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Summarised audited annual results for the year ended 29 February 2016
Freedom Property Fund Limited and its subsidiaries
Incorporated in the Republic of South Africa
(Registration number 2012/129186/06)
Share code: FDP
ISIN: ZAE000185260
("Freedom" or "the Group" or "the Company")
FINANCIAL RESULTS
The board of directors ("the Board") of the Company is pleased to present the audited annual financial
results for the year ended 29 February 2016.
SUMMARISED AUDITED ANNUAL RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2016
SIGNIFICANT RESULTS
- Loss per share decreased from 40,53 cents to 1,56 cents
- Headline loss per share decreased from 22,37 cents to 2,00 cents
- Net asset value per share decreased from 10,47 cents per share (restated) to 9,83 cents per share;
- Shares in issue increased from 1 027 029 031 to 1 178 729 030
- Revenue increased by 79% to R38 474 million
- Net loss after tax decreased from R296 000 million (loss) to R16 654 million (loss)
- Total assets decreased from R359 039 million to R340 883 million
FINANCIAL OVERVIEW
Group Financial Performance
During the course of 2015, concerns arose in regard to the approach adopted by the Group pertaining to
the conduct of its business and the fact that its shares were trading at a substantial discount to NAV. The
majority of shareholders voted to address this, and subsequently the Group initiated some far-reaching
actions. These included a process to replace the Board and to appoint a new CEO in order to address the
issues hampering the Group's growth.
The audit uncovered major concerns, including some matters that related to the reportable findings for
the 2015 and 2016 financial years. The Group was suspended from trading on the main board of the JSE
in July 2016 due to its failure to release its annual results for the year ended 29 February 2016. This
allowed the auditors and the Board the opportunity to clarify the Group's situation and to consider all
options available.
Subsequent to the suspension of trading, the Financial Director also resigned, which added to the
uncertainty the Group was experiencing. A major concern for shareholders was the potential loss of
institutional knowledge resulting from the resignations of two senior executives.
The new Board subsequently undertook a comprehensive review of all business strategies and
operational processes and procedures, and resolved to implement a process of consolidation and
restructuring. Various cost-saving measures were also immediately implemented, which included the
relocation of the head office to Paarl. All corporate procedures and protocols were carefully reviewed in
order to strengthen and streamline corporate governance procedures. As part of this process, the
services of expensive consultants were terminated, salary scales were restructured, and the staff
complement was reduced through a process of natural attrition.
Freedom's property portfolio was also re-assessed and the strategic disposal of non-core properties
approved. It was also resolved that no further acquisitions would be made and that no new
developments would be initiated until such time that the Board was confident that such developments
could successfully be implemented.
Comparative Results
A restatement of the comparative results was required due to the realisation that material transactions in
prior periods did not contribute to the accurate reporting of the results and financial position of the
Group.
Revenues
Total revenue of R38,474 million, is higher than the revenue of R21,445 million (restated) reported for
the corresponding year ending 28 February 2015. The key reason for the increase in revenue is that sales
of development properties (stock of serviced stands) have increased from R92 thousand to R14,627
million.
Investment property revenue is up on the comparative period by 11,7%. The take up of the recently
completed units at Kadoma was not as strong as expected and demand has been affected by protests due
to service delivery and other issues in the area and the growth prospects at Steelpoort Industrial do,
however, remain optimistic.
Headline Earnings
For the year ended 29 February 2016, Freedom reported a headline and diluted headline loss of R0,02
compared to a headline loss and diluted loss of R0,22 (restated) in the previous financial year.
Borrowings
Freedom had previously secured facilities with Nedbank Limited ("Nedbank") to provide term funding to
Kadoma, subject to agreed drawdowns and completion of units. These term facilities were applied to the
Steelpoort Industrial expansion and further development within the Group. The Group is currently re-
negotiating these facilities with Nedbank to ensure the best possible terms and the optimal utilisation of
the facilities within the Group.
The guaranteed share obligations with some of the vendors were renegotiated and they were either
issued further shares or received cash and further loans. The balance of these loans at 29 February 2016
was R45,178 million.
Corporate governance
The Board is fully committed to the principles of the Code of Corporate Practices and Conduct as set out
in King IV. The Board acknowledges its responsibility in ensuring that the Group acts with integrity and
fairness. As such they are continually monitoring and investigating methods of improving systems and
controls in order to ensure that stakeholder opportunities are maximised.
