1996~ acquires controlling stake in Villa Via
Hotel, Granger Bay, Cape Town
1997~ launches the first South African hotel fund
for the German market
2001~ rebrands Villa Via Hotel to
Radisson SAS Hotel, located at the
Cape Town Waterfront
~ negotiates a master franchise for
Southern Africa for Radisson SAS
~ sells interest in master franchise to
Mvelaphanda Holdings whilst retaining
control of the hotel
2002~ acquires 170 room hotel on
Greenmarket Square, Cape Town
~ acquires 30% stake in Tinga Private
Game Lodge, Mpumalanga Province
2003~ opens Cape Town Hollow Hotel and
incorporates the first Amici Restaurant
~ renovates Greenmarket Square Hotel
and rebrands the premises to Park Inn
~ launches Famous Butchers Grill in
the Park Inn
2005~ creates QUEENSGATE Wellness
Holdings and ONEwellness brand
2006~ acquires Hollow on the Square, Cape Town
~ forms exclusive relationship with MCT
(German promoter of property funds)
2007~ opens first ONEwellness operation in
Radisson Hotel, Cape Town
~ acquires the Avenue Hotel, Cape Town
2008~ concludes BEE deal with
Mvelaphanda Holdings
~ places Hollow on the Square and
Avenue Hotel in MCT funds
~ signs The Alphen Hotel in
Constantia, Cape Town
~ lists QUEENSGATE Hotels & Leisure
on the JSE’s AltX
2009~ developing four new hotels:
Cape Town – three
Pretoria – one
~ aquires The Rockwell All Suite Hotel,
Cape Town and acquires QUEENSGATE
Business Development
QUEENSGATE Hotels & Leisure LimitedNoland House 1st floor, River Park, River Lane, Mowbray, 7700, Cape Town
PO Box 5642, Cape Town, 8000, South Africa
Tel: +27 (0) 21 681 6666
Fax: +27 (0) 681 6652
Email: [email protected]
www.queensgate.co.za
2009 Annual Report
QU
EENSG
ATE Hotels &
Leisure Limited – 2009 A
nnual Report
VISIONTo be the premier listed leisure company in 2010 and beyond, internationally renowned as an innovative BEE entity providing lucrative leisure investment opportunities.
MISSION To provide exceptional and consistent performance to all stakeholders through investment and services in the leisure industry by introducing cutting edge systems, technology and product engineering.
Designed by Profit Partnership – 011 532-4000 – More than just paper and ink™
Financial communications – Arcay Financial Communications (Pty) Ltd
AdministrationQUEENSGATE Hotels & Leisure Limited(Registration number 1998/013649/06)
COMPANY SECRETARY AND REGISTERED OFFICEArcay Client Support (Pty) Ltd(Registration number 1998/025284/07)Arcay House II3 Anerley RoadParktown, 2193
PO Box 62397Marshalltown, 2107
Tel +27 11 480 8500Fax +27 11 480 8556
TRANSFER SECRETARIESComputershare Investor Services (Pty) Ltd(Registration number 2004/003647/07)70 Marshall StreetJohannesburg, 2001
PO Box 61051Marshalltown, 2107
DESIGNATED ADVISORArcay Moela Sponsors (Pty) Ltd(Registration number 2006/033725/07)Arcay House II3 Anerley RoadParktown, 2193
PO Box 62397Marshalltown, 2107
AUDITORSNolands Chartered Accountants (SA)(Registration number 2000/004145/21)Noland House, River ParkRiver LaneMowbrayCape Town, 7700
PO Box 2881Cape Town, 8000
QUEENSGATE Divisions
QUEENSGATE
Business and Asset Management
QUEENSGATE
Hotel Management
QUEENSGATE
Hotels & Leisure Limited
Hotels
Wellness
Restaurants
Conferencing
QUEENSGATE Business Development
~ Identifies, secures and places strategic investments
~ Provides technical assistance and project management
~ Catalyst between the developer and investor
QUEENSGATE Business and Asset Management
~ Invests in businesses in the hotel and leisure industry
~ Leases and operates hotel and leisure assets
~ Operates hotels for own account in most instances
QUEENSGATE
Business Development
Restaurants
Wellness
IT
QUEENSGATE
Brands
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Cape Town: Radisson, Park Inn, Hollow on the Square, Cape Town Hollow, Avenue Hotel, The Alphen Hotel, Rockwell Apartments and Shelley Point
Kruger National Park: Tinga
Contents2009 Annual Report
2 Financial Highlights
3 Chairman’s Review
4 CEO’s Report
6 Directors’Profiles
8 Project Pipeline
10 DevelopmentProfiles11 The Alphen Hotel13 Shelley Point Hotel,
Country Club and Spa14 Cape Town Hollow Boutique Hotel15 The Avenue Hotel16 Hollow on the Square17 Rockwell All Suite Hotel18 Park Inn19 ONEwellness
20 Declaration by Company Secretary
20 Directors’ Responsibilities and Approval
21 Report by the Audit Committee
22 Corporate Governance Report
25 Report by the Independent Auditors
26 Directors’ Report
32 Financial Statements
CompanyProfile
Our Company~ specialists in the South African
hospitality and leisure sector~ invests in strategically aligned
businesses in the hotel and leisure industry
~ leases and operates hotel and leisure assets
~ builds leisure brands~ identifies,securesandplaces
investments in the hotel and leisure sector
~ provides technical assistance and project management in the hotel and leisure industry
~ acts as a catalyst between the property developer and the hotel management company, providing a bankable project from vision to reality
Our Strengths~ solid returns, supported by a
long‑term track record~ integrated operational solution~ comprehensive understanding of
hotel investors~ high quality portfolio assets~ strong local and global
strategic alliances~ specialist executive and
management team
Our Key Differentiators~ integrated and balanced operational
solutions ‑ synchronising rooms ‑ food and beverage ‑ conferencing ‑ wellness~ “all in one” package for developers~ partnership philosophy with
a long‑term view of projects and partners
~ flexibleapproach,innovative solutions
~ specialist executive and management team
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Business reviewThe past year has been one of themost difficult in recent economic history and certainly aneventfuloneforQUEENSGATE.Worldwidefinancialandmarketpressurescontributedsignificantlytowards constraining anticipated growth and tourist volumes and negatively impacted the overall financialperformanceoftheGroup.
These global developments also affected the short‑term plans outlined in September 2008, at the timeofourlistingonAltX.However,notwithstandingthedifficulttradingconditions,theGrouphas managed to bed down the framework and ground rules for improved trading and business development going forward.
Our focus continues to be on offering integrated operations solutions to the South African hotel and leisure markets. The combination of wellness, development, leisure and hotel management are the key ingredients for doing so.
During the period under review, a number of strategic partnerships, both foreign and domestic, were established. These will result in the introduction of further top‑class brands to the QUEENSGATE stable, improving the diversity of our portfolio. In addition new avenues of funding have been secured for the further development of the business and to strengthen our position in both the operational and development spheres.
TheacquisitionofQUEENSGATEBusinessDevelopmentattheendof2008hassignificantlybenefitedthe Group. The business development model focuses on identifying projects with significantpotential,acquiringallancillaryservicesrelatedtoaparticulardevelopmentand,finally,drivingthe project from vision to reality, including all services from start to project delivery.
With tourism waning during the past year, it has served the Group well to have a strong development programme in place and an increasing number of projects forming part of our growing portfolio.
Looking forwardIt is with great anticipation that we look ahead to 2010 and the 2010 FIFA World Cup™. It will be adefiningmoment for SouthAfrica.Well done, itwill propel SouthAfrica to thenext level ofdevelopment, presenting our country as a nation “alive with possibility” and allowing us to assert ourselves as one of the world’s “must see” destinations.
With 500 000 anticipated visitors, QUEENSGATE will be well‑positioned to leverage the opportunities provided to further its vision of becoming a premier hotel and leisure provider in South Africa. In addition, the management agreement signed with Three Cities Group post year end, will increase our share of corporate business and extend our overall brand awareness.
Whilst the hotel operations have not been immune to poor global economic conditions over thepastyear,confidence in themarket is returningandwe look forward to improvedfinancialperformancein2010.Itismyfirmbeliefthat,whilstthepastfinancialyearhaspresenteduswithunique challenges, it has also encouraged the dynamic growth of ideas within the business and has strengthened both the management team and management structures.
AppreciationI would like to take this opportunity to thank all board members for their commitment to QUEENSGATE and for the high levels of transparency and accountability which they have brought to the table in the past year. I believe this is testimony to their belief in the Company and its management.
Finally, I would like to extend my sincere appreciation to our clients and business partners for their continued support, commitment and energy. Furthermore, thanks to every member of the QUEENSGATE staff for their ongoing contribution to our vision of innovative development, holistic wellness, an exceptional hospitality experience and the provision of bankable projects from vision to reality.
Colin HumanChairman
Chairman’s Review
“It is my firm belief that, whilst the past financial year has presented us with unique challenges, it has also encouraged the dynamic growth of ideas within the business and has strengthened both the management team and management structures.”
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CEO’s Report
“We operate at the cutting edge of hotel and hospitality industry technology, offering a holistic package that enables us to manage operations for hotels, restaurants, conferencing and wellness facilities.”
Economic ClimateMost businesses have felt the pinch in the last year as the economic meltdown has spread across the globe. A number of the areas in which QUEENSGATE operates have been affected; in particular the travel and tourism industry where it is expected that a decline of 10% in the number of tourists visiting South Africa will be reported for 2009.
Fostering a solid pipeline for growthDespite QUEENSGATE Hotels & Leisure reporting an overall loss of R3.2 million for the period, our wholly‑owned subsidiary, QUEENSGATE Business Development, acquired in November 2008, reportedexceptionalgrowthandrecordedaprofitofR26.6millionfortheperiodunderreview.This strong performance more than made up for challenges experienced on the hotel operations side of the business and further entrenched our position as one of the foremost investors in the local hotel and leisure industry.
During thefiscal year2009,QUEENSGATEwasable toadd twonewproperties to theportfolio.The Rockwell All Suite Hotel, situated in the heart of the vibey city district De Waterkant, will be able to capitalise on the rapidly developing area; especially now that the new Cape Quarter has opened after two years of construction. This property is under lease, and we felt the double effects of opening a new property and the general economic downturn, but expect a very good 2010, especially as all the rooms are sold for the full period for the 2010 FIFA World Cup™.
The second property we were able to secure is the charming Shelley Point Hotel, Spa and Country Club. Contrary to our normal modus operandi, this property is managed by QUEENSGATE. The Hotel is being expanded by another 40 rooms in a second stage, so that there will be a total of 90 rooms under management, and this expansion project is being managed by QUEENSGATE Business Development.
With the increasing global focus on personal wellbeing, the integration of our unique ONEwellness healthandwellnessbrandintoourhotelshasallowedustocombinethebeauty,spaandfitnesssector into our holistic hospitality mix. For the second year running ONEwellness has won the highly acclaimed international accolade from the Parisian spa association Les Nouvelles Esthétique “Best Spa in a Hotel”. This time for our spa in the Radisson Hotel Sandton Isle, and against the strong competition of the spa at the One&Only Cape Town, and the new spa at the Mount Nelson, both having spent multiples of millions of what we spent. My congratulations go out to Rob Cowling and histeam,IthinkthatIcannowproudlysaythatourvisionfiveyearsago,tobecomethepremierspabrandinSouthAfricahasfinallybeenachieved.
Strategic intentOur business strategy incorporates the exploration of the best international opportunities possible for further investment in QUEENSGATE. Over the past ten years, we have established strong relationships with promoters in German markets, who offer closed‑end funding for a number of sound projects. Theyhavealsoassistedusintheidentificationofsuchprojects.Ourrelationshipwithourpromotersin Germany has strengthened over the years, and together we have now been able to secure the GermanPostBankasadistributionchannelforourfunds,wewillonlytrulyseethebenefitofthisin2010, where we expect to raise substantially more equity through the German market.
Post year‑end, we secured an equity drawdown facility from a US‑based investment fund, effectively strengthening our position to tackle our project pipeline for the next three to fiveyearsandenhancingourfinancialpositionsubstantiallygoingforward.EffectivelythefacilitywillprovideQUEENSGATEwith theflexibility toaccess significant liquidity through the issueofnewshares, at the Company’s discretion.
Looking further ahead, strategic financial activities could include the acquisition of a hotelmanagement company, securing an international 4‑Star brand, the execution of further strategic investment placement initiatives with German funds, the development of an additional investment placement avenue and the raising of R100 million to fund growth and capacity creation. Establishing a centralised procurement function will also be a priority.
New opportunitiesOpportunitiesforfuturesalesandearningsgrowtharesignificant,asaresultofthelargevolume
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of new project proposals in the market. These include projects related to the 2010 FIFA World Cup™ and projected growth in post tournament tourism; local and offshore investors favouring the South African tourism industry and the availability of domestic retail hotel and leisure investment opportunities. There is also increased appetite in the market for a new, truly South African brand.
We believe that the 2010 FIFA World Cup™ will provide the springboard for long‑term growth in the South African hotel and leisure industry and that the expected global economic recovery will play its part. To date, we have achieved best possible rates for the event period due to exceptional demand. Revenue in the year aheadwill be further enhanced by improved profitability atTheRockwell All Suite Hotel and the completion of two additional projects ahead of the 2010 FIFA World Cup™.
South Africa represents excellent value for money in global tourism terms and has established itself as a preferred MICE (meeting, incentive, conference and event) destination. Looking ahead, expectations are that tourism will continue to outperform GDP growth as it has done over the past few years.
Despite the somewhat stronger Rand of late, South Africa still offers a relatively affordable holiday experience to world travellers and remains a very popular destination. It is likely that the focus of attention on South Africa in 2010 will enthuse even South Africans and encourage them to see more of their home country.
The year aheadWe operate at the cutting edge of hotel and hospitality industry technology, offering a holistic package that enables us to manage operations for hotels, restaurants, conferencing and wellness facilities. Within this diverse portfolio of value creating service offerings, I believe that QUEENSGATE is well positioned to capitalise on the opportunities that lie ahead.
A word of thanksInclosing, Iwouldfirstly liketoextendmysinceregratitudetomyBoardfortheguidanceandinsights provided over the past year. Secondly, our achievements to date would definitely nothave been possible were it not for the hard work, dedication and commitment of the QUEENSGATE management and staff, all of whom I thank. Thirdly, the ongoing support from our business partners, suppliers and customers, continues to play a major role in the ongoing success of the QUEENSGATE Group and we acknowledge them for this.
Ilookforwardwithenthusiasmtoadefiningyearahead.
Andrew HubbardChiefExecutiveOfficer
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Directors’ Profiles“I would like to take this opportunity to thank all Board members for their commitment to QUEENSGATE and for the high levels of transparency and accountability which they have brought to the table in the past year. I believe this is testimony to their belief in the Company and its management.”
Colin Human
Management TeamRob Cowling: Managing Director (QUEENSGATE Wellness Holdings)Richard Jones: Managing Director (QUEENSGATE Hotel Management)Roland Buhler: Executive (QUEENSGATE Business Development)Pieter Buckle: Group Legal Advisor (QUEENSGATE Hotel & Leisure)
EXECUTIVE DIRECTORS
Andrew John HubbardChiefExecutiveOfficer(49)Andrew studied computer technology at Volkswagen in Germany where he also founded Quick Bit GmbH, a software consultancy in 1987. Following this he startedaFTH-FinanzGmbH,afinancialservices company together with Holger Friedrichsen in 1988. Together with Holger and other partners Andrew founded a real estate company in 1992 which later resulted in the formation of QUEENSGATE Holdings.
Holger Günther Boy FriedrichsenStrategicOfficer(54)Holger studied mathematics, computer science and management science at the Technical University of Braunschweig. HestartedafinancialadvisorycompanyFTH‑Finanz GmbH with Andrew Hubbard in 1988 and partnered with him in 1992 in the formation of the same real estate company which later became QUEENSGATE Holdings in 2002. Holger is responsible for strategy development and execution and the overall operations of the QUEENSGATE business.
Wilfried VoigtChiefFinancialOfficer(50)Wilfried holds a B.Eng (Hons) Industrial from the University of Stellenbosch and a Post Graduate Diploma in Accounting from the University of Cape Town. He registered as a Chartered Accountant (SA) with the South African Institute of Chartered Accountants (SAICA). Wilfried joined the QUEENSGATE Group of companiesastheChiefFinancialOfficerin 2007.
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NON-EXECUTIVE DIRECTORS
Mark WeetmanNon‑Executive Director (39)Mark holds a B.Com (Hons) Finance degree and an MBL from Unisa. He was the founder of Ex‑teq Realtime Systems in 1998. He later headed up the financialderivativesdeskatbothImaraSP Reid and PCS Futures. He founded Cortex Securities, a single stock futures business in 2005 and is currently serving as Managing Director of the company.
Sandile SwanaNon‑Executive Director (41)Sandile completed a B.Com under the Anglo American Scholarship Programme at Wits University in 1992. He also holds a B.Com (Hons) Logistics and B.Th in Ethics from UNISA, as well as an MBA from the University of Pretoria. He has worked for numerous multi‑nationals and private companies such as Anglo American, New York Times, Caltex Oil and the Don Suite Hotels. He is a non‑executive director for several JSE listed companies.
Norman NolandNon‑Executive Director (61)Norman started his career at Old Mutual in 1966. He was later employed in the Standard Bank Group for 15 years. He was Deputy CEO of listed company Sekunjalo Investments Ltd in 2005 and resigned as Deputy‑Chairman in 2008. He is currently the Executive Chairman of Stock Exchange Mauritius Listed, and Trinity Financial Group. He is also the Non‑Executive Director of numerous companies in Mauritius and South Africa.
Tham‑Tham NdzibaNon‑Executive Director (40)Tham‑Tham was the Communications Director of Alexander Forbes. In 1998 with Kopano Ke Matla she founded Sinamuva Global Communications the only communications company that provided specialised trustee training and corporate positioninginthefinancialservicesindustry.She is CEO of Ummango Investment Holdings, a company that has invested in 26.1% of IT web and pursues investments in property, media and mining.
Lindikhaya SipoyoNon‑Executive Director (46)Lindikhaya studied BA Administration with the University of the Western Cape, and MPA Special with the School of Business at the University of Stellenbosch. He headed up the Information and Communications department in the South African Parliament for six years. He is the current Chief Operations Officer for Imbewu MineralResources. He is non‑executive director to Moneyweb and Total Client Services.
Colin HumanNon‑Executive Chairman (66)Colin is a Chartered Accountant (SA) serving as the Executive Chairman of Eagle Capital Limited, a corporate financial consulting group. He hasoccupied various senior management positions in both public and private companies. He is also the Managing DirectorofGoalFix(Pty)Ltd,afinancialmanagement consultancy. Colin lectures locally and internationally in corporate financialmodelingandforecasting.
Project PipelineTotal monetary value: R620 million
QUEENSGATE Hotels & Leisure has a shortlist of 4 projects which will be completed within the next 12 – 18 months. The projects are:~ Upper East Side (Cape Town)~ Hatfield (Pretoria)~ Pearl House (Cape Town)~ 31 Heerengracht (Cape Town)
There are imminent developments in Cape Town, Johannesburg, Durban, Port Elizabeth, Bloemfontein and the Garden Route.
