/02/15
1. Depreciation for the period 158 193 372
2. Capital expenditure for the period 14 519 20 612 51 112
3. Calculation of headline earnings
Net profit 7 818 3 955 7 832
Gain on revaluation of
investment properties (629) (1 685) (2 156)
Profit on disposal of
investment properties - (905) (1 359)
Gain from bargain purchase - - (9)
(Profit)/loss on disposal/purchase
of investments - - (1 117)
Impairment of goodwill - - 1 288
Loss/(profit) on disposal of
property, plant and equipment - - 134
Non-controlling interest - 389 508
7 189 1 754 5 121
4. Calculation of core headline earnings
Headline profit 7 189 1 754 5 121
Gain on revaluation of
investment properties 629 1 685 2 156
Profit on disposal of
investment properties - 905 1 359
Legal fee income - - (782)
Loss/(profit) on fair value
adjustment of financial assets - 1 008 886
Profit on disposal of
financial assets (1 919) - -
Non-controlling interest (33) (389) (410)
5 866 4 963 8 330
5. Number of shares in issue ('000) 185 660 155 600 156 133
6. Net asset value per share (pence) 82.9 74.5 78.3
7. Financial assets
Unlisted investments at fund
managers valuation 6 217 - -
Listed investments at fair value - 6 883 7 271
6 217 6 883 7 271
8. Contingent liabilities 480 480 480
9. Related parties
During the period under review, in the ordinary course of business,
certain companies within the Group entered into transactions with each
other. All these intergroup transactions are similar to those in the
prior year and have been eliminated in the interim financial statements
on consolidation.
10. Cashflow from operating activities
Operating profit/(loss) 9 146 5 283 10 955
Non-cash items (2 018) (1 381) (1 496)
- depreciation 158 193 372
- profit on disposal of
investment properties - (905) (1 359)
- loss/(profit) on disposal of PPE - 8 134
- net gain on fair value adjustment
on investment properties (629) (1 685) (2 155)
- fair value loss(gain) on financial
assets at fair value 372 1 008 886
- impairment of goodwill - - 1 288
- impairment of loans - - 796
- loss/(profit) on disposal
of investments (1 919) - (1 117)
- release of provision for lease
repair liabilities - - (36)
- other non-cash items - - (305)
- bargain purchase gain
Changes in working capital (4 941) 891 544
- trade and other receivables (6 333) (305) (2 664)
- trade and other payables 1 392 1 196 3 208
Cash used in operations (188) (945) (969)
- interest received 1 868 88 810
- interest paid (2 846) (377) (938)
- dividends paid (498) (427) (427)
- taxation paid 1 288 (229) (414)
Net cash flows from operating
activities 1 999 3 848 9 034
11. Goodwill
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
(œ'000) 31/08/15 31/08/14 28/02/15
11.1 Cost 4 850 - 3 594
Accumulated impairment losses (1 288) - (1 288)
3 562 - 2 306
11.2 Cost
Balance at beginning of year 3 594 - -
Acquired through business
combinations 1 547 - 3 566
Foreign currency translation
movements (291) - 28
Balance at end of year 4 850 - 3 594
11.3 Accumulated impairment losses
Balance at beginning of year (1 288) - -
Impairment losses recognised
in the year - - (1 288)
(1 288) (1 288)
11.4 Allocation of goodwill to cash-generating units
Management reviews the business performance based on geography and
type of business. It has identified the United Kingdom, South Africa
and Africa as the main geographies. There are property and short-term
lending operating segments in the UK, mainly short-term lending in SA
and property -residential in Africa. Goodwill is monitored by
management at the operating segment level. The following is a summary
of the goodwill allocation for each applicable operating segment:
Six months to 31 August 2015
(unaudited) Opening Additions Impairment
SA short-term lending 2 287 - -
UK property - commercial - 489 -
Africa property - residential 19 1 058 -
Total 2 306 1 547 -
Six months to 31 August 2015
Foreign
currency
translation
movements Closing
SA short-term lending (291) 1 996
UK property - commercial - 489
Africa property - residential - 1 077
Total (291) 3 562
Twelve months to 28 February 2015
(audited) Opening Additions Impairment
SA short-term lending - 3 575 (1 288)
Africa property - residential - 19 -
Total - 3 594 (1 288)
Twelve months to 28 February 2015
Foreign
currency
translation
movements Closing
SA short-term lending - 2 287
Africa property - residential - 19
Total - 2 306
12. Business Combinations
On 18 March 2015 the group acquired a portfolio of commercial property
assets in Botswana, Zambia, Namibia, Mozambique and the United Kingdom
from Collins Property Projects Proprietary Limited and its affiliates
("Collins group"), and as a composite transaction the Collins group
utilised the sale proceeds to subscribe for ordinary shares in
Tradehold Limited. This is considered, in substance, to be a non-cash
transaction. The subscribers are not permitted to dispose of more than
50% of the Tradehold Limited shares during a 5 year "lock-in" period.