Auditors
The summarised consolidated results of the Group for the year ended 29 February 2016 have been
audited by the Group's auditors, Moore Stephens Cape Town Inc. and their qualified audit report is
available for inspection at the Group's registered office and the company's website. An extract from the
audit report is as follows:
Except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the
consolidated Financial Statements present fairly, in all material respects, the consolidated financial
position of Freedom Property Fund as at 29 February 2016, and its consolidated financial performance and
its consolidated cash flows for the year then ended in accordance with the International Financial
Reporting Standards and the requirements of the Companies Act of South Africa.
Basis for Qualified Opinion on consolidated Financial Statements and Unqualified Opinion on the
Separate Financial Statements
The Company acquired Ligitprops 184 (Pty) Ltd on 1 March 2014. The consolidated financial statements
are materially misstated as we were unable to obtain sufficient appropriate evidence on the values of
certain of the subsidiary's material assets and liabilities at the acquisition date. Consequently, we are
unable to determine whether any adjustments to these amounts were necessary. This matter also effects
the 29 February 2016 consolidated Statement of Financial position. There is no effect on the separate
financial statements.
Statement of Financial Position Group
2016 Restated
2015
R'000 R'000
Assets
Non-Current Assets
Investment properties at fair value 187 307 302 952
Operating lease asset 4 671 5 450
Investment properties per valuation 191 978 308 402
Plant and equipment 1 572 1 528
Intangible assets 59 94
Loans to subsidiaries - -
193 609 310 024
Current Assets
Inventories 12 235 19 855
Trade and other receivables 27 816 23 808
Operating lease asset 921 278
Current tax receivable 4 338 3 250
Cash and cash equivalents 2 875 1 824
48 185 49 015
Non-current assets classified as held for sale 99 089 -
Total Assets 340 883 359 039
Equity and Liabilities
Equity
Stated capital 443 237 421 943
Treasury shares (6 086) (48)
Share-based payment reserve 3 464 -
Accumulated loss (324 738) (314 398)
115 877 107 497
Liabilities
Non-Current Liabilities
Loans from shareholders 45 178 -
Other financial liabilities 82 283 82 291
Deferred tax 30 479 31 018
Guaranteed share obligation - 85 290
157 940 198 599
Current Liabilities
Loans from subsidiaries - -
Other financial liabilities 6 900 3 143
Current tax payable 12 798 9 908
Trade and other payables 37 478 26 249
Guaranteed share obligation - 4 265
Bank overdraft 9 890 9 378
67 066 52 943
Total Liabilities 225 006 251 542
Total Equity and Liabilities 340 883 359 039
Statement of Comprehensive Income Group
Restated
2016 2015
R'000 R'000
Revenue 38 474 21 445
Cost of sales (9 938) (504)
Gross profit 28 536 20 941
Other operating income 5 843 19 283
Other operating losses (3 838) (2 102)
Referral fees - (22 690)
Penalty on forfeit (5 628) -
Commission paid (2 462) (116 140)
Other operating expenses (57 268) (40 313)
Operating loss (34 817) (141 021)
Investment income 2 856 804
Finance costs (12 858) (4 509)
Gain on bargain purchase - 35 909
Fair value gains (losses) on investment properties 10 347 (26 101)
Impairment of goodwill - (148 714)
Gain (loss) on guaranteed share obligation 20 543 (11 729)
(Loss) profit before taxation (13 929) (295 361)
Taxation (2 725) (639)
(Loss) profit for the year (16 654) (296 000)
Statement of Changes in
Equity
Total Share-based
Stated Treasury stated payment Accumulated Total
capital shares capital reserve loss equity
R'000 R'000 R'000 R'000 R'000 R'000
Opening balance as
previously reported 15 - 15 12 895 (17 554) (4 644)
Prior period errors (Note 5) - - - (12 895) 12 895 -
Balance at 01 March 2014
as restated 15 - 15 - (4 659) (4 644)
Total comprehensive loss
for the year as restated - - - - (296 000) (296 000)
Cancellation of shares issued (13) - (13) - - (13)
Issue of shares 421 941 (12 098) 409 843 - - 409 843
Purchase of own/treasury
shares - (3 105) (3 105) - - (3 105)
Disposal of treasury shares - 7 809 7 809 - (7 809) -
Fair value loss on disposal of
treasury shares - 5 930 5 930 - (5 930) -
Issue of treasury shares - 1 120 1 120 - - 1 120
Fair value loss on issue of
treasury shares - 296 296 - - 296
Total contributions by
owners of company
recognised directly in equity
as
restated 421 928 (48) 421 880 - (13 739) 408 141
Opening balance as
previously reported 882 090 (58 759) 823 331 - 516 405 1 339 736
Prior period errors (Note 5) (460 147) 58 711 (401 436) - (830 803) (1 232 239)
Balance at 01 March 2015
as restated 421 943 (48) 421 895 - (314 398) 107 497
Loss for the year - - - - (16 654) (16 654)
Other comprehensive