Hotel @ Hatfield – PretoriaValue: R75 million~ 120 Rooms ~ Conference facilities~ Restaurant and coffee shop~ Manangement contract~ Due to open July 2010
Hotel @ Hatfield is situated within thecommercial, ambassadorial and business districtofHatfieldinPretoria.
Upper East Side Hotel and ConferenceValue: R230 million~ 161 luxury rooms ~ 15 apartments~ Club lounge~ 10 conference venues~ Restaurant and bar~ Wellnessandfitnessfacility~ NewQUEENSGATEheadoffice~ FinancedthroughRedefineIncomeFund~ Due to open May 2010
The hotel is perfectly nestled in the highest setting in Woodstock, taking full advantage of the panoramic views that the Mother City has to offer. This location enjoys the convenience of being five minutes from the Cape TownCBD, world–renowned V&A Waterfront, and a mere fifteen minutes from the Cape TownInternational Airport.
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Pearl HouseValue: R150 million~ 102 rooms~ 3 conference venues~ Restaurant, bar and lounge~ Financed through a German fund~ Due to open in June 2010
Pearl House is situated on the foreshore of Cape Town’s vibrant business district, within walking distance of the Cape Town International Convention Centre (CTICC), and on the doorstep of the V&A Waterfront.
31 HeerengrachtValue: R165 million~ 99 rooms~ Conference facilities~ Restaurant and bar~ Wellnessandfitnessfacilities~ Financed through a German fund~ Due to open January 2011
The building 31 Heerengracht is adjacent to Pearl House, located in the vibrant business district in Cape Town and in close proximity of the Cape Town International Convention Centre (CTICC) and V&A Waterfront.
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The Radisson BLU Hotel – Cape Town~ Location: V&A Waterfront Cape Town ~ QUEENSGATE Hotels & Leisure
controlling shareholder ~ Managed by Rezidor Group under
QUEENSGATE’s supervision ~ Graded 5‑Star ~ 176 Rooms
Spectacularly situated on the edge of the Atlantic Ocean and within walking distance of the famous Victoria & Alfred Waterfront, The Radisson BLU Hotel Cape Town has sweeping views overlooking Table Mountain and Robben Island. This 5‑Star luxury business and leisure hotel has been in operation since November 1997 and can lay claim to be one of Cape Town’sfinesthotels.
Development Profiles
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The Alphen Hotel~ Location: At the gateway of the
Constantia Valley ~ QUEENSGATE Hotels & Leisure owns a
50% share in the hotel ~ Managed by QUEENSGATE Hotel
Management (Pty) Ltd~ Graded to a 5‑Star level (2010)~ 21 Rooms
The Alphen Hotel is a National Monument, a historic country manor house offering more than just accommodation. Centrally situated in the Cape Peninsula and at the gateway of the Constantia Valley and wine route it is at the heart of a former Wine Estate. Its spectacular setting amidst the dappled shade of ancient oaks offers both tranquility and easy access to the many splendours of the Cape. Old fashioned values combine with contemporary efficiency at TheAlphen where warm hospitality has reigned supreme since the 18th century.
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Tinga Private Game Lodge~ Location: Near Skukuza inside the
Kruger National Park ~ QUEENSGATE Leisure Holdings
involved from ground level since 2002 and controlling shareholder since 2005
~ Managed by QUEENSGATE Hotel Management (Pty) Ltd
~ Graded 5‑Star ~ 18 bedroom all suite lodge, divided
into two luxury camps
Tinga Private Game Lodge is located in the renowned Kruger National Park; internationally acclaimed as being one of the best wild life reserves in the world. Tinga is situated at the confluence ofthe Sabie and the Sand Rivers, on one of the only seven concessions made by the South African National Parks Board. Through its eco friendly and sensitive management of the concession, under QUEENSGATE’s management Tinga has consistently been the highest rated concession in terms of SAN Park environmental impact assessments.
Tinga Private Game Lodge offers luxury, exclusivity and a 5‑Star wildlife experience.
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Shelley Point Hotel, Spa & Country Club~ Location: Peninsula Village
of Shelley Point~ Managed by QUEENSGATE Hotel
Management (Pty) Ltd ~ Graded 4‑Star~ 44 en‑suite rooms, an additional
44 currently under construction, due to open March 2010
The Hotel is situated approximately 90 minutes from Cape Town between the silvery white sands of the lush Shelley Point Peninsula, on the Western Cape coastline. Shelley Point’s perfect location allows it to boast the best of the Cape’s Mediterranean‑style climate. It is also one of the most popular bays for Southern Right Whales and Humpback whales to visit and calve. In addition, the hotel encompasses a 9‑hole golf course with a luxurious spa and country club. Shelley Point Hotel is a true escape from the hustle and bustle of city life.
Cape Town Hollow Boutique Hotel~ Location: Gardens, Cape Town~ QUEENSGATE Hotels & Leisure owns a
50% share in the hotel ~ Managed by QUEENSGATE Hotel
Management (Pty) Ltd ~ Graded 4‑Star ~ 56 Rooms
Cape Town Hollow offers stylish, serene accommodation overlooking the Company Gardens and is perfectly suited for both business and leisure travellers. Each of the hotels 56 en‑suite rooms has the finest modern amenities, offeringmagnificent Cape Town views fromcharming open air balconies.
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The Avenue Hotel~ Location: Fish Hoek, 20 mins from
Cape Town CBD ~ Operator: QUEENSGATE
Hotels & Leisure ~ Managed by QUEENSGATE
Hotel Management (Pty) Ltd ~ Graded 3‑Star ~ 51 en‑suite rooms
The Avenue Hotel was established in 1936, situated in the scenic town of Fish Hoek, just 20 minutes drive from Cape Town city centre. The Avenue Hotel is renowned for its spectacular “old‑world” charm and elegance.
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Hollow on the Square~ Location: In the heart of Cape Town ~ QUEENSGATE Hotels & Leisure owns a
50% share in the hotel~ Managed by QUEENSGATE Hotel
Management (Pty) Ltd ~ Graded 4‑Star ~ 116 Rooms
Situated in the heart of Cape Town’s fast developing hotel precinct, in walking distance from the Cape Town International Convention Centre (CTICC) and the world famous Victoria and Alfred Waterfront. This modern 116 room hotel offers stylish accommodation and a comfortable stay for business and leisure travellers.
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Rockwell All Suite Hotel~ Location: De Waterkant, Cape Town ~ Operator: QUEENSGATE
Hotels & Leisure ~ Managed by QUEENSGATE
Hotel Management (Pty) Ltd ~ Graded 4‑Star~ 55 apartments
Designed to have an upmarket industrial New York feel, the Rockwell All Suite Hotel is inspired by the early 1900 buildings of downtown Manhattan. Tucked below the colourful and vibrant Bo Kaap it is located in the heart of De Waterkant Village which is fast becoming Cape Town’s trendiest hot spot. The Rockwell has a contemporary feel and style of its own. Most conveniently the Rockwell is in walking distance from Greenpoint Stadium, Cape Town’s newest development.
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Park Inn~ Location: Greenmarket Square,
Cape Town ~ Part of QUEENSGATE Leisure
Holdings’ portfolio since 2002~ Managed by Rezidor Group, under
QUEENSGATE’s supervision ~ Graded 3‑ to 4‑Star (mid market) ~ 166 Rooms
Conveniently located on the historic Greenmarket Square, Cape Town, the Park Inn lies in the vibrant Central Business District, which is known for its bustling nightlife and its colourful day time trade. This iconic 166 room hotel has been part of QUEENSGATE Leisure Holdings’ portfolio since 2002 and is, managed and marketed under the Park Inn brand.
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ONEwellnessLocation~ ONEwellness Radisson (Cape Town)~ ONEwellness Sandton Isle
(Johannesburg)~ Cape Town Hollow
Here wellness is seen as a process where people are provided the opportunities, encouragement and support to accept responsibility for consistently making healthy choices. Through the unique integration between the worlds of ‘Fitness’, ‘Spa’ and ‘Skincare’ the ONEwellness brand aims to be a leading spa and wellness group in South Africa. Its tranquil and revitalising atmosphere offers members an environment in which to escape overwhelming stresses giving them a place to seek new and effective ways of taking control of their lives and enhancing their health. ONEwellness is entirely committed to the environment and its aim is to operate as a ‘green’ Spa.
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Declaration by Company SecretaryThe Secretary certifies that the Company has lodged with the Registrar of Companies, all such returns as are required of a public company, in terms of section 268 G (d) of the Companies Act, No 61 of 1973, as amended, and that all such returns are true, correct and up to date to the extent that the Secretary has been informed.
Arcay Client Support (Pty) LtdRegistration Number 1998/025284/07Company Secretary27 November 2009
Directors’ Responsibilities and Approval
The directors are required by the South African Companies Act, 1973, to maintain adequate accountingrecordsandareresponsibleforthecontentandintegrityofthefinancialsstatementsandrelatedfinancialinformationincludedinthisreport.ItistheirresponsibilitytoensurethatthefinancialstatementsfairlypresentthestateofaffairsoftheGroupasattheendofthefinancialyearandtheresultsofitsoperationsandcashflowfortheperiodthenended,inconformitywithInternational Financial Reporting Standards. The external auditors are engaged to express an independentopinionofthefinancialstatements.
The financial statements are prepared in accordance with International Financial ReportingStandards and are based upon appropriate accounting policies and are supported by reasonable and prudent judgements and estimates.
Thedirectorsacknowledgethattheyareultimatelyresponsibleforthesystemofinternalfinancialcontrol established by the Company and its subsidiaries (“the Group”) and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the Board sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregationof duties to ensure an acceptable level or risk. These controls are monitored throughout the Group and all employees are required to maintain the highest ethical standards in ensuring the Group’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Group is on identifying, assessing, managing and monitoring all known forms of risk across the Group. While operating risk cannot be fully eliminated, the Group endeavours to minimize it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.
The directors are of the opinion, based on the information and explanations given by management thatthesystemofinternalcontrolprovidesreasonableassurancethatthefinancialrecordsmaybe reliedon for thepreparationof thefinancial statements. However,any systemof internalfinancial control can provide only reasonable and not absolute assurance against materialmisstatement or loss.
ThedirectorshavereviewedtheGroup’scashflowforecastandhaveconcludedthatthebasisofthepreparationofthefinancialstatementsonagoingconcernbasisisappropriate.
Theannualfinancialstatementssetoutonpages31to65whichhavebeenpreparedonthegoingconcern basis, were approved by the Board on the date stated below and were signed on its behalf by Colin Human and Andrew Hubbard.
C Human A Hubbard27 November 2009
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Functions and Responsibilities of the Audit CommitteeThe role of the audit committee is to assist the Board by performing an objective and independent review of the functioning of the organisation’s finance and accounting control mechanisms. Itexercises its functions through close liaison and communication with corporate management and the internal and external auditors.
The committee is guided by its terms of reference, dealing with membership, structure and levels of authority and has the following responsibilities: ~ ensuring compliance with applicable legislation and the requirements of regulatory authorities~ nominating for appointment a registered auditor who, in the opinion of the audit committee, is
independent of the Company~ consideration of the appropriate expertise and experience of the Financial Director~ mattersrelatingtofinancialaccounting,accountingpolicies,reportinganddisclosure~ internal and external audit policy including determination of fees and terms of engagement~ activities, scope, adequacy and effectiveness of the internal audit function and audit plans~ review/approvalofexternalauditplans,findings,problems,reports,feesanddetermination
and approval of any non‑audit services that the auditor may provide to the Company~ compliance with the Code of Corporate Practices and Conduct ~ compliance with the Company’s code of ethics
Theauditcommitteeaddresseditsresponsibilitiesproperlyintermsofthecharterduringthe2009financialyear.Nochangestothecharterwereadoptedduringthe2009financialyear.Theauditcommitteeisinthe process of reassessing the charter to comply with the King III Report and the new Companies Act.
Members of the Audit CommitteeThe audit committee consists of three non‑executive directors and the designated advisor as follows:
S Swana (Chairman) LW Sipoyo
JC Human MJ Krastanov (Designated Advisor)
The external auditors and the Financial Director are invited to attend the audit committee meetings. The members of the audit committee have at all times acted in an independent manner.
Frequency of meetingsThecommitteemettwiceduringthe2009financialyear.Provisionismadeforadditionalmeetingsto be held, when and if necessary.
Independence of external auditOne of the responsibilities of the audit committee was the assessment of the independence of the auditor.ThecommitteeissatisfiedthattheauditorisindependentoftheCompany.TheauditorhasalsoconfirmedthatitspersonnelareindependentoftheCompanyandGroup.
Expertise and experience of financial directorAsrequiredbyJSEListingRequirements3.84(h),theauditcommitteehassatisfieditselfthatthefinancialdirectorhasappropriateexpertiseandexperience.
Financial statementsManagementhasreviewedthefinancialstatementswiththeauditcommittee,andtheauditcommitteehas reviewed them without management or external auditors being present. The quality of the accountingpoliciesarediscussedwiththeexternalauditors.TheauditcommitteeconsidersthefinancialstatementsofQUEENSGATEHotels&LeisureLimitedtobeafairpresentationofitsfinancialpositionat31August2009andoftheresultsoftheoperations,changesinequityandcashflowsfortheperiodendedthen, in accordance with International Financial Reporting Standards and the Companies Act.
S SwanaChairman
Report by the Audit Committee
The report of the audit committee is presented as required by Sections 269A and 270A of the Companies Act of South Africa, as part of the measures contained in the Corporate Laws Amendment Act 2006.
for the year ended 31 August 2009
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INTRODUCTIONThe Group endorses the principles contained in the King II and draft King III reports on Corporate Governanceandconfirmsitscommitmenttotheprinciplesoffairness,accountability,responsibilityand transparency as advocated therein. The Board strives to ensure that the Group is being ethically managed according to prudently determined risk parameters and in compliance with generally accepted corporate practices and conduct. The Group has also noted the changes in terms of The Corporate Laws Amendment Act, as published on 14 December 2007 as well at the draft King III report.
THE BOARDStructure of the BoardQUEENSGATE has a unitary Board with a non‑executive Chairman. The directors bring a wide range of experience, diversity, insight and independence of judgment on issues of strategy, performance resources and standards of conduct, to the Board.
Independence of the Board and Board balanceAt year end, the Board comprised nine directors – three executives and six non‑executives. The predominance of non‑executive directors on the Board helps maintain a balance of power and ensuresindependent,unbiaseddecisionmaking.TherolesofChairmanandChiefExecutiveOfficerare separate. The non‑executive directors do not have service contracts and their remuneration is not tied to the Company’s performance. Directors are entitled to ask questions of any personnel and have unrestricted access to all company documentation, information and property.
Role and function of the BoardThe Board’s main responsibilities include strategy, acquisition and disinvestment policies, risk management, financing and corporate governance. In addition, the Board is accountable forrelations with stakeholders and is responsible for creating, protecting and enhancing the Company’s wealth and resources, timely and transparent reporting and acting at all times in the best interests of the Company and its shareholders. It is the responsibility of the Board to ensure a sound system of internal control to safeguard stakeholders’ interests and the Company’s assets.
Appointments to the BoardNo formal procedure exists for appointment to the Board or for the delegation of the functions of the Board. Appointments to the Board are considered by the Board as a whole. The Chairman andChiefExecutiveOfficerareresponsibleforreviewingthecontentandimplementationoftheauthorised delegation of functions and will report thereon to the Board. One third of the directors retire by rotation each year and are eligible for re‑election by shareholders in accordance with the articles of association.
Board and committee meetings and attendance thereofDirectors’ board packs are prepared and distributed before each board meeting so as to ensure that the directors are fully informed of the issues at hand and to give full consideration to all the matters under discussion.
All directors, committee members and chairmen are encouraged to attend the annual general meeting of the Company.
Alldirectors,excepttheChiefExecutiveOfficer,retireonathree-yearrotationalbasis.Ifeligiblefor re‑election, they can be re‑elected at the annual general meeting.
Fourboardmeetingswereheldduringthefinancialyearended31August2009andoneaftertheyear end until the date of this report. Two audit and risk committee meetings were held during the year and one post year end. Minutes are kept of all board and committee meetings.
The attendance of the directors as at 31 August 2009 for the year under review, taking into account their dates of appointment and/or resignation, was as follows:
Corporate governance Report for the year ended 31 August 2009
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Director/committee member% of board
meetings attendedNumber of meetings
attended (4)% of audit committee
meetings attendedNumber of committee meetings attended (2)
JC Human 100% 4/4 100% 2/2
AJ Hubbard 100% 4/4 n/a n/a
HGB Friedrichsen 100% 4/4 n/a n/a
W Voigt 100% 4/4 n/a n/a
MH Weetman 75% 3/4 100% 2/2
S Swana 100% 4/4 100% 2/2
LW Sipoyo 75% 3/4 n/a n/a
TN Ndziba 75% 3/4 n/a n/a
NT Noland 50% 1/2 n/a n/a
A Keet 100% 2/2 n/a n/a
P Nieman (alternate) 50% 1/2 n/a n/a
M Krastanov # 100% 4/4 100% 2/2
# representing the Designated Advisor
Appointment of Audit, Risk and Remuneration CommitteeThe Board established a combined audit and risk committee comprising four members namely S Swana (Chairman), JC Human and MH Weetman, all of whom are non‑executive directors and M Krastanov, a representative of the Designated Advisor. Subsequent to year end MH Weetman has resigned from the audit and risk committee and LW Sipoyo has been appointed in his stead.
Audit and Risk CommitteeThe Company’s audit and risk committee meets at least twice per year and consists of a minimum of two non‑executive directors and a representative of the Designated Advisor in accordance with the Alternative Exchange Listings Requirements. The company secretary is in attendance at the meetings.
The committees’ responsibilities include:~ reviewing the scope quality, independence and objectivity of the statutory audit~ ensuringtheintegrityoftheCompany’saccountingandfinancialreportingsystem~ consideringtheexpertiseandexperienceofthefinancialdirector~ evaluating the effectiveness of the management functions of the Company ~ ensuringappropriatesystemsareinplaceformonitoringrisk,financialcontrol,compliance
with the law and codes of conduct~ promoting the overall effectiveness of corporate governance within the Group.
The external auditors are invited to attend the audit committee meetings and have unrestricted access to both the committee and its Chairman. The committee advises on the appointment of the external auditors, considers the auditor’s independence, the handling of non‑audit functions by the auditors and fees in respect of non‑audit services.
The audit committee has been given explicit authority to investigate any matter under its terms of reference and will have access to all resources and information it requires in order to act on this authority. The audit committee will furthermore be responsible for monitoring all contracts entered intoby theCompany inwhichanyof thedirectorsareeitherbeneficiallyor indirectlybeneficiallyinterested,soastoensurethatallsuchcontractsarefairandreasonableandinthebest interests of the Company. The risk committee will be responsible for ensuring that all risks associated with the Group’s operations are effectively managed in support of the creation and preservation of stakeholder value.
Remuneration CommitteeThe Company felt that, at present, it does not require a remuneration committee given the size of the Company. This has been held over until such time as the directors believe that it becomes necessary to form this committee.