As a result of the acquisition, the group has expanded its property
interest in southern Africa (excluding South Africa), and has gained
access to the resources and property expertise of the Collins group in
Namibia, Botswana, Zambia and Mozambique to assist with the
development of the group's African portfolio.
Goodwill acquired has not yet been allocated to a cash-generating unit
at the end of the period as accounting for the business combination is
still provisional.
The following table summarises the provisional purchase price
allocation for the acquisition, and the amounts of the assets acquired
and liabilities assumed recognised at the acquisition date.
Unaudited
6 months to
(œ'000) 31/08/15
Total consideration 28 157
Issuance of ordinary shares 25 644
Deferred consideration 2 513
Recognised amounts of identifiable assets acquired
and liabilities assumed at provisional fair value
Total assets 58 064
Investment property 45 348
Financial assets 5 626
Investment in associates 2 130
Cash and cash equivalents 2 932
Trade and other receivables 765
Tax receivables 1 263
Total liabilities (31 453)
Borrowings (28 738)
Deferred revenue (59)
Tax creditor (202)
Trade and other payables (2 454)
Total identifiable net assets 26 611
Goodwill 1 546
Total consideration 28 157
Based on the information available, it was not possible to finalise
the fair value measurement of the acquired assets and liabilities by
31 August 2015. The twelve-month period permitted under IFRS 3 for
finalising purchase price allocations was used; it allows for
provisional allocation of the purchase price to the individual assets
and liabilities until the end of that period.
13. Fair value hierarchy
IFRS7 requires disclosure of fair value measurements by level of the
following fair value measurement hierarchy:
- Quoted prices (unadjusted) in active markets for identical assets or
liabilities (level 1).
- Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from prices) (level 2).
- Inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs) (level 3).
The following table presents the group's financial assets and
liabilities that are measured at fair value at 31 August 2015.
Assets Level 1 Level 2 Level 3
Financial assets at fair value
through profit and loss
Securities - 6 217 -
Non-financial assets at fair value
through profit or loss
Investment properties - - 179 397
Total assets - 6 217 179 397
Liabilities
Financial liabilities at fair value
through profit and loss
Contingent consideration - - 1 862
Trading derivatives
Cross currency swap - 5 776 -
Derivatives used for hedging - 549 -
Interest rate contracts
Financial liabilities at
amortised cost
Preference shares 30 716 - -
Borrowings - - 89 882
Total liabilities 30 716 6 325 91 744
The following table presents the group's financial assets and
liabilities that are measured at fair value at 28 February 2015.
Assets Level 1 Level 2 Level 3
Financial assets at fair value
through profit and loss
Trading securities 7 271 - -
Non-financial assets at fair value
through profit or loss
Investment properties - - 120 552
Total assets 7 271 - 120 552
Liabilities
Financial liabilities at fair value
through profit and loss
Contingent consideration - - 2 064
Trading derivatives
Cross currency swap - 1 765 -
Derivatives used for hedging
Interest rate contracts - 549 -
Financial liabilities at
amortised cost
Preference shares 34 753 - -
Borrowings - - 32 321
Total liabilities 34 753 2 314 34 385
The fair value of financial instruments traded in active markets is
based on quoted market prices at the period-end. A market is regarded
as active if quoted prices are readily and regularly available from
an exchange, dealer, broker, industry group, pricing service, or
regulatory agency, and those prices represent actual and regularly
occurring market transactions on an arm's length basis. The quoted
market price used for financial assets held by the group is the
current bid price.
The fair value of investment properties is based on rental yield
valuations at the period-end. Should property yields increase by 1%,
the valuations would be approximately œ15 million lower. Should the
property yields decrease by 1%, the valuations would be approximately
œ21 million higher.
The fair value of financial liabilities for disclosure purposes is
estimated by discounting the future contractual cash flows at the
current market interest rate that is available to the group for
similar financial instruments.
There were no transfers between the levels 1 and 2 and 3 during the
period.
14. Fair value of financial instruments
The carrying amounts reported in the statement of financial position
approximate fair values. Discounted cash flow models are used for
trade and loan receivables. The discount yields in these models use
calculated rates that reflect the return a market participant would
expect to receive on instruments with similar remaining maturities,
cash flow patterns, credit risk, collateral and interest rates.
Directors and administration
Executive directors: TA Vaughan, FH Esterhuyse, DA Harrop, KL Nordier
Non-executive directors: CH Wiese (alternate JD Wiese), HRW Troskie, JM
Wragge, MJ Roberts
Independent non-executive directors: HRW Troskie, JM Wragge, MJ Roberts
Company secretary: FM ver Loren van Themaat
Transfer secretary: Computershare Investor Services (Pty) Ltd
Sponsor: Bravura Capital (Pty) Ltd
Date: 09/11/2015 10:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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