income - - - - - -
Total comprehensive loss
for the year - - - - (16 654) (16 654)
Issue of shares 21 294 - 21 294 - - 21 294
Issue of treasury shares - 70 70 - - 70
Fair value gain on issue of
treasury shares - 183 183 - - 183
Guaranteed share obligation - - - 3 464 - 3 464
Recovery of unauthorised
shares - (6 314) (6 314) - 6 314 -
Fair value loss on recovery
of unauthorised shares - 23 23 - - 23
Total contributions by
owners of company
recognised directly in equity 21 294 (6 038) 15 256 3 464 6 314 25 034
Balance at 29 February 2016 443 237 (6 086) 437 151 3 464 (324 738) 115 877
Statement of Cash Flows Group
Restated
2016 2015
R'000 R'000
Cash flows from operating activities
Cash used in operations (4 843) (7 643)
Interest income 2 856 804
Finance costs (11 579) (4 509)
Tax (paid) refunded (1 463) 52
Net cash used in operating activities (15 029) (11 296)
Cash flows from investing activities
Purchase of plant and equipment (754) (780)
Proceeds on disposal of plant and equipment 22 -
Purchase of investment properties (28 381) (56 647)
Proceeds on disposal of investment properties 50 854 -
Purchase of intangible assets (7) (109)
Business combinations - (24 108)
Net cash generated from (used in) investing activities 21 734 (81 644)
Cash flows from financing activities
Net movement on treasury shares 85 (48)
Proceeds from other financial liabilities 3 749 85 434
Repayment of shareholders loan (10 000) -
Net cash (used in) generated from financing activities (6 166) 85 386
Total cash movement for the year 539 (7 554)
Cash at the beginning of the year (7 554) -
Total cash at end of the year (7 015) (7 554)
Segment Reporting
The group has identified two reportable segments which represent the structure used by the Executive
Committee to make key operating decisions and assess performance.
The two reportable segments are:
- Property rental income - Leasing of industrial parks and residential units, with residential units
being a small portion
- Development property sales - Sale of stands and undeveloped land
2016
Gross profit Separately disclosable items
Fair value Gain on
Profit gain on guaranteed
Cost of Gross (loss) Commission Penalty on Investment Finance investment share
External Revenue sales profit before tax paid forfeit income cost properties obligation Taxation
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Rental income 23 847 - 23 847 8 840 (1 522) - - (9 055) 9 668 - (2 171)
Property sales 14 627 (9 938) 4 689 2 209 (940) - 2 782 (1) - - 982
All other segments - - - (24 978) - (5 628) 74 (3 802) 679 20 543 (1 536)
Total 38 474 (9 938) 28 536 (13 929) (2 462) (5 628) 2 856 (12 858) 10 347 20 543 (2 725)
2015
Gross profit Separately disclosable items
Fair value Loss on
Commission gain on guaranteed Gain on
Cost of Gross Loss paid and Investment Finance investment share bargain
External Revenue sales profit before tax Referral fees income costs properties obligation purchase Taxation
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Rental income 21 353 - 21 353 (11 032) (8 039) - (3 672) (27 084) - 12 831 4 223
Property sales 92 (504) (412) (7 876) - 719 (71) 983 - - 466
All other segments - - - (150 817) (130 791) 85 (766) - (11 729) - (5 328)
Total 21 445 (504) 20 941 (169 725) (138 830) 804 (4 509) (26 101) (11 729) 12 831 (639)
Reconciling items
Gain on bargain purchase 23 078
Impairment of goodwill (148 714)
(295 361)
Segment assets and liabilities
Investment
properties per Deferred Total
valuation Inventories tax liability Other financial liabilities assets Total liabilities
2016 R'000 R'000 R'000 R'000 R'000 R'000
Rental income 186 007 - 22 405 89 128 199 194 117 973
Property sales 1 300 12 235 1 096 - 25 122 22 094
All other segments - - 6 978 55 116 567 84 939
Total 187 307 12 235 30 479 89 183 340 883 225 006
Investment
properties per Deferred Total Total
valuation Inventories tax liability Other financial liabilities assets liabilities
R'000 R'000 R'000 R'000 R'000 R'000
Restated 2015
Rental income 210 872 - 22 815 85 379 222 720 126 380
Property sales 1 300 19 855 2 220 - 27 499 10 850
All other segments 90 780 - 5 983 55 108 820 114 312
Total 302 952 19 855 31 018 85 434 359 039 251 542
COMMENTARY
BASIS OF PREPARATION
The summarised audited consolidated annual financial statements for the year ended 29 February 2016
("summarised results"), have been prepared in accordance with IAS 34: Interim Financial Reporting,
framework concepts, the measurement and recognition requirements of International Financial Reporting
Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and Financial Pronouncements issued by the Financial Reporting Standards Council. The results comply
with the JSE Listings Requirements and the Companies Act, 71 of 2008, of South Africa (Companies Act).