Investment CommitteeThe Board has recently established an investment committee comprising six members namely
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TN Ndziba (Chairperson), NT Noland, AJ Hubbard, HGB Friedrichsen, MH Weetman and W Voigt. P Nieman is invited to attend all investment committee meetings.
ACCOUNTING AND INTERNAL CONTROLSThe Board has established controls and procedures to ensure the accuracy and integrity of the accounting records and to provide reasonable assurance that assets are safeguarded from loss or unauthoriseduseandthatthefinancialstatementsmayberelieduponformaintainingaccountabilityfor assets and liabilities and preparing the financial statements. The directors’ responsibilitystatement is set out on page 20 of this annual report.
EXTERNAL AUDIT AND AUDITORSThe auditors are Nolands Incorporated (“Nolands”). Nolands performs an independent and objective auditonthefinancialstatements.Interimreportsarenotaudited,butarediscussedwiththeauditors.The audit committee approves the audit plan and reviews the audit fees for the audit. The auditors have unrestricted access to the audit committee and are invited to attend all audit committee meetings. The reappointment of the auditors is reviewed annually by the audit committee. The auditcommitteehasconfirmedthattheexternalauditorsareconsideredtobeindependent.
COMMUNICATION WITH STAKEHOLDERSThe Company is committed to a policy of effective communication and engagement with its stakeholders on issues of mutual interest. It subscribes to a policy of open, frank and timeous communicationwithitsstakeholdersinitsactivitiesonbothfinancialandnon-financialmatters.
CLOSED AND PROHIBITED PERIODSThe Company enforces a restricted period for dealing in its shares, in terms of which any dealings in shares by all directors and senior personnel is disallowed by the Board from the time that the reporting period has elapsed to the time that results are released and at any time that the Company is trading under cautionary announcement or is in possession of price sensitive information.
INSIDER TRADINGThe Company enforces a restricted period for dealing in its shares, in terms of which any dealings in shares by all directors and senior personnel is disallowed by the Board from the time that the reporting period has lapsed to the time that results are released and at any time that such individuals are aware of unpublished price sensitive information, whether the Company is trading under cautionary announcement as a result of such information or not.
ClearancehastobeobtainedfromtheChairmanortheChiefExecutiveOfficer,priortodealingintheCompany’sshares.TheChiefExecutiveOfficermustobtainclearancefromtheChairmanandvice versa. The company secretary is advised immediately once the clearance has been obtained and the trade has been effected.
COMPANY SECRETARYThe Company Secretary is required to provide the members of the Board with guidance and advice
regarding their responsibilities, duties and powers and to ensure that the Board is aware of all legislation relevant to or affecting the Company. The company secretary is required to ensure that the Company complies with all applicable legislation regarding the affairs of the Company, including the necessary recording of meetings of the Board, board committee and shareholders of the Company.
DESIGNATED ADVISORIn accordance with the JSE Limited’s Listings Requirements relating to companies listed on the Alternative Exchange, the Company is required to appoint a designated advisor at all times. The Company’s designated advisor is Arcay Moela Sponsors (Proprietary) Ltd.
CODE OF ETHICSThe Board subscribes to the highest level of professionalism and integrity in conducting its business and dealing with all of its stakeholders. In adhering to its code of ethics, the Board is guided by the following broad principles:~ Businesses should operate and compete
in accordance with the principles of free enterprise
~ Free enterprise will be constrained by the observance of relevant legislation and generally accepted principles regarding ethical behaviour in business
~ Ethical behaviour is predicated on the concept of utmost good faith and characterised by integrity, reliability and a commitment to avoid harm
~ Businessactivitieswillbenefitallparticipants through a fair exchange of value or satisfaction of needs
~ Equivalent standards of ethical behaviour are expected from individuals and companies with whom business is conducted.
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Report by the Independent Auditors
“We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.”
for the year ended 31 August 2009To the shareholders of QUEENSGATE Hotels & Leisure LimitedWehaveauditedtheGroupandCompanyannualfinancialstatementsofQUEENSGATEHotels&Leisure Limited, which comprise the consolidated and separate balance sheets as at 31 August 2009, the consolidated and separate income statements, the consolidated and separate statements of changes in equity and the consolidated and separate cash flow statements for the year thenended,anda summaryof significantaccountingpoliciesandotherexplanatorynotes, and theDirectors’ Report as set out on pages 26 to 64.
Directors’ Responsibility for the Annual Financial StatementsThe Company’s directors are responsible for the preparation and fair presentation of these financial statements inaccordancewith International FinancialReporting Standards, and in themanner required by the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financialstatementsthatarefreefrommisstatement,whetherduetofraudorerror;selectingandapplying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditor’s ResponsibilityOurresponsibilityistoexpressanopinionontheseannualfinancialstatementsbasedonouraudit.We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonableassurancethattheannualfinancialstatementsarefreeofmaterialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthefinancialstatements.Theproceduresselecteddependontheauditor’sjudgement,includingtheassessmentoftheriskofmaterialmisstatementofthefinancialstatements,whetherduetofraud or error. In making those assessments, the auditor considers internal control relevant to theentity’spreparationandfairpresentationofthefinancialstatementsinordertodesignauditprocedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement,aswellasevaluatingtheoverallfinancialstatementpresentation.
Webelievethattheauditevidencewehaveobtained issufficientandappropriatetoprovideabasis for our opinion.
OpinionIn our opinion, the annual financial statements present fairly, in all material respects, theconsolidatedandseparatefinancialpositionofQUEENSGATEHotels&LeisureLimitedasat31August2009,anditsconsolidatedandseparatefinancialperformanceandconsolidatedandseparatecashflowsfortheyearthenendedinaccordancewithInternationalFinancialReportingStandards,andin the manner required by the Companies Act of South Africa.
Nolands IncPer: Allan Mundell Registered AuditorCape Town27 November 2009
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1) GENERAL REVIEW AND PROSPECTSThe shareholders were advised that QUEENSGATE negotiated the conclusion of an agreement dated 21 February 2008 in terms of which QUEENSGATE acquired 100% of the issued share capital and shareholders loans in QUEENSGATE Leisure Holdings (Proprietary) Limited (“QUEENSGATE Leisure”) from QUEENSGATE Holdings (Proprietary) Limited (“QUEENSGATE Holdings”) and Mvelaphanda Holdings (Proprietary) Limited (“Mvelaphanda”). The purchase consideration which was paid for QUEENSGATE Leisure was R219 545 921, which was settled by the issue of 731 819 736 new ordinary shares in QUEENSGATE at 30 cents per share, which shares were issued on approval of the acquisitionatageneralmeetingandfulfilmentofthenormaltermsandconditionsforatransactionof the nature contemplated. The effective date of the acquisition was 01 September 2008.
Mvelaphanda acquired a 50% shareholding in QUEENSGATE Leisure in late 2007 in return for the injection of R60 000 000 cash through a loan. The preference share obligation resulted in the purchase price differential between QUEENSGATE and Mvelaphanda. In terms of the acquisition agreement, Mvelaphanda was required to maintain a minimum shareholding of 26% in QUEENSGATE and would be required to either subscribe for new shares in QUEENSGATE at the market price in 3 years time or alternatively purchase QUEENSGATE shares on the open market. The original acquisition of 50% of QUEENSGATE Leisure by Mvelaphanda from QUEENSGATE was subject to Competition Commission approval.
The Company concluded an agreement dated 17 November 2008 in terms of which QUEENSGATE acquired 100% of the issued share capital in QUEENSGATE Business Development (Proprietary) Limited (“QUEENSGATE Business Development”) from QUEENSGATE Holdings for a purchase consideration of R75 000 000 which was settled by the issue of 375 000 000 new ordinary shares in QUEENSGATE at 20 cents per share. The effective date of the acquisition was 31 October 2008. QUEENSGATE Holdings, the vendor, is a related party to QUEENSGATE as it is the controlling shareholder of the Company and the Boards of directors of QUEENSGATE and QUEENSGATE Holdings have certain common directors, namely Messrs AJ Hubbard and HGB Friedrichsen.
2) FINANCIAL RESULTSThe accounting policies adopted for purposes of this report comply, and have been consistently applied in all material respects, with International Financial Reporting Standards (“IFRS”). The same accounting policies and methods of computation have been followed as compared to the prior year.
The Group’s loss on ordinary activities after taxation for the year amounted to R3 242 580 (2008:R4523280)FulldetailsofthefinancialpositionandresultsoftheCompanyaresetoutintheseannualfinancialstatements.
3) DIRECTORSComposition of the board of directors The composition of the board of directors as at the date of posting of this annual report is three executive directors and six non‑executive directors. These directors are drawn from diverse backgrounds and bring a wide range of experience, insight and professional skills to the Board.
The board of directors of the Company for the year ended 31 August 2009 and to the date of this report was as follows:
Non-Executive Directors Date of appointment Age Audit & Risk InvestmentMH Weetman 07 March 2001 39 n/a memberJC Human (Chairman) 19 August 2002 66 member n/aS Swana 24 July 2008 41 Chairman n/aTN Ndziba 25 November 2008 40 n/a ChairpersonLW Sipoyo 25 November 2008 46 member n/aNT Noland 29 January 2009 61 n/a member P Nieman# 29 May 2009 41 n/a memberExecutive Date of appointment Age Audit & Risk InvestmentAJHubbard(ChiefExecutiveOfficer) 21 December 2006 49 n/a member HGB Friedrichsen 21 December 2006 54 n/a member W Voigt (Financial Director) 21 January 2008 50 n/a member
#Alternate Director
Directors’interestincontractsisavailableforinspectionattheregisteredofficeoftheCompany.
Directors’ Reportfor the year ended 31 August 2009
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DIRECTORS INTERESTS IN SECURITIES OF THE COMPANYThe register of interests of directors in contracts in terms of Section 234 of the Companies Act, No 61 of 1973, as amended, is available to the public on request. The interest (direct and indirect) of directors in the Company’s securities as at 31 August 2009 was as follows:
Beneficially held as at 31/08/2009
Total shares as at 31/08/2009
Total % as at 31/08/2009
DIREct INDIREctMH Weetman ‑ 28,615,867 28,615,867 1.78%
JC Human ‑ 28,666,666 28,666,666 1.78%
AJ Hubbard ‑ 266,460,096 266,460,096 16.58%
HGB Friedrichsen ‑ 184,473,617 184,473,617 11.48%
W Voigt 5,000,000 ‑ 5,000,000 0.31%
S Swana ‑ ‑ ‑ 0.00%
TT Ndziba ‑ ‑ ‑ 0.00%
LW Sipoyo ‑ ‑ ‑ 0.00%
N Noland 3,162,655 125,000,000 128,162,655 7.98%
TOTAL 8,162,655 633,216,246 641,378,901 39.92%
There has been no change in directors’ shareholdings from 31 August 2009 to the date of this report.
6) ACQUISITIONS AND DISPOSALSDuring the period under review assets were acquired as detailed in paragraph 12 below.
7) AUDITORSRainCharteredAccountants(SA)nolongerqualifiedtoberetainedasauditorsintermsoftheJSE Listings Requirements and therefore tendered their resignation as auditors to QUEENSGATE Hotels & Leisure Limited. Nolands Incorporated were appointed as auditors to QUEENSGATE with effect from 01 July 2009, being the existing auditors of QUEENSGATE Leisure and QUEENSGATE Business Development.
8) LitigationThere are no legal or arbitration proceedings, including any proceedings that are pending or threatened, of which QUEENSGATE is aware and that may have or have had, in the 12‑month period preceding thedateof issueof thisannual report,amaterialeffecton thefinancialpositionofQUEENSGATE or its subsidiaries.
9) COMPANY SECRETARYThe directors all have unlimited access to the company secretary who, inter alia, advises the Board and its committees on issues relating to compliance with procedures, the Companies Act, as amended, the JSE Listings Requirements and King II. It requires a decision of the Board as a whole to remove the company secretary, should this become necessary. All the directors have access to the advice and services of the company secretary. The Board is of the opinion that the management representingthecompanysecretaryhastherequisiteattributes,experienceandqualificationstofulfilitscommitmentseffectively.
10) SHARE CAPITALThe authorised and issued share capital of the Company at 31 August 2009 is set out in note 14 to thefinancialstatements.Asat31August2009therewere1606819736ordinaryshares(31August2008: 500 000 000) in issue.
At year end there were 393 180 264 unissued ordinary shares. The unissued shares are under the control of the directors subject to the provisions of Sections 221 and 222 of the Companies Act and the requirements of the JSE Limited until the next annual general meeting. Shareholders will be asked to renew the directors’ authority over the unissued shares at the forthcoming annual general meeting.
11) DIVIDENDNo dividend was declared for the year ended 31 August 2009 (2008: R nil).
12) SHARE ISSUES FOR ACQUISITIONSThe following shares were issued during the financialyearended31August2009:~ on 15 September 2008, 465 909 868 shares
were issued to QUEENSGATE Holdings at 30 cents a share for 50% of QUEENSGATE Leisure and 265 909 868 shares were issued at 30 cents a share to Mvelaphanda for the remaining 50% of QUEENSGATE Leisure;
~ on 7 January 2009, 375 000 000 shares were issued at 20 cents a share to QUEENSGATE Holdings for the acquisition of 100% of QUEENSGATE Business Development.
No further shares have been issued prior to the posting of this annual report.
13) SPECIAL RESOLUTIONSDuring the year under review the Company increased its authorised share capital from 1 000 000 000 shares at 0.1 cents to 2 000 000 000 of 0.1 cents each. No other specialresolutionswerepassedforthefinancialyear ended 31 August 2009.
14) SUBSEQUENT EVENTS QUEENSGATE Business Development has entered into two agreements dated 03 March 2009 (“the agreements”) to acquire 70% of the total issued share capital in XN Corporation Africa (Pty) Ltd from XN PLC, The Sun Valley Trust, The White Heather Trust and the Ganesh Trust for a combined purchase consideration of R26 250 000 which will be settled through the issue of 87 500 000 new ordinary shares in the Company at an issue price of 30 cents per share. XN PLC will remain as a 30% shareholder in XN Africa. This acquisition is still subject to certain conditions precedent beingfinalisedandmayneedtoberenegotiatedon similar terms.
An agreement to issue 5 000 000 shares to Luxury Branding for corporate rebranding services has been entered into as well as a standby equity facility for R50 000 000 over the next three years has been entered into with YA Global Master SPV Limited. The raising of R500 000 000 fees are to be settled though the issue of shares, subject to SA Reserve Bank approval.
Furthermore, the Company has entered into a strategic joint venture with the Three Cities Hotel Group for the management if its current hotels and new hotels going forward. QUEENSGATE’s existing hotel management capability will be integrated with the Three Cities Group.
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15) INVESTMENT IN SUBSIDIARIES
Name of Subsidiary Activity
Issued share
capital
% held Shares at cost
2009 2008 2009 2008DIREct SubSIDIARIESQUEENSGATE Leisure Holdings (Pty) Ltd Investment holdings 486 100% ‑ 219,545,921 ‑
QUEENSGATE Business Development (Pty) Ltd Business developments 120 100% ‑ 103,169,405 ‑
INDIREct SubSIDIARIESQUEENSGATE Wellness Holdings (Pty) Ltd Investment holdings 100 100% ‑ 2,700,074 ‑
QUEENSGATE Greenmarket Square (Pty) Ltd Hotelier 200 100% ‑ 35,395,870 ‑
Pamodzi Leisure Solutions (Pty) Ltd Investment holdings 1,666 58% ‑ 6,428,557 ‑
Hollow Property Investments (Pty) Ltd Investment holdings 120 100% ‑ 120 ‑
The Avenue Hotel (Pty) Ltd Hotelier 120 100% ‑ 120 ‑
Sharp Move Trading 253 (Pty) Ltd Hotelier 120 100% ‑ 120 ‑
QUEENSGATE Hotel Management (Pty) Ltd Management company 120 100% ‑ 120 ‑
ONEwellness Waterfront (Pty) Ltd) Wellness centre 120 100% ‑ 120 ‑
ONEwellness Sandton Isle (Pty) Ltd Wellness centre 120 100% ‑ 120 ‑
Top Restaurants Greenmarket Square (Pty) Ltd Restaurant 100 100% ‑ 501,250 ‑
QUEENSGATE Timeball Management Company (Pty) Ltd Business development 120 100% ‑ 120 ‑
DoRmANt compANIESONEwellness Cape Town Hollow (Pty) Ltd Wellness centre 120 100% ‑ 120 ‑
ONEwellness Claremont (Pty) Ltd Wellness centre 120 100% ‑ 120 ‑
ONEwellness Spa Management Company (Pty) Ltd Wellness centre 120 100% ‑ 120 ‑
The percentage held in respect of indirect holdings reflects the effective interest in thosecompanies.
The aggregate amount of profits and losses, after taking into account taxation, earned by thesubsidiaries in so far as concerns the interest of the Company in its subsidiaries is a profit ofR12 578 351 (2008: R nil).
16) AssociatesFor further details pertaining to associates, refer to note 6.
17) JOINT VENTURESFor further details pertaining to joint ventures, refer to note 7.