These Summarised Results have been extracted from audited information, but are not themselves audited.
The audited annual financial statements and the qualified audit report provided by Moore Stephens Cape
Town Inc. on the audited results are available for inspection at the issuer's registered office. The directors
take full responsibility for the preparation of this report and that the financial information has been
correctly extracted from the underlying annual financial statements.
The financial results were prepared under the supervision of the Interim Chief Financial Officer, Jonathan
George CA (SA).
ACCOUNTING POLICIES
The accounting policies applied in the preparation of these summarised consolidated annual financial
results are in terms of IFRS and are consistent with those prepared in prior periods.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
1. Earnings per share
Basic loss per share is based on the loss below and a weighted average number of ordinary shares
of 1,066,111,650 (Restated 2015: 730,331,755).
Diluted loss per share is equal to loss per share as there are no dilutive potential ordinary shares in issue.
Basic headline loss and diluted headline loss are determined by adjusting basic loss and diluted loss
by excluding separately identifiable re-measurement items. Basic headline loss and diluted
headline loss are presented after tax.
Restated
2016 2015
Cents Cents
Loss per share
Basic and diluted loss (1,56) (40,53)
Basic and diluted (2,00) (22,37)
headline loss
2016 2015
Gross Net Gross Net
R'000 R'000 R'000 R'000
Reconciliation between
loss for the year and
headline loss Restated Restated
Loss for the year
attributable to equity
holders of the parent - (16 654) (296 000)
Adjusted for:
Fair value (gain) loss on
investment properties (10 347) (7 450) 26 101 18 793
Profit on disposal of
subsidiary - - (641) (462)
Gain on bargain
purchase - - (35 909) (35 909)
Impairment of goodwill - - 148 714 148 714
Loss on disposal of
assets 3 838 2 763 2 102 1 513
Basic and diluted
headline loss (6 509) (21 341) 140 367 (163 351)
2. Business combinations
The table below outlines the acquisitions made by the group during the year ended 28 February 2015. All
of these acquisitions occurred to facilitate the company's listing on the JSE.
All of the businesses acquired operate in South Africa and all properties acquired are located in South
Africa.
The majority of the business combinations were settled by the issue of shares with a value of R0.26 each.
However, in the case of Kadoma Investments Proprietary Limited, an additional top up payment was due.
On 25 July 2014 the company disposed of its entire shareholding in Bilko Investments Proprietary Limited
for a consideration of 12 000 000 Freedom shares.
Actual
Gain on Actual profit
Restated 2015 - % Acquisition Fair value of bargain Revenue (loss)
Company/Property Date of shares Purchase costs net assets purchase included included in
acquired acquisition acquired price expensed acquired Goodwill in 2015 2015
R'000 R'000 R'000 R'000 R'000 R'000
Bilko Investments 14 June 2014 100% 3 591 - 10 209 (6 618) - -
Proprietary Limited
Kadoma 01 March 2014 100% 145 792 108 338 121 975 23 817 20 891 (128 760)
Investments
Proprietary Limited
Ligitprops 184 01 March 2014 100% 11 905 26 119 5 220 6 685 - (425)
Proprietary Limited
Stellenbosch 25 April 2014 Title 27 098 8 529 38 000 (10 902) 4 628 (26 307)
Industrial deed
Wespark Palms 17 April 2014 Title 2 871 1 632 4 800 (1 929) 228 (2 163)
deed
191 257 144 618 180 204 11 053 25 747 (157 655)
3. Prior Period Errors
Throughout these consolidated annual financial statements, significant errors in the application of IFRS have arisen in previous
reporting periods. The material effects on the financial statements are summarised below.
Statement of financial position
As previously Impact of
reported Restated errors
R'000 R'000 R'000
Assets
Non-Current Assets
Investment properties at fair value 1 556 382 302 952 1 253 430
Operating lease asset 1 086 5 450 (4 364)
Investment properties per valuation 1 557 468 308 402 1 249 066
Plant and equipment 1 138 1 528 (390)
Intangible assets - 94 (94)
Other investments 2 433 - 2 433
Deferred tax 851 - 851
1 561 890 310 024 1 251 866
Current Assets
Inventories 87 694 19 855 67 839
Trade and other receivables 54 325 23 808 30 517
Operating lease asset - 278 (278)
Current tax receivable - 3 250 (3 250)
Cash and cash equivalents 1 337 1 824 (487)
143 356 49 015 94 341
Total Assets 1 705 246 359 039 1 346 207
Equity and Liabilities
Equity
Stated capital 823 331 421 943 401 388
Treasury shares - (48) 48
Retained earnings (accumulated loss) 516 405 (314 398) 830 803
1 339 736 107 497 1 232 239
Liabilities
Non-Current Liabilities
Loans from subsidiaries
Other financial liabilities 82 291 82 291 -
Guaranteed share obligation - 85 290 (85 290)
Deferred tax 245 620 31 018 214 602
327 911 198 599 129 312
Current Liabilities
Loans from subsidiaries
Other financial liabilities 3 143 3 143 -
Current tax payable 5 385 9 908 (4 523)
Trade and other payables 19 883 26 249 (6 366)
Guaranteed share obligation - 4 265 (4 265)
Bank overdraft 9 188 9 378 (190)
37 599 52 943 (15 344)
Total Liabilities 365 510 251 542 113 968
Total Equity and Liabilities 1 705 246 359 039 1 346 207
Statement of comprehensive income
As previously Impact of
reported Restated errors
R'000 R'000 R'000
Revenue 42 779 21 445 21 334
Cost of sales (9 414) (504) (8 910)
Gross profit 33 365 20 941 12 424
Other operating income 17 898 19 283 (1 385)
Other operating losses - (2 102) 2 102
Impairment of investments in subsidiaries - - -
Referral fees - (22 690) 22 690
Commission paid - (116 140) 116 140
Other operating expenses (26 868) (40 313) 13 445
Operating loss 24 395 (141 021) 165 416
Investment income 32 804 (772)
Finance costs (4 436) (4 509) 73
Gain on bargain purchase 314 195 35 909 278 286
Fair value gains (losses) on investment properties 235 805 (26 101) 261 906
Impairment of goodwill - (148 714) 148 714
Recovery of unauthorised shares - - -
Write-off of unauthorised shares - - -
Loss on guaranteed share obligation - (11 729) 11 729
Profit (loss) before taxation 569 991 (295 361) 865 352
Taxation (48 927) (639) (48 288)
Profit (loss) for the period 521 064 (296 000) 817 064
4. Related Party Transactions
Restated
2016 2015
R'000 R'000
Interest paid to related parties
C la Grange/Christo la Grange Familie Trust Passion Way Props
Proprietary Limited 2 079 -
Unwinding of discount on guaranteed share obligation
C la Grange/Christo la Grange Familie Trust 1 134 -
Rental income and recoveries received from related parties
Freesteel Proprietary Limited - Rental income 3 350 250
Freesteel Proprietary Limited - Rental recoveries 2 3
Hot Dip Galvanising Proprietary Limited - Rental Income - 649
Hot Dip Galvanising Proprietary Limited - Rental recoveries - 1 179
3 352 2 081
Consulting and professional fees paid to
related parties
HA Lambrechts/Huganel Trust 50 -
WC Jansen van Rensburg 842 478
Nyamelzela Trust 390 91
Booktrogoloon 223 Proprietary Limited 30 -
G Stavridis/Freedom Property Fund Business Development
Proprietary Limited 3 410 1 762
G Erasmus/Freedom Property Fund Development Managers
Proprietary Limited 563 -
JS Bosman - 30
Base Capital Proprietary Limited - 670
5 285 3 031
Legal fees paid to related party
Van Rensburg Attorneys 348 -
Accounting fees paid to related party
G Stavridis/Freedom Property Fund Business Development
Proprietary Limited - 10
Bright Crest Proprietary Limited - 286
Base Capital Proprietary Limited - 208
- 504
Listing expenses paid to related party
Base Capital Proprietary Limited - 439
Provisions raised for impairment of trade of trade and other
receivables
Freesteel Proprietary Limited 5 756 -
All Wide Property Proprietary Limited 4 718 -
NT Govender - 257
10 474 257
Value of shares issued to related parties
NT Govender - 257
JS Bosman - 250
Base Capital Proprietary Limited - 500
During 2015 the following shares were issued to related parties:
- 1,750,000 shares were issued to NT Govender which was fair
valued at R257,425. A receivable was raised for the value of
the shares, but has subsequently been impairment in full
(refer to note 16 for details on this). Refer to the director's
report for NT Govender's shareholding in Freedom as at 29
February 2016 and 28 February 2015.