18) SecretaryThe company secretary is Arcay Client Support (Proprietary) Limited (registration number 1998/025284/07), whose business and postal address are:
Physical address Postal addressArcay House PO Box 62397Number 3 Anerley Road MarshalltownParktown, 2193 2107
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Shelley Point
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ONEwellness – Radisson Blu, Cape Town
ContentsFinancial Statements
32 Balance Sheets
33 Income Statements
34 Changes in Equity
35 Cash Flow Statements
36 Summary of Accounting Policies
43 Notes to the Financial Statements
65 Shareholders’ Diary
65 Shareholder Analysis
68 Notice of Annual General Meeting
70 Abridged Curriculum Vitae
71 Form of Proxy
73 Administration
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Balance Sheetsas at 31 August 2009
Group Company
Notes31 August 2009
R31 August 2008
R31 August 2009
R31 August 2008
RASSEtSNon-current assets 429,301,096 11,771,197 328,804,979 11,771,197
Property, plant and equipment 2 4,887,717 7,350 6,125 7,350
Goodwill 3 323,332,622 ‑ - ‑
Intangible assets 4 155,597 7,600,000 - 7,600,000
Loans receivable 5 42,712,215 ‑ 2,341,874 ‑
Interest in associates 6 9,336,594 ‑ - ‑
Interest in joint ventures 7 9,898,725 ‑ - ‑
Interest in subsidiaries 8 - ‑ 322,715,326 ‑
Deferred taxation 9 13,283,862 4,163,847 3,741,654 4,163,847
Prepaid operating lease 10 25,693,764 ‑ - ‑
current assets 28,656,655 4,697,870 6,539,718 4,697,870
Inventories 11 769,835 ‑ - ‑
Trade and other receivables 12 11,916,233 4,696,417 189,009 4,696,417
Prepaid operating lease 10 5,625,000 ‑ - ‑
Loans receivable 5 6,052,523 ‑ - ‑
Otherfinancialassets 13 3,066,901 ‑ 6,350,491 ‑
Cash and cash equivalents 30.3 1,226,163 1,453 218 1,453
Total assets 457,957,751 16,469,067 335,344,697 16,469,067
EQuItY AND LIAbILItIESCapital and reserves 306,526,107 15,222,766 298,639,881 15,222,766
Issued capital 14 329,841,635 35,295,714 329,841,635 35,295,714
Accumulated losses (23,315,528) (20,072,948) (31,201,754) (20,072,948)
Non-current liabilities 62,680,031 ‑ 1,715 ‑
Long term liabilities 15 62,607,437 ‑ - ‑
Deferred taxation 9 72,594 ‑ 1,715 ‑
Current liabilities 88,751,613 1,246,301 36,703,101 1,246,301
Trade and other payables 16 28,472,238 563,301 1,935,984 563,301
Otherfinancialliabilities 13 98,116 ‑ 6,369,999 ‑
Loans payable 17 30,062,364 683,000 28,169,405 683,000
Taxation 22,191,608 ‑ - ‑
Provisions 18 2,955,184 ‑ 225,000 ‑
Short‑term borrowings 19 4,972,103 ‑ 2,713 ‑
Total equity and liabilities 457,957,751 16,469,067 335,344,697 16,469,067
Net asset value per share (cents) 19.08 3.04 18.59 3.04
Net tangible asset value per share (cents) (1.06) 1.52 18.59 1.52
Number of shares in issue 1,606,819,736 500,000,000 1,606,819,736 500,000,000
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Income Statementsas at 31 August 2009
Group Company
Notes31 August 2009
R31 August 2008
R31 August 2009
R31 August 2008
RRevenue 20 121,010,712 4,032,000 7,100,000 4,032,000
Cost of sales (22,634,997) ‑ - ‑
Gross profit 98,375,715 4,032,000 7,100,000 4,032,000
Other operating income 1,198,632 10,000 - 10,000
Operating expenses (83,548,251) (2,235,499) (10,500,615) (2,235,499)
Profit/(Loss)fromoperations 21 16,026,096 1,806,501 (3,400,615) 1,806,501
Impairments 22 (2,983,521) (7,550,000) - (7,550,000)
Investment income 23 3,100,084 685 296,002 685
Loss on disposal of non‑current assets 24 (7,594,844) (2) (7,600,000) (2)
Loss from equity accounted investments 25 (2,077,359) ‑ - ‑
Finance costs 26 (10,058,977) (72) (285) (72)
Loss before taxation (3,588,521) (5,742,888) (10,704,898) (5,742,888)
Taxation 28 345,941 1,219,608 (423,908) 1,219,608
Net loss for the year attributable to equity holders (3,242,580) (4,523,280) (11,128,806) (4,523,280)
Weighted average number of shares in issue 1,544,148,503 500,000,000 1,544,148,503 500,000,000
Earnings per share (cents) 29 (0.21) (0.90) (0.72) (0.90)
Headline earnings per share (cents) 29 0.48 0.61 (0.23) 0.61
Diluted earnings per share (cents) 29 (0.21) (0.90) (0.72) (0.90)
Diluted headline earnings per share (cents) 29 0.43 0.61 (0.23) 0.61
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Changes in equityas at 31 August 2009
Share capitalR
Share premiumR
Accumulated losses
RTotal
RGRoupBalance at 31 August 2007 500,000 34,795,714 (15,549,668) 19,746,046 Net loss for the year ‑ ‑ (4,523,280) (4,523,280)Balance at 31 August 2008 500,000 34,795,714 (20,072,948) 15,222,766 Shares issued 1,106,820 293,439,101 ‑ 294,545,921 Net loss for the year ‑ ‑ (3,242,580) (3,242,580)
Balance at 31 August 2009 1,606,820 328,234,815 (23,315,528) 306,526,107
compANYBalance at 31 August 2007 500,000 34,795,714 (15,549,668) 19,746,046 Net loss for the year ‑ ‑ (4,523,280) (4,523,280)Balance at 31 August 2008 500,000 34,795,714 (20,072,948) 15,222,766 Shares issued 1,106,820 293,439,101 ‑ 294,545,921 Net loss for the year ‑ ‑ (11,128,806) (11,128,806)
Balance at 31 August 2009 1,606,820 328,234,815 (31,201,754) 298,639,881
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Cash Flow Statementsas at 31 August 2009
Group Company
Notes31 August 2009
R31 August 2008
R31 August 2009
R31 August 2008
RCash receipts from customers 119,192,012 43,560 11,540,111 43,560
Cash paid to suppliers and employees (100,740,656) (1,864,386) (8,901,707) (1,864,386)
Cash generated by/(applied to) operations 30.1 18,451,356 (1,820,826) 2,638,404 (1,820,826)
Interest paid (8,222,210) (72) (285) (72)
Interest received 3,100,084 685 296,002 685
Taxation 30.2 (1,619,924) ‑ - ‑
Cash flows from operating activities 11,709,306 (1,820,213) 2,934,121 (1,820,213)
Cash flows from investing activities (15,949,783) (7,350) (2,322,366) (7,350)
Acquisition of property, plant and equipment 2 (4,134,223) (7,350) - (7,350)
Proceeds on disposal of property, plant and equipment 24 111,610 ‑ - ‑
Acquisition of intangible assets (5,597) ‑ - ‑
Acquisition of joint ventures (60) ‑ - ‑
Cash acquired on acquisition of subsidiaries 31 2,040,243 - ‑
Net movement in loans and other receivables (13,961,756) ‑ (2,322,366) ‑
Cash flows from financing activities 5,445,608 615,440 (615,703) 615,440
Increase in borrowings 5,445,608 615,440 (615,703) 615,440
Net increase/(decrease) in cash and cash equivalents 1,205,131 (1,212,123) (3,948) (1,212,123)
Cash and cash equivalents at beginning of period 1,453 1,213,576 1,453 1,213,576
Cash and cash equivalents at end of period 30.3 1,206,584 1,453 (2,495) 1,453
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1 BASIS OF PREPARATIONThe financial statements are prepared in accordance with International Financial ReportingStandards(IFRS),theCompaniesActofSouthAfricaandtheJSEListingsRequirements.Thefinancialstatements are prepared under the historical cost basis, except tor the measurement of certain financialinstrumentsatfairvalue,andincorporatetheprincipalaccountingpoliciessetoutbelow.This basis is consistent with that of the previous year, except for the adoption of certain new or revised Standards and Interpretations listed below.
1.1SignificantjudgementsThepreparationoffinancial statements inconformitywith IFRSrequiresmanagementtomakejudgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Trade receivablesThe Group assesses its trade receivables for impairment at each balance sheet date. In determining whether an impairment loss should be recorded in the income statement, the Group makes judgements as to whether there is observable data indicating a measurable decrease in the estimatedfuturecashflowsfromthefinancialasset.
The impairment for trade receivables is calculated on a portfolio basis, based on historical loss ratios,adjustedfornationalandindustry-specificeconomicconditionsandotherindicatorspresentat the reporting date that correlate with defaults on the portfolio. These annual loss ratios are applied to loan balances in the portfolio and scaled to the estimated loss emergence period.
Business combinationsAcquisitions of subsidiaries and businesses are accounted for using the purchase method, which involves the identification of an acquirer,measuring the cost of the business combination andallocating, at acquisition date, the cost of the business combination to the assets acquired and liabilities and contingent liabilities incurred or assumed. The cost of the business combination is measured as the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the acquirer in exchange for control of the acquiree, plus any costs directly attributable to the business.
Theacquiree’sidentifiableassets,liabilitiesandcontingentliabilities,thatmeettheconditionsforrecognition under IFRS 3, Business Combinations, are recognised at their fair values at the acquisition date, except for non-current assets, or disposal Groups, that are classified as “held-for-sale” inaccordance with IFRS 5, Non‑current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.
Goodwill arising on acquisition is recognised as an asset and is initially measured at the cost of the business combination over the Group’s interest in the net fair value of the acquiree’s recognised identifiableassets,liabilitiesandcontingentliabilities.
Property, plant and equipmentThe Group assesses the useful lives of depreciation rates and residual values of these assets at each reporting date. These estimates take cognisance of current market and trading conditions fortheGroup’sspecificassets.
Basis of consolidationTheconsolidatedannualfinancialstatementscomprisethefinancialstatementsoftheCompanyand the subsidiaries controlledby theCompany. Subsidiariesaredefinedas thosecompanies inwhich the Group, either directly or indirectly, has more than one half of the voting rights, has the right to appoint more than half of the board of directors or otherwise has the power to control the financialandoperatingactivitiesoftheCompany.
The results of subsidiaries are consolidated from acquisition date and cease to be consolidated
SUMMARY OF ACCOUNTING POLICIES
on the date control ceases. Where there is a disposal or loss of control of a subsidiary, the consolidated financial statements include theresults for part of the reporting period during which the Group had control. Any difference arising on disposal between the carrying amount of the subsidiary and the net proceeds is recognised in the income statement.
All intra‑group transactions, balances, income and expenses are eliminated in full on consolidation and where necessary accounting policies for subsidiaries are changed to ensure consistency with the policies adopted by the Group.
Minority interests in the net assets (excluding goodwill) of consolidated subsidiaries are identified separately fromtheGroup’sequity.Minority interests consist of those interests at the date of the original business combination and the minority’s share of the changes in equity since the date of the combination. Losses applicable to minorities in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of the Group, except in the event that the minority has a binding obligation and is able to make an additional investment to cover the losses.
1.2 Underlying assumptionsThe estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both the current and futureperiods.Significantjudgements includeimpairment testing. Management uses the value in use approach to determine the recoverable amount of intangible assets that may have been impaired. Additional disclosure of these estimates is included in note 4.
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The following new Interpretations were adopted in the year under review:
Interpretation Impact
IFRIC 12 Service Concession Arrangements New issuance
IFRIC 13 Customer Loyalty Programmes New issuance
IFRIC 14 / IAS 19 TheLimitonaDefinedBenefitAsset,Minimum Funding Requirements and their Interaction
New issuance
Exceptforadditionaldisclosuresinthefinancialstatements,theadoptionoftheaboveInterpretationsdidnotmateriallyaffecttheresultsorfinancialposition of the Company for the year ended 31 August 2009.
At balance sheet date, the following accounting Standards and Interpretations were in issue but not yet effective:
Standard Details of Amendment
IFRS 1 First‑time Adoption of International Financial Reporting Standards
Measurement of the cost of investments in subsidiaries, jointly controlled entitiesandassociateswhenadoptingIFRSforthefirsttime.
IFRS 1 First‑time Adoption of International Financial Reporting Standards
Amendments relating to oil and gas assets and determining whether an arrangement contains a lease.
IFRS 2 Share‑based Payments Amendment relating to vesting conditions and cancellations andclarificationofIFRS2andIFRS3revised
IFRS 2 Share‑based Payments Accounting for group cash‑settled share‑based payment transactions–clarityofthedefinitionoftheterm“Group”
IFRS 3 Business Combinations Amendments to accounting for business combinations
IFRS 5 Non‑current Assets Held for Sale and Discontinued Operations
Plan to sell the controlling interest in a subsidiary and amendments resulting from IFRIC 17 for assets held for distribution to owners
IFRS 5 Non‑current Assets Held for Sale and Discontinued Operations
Disclosuresofnon-currentassets(ordisposalgroups)classifiedas held for sale or discontinued operations
IFRS 7 Financial Instruments: Disclosures Presentationoffinancecosts,amendmentdealingwithimprovingdisclosures about Financial Instruments and amendments enhancing disclosures about value and liquidity risk
IFRS 8 Operating Segments New standard on segment reporting (replaces IAS 14)
IFRS 8 Operating Segments Disclosure of information about segment assets
IFRS 9 Financial Instruments Newstandardthatformsthefirstpartofathree-partprojecttoreplaceIAS 39 Financial Instruments: Recognition and Measurement
IAS 1 Presentation of Financial Statements Amendmentstostructureoffinancialstatementsandcurrent/non-currentclassificationofderivatives
IAS 1 Presentation of Financial Statements Current/non-currentclassificationofconvertibleinstruments
IAS 7 Statement of Cash Flows Cashflowsfromassetsheldforrentalclassifiedasoperatingactivities
IAS 7 Statement of Cash Flows Classificationofexpendituresonunrecognisedassets
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
Status of implementation guidance
IAS 10 Events after the Reporting Period Dividends declared after the end of the reporting period and amendments resulting from the issue of IFRIC 17
IAS 16 Property Plant and Equipment Recoverableamountdefinitionandaccountingofsaleofassetsheldforrental
IAS 17 Leases Classificationofleasesoflandandbuildings
IAS 18 Revenue Costs of originating a loan
IAS 19 EmployeeBenefits Curtailments and negative past service costs, plan administration costs, replacement of term “fall due” and guidance on contingent liabilities
IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
Government loans with a below‑market rate of interest and consistency of terminology with other IFRS’s
IAS 23 Borrowing Costs Amendment requiring capitalisation only model and components of borrowing costs
IAS 27 Consolidated and Separate Financial Statements
Amendment dealing with measurement of the cost of investments when adopting IFRS forthefirsttime,consequentialamendmentsfromchangestoBusinessCombinations,measurementofsubsidiaryheldforsaleinseparatefinancialstatements
IAS 28 Investments in Associates Required disclosures when investments in associates are accounted for at fairvaluethroughprofitandloss,impairmentofinvestmentinassociateand consequential amendments from changes to Business Combinations
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IAS 29 Financial Reporting in HyperinflationaryEconomies
Descriptionofmeasurementbasisinfinancialstatementsand consistency of terminology with other IFRS’s
IAS 31 Interests in Joint Ventures Required disclosures when interests in jointly controlled entities are accountedforatfairvaluethroughprofitorlossandconsequentialamendments from changes to Business Combinations
IAS 32 Financial Instruments: Presentation Certainfinancialinstrumentswillbeclassifiedasequitywhereas,priortotheseamendments,theywouldhavebeenclassifiedasfinancialliabilities
IAS 32 Financial Instruments: Presentation Accounting for rights issues (including rights, options and warrants) that are denominated in a currency other than the functional currency of the issuer.
IAS 34 Interim Financial Reporting Earningspersharedisclosuresininterimfinancialreports
IAS 36 Impairment of Assets Disclosure of estimates used to determine recoverable amount
IAS 36 Impairment of Assets Unit of accounting for goodwill impairment test
IAS 38 Intangible Assets Advertising and promotional activities and unit of production method of amortisation, additional consequential amendments arising from revised IFRS 3 and measuring the fair value of an intangible asset acquired in a business combination
IAS 39 Financial Instruments: Recognition and Measurement
Reclassificationofderivativesintooroutoftheclassificationofatfairvaluethroughprofitorloss,designatinganddocumentinghedgesatthesegmentlevel and applicable effective interest rate on cessation of fair value hedge accounting,clarifiestwohedgeaccountingissues(inflationinafinancialhedged item and a one‑sided risk in a hedged item) and amendments forembeddedderivativeswhenreclassifyingfinancialinstruments
IAS 39 Financial Instruments: Recognition and Measurement
Treating loan prepayment penalties as closely related embedded derivatives, scope exemptionforbusinesscombinationcontractsandcashflowhedgeaccounting
IAS 40 Investment Property Property under construction or development for future use as investment property, consistency of terminology with IAS 8 and investment property held under lease
IAS 41 Agriculture Discount rate for fair value calculations, additional biological transformation, example of agricultural produce and products and point‑of‑sale costs
IFRIC 9 amended Reassessment of Embedded Derivatives Scope of IFRIC 9 and revised IFRS 3
IFRIC 15 Agreements for the Construction of Real Estate
New issuance
IFRIC 16 Hedges of a Net Investment in a Foreign Operation
New issuance
IFRIC 16 amended
Hedges of a Net Investment in a Foreign Operation
Amendment to restriction on the entity that can hold hedging instruments
IFRIC 17 Distribution of Non‑cash assets to Owners New issuance
IFRIC 18 Transfers of Assets from Customers New issuance
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
New issuance
The directors are assessing the impact of the above standards and interpretations but anticipate that the adoption of these Standards and Interpretations in future periods will have no material impactonthefinancialstatementsoftheCompanyandwillprimarilyresultinadditionaldisclosurerequirements. The Statements will be adopted at the respective effective dates.
1.3 Revenue Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for goods and services provided in the normal course of business, net of trade discounts and volume rebates, and value added tax.
Revenue from the sale of goods is recognised when all the following conditions have beensatisfied:~ theGrouphastransferredtothebuyerthesignificantrisksandrewardsofownershipof
the goods;~ the Group retains neither continuing managerial involvement to the degree usually associated
with ownership nor effective control over the goods sold;~ the amount of revenue can be measured reliably;~ itisprobablethattheeconomicbenefitsassociatedwiththetransactionwillflowtothe
Group; and~ the costs incurred or to be incurred in respect of the transaction can be measured reliably.
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Rental income is recognised in terms of the lease agreements.
Revenue from the rendering of services is recognised when the service is rendered.
Interestisrecognised,inprofitorloss,usingtheeffectiveinterestratemethod.
1.4 Borrowing costsInterest costs are charged against income in the period in which they are incurred.
1.5 LeasesA lease is classified as a finance lease if it transfers all the risks and rewards incidental toownership.Aleaseisclassifiedasanoperatingleaseifitdoesnottransfersubstantiallyalltherisksand rewards incidental to ownership.
Finance leases – lesseeFinance leases are recognised as assets and liabilities in the the balance sheet at amounts equal to the fair value of the leased property or, if lower, the net present value of the minimum lease payments.Thecorrespondingliabilityofthelessorisincludedinthebalancesheetasafinancelease obligation.
The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease.
Theleasepaymentsareapportionedbetweenthefinancechargeandreductionoftheoutstandingliability.Thefinancechargeisallocatedtoeachperiodduringtheleasetermsoastoproduceaconstant periodic rate of interest on the remaining balance of the liability.
Operating leases – lesseeOperating lease payments are recognised as an expense on a straight‑line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset. This liability is not discounted.
Operating leases – lessorOperating lease receipts are recognised as income on a straight‑line basis over the lease term.
Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as the lease income.
Income from leases is disclosed under revenue in the income statement.
1.6 Investment in subsidiariesIntheCompany’sseparateannualfinancialstatements,investmentsinitssubsidiariesarecarriedat cost less any accumulated impairment.
The cost of an investment in a subsidiary is the aggregate of:~ the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and
equity instruments issued by the Company; plus~ any costs directly attributable to the purchase of the subsidiary.
An adjustment to the cost of a business combination contingent on future events is included in the cost of the combination if the adjustment is probable and can be measured reliably.
1.7 Investment in associatesAnassociateisanentityoverwhichtheGrouphassignificantinfluence,butnotcontrolovertheoperating and financial policies, generally accompanying, but not limited to, a shareholding ofbetween 20 ‑ 50% of the voting rights.
Investments in associates are accounted for using the equity method, except when the asset is classifiedasheld-for-sale.Undertheequitymethod,theinvestmentisinitiallyrecognisedatcost
and the carrying value is increased or decreased torecognisetheGroup’sshareoftheprofitsorlosses of the investee after acquisition date. The use of the equity method is discontinued from thedate theGroupceases tohave significantinfluenceovertheassociate.
Any impairment losses are deducted from the carrying amount of the investment in an associate.
Distributions received from the associate reduce the carrying amount of the investment.
Profits and losses resulting from transactionswith associates are recognised only to the extent of unrelated investors’ interest in the associate.