- 250,000 shares were issued to JS Bosman as partial
consideration for the valuation services provided to the
group. JS Bosman still held the 250,000 shares as at 28
February 2015.
- 500,000 shares were issued to Base Capital Proprietary
Limited as partial consideration for the corporate advisory
services provided to the group. Base Capital Proprietary
Limited did not own any of these shares as at 28 February
2015.
Development costs paid to related parties
Freesteel Proprietary Limited 10 841 43 687
G Erasmus/Freedom Property Fund Development Managers
Proprietary Limited - 2 094
Hot Dip Galvanising Proprietary Limited - 246
Van Rensburg Attorneys 120 -
10 961 46 027
Operating expenses paid to related party
Hot Dip Galvanising Proprietary Limited - 31
Promoters' fees paid to related parties
JF Pretorius - 14 200
NT Govender - 14 500
SB Rule - 20 600
JD Bruwer Estate (JD Bruwer) - 7 757
G Stavridis - 12 205
G Erasmus - 14 994
- 84 256
Commission paid to related parties
WC Jansen van Rensburg 52 93
Compensation paid to other key
management
Salaries, bonuses and other benefits 474 467
Share based compensation expense 47 74
521 541
5. Shareholder loans
Dr. I Botha
The loan bears interest at the prime interest rate and is repayable in three annual instalments, with
the first payment due in August 2017.
The loan is secured by:
A covering mortgage bond of R35,000,000 in favour of SADC Infrastructure Consulting Proprietary
Limited, plus an additional R3,500,000 to cover interest claimable from Zambesa Investments
Proprietary Limited and other expenses, over the property described as Erf 5973 Burgersfort,
Extension 40 Township, Limpop Province. Interest on all amounts secured in terms of
aforementioned bonds will be charged at the prime interest rate.
Christo la Grange Familie Trust
The loan bears interest at the repo rate. A minimum payment of R200,000 per month is required, but
there are no further fixed terms of repayment.
The loan is secured by:
A first covering mortgage bond of R20,000,000, plus an additional 25% to cover expenses, over the
property described as the remaining extent of portion 18 (a portion of portion 8) of the farm no.799,
East London.
A second covering mortgage bond of R37,000,000, plus an additional 21.14% to cover expenses, over
the property described as the remaining extent of portion 18 (a portion of portion 8) of the farm no.
799, East London. Interest on all amounts secured in terms of aforementioned bonds will be charged
at the prime interest rate.
6. Nedbank bonds
Restated
2016 2015
R'000 R'000
Non-current liabilities 82 283 82 291
Current liabilities 6 900 3 143
89 183 85 434
The Group has not defaulted on its shareholder loans or Nedbank bonds.
7. Subsequent Events
The material events subsequent to the reporting date and up to the date of this report are as follows:
Adjusting
- Revaluation of investment properties
- Reassessment of business combinations
- Revaluation of stated capital
Non-adjusting
Disposal of subsidiaries
- Ligit Props 184 Proprietary Limited (Langebaan Beach Resort) for R7,500,000 cash and
150,000,000 Freedom shares with conditions precedent.
- Zolo Props Proprietary Limited (Gevonden) for R12,000,000. This transaction was done to pay for
the costs relating to 10 houses developed through Tubatse Homes.
Disposal of investment properties
- La Hoff Mews, that was held by Panzaweb Proprietary Limited (La Hoff) for R2,400,000
- Erf 1210 for R10,000,000, that was part of Kadoma Investments Proprietary Limited in April 2017
- Erf 1212 for R3,452,000, that was part of Kadoma Investments Proprietary Limited in April 2017
- The remainder of portion 18 of farm 799 in the division of East London for R13,680,000. The
property was sold throughout the subsidiary Clear Creek 145 Proprietary Limited. This sale was
concluded in April 2017
Other
- A settlement agreement with C la Grange, a large shareholder, for R50,000,000 was ratified at a
shareholders meeting in May 2016. The effective date of the transaction was 12 June 2015.
- During May 2016 a former member of the executive management team, entered into a settlement
arrangement with the group for R5,000,000 cash and the return of 40,000,000 Freedom shares.
- Onerous contract - The group decided to relocate its head office from Johannesburg in Gauteng, to
Paarl in the Western Cape. The premises in Johannesburg, situated at 24 Peter Place, Randburg,
Johannesburg, was vacated at the end of February 2017. The lease on these premises expired on 31
August 2018 and it was therefore considered onerous as there were 18 months left on the lease
before it expired. The value of the onerous contract, based on average rentals of R75,000 was
R1, 350,000.
- The Group was suspended from trading on the main board of the JSE in July 2016 due to its failure to
release its annual results for the year ended 29 February 2016. The suspension remains at the date
of signing this report.
- The group is currently holding more than 10% of its own shares (treasury shares). This is a
contravention of the Companies Act and the Board and management are in the process of rectifying
this contravention.
Other than as disclosed in this announcement, the Board is not aware of any events, other than those
disclosed in this report that have a material impact on the results or disclosures of the Group, which have
occurred subsequent to the end of the reporting period.
8. Going Concern
The Board has undertaken a detailed review of the going concern capability of the Company (and all
subsidiary companies of the Company that form the Group) with reference to certain assumptions and
plans underlying various internal cash flow forecasts.
The Board has not identified any events or conditions that individually or collectively cast significant doubt
on the ability of the Company and/or the Group to continue as a going concern.
9. Changes to the Board
The following Board changes occurred during the period covered by these results:
Name: Designation Changes
Current directors and
prescribed officer
WS Grobbelaar Chairman Appointed 27 November 2015
(Independent Non-
executive)
Chief Executive
S Maritz Officer Appointed 15 December 2015
C la Grange Non-executive Appointed 14 March 2018
WC Jansen van Rensburg Executive Appointed 07 October 2016
HA Lambrechts Non-executive Appointed 15 December 2015
CJ Sidego (resigned Independent Non-
October 2018) executive Appointed 01 September 2016, Resigned 09 October 2018
Independent Non-
PD Dexter executive Appointed 27 November 2015
J George Prescribed officer Appointed 11 July 2016
Former directors and
prescribed officer
PE Burton Chairman Appointed 24 October 2013, Resigned 28 August 2015
(Independent Non-
executive)
Chief Executive
NT Govender Officer Appointed 24 October 2013, Resigned 10 December 2015
Chief Financial
JF Pretorius Officer Appointed 17 October 2014, Resigned 31 August 2016
D Nel Executive Appointed 15 December 2015, Resigned 13 June 2016
SB Rule Non-executive Appointed 24 October 2013, Resigned 18 January 2016
Independent Non-
NM Phosa executive Appointed 11 May 2015, Resigned 12 May 2015
Independent Non-
N Retief executive Appointed 15 December 2015, Resigned 08 August 2016
Independent Non-
BM Molefi executive Appointed 18 February 2014, Resigned 20 January 2016
Independent Non-
RD Eaton executive Appointed 24 October 2013, Resigned 28 August 2015
Independent Non-
WH Rule executive Appointed 24 October 2013, Resigned 18 January 2016
Independent Non-
WB Stocks executive Appointed 24 October 2013, Resigned 18 January 2016
G Stavridis Prescribed officer Appointed 01 November 2013
10. Litigation
The Group is involved with various litigation process relating to the irregularities identified in the Group.
This constitutes both civil and criminal matters.
11. Dividends
No dividend was declared in respect of the 12 months ended 29 February 2016.
12. Reportable Irregularities
The following reportable irregularities were identified:
No Reportable irregularity Date of first Financial
report year
affected
1 Towersky Properties sold stands amounting to R14,190,000 to 14/12/2016 2015
Weskus Aftree Oord Beleggings and received R7,000,000 in cash.