The excess of the Group’s share of the net fairvalueofanassociate’s identifiableassets,liabilities and contingent liabilities over the cost is excluded from the carrying amount of the investment and is instead included as income in the period in which the investment is acquired.
1.8 Interest in joint venturesA jointly controlled entity is one where a contractual arrangement establishes joint control over the financial and operatingactivities of the entity.
Joint ventures are accounted for by means of the equity method, whereby the attributable share of assets and liabilities, revenue and expenses and cash flows of the jointventure are incorporated in the Company’s or consolidated financial statements, whereapplicable. The proportionate share of intra‑company items is eliminated.
When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the balance sheet date. The outcome of a transaction can be estimated reliably when the following conditionsaresatisfied:~ the amount of revenue can be measured
reliably;~ itisprobablethattheeconomicbenefits
associatedwiththetransactionwillflowtothe Group;
~ the stage of completion of the transaction at the balance sheet date can be measured reliably; and
~ the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
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Revenue is measured at fair value of the consideration received or receivable and represents the amounts receivable for goods and services provided in the normal course of business, net of trade discounts and volume rebates, and value added tax.
Interestisrecognised,inprofitorloss,usingtheeffectiveinterestratemethod.
1.9 Property, plant and equipmentThe cost of an item of property, plant and equipment is recognised as an asset when:~ itisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheCompany;and~ the cost of the item can be measured reliably.
Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to or replace parts of it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.
Property, plant and equipment are carried at cost less accumulated depreciation and any impairment losses.
Depreciation is provided for on the straight‑line basis on all property, plant and equipment, to write down the cost, or revalued amounts, to their residual values over their estimated useful lives. The usefullivesandresidualvaluesofeachassetisreviewedateachfinancialperiod-end.
Item: Average useful life~ Leasehold improvements over the period of the underlying lease~ Computer equipment and software 2 ‑ 3 years~ Furnitureandfittings 6years~ Hotel equipment 5 years~ Kitchen equipment 3 ‑ 5 years~ Officeequipment 6years
Eachpartofanitemofproperty,plantandequipmentwithacostsignificantinrelationtothetotalcost of the items is depreciated separately.
Thedepreciationchargeforeachperiodisrecognisedinprofitorloss,unlessitisincludedinthecarrying amount of another asset.
The gain or loss arising from the derecognition of an item of property, plant and equipment is included inprofitorlosswhentheitemisderecognised.Thegainorlossarisingfromthederecognitionofan item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.
1.10 GoodwillGoodwill represents the excess of the cost of the acquisition of a subsidiary, associate or joint ventureovertheanticipatedeconomicbenefitstobederivedfromassetsthatarenotindividuallyidentifiedandseparatelyrecognised.
Goodwill is initially recognised at cost. Subsequent to initial recognition goodwill is tested annually forimpairment.Anyimpairmentlossisrecognisedinnetprofitorlossfortheperiod.
Internally generated goodwill is not recognised as an asset.
1.11 Intangible assetsAn intangible asset is recognised when:~ itisprobablethattheexpectedfutureeconomicbenefitsthatareattributabletotheassetwill
flowtotheentity;and~ the cost of the asset can be measured reliably.
Intangible assets are initially recognised at cost. The carrying amount of the intangible asset is reviewed annually and adjusted for impairment where it is considered necessary. An intangible
assetisregardedashavinganindefiniteusefullife when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows.Amortisationisnotprovidedfortheseintangible assets.
1.12 Share capital and equityAn equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
1.13 TaxationCurrent tax assets and liabilitiesCurrent tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset.
Current tax liabilities/(assets) for the current and prior periods are measured as the amount expected to be paid to/(recovered from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date.
Deferred tax assets and liabilitiesA deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction, affects neither accounting profitnortaxableprofit/(loss).
A deferred tax asset is recognised for all deductible differences to the extent that it is probablethatataxableprofitwillbeavailableagainst which the deductible temporary difference can be utilised. A deferred tax asset is not recognised when it arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction, affects neither accounting profitnortaxableprofit/(loss).
A deferred tax asset is recognised for the carry forward of unused tax losses and unused STC credits to the extent that it is probable that future taxable profitwill be available againstwhich the unused tax losses and unused STC credits can be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date.
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Tax expensesCurrentanddeferredtaxesarerecognisedasincomeoranexpenseandincludedinprofitorlossfor the period, except where the tax arises from:~ a transaction or event which is recognised, in the same or a different period, directly in equity,
or~ a business combination
Current taxes and deferred taxes are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity.
1.14 InventoriesInventoriesaremeasuredatthelowerofcostandnetrealisablevalue,onafirst-in,first-outbasis.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
When inventories are sold, the carrying amount of those inventories are recognised as an expense in the period in which the related revenue is recognised. The amount of any write‑down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write‑down or loss occurs.
1.15 Financial instrumentsInitial recognitionTheGroupclassifiesfinancial instruments,or their componentparts,on initial recognitionasafinancialasset,afinancialliabilityoranequityinstrumentinaccordancewiththesubstanceofthecontractual arrangement.
Financial assets and financial liabilities are recognised on theGroup’s balance sheetwhen theGroup becomes party to the contractual provisions of the instrument.
Group company loans / Loans receivable and payableThese include loans to/(from) holding companies, fellow subsidiaries, joint ventures and associates and are recognised initially at fair value plus direct transaction costs.
Subsequently these loans are measured at amortised cost using the effective interest rate method, lessanyimpairmentlossrecognisedtoreflectirrecoverableamounts.Loansthatareinterest-freeandhavenofixeddateofrepaymentaremeasuredatcost.
On loan receivables an impairment loss is recognised in profit or loss when there is objectiveevidence that is impaired. The impairment is measured as the difference between the investment at the date the impairment is reversed shall not exceed what the amortised cost would have been had the impairment not been recognised.
Impairment losses are reversed in subsequent periods when an increase in the investment’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the investment at the date the impairment is reversed shall not exceed what the amortised cost would have been had the impairment not been recognised.
Loans to shareholders, directors, managers and employeesThese loans are initially measured at fair value and are subsequently measured at amortised cost using the effective interest rate method.
Onloanreceivablesanimpairmentloss isrecognisedinprofitor losswhenthereisobjectiveevidence that it is impaired. The impairment is measured as the difference between the investment’scarryingamountandthepresentvalueofestimatedfuturecashflowsdiscountedat the effective interest rate computed at initial recognition.
Trade and other receivablesTrade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method.
Appropriate allowances for estimated irrecoverableamountsarerecognisedinprofitor loss when there is objective evidence that the asset is impaired. Significant financialdifficulties of the debtors and default ordelinquency in payments are considered indicators that the trade receivables are impaired. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement.
Bad debts are written off to the income statement when it is considered that the Group will be unable to recover the debt and it has been handed over to a third party for collection. Subsequent recoveries of amounts previously written off are credited to relevant account in the income statement. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flowsdiscountedattheeffectiveinterestratecomputed at initial recognition.
Trade and other payablesTrade payables, which are primarily settled on 30 day terms, are carried at cost, being the fair value of the consideration to be paid in the future for goods and services rendered. These are subsequently measured at amortised cost using the effective interest rate method.
Other payables are initially measured at fair value and are subsequently measured at amortised cost using the effective interest rate method.
Cash and cash equivalentsCash and cash equivalents comprise cash on hand and demand deposits, and other short‑term highly liquid investments that are readily convertible to a known amount of cash and aresubjecttoaninsignificantriskofchangesin value. These are initially and subsequently recorded at fair value.
Bank overdraft and borrowingsBank overdrafts and borrowings are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is
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recognised over the term of the borrowings in accordance with the Group’s accounting policy for borrowing costs.
1.16 Impairment of assetsThe Company and Group assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset.
If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash‑generating unit to which the asset belongs is determined.
The recoverable amount of an asset or a cash‑generating unit is the higher of its fair value less costs to sell and its value in use. If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Such a reduction is recognised as an impairment loss.
1.17 ProvisionsProvisions are recognised when the Group has a present legal or constructive obligation as a result of past events, for which it is probable that an outflow of economic benefits will berequired to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Where the effect of discounting to present value is material, provisions are adjustedtoreflectthetimevalueofmoney.
1.18EmployeebenefitsShort-termemployeebenefitsThecostofshort-termemployeebenefits,(thosepayable within 12 months after the service is rendered, such as paid vacation leave and sick leave,bonuses,andnon-monetarybenefitssuchas medical care), are recognised in the period in which the service is rendered and are not discounted.
The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non‑accumulating absences, when the absence occurs.
The expected cost of profit sharing and bonuspayments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance.
1.19 ExpensesExpenses, other than those specificallydealt with in another accounting policy, are recognised in the income statement when it is
probablethatanoutflowofeconomicbenefitsassociatedwithatransactionwilloccurandthatoutflowcanbemeasuredreliably.
1.20 Earnings per shareEarningspershareiscalculatedonprofitfortheperiodattributabletoordinaryshareholdersandthe weighted average number of ordinary shares in issue during the year. Headline earnings per share is calculated in accordance with Circular 3/2009 issued by the South African Institute of Chartered Accountants.
1.21 Segmental informationTheprimarysegmentsoftheGrouphavebeenidentifiedbynatureofbusiness,beinghospitalityandbusinessdevelopment.Eachsegmenthasitsownrevenues,profits,assetsandliabilities.
Segment revenue, expenses, assets and liabilities include items directly attributable to a segment and those that can be allocated on a reasonable basis.
The accounting policies are consistently applied in determining the segmental information.
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Notes to the financial statementsas at 31 August 2009
2 PROPERTY, PLANT AND EQUIPMENT31 August 2009 31 August 2008
costAccumulated depreciation
Carrying value cost
Accumulated depreciation
Carrying value
GRoupLeasehold improvements 2,185,839 (557,039) 1,628,800 ‑ ‑ ‑
Computer equipment and software 558,732 (218,544) 340,188 ‑ ‑ ‑
Furnitureandfittings 1,632,759 (346,458) 1,286,301 7,350 ‑ 7,350
Hotel equipment 1,665,305 (369,481) 1,295,824 ‑ ‑ ‑
Kitchen equipment 69,099 (15,199) 53,900 ‑ ‑ ‑
Officeequipment 330,209 (47,505) 282,704 ‑ ‑ ‑
6,441,943 (1,554,226) 4,887,717 7,350 ‑ 7,350
compANYFurnitureandfittings 7,350 (1,225) 6,125 7,350 ‑ 7,350
7,350 (1,225) 6,125 7,350 ‑ 7,350
Reconciliation of property, plant and equipment ‑ Group ‑ 31 August 2009
opening Balance Additions
Additions through business
combinations Disposals Depreciation TotalLeasehold improvements ‑ 463,568 1,249,224 ‑ (83,992) 1,628,800 Computer equipment and software ‑ 391,613 179,989 (5,922) (225,492) 340,188 Furnitureandfittings 7,350 1,665,306 784,509 ‑ (1,170,864) 1,286,301 Hotel equipment ‑ 1,327,293 ‑ ‑ (31,469) 1,295,824 Kitchen equipment ‑ ‑ 97,067 ‑ (43,167) 53,900 Motor vehicles ‑ ‑ 128,267 (100,534) (27,733) - Officeequipment ‑ 286,443 25,441 ‑ (29,180) 282,704
7,350 4,134,223 2,464,497 (106,456) (1,611,897) 4,887,717
Reconciliation of property, plant and equipment ‑ Group ‑ 31 August 2008
opening Balance Additions Disposals Depreciation Total
Computer equipment and software 2 ‑ (2) ‑ - Furnitureandfittings ‑ 7,350 ‑ ‑ 7,350
2 7,350 (2) ‑ 7,350
Reconciliation of property, plant and equipment ‑ Company ‑31 August 2009
Carrying value at beginning of year Additions Disposals Depreciation
Carrying value at end
of yearFurnitureandfittings 7,350 ‑ ‑ (1,225) 6,125
7,350 ‑ ‑ (1,225) 6,125
Reconciliation of property, plant and equipment ‑ Company ‑ 31 August 2008
Carrying value at beginning of year Additions Disposals Depreciation
Carrying value at end
of yearComputer equipment and software 2 ‑ (2) ‑ - Furnitureandfittings ‑ 7,350 ‑ ‑ 7,350
2 7,350 (2) ‑ 7,350
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3 GOODWILL31 August 2009 31 August 2008
Group costAccumulated amortization
Carrying value cost
Accumulated amortization
Carrying value
Goodwill 323,332,622 - 323,332,622 ‑ ‑ ‑
323,332,622 - 323,332,622 ‑ ‑ ‑
Reconciliation of goodwill - Group - 31 August 2009
Carrying value at beginning of year
Additions through business
combinations Impairment
Carrying value at end
of year
Goodwill ‑ 323,332,622 ‑ 323,332,622
‑ 323,332,622 ‑ 323,332,622
Goodwill arose on the acquisition of the subsidiaries.
Impairment test of goodwillGoodwillisallocatedtotheGroup’scashgeneratingunits(“CGU’s”)identifiedaccordingtothebusinesssegment.
A segment level summary of the goodwill allocation is presented below:
Hospitality 233,480,068 ‑ ‑ ‑
Business development 89,852,554 ‑ ‑ ‑
323,332,622 ‑ ‑ ‑
The Company tests goodwill annually for impairment. The recoverable amounts of the cash‑generating units to which the goodwill assets are allocated, are determined from value‑in‑use calculations. The key assumptions for the value‑in‑use calculations are those regarding to the discount rates and estimatedprofitsgeneratedfromtheseunits.Managementestimatesdiscountratesusingbefore-taxratesthatreflectcurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictothecash-generatingunits.Theprofitsgeneratedarebasedonforecastsandmanagementestimatesofnewbusinesscontracts.TheCompanypreparespre-taxcashflowforecastsderivedfromthemostrecentbudgetsandestimatedgrowthratesoverthenext5yearsandasustainablecashflowthereafter.Therateusedtodiscountthepre-taxforecastcashflowsis13.6%.
4 INTANGIBLE ASSETS31 August 2009 31 August 2008
costAccumulated impairment
Carrying value cost
Accumulated impairment
Carrying value
GRoupDistribution rights - - - 150,000 (70,000) 80,000
Open IT platform - - - 2,000,000 (1,000,000) 1,000,000
Restaurant brands - - - 13,000,000 (6,480,000) 6,520,000
Patents and trademarks 155,597 - 155,597 ‑ ‑ ‑
155,597 - 155,597 15,150,000 (7,550,000) 7,600,000
compANYDistribution rights - - - 150,000 (70,000) 80,000
Open IT platform - - - 2,000,000 (1,000,000) 1,000,000
Restaurant brands - - - 13,000,000 (6,480,000) 6,520,000 - - - 15,150,000 (7,550,000) 7,600,000
Reconciliation of intangible assets - Group - 31 August 2009
Carrying value at beginning of year Additions
Additions through business
combinations Impairment Disposal
Carrying value at end
of yearDistribution rights 80,000 ‑ ‑ ‑ (80,000) ‑
Open IT platform 1,000,000 ‑ ‑ ‑ (1,000,000) ‑
Restaurant brands 6,520,000 ‑ ‑ ‑ (6,520,000) ‑
Patents and trademarks ‑ 5,597 150,000 ‑ ‑ 155,597
7,600,000 5,597 150,000 ‑ (7,600,000) 155,597
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Notes to the financial statements for the year ended 31 August 2009 continued
Reconciliation of intangible assets - Group - 31 August 2008
Carrying value at beginning of year Additions
Additions through business
combinations Impairment Disposal
Carrying value at end
of yearDistribution rights 150,000 ‑ ‑ (70,000) ‑ 80,000 Open IT platform 2,000,000 ‑ ‑ (1,000,000) ‑ 1,000,000 Restaurant brands 13,000,000 ‑ ‑ (6,480,000) ‑ 6,520,000
15,150,000 ‑ ‑ (7,550,000) ‑ 7,600,000
Reconciliation of intangible assets - Company - 31 August 2009
Carrying value at beginning of year Additions Impairment Disposal
Carrying value at end
of yearDistribution rights 80,000 ‑ ‑ (80,000) - Open IT platform 1,000,000 ‑ ‑ (1,000,000) - Restaurant brands 6,520,000 ‑ ‑ (6,520,000) -
7,600,000 ‑ (7,600,000) ‑
Reconciliation of intangible assets - Company - 31 August 2008
Carrying value at beginning of year Additions Impairment Disposal
Carrying value at end
of yearDistribution rights 150,000 ‑ (70,000) ‑ 80,000 Open IT platform 2,000,000 ‑ (1,000,000) ‑ 1,000,000 Restaurant brands 13,000,000 ‑ (6,480,000) ‑ 6,520,000
15,150,000 ‑ (7,550,000) 7,600,000
Impairment test of intangible assetsIntangibleassetsareallocatedtotheGroup’scashgeneratingunits(“CGU’s”)identifiedaccordingtothebusinesssegment.
A segment level summary of the intangible asset allocation is presented below:
Group Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
Hospitality 155,597 7,600,000 ‑ 7,600,000
The Company tests intangible assets annually for impairment. The recoverable amounts of the cash‑generating units to which the intangible assets are allocated, are determined from value in use calculations. The key assumptions for the value in use calculations are those relating to the discount rates andestimatedprofitsgeneratedfromtheserights.Managementestimatesdiscountratesusingafter-taxratesthatreflectcurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictothecash-generatingunits.Theprofitsgeneratedarebasedonforecastsandmanagementestimatesofnewbusinesscontracts.TheCompanypreparescashflowforecastsderivedfromthemostrecentbudgetsandestimatedgrowthrates.
5 LOANS RECEIVABLELong term
Group Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
Loan to Company controlled by directors 42,712,215 ‑ 2,341,874 ‑
The loan is unsecured, bears interest at a rate linked to the rate administered by the South African Revenue Service and is repayable on demand.
Short-term
Unsecured 6,052,523 ‑ - ‑
The loan can be settled by the acquisition of 25% of an investment property, being erven 10351, 10352 and 16540 situated at Fish Hoek, Cape Town by QUEENSGATE Business Development (Pty) Ltd at their option.
Total 48,764,738 ‑ 2,341,874 ‑
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6 INTEREST IN ASSOCIATESName of Company Principal activity % holding % holding % holding % holding
Tinga Private Game Lodge (Pty) Ltd Game lodge 30.0% 0.0% 0.0% 0.0%The year end of the associate is 31 March
Shares at cost 300 ‑ ‑ ‑
Loans 9,336,294 ‑ ‑ ‑
Net investment 9,336,594 ‑ ‑ ‑
The loans are unsecured, interest free with no repayment terms. No repayments of this loan may be made until the Industrial Development Corporation’s commercial loan and quasi equity in the associate have been repaid.
The loans have been subordinated.