The property did not transfer. Suspected deliberate misstatement of
falsifying of financial statements - contravention of s29(2) of the
Companies Act.
2 Freesteel Property Developer was appointed to develop 7 14/12/2016 2015 &
warehouses for Kadoma. Payments to Freesteel i.r.o. the buildings 2016
constructed were significantly higher than the amounts stipulated in
the agreement and the 7th warehouse was paid for, but never built.
Invalid payments (deliberate misstatement - contravention of s29(2))
and failure by directors to disclose interest in contracts (section
75(5) of the Companies Act contravened).
3 Ligitprops 184 sold units to Montanita Investments for R7,260,295 14/12/2016 2015
and received R2,754,983 in cash. The transfer of the property did
not occur. Appears to be deliberate misstatement of the financial
statements - contravention of s29(2) of the Companies Act.
4 Ligitprops 184 sold unis to Pasta Point for R2,270,000 and received 14/12/2016 2015
R493,406 in cash. The transfer of the property did not occur.
Appears to be deliberate misstatement of the financial statements -
contravention of s29(2) of the Companies Act.
5 Freedom issued 35,000,000 shares to All Wide Properties in 29/06/2016 2016
exchange for the acquisition of Cross Atlantis (an investment
property holding company). Allegations indicate that these shares
were actually issued to a related party and thus, i.t.o. s41 of the
Companies Act, the issue of shares required a special resolution
signed by the shareholders. It was also considered that the
transaction was to the detriment of the financial well-being and
interests of FPF, as the consideration paid by FPF was far greater
than the value of the asset received.
6 Transfer of FPF treasury shares held by Zambesa to Cool Runnings 29/06/2016 2015
Prop was unauthorised and thus constitutes an unlawful act.
7 Kadoma sold tailings to Montepio amounting to R6,000,000. The 29/06/2016 2015
company received proceeds from the sale as follows; R1, 500,000
from Zambesa and R250,000 from Epic Beach. Montepio does not
exist and owner claims he's deregistered the company. Appears to
be deliberate misstatement of the financial statements -
contravention of s29(2) of the Companies Act.
8 Zambesa's treasury shares were issued to Govender (COE) and 29/06/2016 2015 &
Franky Pretorius (CFO), who are related parties for the purposes of 2016
the Companies Act and the JSE Listings Requirements. Thus,
contravention of section 41 of the Companies Act (no special
resolution obtained), s10.4 and 21.11© of the JSE Listings
Requirements (no announcement made to JSE and shareholders)
and s3.63 - no disclosure made.
9 Lost corporate opportunities arose as a result of misrepresentations 29/06/2016 2015
made by Stavridis and Erasmus to sellers, who were under the
impression that the acquiring entities formed part of the FPF Group
of Companies. Stavridis is generally alleged to have usurped FPF's
corporate opportunities for his own gain and no disclosure made
i.t.o. section 75 of the Companies Act (Stavridis regarded as
Prescribed Officer).
10 33 500 000 FPF shares were issued to Nahoon Reef Investments, 29/06/2016 2016
which held the shares in Sunset Bonsmara (which supposedly owned
Vredenhof Farm). The agreement further stipulated an additional
R1,000,000 to be paid in cash, of which R700,000 was actually paid.
Thus, FPF received nothing in return for the issue of shares and the
cash paid. The cancellation and settlement reached i.r.o. the sale of
shares agreement has no ostensible basis in law.
11 Two sale agreements exist, selling the same property twice, as 14/12/2016 2015
follows: FPF obo Kadoma sold property to Kohala Lighthouse and
Kadoma sold property to Dimaplex. The sale amount of R1,000,000
was received from Freedom Rock, but to date no transfer of the
property has occurred. Appears to be deliberate misstatement of the
financial statements - contravention of s29(2) of the Companies Act.
12 Zambesa held treasury shares in FPF, and exceeded the 10% 20/03/2018 2017
threshold i.t.o. section 48 of the Companies Act.
13 Annual financial statements not issued within 6 months after year 21/09/2017 2016-
end - with re to the 2016-2018 financial statements. and 2018
04/10/2018
14 Interim financial statements not issued within 3 months after the 01/06/2017 2016-
interim period - with regard to the 2016-2018 financial statements. and 2018
02/07/2018
Paarl, Western Cape
20 March 2019
Sponsor
Questco Corporate Advisory Proprietary Limited
Date: 20/03/2019 03:49:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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