Summary of Group’s interest in associate as at 31 March 2009Total assets 27,048,663 ‑ ‑ ‑
Total liabilities (65,559,504) ‑ ‑ ‑
Net liabilities (38,510,841) ‑ ‑ ‑
Total loss for the 6 months ended 31 March 2009 3,083,434 ‑ ‑ ‑
7 INTEREST IN JOINT VENTURESUnlistedName of Company Principal activity % holding % holding % holding % holdingCape Town Hollow (Pty) Ltd Hotelier
Number of shares held 50 ‑ ‑ ‑
Percentage holding 50% 0% 50% 0%
At cost 1,728,892 ‑ ‑ ‑
Share of results before taxation as per income statement 447,316 ‑ ‑ ‑
Share of taxation (note 28) (147,998) ‑ ‑ ‑
Loan 1,090,371 ‑ ‑ ‑
3,118,581 ‑ ‑ ‑
Total assets 8,574,989 ‑ ‑ ‑
Total liabilities (5,482,019) ‑ ‑ ‑
Net asset position 3,092,970 ‑ ‑ ‑
Totalprofitfortheyear 894,632 ‑ ‑ ‑
Taxation for the year (295,996) ‑ ‑ ‑
Netprofitfortheyear 598,636 ‑ ‑ ‑
Group’sshareofprofits 299,318 ‑ ‑ ‑
Theaboveloanisunsecured,bearsinterestattherulingSouthAfricanprimelendingratefromtimetotime,andhasnofixeddateofrepayment.
Name of Company Principal activity % holding % holding % holding % holdingHollow On The Square (Pty) Ltd Hotelier
Number of shares held 100 ‑ ‑ ‑
Percentage holding 50% 50% 50% 0%
At cost 964,496 ‑ ‑ ‑
Share of loss before taxation as per income statement (944,304) ‑ ‑ ‑
Share of taxation (note 28) 234,785 ‑ ‑ ‑
Loan 6,003,766 ‑ ‑ ‑
6,258,743 ‑ ‑ ‑
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Notes to the financial statements for the year ended 31 August 2009 continued
Name of Company Principal activity % holding % holding % holding % holdingTotal assets 28,666,429 ‑ ‑ ‑ Total liabilities (28,156,471) ‑ ‑ ‑ Net asset position 509,958 ‑ ‑ ‑
Total loss for the year (1,888,608) ‑ ‑ ‑ Taxation for the year 469,570 ‑ ‑ ‑ Net loss for the year (1,419,038) ‑ ‑ ‑
Group’s share of losses (709,519) ‑ ‑ ‑
Theaboveloanisunsecured,bearsinterestattherulingSouthAfricanprimelendingratefromtimetotime,andhasnofixeddateofrepayment.
Name of Company Principal activity % holding % holding % holding % holdingAlphen Hotel Operating Company (Pty) Ltd HotelierNumber of shares held 100 ‑ ‑ ‑ Percentage holding 50% 50% 50% 0%
At cost ‑ ‑ ‑ ‑ Share of loss before taxation as per income statement (1,779,378) ‑ ‑ ‑ Share of taxation (note 28) (5,207) ‑ ‑ ‑ Loan 4,768,106 ‑ ‑ ‑ Less impaired (2,983,521) ‑ ‑ ‑
‑ ‑ ‑ ‑
Total assets 2,374,445 ‑ ‑ ‑
Total liabilities (7,386,235) ‑ ‑ ‑ Net liability position (5,011,790) ‑ ‑ ‑
Total loss for the year (3,558,756) ‑ ‑ ‑ Taxation for the year (10,414) ‑ ‑ ‑ Net loss for the year (3,569,170) ‑ ‑ ‑
Group’s share of losses (1,784,585) ‑ ‑ ‑
Theaboveloanisunsecured,bearsinterestatvaryingratesandhasnofixeddateofrepayment.
The Group’s investment in this joint venture has been impaired as it is deemed to be irrecoverable.
Name of Company Principal activity % holding % holding % holding % holdingTop Restaurants Beacon Isle (Pty) Ltd RestauranteurNumber of shares held 100 ‑ ‑ ‑ Percentage holding 50% 50% 50% 0%
At cost 7,708 ‑ ‑ ‑ Shareofprofitsbeforetaxationasperincomestatement 199,187 ‑ ‑ ‑ Share of taxation (note 28) 570,514 ‑ ‑ ‑ Loan 44,112 ‑ ‑ ‑
821,521 ‑ ‑ ‑
Total assets 2,279,422 ‑ ‑ ‑ Total liabilities (5,381,441) ‑ ‑ ‑ Net liability position (3,102,019) ‑ ‑ ‑
Totalprofitfortheyear 398,374 ‑ ‑ ‑ Taxation for the year 1,141,028 ‑ ‑ ‑ Netprofitfortheyear 1,539,402 ‑ ‑ ‑
Group’sshareofprofits 769,701 ‑ ‑ ‑
Theaboveloanisunsecured,bearsinterestatvaryingratesandhasnofixeddateofrepayment.
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Name of Company Principal activity % holding % holding % holding % holdingPearl House Property Joint Venture (Pty) Ltd Business Development
Number of shares held 60 ‑ ‑ ‑
Percentage holding 50% 50% 50% 0%
At cost 60 ‑ ‑ ‑
Share of loss before taxation as per income statement (180) ‑ ‑ ‑
Loan (300,000) ‑ ‑ ‑
(300,120) ‑ ‑ ‑
Total assets 15,803,143 ‑ ‑ ‑
Total liabilities (15,803,383) ‑ ‑ ‑
Net liability position (240) ‑ ‑ ‑
Total loss for the year (360) ‑ ‑ ‑
Taxation for the year ‑ ‑ ‑ ‑
Net loss for the year (360) ‑ ‑ ‑
Group’s share of losses (180) ‑ ‑ ‑
Theaboveloanisunsecured,bearsinterestatvaryingratesandhasnofixeddateofrepayment.
Summary of Group’s interest in joint venturesTotal assets 57,698,428 ‑ ‑ ‑
Total liabilities (62,209,549) ‑ ‑ ‑
Net liability position (4,511,121) ‑ ‑ ‑
Total loss for the year (4,154,718) ‑ ‑ ‑
Taxation for the year 1,304,188 ‑ ‑ ‑
Net loss for the year (2,850,530) ‑ ‑ ‑
Group’sshareofprofits/(losses) (1,425,265) ‑ ‑ ‑
Total of loans 11,606,355 ‑ ‑ ‑
Less amortised amounts (4,768,106) ‑ ‑ ‑
Carrying value of loans ‑ amortised cost 6,838,249 ‑ ‑ ‑
8 INTEREST IN SUBSIDIARIESActivity % held Carrying amount
2009 2008 2009 2008NAmE of SubSIDIARYQUEENSGATE Leisure Holdings (Pty) Ltd Investment holding 100% 0% 219,545,921 ‑
QUEENSGATE Business Development (Pty) Ltd Business development 100% 0% 103,169,405 ‑
322,715,326 ‑
Investments in subsidiaries are valued as stated in note 1.
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Notes to the financial statements for the year ended 31 August 2009 continued
9 DEFERRED TAXATIONGroup Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
Balance at beginning of the year 4,163,847 2,944,239 4,163,847 2,944,239
Movements during the year attributed to:
Acquisition of subsidiary 7,677,387 ‑ - ‑
Current year 1,370,034 1,321,133 (423,908) 1,321,133
Change in rate - (101,525) - (101,525)
Balance at end of year 13,211,268 4,163,847 3,739,939 4,163,847
Balance at end of year comprises:
Allowances and provisions 759,074 ‑ 63,000 ‑
Impairments 6,594,492 ‑ - ‑
Lease straight‑lining 1,220,472 ‑ - ‑
Tax loss 4,599,709 2,420,572 3,678,654 2,420,572
Capital and other allowances (72,594) 1,743,275 (1,715) 1,743,275
Receipts in advance 110,115 ‑ - ‑
13,211,268 4,163,847 3,739,939 4,163,847
Non‑current assets 13,283,862 4,163,847 3,741,654 4,163,847
Non‑current liabilities (72,594) ‑ (1,715) ‑
13,211,268 4,163,847 3,739,939 4,163,847
Unprovided debit deferred taxes amount to 7,529,965 ‑ - ‑
10 Prepaid OPERATING LEASEGroup Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
QUEENSGATE Leisure Holdings (Pty) Ltd 19,800,000 ‑ - ‑
QUEENSGATE Greenmarket Square (Pty) Ltd 11,137,500 ‑ - ‑
QUEENSGATE Timeball Management Company (Pty) Ltd 381,264 ‑ - ‑
31,318,764 ‑ - ‑
Long term 25,693,764 ‑ - ‑
Current 5,625,000 ‑ - ‑
31,318,764 ‑ - ‑
Reconciliation of intangible assets - Group - 31 August 2009
Carrying value at
beginning of year Additions
Additions through business
combinations
Released during the
year
Carrying value at end
of year
QUEENSGATE Leisure Holdings (Pty) Ltd ‑ ‑ 23,400,000 (3,600,000) 19,800,000
QUEENSGATE Greenmarket Square (Pty) Ltd ‑ ‑ 13,162,500 (2,025,000) 11,137,500
QUEENSGATE Timeball Management Company (Pty) Ltd ‑ 381,264 ‑ ‑ 381,264
‑ 381,264 36,562,500 (5,625,000) 31,318,764
QUEENSGATE Leisure Holdings (Pty) LtdThe Company has entered into a lease agreement with Conference Centre Properties (Pty) Ltd in terms of which it paid an original lease premium of R32,000,000, which has been capitalised to a prepaid operating lease and is being released on an ongoing basis over the period of the lease. At the time of acquiring QUEENSGATE Leisure Holdings (Pty) Ltd, the carrying value of the unreleased prepaid operating lease amounted to R23 400 000.
In addition, the Company pays an annual lease rental to Conference Centre Properties (Pty) Ltd commencing on 1 March 2006 and terminating on 8 February 2015. At the commencement of the lease the minimum rentals were R2,000,000 per annum excluding value‑added tax escalating by 7%, compounded on each anniversary of the commencement date.
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A further lease rental of 50%of theCompany’s share in theprofitsof its investment in theRadissonHotel units inexcessofR10,000,000, aftermanagement fees payable to QUEENSGATE Hotel Management (Pty) Ltd, will become payable to Conference Centre Properties (Pty) Ltd commencing from March 2009 and terminating on 8 February 2015.
QUEENSGATE Greenmarket Square (Pty) LtdThe Company has entered into a lease agreement with QUEENSGATE Greenmarket Square Investments (Pty) Ltd in terms of which it paid an original lease premium of R18,000,000, which has been capitalised to a prepaid operating lease and is being released on an ongoing basis over the period of the lease. At the time of acquiring QUEENSGATE Greenmarket Square (Pty) Ltd, the carrying value of the unreleased prepaid operating lease amounted to R13 162 500.
In addition, the Company pays an annual lease rental to QUEENSGATE Greenmarket Square Investments (Pty) Ltd commencing on 1 March 2006 and terminating on 8 February 2015. At the commencement of the lease the minimum rentals were R1,000,000 per annum excluding value‑added tax, escalating by 7% compounded on each anniversary of the commencement date.
Afurtherleaserentalof100%,oftheCompany’sshareintheprofitsofitsinvestmentintheGreenmarketSquareParkInnHotelinexcessofR8,000,000,after management fees payable to QUEENSGATE Hotel Management (Pty) Ltd, will become payable to QUEENSGATE Greenmarket Square (Pty) Ltd commencing from March 2009 and terminating on 8 February 2015.
QUEENSGATE Timeball Management Company (Pty) LtdA gross lease premium of R1 500 000 was payable at the commencement of the lease term on 1 May 2009. Actual monthly lease payments of R450 000 forthefirsttwelvemonths,escalatingat10%perannumfortheremainderoftheleaseterm.Theleasetermisforaperiodoftenyears.
11 INVENTORIESGroup Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
Consumables 536,517 ‑ - ‑
Merchandise for resale 233,318 ‑ - ‑
769,835 ‑ - ‑
Inventories are valued as stated in note 1.
The cost of inventories expensed for the year amounted to R23 404 832 (2008:R nil).
12 TRADE AND OTHER RECEIVABLESGroup Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
Trade receivables 9,611,701 4,626,120 182,323 4,626,120
Deposits 1,229,532 ‑ - ‑
Prepayments and other receivables 36,277 ‑ - ‑
Short term loan ‑ interest free 36,861 67,297 - 67,297
Value‑added tax 804,331 ‑ 3,686 ‑
Other 197,531 3,000 3,000 3,000
11,916,233 4,696,417 189,009 4,696,417
Beforeacceptinganynewcreditcustomer,theGroupassesseseachpotentialcustomer’screditqualityanddefinescreditlimitsbycustomer.Limitsare reviewed periodically in accordance with the requirements of the National Credit Act and upon request by a customer. Due to the nature of the business,therearenocustomersthatindividuallyrepresentasignificantportionofthetotalbalanceoftradereceivables.
Interest is charged on outstanding accounts at the South African prime lending rate. Interest on outstanding accounts is waived at the discretion of the directors.
Where necessary, the Group has raised an impairment provision for trade receivables in all ageing status levels based on estimated irrecoverable amounts from the sale of merchandise, determined by reference to past default experience.
As at 31 August 2009, trade receivables of R706 979 were past due but not impaired.
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The ageing of these trade receivables is as follows:
Group Company31 August 2009
R31 August 2008
R31 August 2009
R31 August 2008
RBetween 30 and 90 days 626,744 ‑ - ‑
Greater than 90 days 80,235 2,346,120 - 2,346,120
706,979 2,346,120 - 2,346,120
As at 31 August 2009, trade receivables of R121 465 were impaired and provided for:
Between 30 and 90 days - ‑ - ‑
Greater than 90 days 121,465 ‑ - ‑
121,465 ‑ - ‑
13 OTHER FINANCIAL ASSETS AND LIABILITIESShort term
Group Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
Trading accounts ‑ subsidiaries - ‑ 5,900,000 ‑
Trading accounts ‑ associated companies 3,066,901 ‑ 450,491 ‑
Loans from subsidiaries - ‑ (1,771,883) ‑
Trading accounts ‑ subsidiaries - ‑ (4,500,000) ‑
Trading accounts ‑ associated companies (98,116) ‑ (98,116) ‑
2,968,785 ‑ (19,508) ‑
Assets 3,066,901 ‑ 6,350,491 ‑
Liabilities (98,116) ‑ (6,369,999) ‑
2,968,785 ‑ (19,508) ‑
The above loans are unsecured, interest‑free and repayable on demand.
14 ISSUED CAPITAL Group Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
AuTHORISeD2 000 000 000 Ordinary shares of 0,1c each 2,000,000 1,000,000 2,000,000 1,000,000
ISSuED1 606 819 736 Ordinary shares of 0,1c each 1,606,820 500,000 1,606,820 500,000
Share premium 328,234,815 34,795,714 328,234,815 34,795,714
329,841,635 35,295,714 329,841,635 35,295,714
Balance at beginning of year
Issues of shares for acquisition of
subsidiaries Balance at end of
year2009Ordinary shares 500,000 1,106,820 1,606,820
2008Ordinary shares 500,000 - 500,000
The unissued shares are under the control of the directors until the next annual general meeting subject to sections 221 and 222 of the Companies Act.
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15 LONG TERM LIABILITIESGroup Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
uNSEcuREDMvelaphanda Holdings (Pty) Ltd, bearing interest at the ruling South African prime lending rate from time to time and repayable in full in June 2011. 64,952,524 ‑ - ‑ Other ‑ interest free 2,607,437 ‑ - ‑
67,559,961 ‑ - ‑
Interest free liabilities 2,607,437 ‑ - ‑ Interest bearing liabilities 64,952,524 ‑ - ‑
67,559,961 ‑ - ‑
Total long term liabilities 67,559,961 ‑ - ‑ Current portion transferred to current liabilities (4,952,524) ‑ - ‑
62,607,437 ‑ - ‑
The other loans are unsecured and not repayable within the next 12 months.
During 2009, the Group was late in paying interest on the Mvelaphanda Holdings (Pty) Ltd loan. The delays arose because of a temporary lack of funds on the days the interest was payable. The Group has entered into alternative arrangements with the Company to settle the arrear interest payments. No penalties due to the non‑payment of the interest have been incurred.
16 TRADE AND OTHER PAYABLESGroup Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
Trade payables 10,033,405 312,957 989,486 312,957
Accrued expenses 7,326,354 ‑ 946,498 ‑ Amounts received in advance 2,621,487 ‑ - ‑
Value‑added tax 3,505,814 196,820 - 196,820
Lease straight‑lining 4,736,836 ‑ - ‑
Other 248,342 53,524 - 53,524
28,472,238 563,301 1,935,984 563,301
17 LOANS PAYABLEGroup Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
Loans from directors of subsidiaries 473,695 ‑ - ‑
Other loans 1,419,264 683,000 - 683,000
1,892,959 683,000 - 683,000
Theloansareunsecuredandhavenofixeddateofrepayment.TheloansfromdirectorsofsubsidiariesbearinterestattherulingSouthAfricanprimelending rate from time to time and the other loans are interest‑free.
Shares to be issued 28,169,405 ‑ 28,169,405 ‑
The agreement on the acquisition of QUEENSGATE Business Development (Pty) Ltd (“QBD”), QUEENSGATE Holdings (Pty) Ltd makes provision for an adjustmentofthepurchaseprice.Theadjustmentamountsto50%oftheprofitaftertax(“PAT”),adjustedforanyitemsnotintheordinarycourseofbusiness, in excess of R15 000 000 as earned by QBD. This adjustment shall be settled by way of the issue of new ordinary shares in QUEENSGATE Hotels & Leisure Limited at a price earnings ratio of 5 after the release of the Company’s audited annual results at a price that is equivalent to the 30 (thirty) day volume weighted average trading price (“VWAP”) calculated from the day prior to the release of the audited annual results.
In the subsequent year ending August 2010, a further adjustment will be made by increasing the PAT of R15 000 000 by 50% of the adjustment made duringtheyearendedAugust2009,and50%oftheexcessoverthatnumberwillbeincentivisedonthesamebasisasinthefinancialyearendedAugust2009.ThisadjustmentwillonlybepayableinrespectofthefinancialyearsendingAugust2009and2010.
Total 30,062,364 683,000 28,169,405 683,000
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Notes to the financial statements for the year ended 31 August 2009 continued
18 PROVISIONSReconciliation of provisions ‑ Group ‑ 31 August 2009
Opening Balance Additions
Additions through business
combinationsutilised during
the year Closing balanceLeavepaybenefits ‑ 2,169,319 472,865 ‑ 2,642,184 Salary bonus ‑ (226,725) 539,725 ‑ 313,000
‑ 1,942,594 1,012,590 ‑ 2,955,184
Reconciliation of provisions ‑ Company ‑ 31 August 2009
Opening Balance Additionsutilised during
the year Closing balanceLeavepaybenefits ‑ 171,000 ‑ 171,000 Salary bonus ‑ 54,000 ‑ 54,000
‑ 225,000 ‑ 225,000
The leave pay provision is based on the number of days accruing at year end multiplied by the average daily rate of remuneration entitlement by an employee.
The provision for bonuses is based on a pro rata rate of annual salary. Annual bonuses are paid at management’s discretion, however the Group has created a constructive obligation for amounts due.
19 SHORT TERM BORROWINGSGroup Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
Bank overdraft 19,579 ‑ 2,713 ‑
Short‑term portion of long‑term liabilities 4,952,524 ‑ - ‑
4,972,103 ‑ 2,713 ‑
The bank overdraft is unsecured.
20 REVENUEGroup Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
Sales 38,738,285 ‑ - ‑
Accommodation and related services 50,571,287 ‑ - ‑
Consulting fees 180,268 ‑ - ‑
Management fees 8,564,614 ‑ 5,900,000 ‑
Rental received 11,286,008 ‑ - ‑
Royalties 1,200,000 2,960,000 1,200,000 2,960,000
Technical assistance fees 10,250,000 ‑ - ‑
Licence fees - 1,072,000 - 1,072,000
Other revenue 220,250 ‑ - ‑
121,010,712 4,032,000 7,100,000 4,032,000
Revenue is recognised as stated in note 1.
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21 PROFIT/(LOSS) FROM OPERATIONSInarrivingatprofit/(loss)fromoperations,thefollowinghavebeentakenintoaccount:
Group Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
ExpENDItuREAdvertising 2,302,969 ‑ 471,832 ‑
Auditors' remuneration
~ Audit fee 779,193 44,382 126,500 44,382
~ Other services - 126,421 - 126,421
Depreciation 1,611,897 ‑ 1,225 ‑
Employee costs 19,524,217 175,374 2,903,175 175,374
Lease rental ‑ premises 35,131,790 ‑ - ‑ Lease rental ‑ equipment 27,196 ‑ - ‑ Management fees 2,370,993 ‑ - ‑
Municipal costs 2,593,847 ‑ - ‑
Repairs and maintenance 1,331,102 ‑ - ‑
Travelling 1,228,921 ‑ 416,211 ‑
22 IMPAIRMENTSGroup Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
Impairment of investment in the joint venture Alphen Hotel Operating Company (Pty) Ltd (2,983,521) ‑ - ‑ Impairment of distribution rights, open IT platform and restaurant brands - (7,550,000) - (7,550,000)
(2,983,521) (7,550,000) - (7,550,000)
The Group has impaired its investment in the joint venture Alphen Hotel Operating Company (Pty) Ltd as it has been determined that, due to continuous losses in the joint venture, the investment therein is irrecoverable.
Refer to note 39 for segmental allocation.
23 INVESTMENT INCOMEGroup Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
Financial institutions 160,167 685 2 685
Loans 2,933,764 ‑ 296,000 ‑
Other 6,153 ‑ - ‑
3,100,084 685 296,002 685
Alltheinvestmentincomeearnedrelatestothefinancialinstrumentcategory“Loansandreceivables”,includingcashandbankbalances.
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Notes to the financial statements for the year ended 31 August 2009 continued
24 LOSS ON DISPOSAL OF NON-CURRENT ASSETSGroup Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
Proceeds on disposal of property, plant and equipment 11,611 ‑ - ‑
Book value on disposal (5,922) ‑ - ‑
5,689 ‑ - ‑
Proceeds on disposal of distribution rights, open IT platform and restaurant brands - ‑ - ‑
Book value 7,600,000 ‑ 7,600,000 ‑
(7,600,000) ‑ (7,600,000) ‑
Scrapping of computer equipment - (2) - (2)
- (2) - (2)
Proceeds on disposal of property, plant and equipment 100,534 ‑ - ‑
Book value on disposal (101,067) ‑ - ‑ (533) ‑ - ‑
(7,594,844) (2) (7,600,000) (2)
Refer to note 39 for segmental allocation.
25 LOSS FROM EQUITY ACCOUNTED INVESTMENTSGroup Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
Revenue 19,547,824 ‑ - ‑
Cost of sales (5,182,797) ‑ - ‑
Gross profit 14,365,027 ‑ - ‑
Other operating income 65,455 ‑ - ‑
Operating expenses (15,662,597) ‑ - ‑
Loss from operations (1,232,115) ‑ - ‑
Interest received 550,587 ‑ - ‑
Finance costs (1,395,831) ‑ - ‑
Loss before taxation (2,077,359) ‑ - ‑
Refer to note 39 for segmental allocation.
26 FINANCE COSTSGroup Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
Financial institutions 43,610 72 285 72
Joint ventures 3,000 ‑ - ‑
Loans 8,175,594 ‑ - ‑
South African Revenue Services 1,836,767 ‑ - ‑
Other 6 ‑ - ‑
10,058,977 72 285 72
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27 DIRECTORS’ EMOLUMENTS31 August 2009 31 August 2008
Basic salary - short-term employee benefits
Travelling allowance Total
Basic salary - short-term employee benefits
Travelling allowance Total
AJ Hubbard 780,000 - 780,000 65,000 ‑ 65,000
HGB Friedrichsen 780,000 - 780,000 65,000 ‑ 65,000
W Voigt 585,000 86,400 671,400 33,000 12,000 45,000
C Human 120,000 - 120,000 ‑ ‑ ‑
S Swana 120,000 - 120,000 ‑ ‑ ‑
M Weetman 84,000 - 84,000 ‑ ‑ ‑
TN Ndziba 64,400 - 64,400 ‑ ‑ ‑
LW Sipoyo 64,400 - 64,400 ‑ ‑ ‑
NT Noland 50,400 - 50,400 ‑ ‑ ‑
JR Cowling 810,000 - 810,000 ‑ ‑ ‑
3,458,200 86,400 3,544,600 163,000 12,000 175,000
28 TAXATIONGroup Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
S.A. Normal taxation
Current taxation
Current year 1,676,187 ‑ - ‑
Share of taxation ‑ joint ventures 158,524 ‑ - ‑
Deferred taxation
Current year (1,370,034) 1,321,133 423,908 1,321,133
Share of taxation ‑ joint ventures (810,618) ‑ - ‑
Change in rate - (101,525) - (101,525)
(345,941) 1,219,608 423,908 1,219,608
Reconciliation of rate of taxation
S.A. Normal taxation rate 28% 28% 28% 28%
Adjusted for:
Non‑deductible expenses (123.4%) (5.0%) (31.9%) (5.0%)
Non‑taxable income 88.4% 0.0% 0.0% 0.0%
Timing differences unprovided for (0.7%) 0.0% 0.0% 0.0%
Tax losses unprovided for 17.0% 0.0% 0.0% 0.0%
Prior period taxes 0.2% 0.0% (0.1%) 0.0%
Change of tax rate 0.0% (1.8%) 0.0% (1.8%)
(18.4%) (6.8%) (32.0%) (6.8%)
Effective taxation rate 9.6% 21.2% (4.0%) 21.2%
No provision has been made for 2009 taxation as the Company had no taxable income at the accounting date. At 31 August 2009 the Group had the following tax losses:
20,348,897 8,644,900 13,138,050 8,644,900
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Notes to the financial statements for the year ended 31 August 2009 continued
29 EARNINGS PER ORDINARY SHAREThecalculationofbasicandheadlineearningspershareisbasedonthefollowingattributableprofitsandweightedaveragenumberofshares:
Group Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
Losses attributable to parent shareholders (3,242,580) (4,523,280) (11,128,806) (4,523,280)
Adjustments:
Loss on disposal of non‑current assets 7,594,844 2 7,600,000 2
Impairment losses 2,983,521 7,550,000 - 7,550,000
Headline earnings 7,335,785 3,026,722 (3,528,806) 3,026,722
Weighted average number of ordinary shares in issue 1,544,148,503 500,000,000 1,544,148,503 500,000,000
Weighted average number for diluted shares 1,710,127,737 500,000,000 1,710,127,737 500,000,000
The weighted average number of ordinary shares for the purposes of diluted earnings per share reconciles to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows:
Weighted average number of ordinary shares used in the calculation of basic earnings per share 1,544,148,503 500,000,000 1,544,148,503 500,000,000 Shares deemed to be issued in respect of the QBD acquisition (refer note 17) 165,979,234 ‑ 165,979,234 ‑ Weighted average number of ordinary shares used in the calculation of diluted earnings per share (all measures) 1,710,127,737 500,000,000 1,710,127,737 500,000,000
Basic earnings per share (cents) (0.21) (0.90) (0.72) (0.90)
BasicearningspershareiscalculatedbydividingtheprofitattributabletotheparentshareholdersoftheCompanywiththeweightedaveragenumber of ordinary shares in issue during the year.
Headline earnings per share (cents) 0.48 0.61 (0.23) 0.61
HeadlineearningspershareiscalculatedbydividingtheprofitattributabletotheparentshareholdersoftheCompany,adjustedforcertainitemsasreflectedabove,withtheweightedaveragenumberofordinarysharesinissueduringtheyear.
Diluted earnings per share (cents) (0.21) (0.90) (0.72) (0.90)
DilutedearningspershareiscalculatedbydividingtheprofitsattributabletotheparentshareholdersoftheCompanywiththeweightedaveragenumber of ordinary shares in issue during the year, increased by the number of shares that would have been issued assuming the conversion of all outstanding share options, representing dilutive potential ordinary shares.
Diluted headline earnings per share (cents) 0.43 0.61 (0.23) 0.61
DilutedheadlineearningspershareiscalculatedbydividingtheprofitsattributabletotheparentshareholdersoftheCompany,adjustedforcertainitemsasreflectedabove,withtheweightedaveragenumberofordinarysharesinissueduringtheyear,increasedbythenumberofsharesthatwould have been issued assuming the conversion of all outstanding share options, representing dilutive potential ordinary shares.
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30 NOTES TO THE CASH FLOW STATEMENTGroup Company
31 August 2009R
31 August 2008R
31 August 2009R
31 August 2008R
30.1Reconciliationoflossbeforetaxationtocashflowsfromoperatingactivities
Loss before taxation (3,588,521) (5,742,888) (10,704,898) (5,742,888)
Adjusted for:
Impairments 2,983,521 7,550,000 - 7,550,000
Depreciation 1,611,898 ‑ 1,225 ‑
Lease premiums released to income statement 5,625,000 ‑ - ‑
Interest received (3,100,084) (685) (296,002) (685)
Interest expense 10,058,977 72 285 72
Loss on disposal of non‑current assets 7,594,844 2 7,600,000 2
Loss from equity accounted investments 2,077,359 ‑ - ‑
Operatingprofit/(loss)beforeworkingcapitalchanges 23,262,993 1,806,501 (3,399,390) 1,806,501
Working capital changes (4,811,637) (3,627,327) 6,037,794 (3,627,327)
Decrease in inventories 1,637,346 ‑ - ‑
(Increase)/decrease in trade and other receivables (3,017,332) (3,988,440) 4,440,111 (3,988,440)
(Decrease)/increase in trade and other payables (5,374,245) 361,113 1,372,683 361,113
Increase in provisions 1,942,594 ‑ 225,000 ‑
Cash generated by/(applied to) operations 18,451,356 (1,820,826) 2,638,404 (1,820,826)
30.2 TaxationBalance at beginning of year - ‑ - ‑
On acquisition of subsidiaries (20,298,578) ‑ - ‑
Current tax recognised in income statement (1,676,187) ‑ - ‑
Penalties and interest (1,836,767) ‑ - ‑
Balance at end of year 22,191,608 ‑ - ‑
(1,619,924) ‑ - ‑
30.3 Cash and cash equivalentsCashandcashequivalentsconsistofcashonhandandbalanceswithbanks.Cashandcashequivalentsincludedinthecashflowstatementcomprisethe following balance sheet amounts:
Bank balances 1,195,935 1,453 218 1,453
Cash on hand 30,228 ‑ - ‑
1,226,163 1,453 218 1,453
Bank overdraft (refer note 19) (19,579) ‑ (2,713) ‑
1,206,584 1,453 (2,495) 1,453
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Notes to the financial statements for the year ended 31 August 2009 continued
31 ACQUISITION OF SUBSIDIARIESOn 1 September 2008 the Group acquired a 100% interest in QUEENSGATE Leisure Holdings (Pty) Ltd for a purchase consideration of R219 545 921. The results of this Company are included in the hospitality segment results and contributed R66 922 114 to the revenue and a loss of R6 984 238 to theoperatingprofitsoftheGroup.
Thefollowingreflectsthecumulativenetassetsacquiredandliabilitiesassumedthroughtheacquisition:
Group Company31 August 2009
R31 August 2008
R31 August 2009
R31 August 2008
RProperty, plant and equipment 2,464,497 ‑ - ‑
Goodwill 15,223,851 ‑ - ‑
Intangible assets 150,000 ‑ - ‑
Interest in associates and joint ventures 18,183,515 ‑ - ‑
Intra group indebtedness 2,044,543 ‑ - ‑
Deferred taxation 8,064,539 ‑ - ‑
Operating lease accrual 36,562,500 ‑ - ‑
Inventories 609,491 ‑ - ‑
Trade and other receivables 3,796,374 ‑ - ‑
Cash and cash equivalents 2,038,383 ‑ - ‑
Long term borrowings (63,279,304) ‑ - ‑
Trade and other payables (17,548,719) ‑ - ‑
Taxation (5,962,366) ‑ - ‑
Provisions (1,012,590) ‑ - ‑
Short term borrowings (45,009) ‑ - ‑
Net assets acquired 1,289,705 ‑ - ‑
Goodwill on acquisition 218,256,216 ‑ - ‑
consideration paid 219,545,921 ‑ - ‑
consideration paidIssue of ordinary shares 219,545,921 ‑ - ‑
Net cash inflow on acquisitionCash consideration paid ‑ ‑ ‑ ‑
Cash acquired 2,038,383 ‑ ‑ ‑
2,038,383 ‑ ‑ ‑
On 31 October 2008 the Group acquired a 100% interest in QUEENSGATE Business Development for a purchase consideration of R75 000 000. The results of this Company are included in the business development segment results and contributed R52 888 598 to the revenue and R22 810 950 to the operating profitsoftheGroup.AnadjustmentofR28169405wasmadetothepurchasepriceinaccordancewiththetermsoftheacqusitionagreement.Refertonote 17 for further details.
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Thefollowingreflectsthecumulativenetassetsacquiredandliabilitiesassumedthroughtheacquisition:
Group Company31 August 2009
R31 August 2008
R31 August 2009
R31 August 2008
RIntangible assets 5,000,000 ‑ - ‑ Intra group indebtedness 2,781 ‑ - ‑ Otherfinancialassets 41,184,973 ‑ - ‑ Deferred taxation (387,152) ‑ - ‑ Inventories 1,797,690 ‑ - ‑ Trade and other receivables 406,110 ‑ - ‑ Cash and cash equivalents 1,860 ‑ - ‑ Trade and other payables (20,353,199) ‑ - ‑ Taxation (14,336,212) ‑ - ‑ Net assets acquired 13,316,851 ‑ - ‑ Goodwill on acquisition 89,852,554 ‑ - ‑ consideration paid 103,169,405 ‑ - ‑
consideration paidIssue of ordinary shares 75,000,000 ‑ - ‑Loan account 28,169,405 ‑ - ‑
103,169,405 ‑ - ‑
Net cash inflow on acquisitionCash consideration paid - ‑ - ‑ Cash acquired 1,860 ‑ - ‑
1,860 ‑ - ‑
Thefollowingreflectsthecumulativenetassetsacquiredandliabilitiesassumedthroughacquisitionduringtheperiodunderreview:
Group Company31 August 2009
R31 August 2008
R31 August 2009
R31 August 2008
RProperty, plant and equipment 2,464,497 ‑ - ‑ Goodwill 15,233,851 ‑ - ‑Intangible assets 5,150,000 ‑ - ‑ Interest in associates and joint ventures 18,183,515 ‑ - ‑ Intra group indebtedness 2,047,324 ‑ - ‑ Otherfinancialassets 41,184,973 ‑ - ‑ Deferred taxation 7,677,387 ‑ - ‑ Operating lease accrual 36,562,500 ‑ - ‑ Inventories 2,407,181 ‑ - ‑ Trade and other receivables 4,202,484 ‑ - ‑ Cash and cash equivalents 2,040,243 ‑ - ‑ Long term borrowings (63,279,304) ‑ - ‑ Trade and other payables (37,901,918) ‑ - ‑ Taxation (20,298,578) ‑ - ‑ Provisions (1,012,590) ‑ - ‑ Short term borrowings (45,009) ‑ - ‑ Net assets acquired 14,606,556 ‑ - ‑ Goodwill on acquisition 308,108,770 ‑ - ‑ consideration paid 322,715,326 ‑ - ‑
consideration paidIssue of ordinary shares 294,545,921 ‑ - ‑ Loan account 28,169,405 ‑ - ‑
322,715,326 ‑ - ‑
Net cash inflow on acquisitionCash consideration paid - ‑ - ‑ Cash acquired 2,040,243 ‑ - ‑
2,040,243 ‑ - ‑
32 LITIGATIONThereisnolitigationpendingagainsttheCompanyorbeinginitiatedbyCompanyasatthedateoftheseannualfinancialstatements.
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Notes to the financial statements for the year ended 31 August 2009 continued
33 CONTINGENT LIABILITIESThe Company has provided unlimited suretyship to the landlord of QUEENSGATE Timeball Management Company (Pty) Ltd.
QUEENSGATE Leisure Holdings (Pty) Ltd has provided limited suretyship and a cession of the Company’s loan funds to the bankers of QUEENSGATE Holdings (Pty) Ltd limited to an amount of:
3,000,000 ‑ ‑ ‑
TheGrouphasprovidedconcurrentlimitedsuretyshiptothefinanciersofBlackRiverDevelopments(Pty)Ltd,apropertydevelopmentcompany.Aletter of demand in respect of this surety has been received amounting to:
17,353,419 ‑ ‑ ‑
QUEENSGATE Leisure Holdings (Pty) Ltd has provided limited suretyship to the bankers of the landlord of The Avenue Hotel (Pty) Ltd amounting to:
18,000,000 ‑ ‑ ‑
QUEENSGATELeisureHoldings(Pty)Ltdhasprovidedunlimitedsuretyforthedueandproperfulfilmentofalltheobligationsofandforthepunctualpayment of all sums which are or may become due by Top Restaurant Holdings (Pty) Ltd to Westlake Lifestyle Centre (Pty) Ltd in terms of or in connection with an agreement of lease.
QUEENSGATE Leisure Holdings (Pty) Ltd has provided unlimited suretyship including the cession of loan funds in favour of Sovereign Seeker Investments 42 (Pty) Ltd.
The Industrial Development Corporation has a put option against Pamodzi Leisure Solutions (Pty) Ltd in terms of a shareholders’ agreement for the acquisition of 75% of its investment in and claims against Tinga Private Game Lodge (Pty) Ltd. The value of the option has been estimated at R38 500 000. There is no recourse against the company.
QUEENSGATELeisureHoldings(Pty)Ltdhasprovidedunlimitedsuretyshipforthefinancingofcomputerequipmentintermsofarentalagreement.
34 RENTAL AGREEMENT COMMITMENTSCommitments exist in respect of the unexpired portions of rental agreements for premises and public roads, repayable as follows:
Group Company31 August 2009
R31 August 2008
R31 August 2009
R31 August 2008
RImmovable:
Due within one year 30,111,278 ‑ - ‑
Duebetweentwoandfiveyears 128,899,920 ‑ - ‑
Due thereafter 222,392,789 ‑ - ‑
381,403,987 ‑ - ‑
35 RETIREMENT BENEFIT INFORMATION33 (2008: Nil) employees are members of the Liquor and Catering Trade (Cape) Pension Fund. The fund is registered in terms of the Pension Funds Act andoperatesasadefinedcontributionfund.ThetotalcontributionsexpensedduringtheyeartotalledR117065.
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36 RELATED PARTY TRANSACTIONSThefollowingmateralrelatedpartytransactionshavebeenidentified:
RelationshipsSubsidiaries Refer note 8Joint ventures Refer note 7Associates Refer note 6Company controlled by directors QUEENSGATE Holdings (Pty) Ltd QUEENSGATE Leisure Holdings (Pty) Ltd ‑ prior yearShareholders Mvelaphanda Holdings (Pty) LtdDirectors of subsidiaries JR Cowling CR Jones
Investment incomeCompany controlled by directors 2,083,759 ‑ 296,000 ‑
Joint ventures 850,005 ‑ - ‑
Royalties and licence fees receivedCompany controlled by directors 1,200,000 4,008,000 1,200,000 4,008,000
management fees receivedJoint ventures 8,403,720 ‑ - ‑
Technical assistance fees receivedJoint ventures 3,000,000 ‑ - ‑
Infrastructure fees paidCompany controlled by directors 3,262,000 ‑ - ‑
Interest paidShareholders 8,159,598 ‑ - ‑
Joint ventures 3,000 ‑ - ‑
Directors of subsidiaries 15,996 ‑ - ‑
Related party balances
Loan accounts owing (to)/by related partySubsidiaries - ‑ (1,771,883) ‑
Joint ventures 6,838,249 ‑ - ‑
Associates 9,336,294 ‑ - ‑
Company controlled by directors 14,542,810 ‑ (25,827,531) ‑
Directors of subsidiaries (473,695) ‑ - ‑
Shareholders (64,952,524) ‑ - ‑
Trading accounts owing (to)/by related partySubsidiaries - ‑ 1,454,963 ‑
Joint ventures 2,727,738 ‑ 56,365 ‑
Associates 158,737 ‑ 158,737 ‑
Company controlled by directors 82,310 ‑ 82,310 ‑
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Notes to the financial statements for the year ended 31 August 2009 continued
37 FINANCIAL INSTRUMENTSTheGroupclassifieditsfinancialassetsandliabilitiesasfollows:
Financial assetsLoans and receivables at amortised cost
~ Trade receivables 12,678,602 4,626,120 6,532,814 4,626,120
~ Other receivables, excluding prepayments and taxes receivable 1,463,924 70,297 3,000 70,297
~ Loans receivable 65,239,281 ‑ 6,350,491 ‑
~ Cash and cash equivalents 1,226,163 1,453 218 1,453
80,607,970 4,697,870 12,886,523 4,697,870
Financial liabilitiesLoans and payables at amortised cost
~ Trade payables 10,131,521 312,957 5,587,602 312,957
~ Other payables and accruals excluding taxes payable 10,196,183 53,524 946,498 53,524
~ Borrowings 67,559,961 ‑ - ‑
~ Loans payable 30,460,480 683,000 34,539,404 683,000
~ Bank overdrafts 19,579 ‑ 2,713 ‑
118,367,724 1,049,481 41,076,217 1,049,481
38 FINANCIAL RISK MANAGEMENTThe Group is exposed, directly and indirectly to market risk, credit risk and liquidity risk. The board of directors is ultimately responsible for overseeing the Group’s risk management framework and use internal techniques to manage the risks where practicable.
38.1 Liquidity riskLiquidityriskistheriskthattheCompanywillbeunabletomeetafinancialcommitment.Thisriskisminimisedthroughtheholdingofcashbalances.Inaddition,detailedcashflowforecastsareregularlypreparedandfuturecommitmentsandcreditfacilitiesarereviewedonanongoingbasis.
ThetablebelowanalysestheGroupandCompany’sfinancialliabilitiesintotheirrelevantmaturitygroupingsbasedontheremainingperiodatthebalancesheetdatetothecontractualmaturitydate.Theamountsdisclosedinthetablearetheactualundiscountedcashflows.Balancesduewithin12monthsequaltheircarryingbalancesastheimpactofdiscountingisnotsignificant.
Less than 1 year Greater than 1 year Less than 1 year Greater than 1 yearAt 31 August 2009Trade and other payables 23,735,402 ‑ 1,935,984 ‑
Long‑term liabilities ‑ 62,607,437 ‑ ‑
Short‑term portion of long‑term liabilities 4,952,524 ‑ ‑ ‑
Loans payable 1,892,959 ‑ ‑
30,580,885 62,607,437 1,935,984 ‑
At 31 August 2008Trade and other payables 563,301 ‑ 563,301 ‑
Long‑term liabilities ‑ ‑ ‑ ‑
Short‑term portion of long‑term liabilities ‑ ‑ ‑ ‑
Loans payable 683,000 ‑ 683,000 ‑
1,246,301 ‑ 1,246,301
38.2 Capital risk managementThe capital structure of the Company consists of cash and cash equivalents and equity attributable to equity holders of the Company which comprises issued share capital and premium disclosed under note 14 and accumulated losses. The Company’s capital management objective is to achieve an optimal weighted average cost of capital while continuing to meet the Company’s ability to meet its liquidity requirements, repay borrowings as they falldueandcontinueasagoingconcern.ThepolicyoftheCompanyistoachievesufficientgearingsoastohaveanoptimalweightedaveragecostof capital while also ensuring that at all times its creditworthiness is considered to be at least investment grade. The targeted level of gearing is determined after consideration of the needs of the Company to fund future capital expenditure to achieve its growth targets and the desire of the Company to maintain its gearing within levels considered to be acceptable and consistent with an investment grade standing, taking into account potential business volatility.
OnanannualbasistheCompanyupdatesitslongtermbusinessplanwhichisthenincorporatedintothebudgetprocess.Thetargetedgrowthprofiledetermines the Company’s funding requirements, which in turn determines whether the Company is likely to have excess capital or whether it is
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likely to require additional capital. If it has excess capital, the Board will consider returning this to shareholders (through dividends or share buy‑backs). Alternatively, if additional capital is required, the Company will look to source this from either the debt markets or from shareholders, whichever is most appropriate at the time.
38.3 Interest rate riskThecarryingamountoftheCompany’sfinancialassetsandliabilitiesthataresubjecttointerestrate risk is disclosed in notes 5, 7, 15 and 17. The size of the Company’s position exposes it to interest rate risk. This risk is managed through the term structure utilised when placing deposits or taking out borrowings.
The Company is sensitive to the movements in the ZAR interest rates which is the only interest rate to which the Company is exposed. Management has performed a sensitivity analysis of the Company and found that if the ZAR interest rate increased or decreased by 100 basis points, the effect on profit/losshasbeenestimatedatR559600forthecurrentandwouldbenegligibleforthepriorfinancialyear.
38.4 Credit risk managementPotential concentrations of credit risk consist primarily of cash deposits, cash equivalents and trade debtors. Credit risk arises from the risk that a counterparty may default or meet its obligations timeously. The Company minimises credit risk by depositing cash with major banks with high quality credit standing and that appropriate credit limits are in place for each counterparty.
Trade receivables comprise a large customer base. Management evaluates credit risk relating to customersonanongoingbasis.Atyearend,theCompanydidnotconsidertheretobeanysignificantconcentration of credit risk which had not been adequately provided for.
39 SEGMENT INFORMATIONTheGroup’s reportable segments have been identified as hospitality and business developmentunits.
The hospitality unit is involved in the hotels and leisure industry in South Africa.
The business development unit is involved in the development of properties in the hospitality sector.
Business segments
Hospitalitybusiness
development Total2009Revenue and other income 68,934,238 53,275,106 122,209,344
Net interest income/(expense) (7,462,341) 503,448 (6,958,893)
Net income/(loss) from equity accounted investments (2,077,179) (180) (2,077,359)
Impairments (2,983,521) ‑ (2,983,521)
Loss on disposal of non‑current assets (7,594,844) ‑ (7,594,844)
Loss from equity accounted investments (2,077,179) (180) (2,077,359)
Segmentprofitsattributabletoparentshareholders (29,834,614) 26,592,034 (3,242,580)
Segment assets 308,926,557 149,031,194 457,957,751
Segment liabilities (104,712,911) (46,718,733) (151,431,644)
2008Revenue and other income 4,032,000 ‑ 4,032,000
Net interest income/(expense) 613 ‑ 613
Loss on disposal of non‑current assets (2) ‑ (2)
Segmentprofitsattributabletoparentshareholders (4,523,280) ‑ (4,523,280)
Segment assets 16,469,067 ‑ 16,469,067
Segment liabilities (1,246,301) ‑ (1,246,301)
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Shareholders’ Diary
Shareholder Analysis
Financial year end31 August 2009
Next Annual General Meeting14 January 2010
Interim results28 February 2010
Publication of interim resultsMay 2010
for the year ended 31 August 2009 as at 31 August 2009
SHAREHOLDERS HOLDING MORE THAN 5 %
ShareholderNumber of
shares % holdingMvelaphanda Holdings (Pty) Ltd 328 409 868 20.44%
Pershing Securities London 250 504 570 15.59%
Corpclo 500 CC 187 975 269 11.69%
Devsand Investments (Pty) Ltd 152 191 785 9.47%
QUEENSGATE Holdings (Pty) Ltd 132 500 000 8.24%
BackOfficeStaffAccount 117 591 760 7.32%
Mr Giovanni Contaldi 102 963 950 6.41%
TOTAL 1 272 137 202 79.16%
CATEGORISATION OF SHAREHOLDERS PUBLIC VS NON-PUBLIC as at 31 August 2009
Number of holders
Number of shares % holding
NoN pubLIcShareholders holding more than 10% of total issued capitalMvelaphanda Holdings (Pty) Ltd 1 328 409 868 20.44%
Pershing Securities London 1 250 504 570 15.59%
Corpclo 500 CC 1 187 975 269 11.69%
Directors and Associates of the Company 7 652 369 008 40.60%
pubLIc 775 187 561 021 11.68%
TOTAL 785 1 606 819 736 100.00%
SHAREHOLDERS’ SPREAD ANALYSIS AND INFORMATION
Shareholders’ SpreadNumber of
holdersNumber of
shares % holdingIndividuals 645 182 038 626 11.34%
Nominees and Trusts 51 149 395 179 9.30%
Close Corporations 17 1 786 588 0.11%
Companies and Financial Institutions 72 1 273 499 343 79.25%
TOTAL 785 1 606 819 736 100.00%
Size of ShareholdingNumber of
holdersNumber of
shares % holding1 ‑ 1 000 46 31 209 0.00%
1 001 – 10 000 252 1 446 331 0.09%
10 001 – 100 000 280 12 059 252 0.75%
100 001 – 1 000 000 133 44 656 900 2.78%
1 000 001 and over 74 1 548 626 044 96.38%
TOTAL 785 1 606 819 736 100.00%
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Radisson Blu, Cape Town
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A brief curriculum vitae for TN Ndziba is on page 70.
5. Ordinary resolution number 5 – director retirement and re‑election – LW Sipoyo“RESOLVED THAT, LW Sipoyo, who retires in accordance with the provisions of the Company’s articles of association, and being eligible, offers himself for re‑election, be and hereby is re‑elected as a non‑executive director of the Company.”
A brief curriculum vitae for LW Sipoyo is on page 70.
6. Ordinary resolution number 6 – auditors’ re‑appointment and remuneration“RESOLVED THAT, the re‑appointment of Nolands Incorporated as the auditors, with Mr Allan Mundell as the Designated Auditor at partner status, be and is hereby approved and that the audit committee be and is hereby authorised to determine the remuneration of the auditors.”
Explanatory Note:Nolands Incorporated has indicated its willingness to continue as the Company’s auditors until thenextannualgeneralmeeting.Theauditcommitteehassatisfieditselfastotheindependenceof Nolands Incorporated. The audit committee has the power in terms of the Corporate Laws Amendment Act, 2006 to approve the remuneration of the external auditors. The remuneration and non‑audit fees paid to the auditors during the year ended 31 August 2009 are contained on page 54 of the Annual Financial Statements.
7. Ordinary resolution number 7 – Non‑Executive Directors’ remuneration“RESOLVED THAT, the approval of the remuneration payable to the non‑executive directors for the financialyearcommencing01September2009asfollows:”
Chairman Other directors/members of committeesboard meeting:Monthly fee: R10,000 R7,000Audit & Risk committee:Monthly Fee: R10,000 R7,000Other Committees:Monthly fee: R10,000 R7,000
8. Ordinary resolution number 8 – placing unissued shares under the control of the directors
“RESOLVED THAT, the authorised, but unissued ordinary shares in the capital of the Company be placed at the disposal and under the control of the directors of the Company until the next annual general meeting of the Company and that the directors be and are hereby authorised and empowered to allot, issue and otherwise dispose of such shares, on such terms and conditions and at such times asthedirectorsintheirdiscretiondeemfit,subjecttosections221and222oftheCompaniesAct,No. 61 of 1973 and the JSE Limited’s (“JSE”) Listings Requirements.”
9. Ordinary resolution number 9 – general authority to allot and issue shares for cash
“RESOLVED THAT, subject to the approval of 75% of the members present in person and by proxy, and entitled to vote at the meeting, excluding the controlling shareholders of the Company and the Company’s Designated Advisor, the directors of the Company be and hereby are authorised, by way
Notice of Annual General Meeting of Shareholders of QUEENSGATE Hotels & Leisure LimitedQUEENSGATE HOTELS & LEISURE LIMITED (Incorporated in the Republic of South Africa)(Registration number 1998/013649/06) Share code: QHL ISIN code: ZAE000113718(“QUEENSGATE” or “the Company”)
DirectorsJC Human* (Chairman) AJ Hubbard (CEO) HGB FriedrichsenW Voigt (FD) MH Weetman* TN Ndziba*NT Noland* LW Sipoyo* S Swana*
*Non-executive
Notice is hereby given that an annual general meeting of shareholders of QUEENSGATE will be held at Arcay House II, Number 3 Anerley Road, Parktown, Johannesburg, 2193 at 11h00 on Thursday, 14 January 2010 to consider, and if deemed fit, to pass, with or withoutmodifications,thefollowingresolutions:
1. Ordinary resolution number 1 – annualfinancialstatements
“RESOLVED THAT, the annual financialstatements of the Company for the year ended 31 August 2009, together with the directors’ and auditors’ reports thereon, be and are hereby received, considered and adopted.”
2. Ordinary resolution number 2 – director appointment – NT Noland
“RESOLVED THAT, the interim appointment of NT Noland as a non‑executive director of the Company with effect from 26 January 2009 be and here is approved.”
A brief curriculum vitae for NT Noland is on page 70.
3. Ordinary resolution number 3 – director retirement and re‑election – S Swana
“RESOLVED THAT, S Swana, who retires in accordance with the provisions of the Company’s articles of association, and being eligible, offers himself for re‑election, be and hereby is re‑elected as a non‑executive director of the Company.”
A brief curriculum vitae for S Swana is on page 70.
4. Ordinary resolution number 4 – director retirement and re‑election – TN Ndziba
“RESOLVED THAT, Ms TN Ndziba, who retires in accordance with the provisions of the Company’s articles of association, and being eligible, offers herself for re‑election, be and hereby is re‑elected as a non‑executive director of the Company.”
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of general authority, to allot and issue all or any of the authorised but unissued shares in the capital oftheCompanyastheyintheirdiscretiondeemfit,subjecttothefollowinglimitations:• theshareswhicharethesubjectoftheissueforcashmustbeofaclassalreadyinissue,
or where this is not the case, must be limited to such equity securities or rights that are convertible into a class already in issue;
• thisauthorityshallnotendurebeyondthenextannualgeneralmeetingoftheCompanynorshall it endure beyond 15 months from the date of this meeting;
• therewillbenorestrictionsinregardtothepersonstowhomthesharesmaybeissued,providedthatsuchsharesaretobeissuedtopublicshareholders(asdefinedbytheJSEinitsListings Requirements) and not to related parties;
• uponanyissueofshareswhich,togetherwithpriorissuesduringanyfinancialyear,willconstitute 5% or more of the number of shares of the class in issue, the Company shall by way of an announcement on Securities Exchange News Service (“SENS”), give full details thereof, including the effect on the net asset value of the Company and earnings per share;
• theaggregateissueofaclassofsharesalreadyinissueinanyfinancialyearmaynotexceed50%of the number of that class of shares (including securities which are compulsorily convertible into shares of that class); and
• themaximumdiscountatwhichsharesmaybeissuedis10%oftheweightedaveragetradedprice of the Company’s shares over the 30 business days prior to the date that the price of the issue is determined or agreed by the directors of the applicant.”
10. Special resolution number 1 – increase in authorised share capital“RESOLVED THAT, the authorised share capital of the Company comprising R20 000 000 divided into 2 000 000 000 ordinary shares with a par value of R0.01 per share, be and hereby is increased by R10 000 000 to R30 000 000 by the creation of an additional 1 000 000 000 ordinary shares with a par value of R0.01 per share each in the share capital of the Company, which additional ordinary shares shall in all respects rank pari passu with the existing ordinary shares in the capital of the Company, be and is hereby approved.”
Reason and effect of Special resolution number 1The reason for this special resolution is to increase the authorised share capital of QUEENSGATE to facilitate any future acquisitions that the Company might want to do.
11. Special resolution number 2 – change in main object and purpose of the Company
“RESOLVED THAT, the Company change its main object and purpose to identify, develop and operate businesses in the hotel and leisure industry.”
Reason and effect of Special resolution number 2The reason for this special resolution is to change the main object and purpose to more adequately reflectthebusinessoftheCompany.
Voting and ProxiesEach shareholder, whether present in person or represented by proxy, is entitled to attend and vote at the annual general meeting. On a show of hands every shareholder who is present in person or by proxy shall have one vote, and, on a poll, every shareholder present in person or by proxy shall have one vote for each share held by him/her.
Certificatedshareholdersanddematerialised shareholders with “own name” registrationIf youareacertificated shareholderorhavedematerialised your shares with “own name” registration and you are unable to attend the annual general meeting of QUEENSGATE shareholders to be held at 11h00 on Thursday, 14 January 2010 at Arcay House II, Number 3 Anerley Road, Parktown, Johannesburg, 2193, and wish to be represented thereat, you must complete and return the attached form of proxy in accordance with the instructions contained therein and lodge it with, or post it to,thetransferoffice,namelyComputershareInvestor Services (Proprietary) Limited 70 Marshall Street, Johannesburg, 2001, (PO Box 61051, Marshalltown, 2107), so as to be received by them no later than 10h00 on Tuesday, 12 January 2010.
Dematerialised shareholders other than those with “own name” registrationIf you hold dematerialised shares in QUEENSGATE through a CSDP or broker other than with an “own name” registration, you must timeously advise your CSDP or broker of your intention to attend and vote at the annual general meeting in order for your CSDP or broker to provide you with the necessary authorisation to do so, or should you not wish to attend the annual general meeting in person, you must timeously provide your CSDP or broker with your voting instruction in order for the CSDP or broker to vote in accordance with your instruction at the annual general meeting.
By order of the Board
Arcay Client Support (Proprietary) LimitedCompany SecretaryJohannesburg27 November 2009
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Scholarship Programme at Wits University, Johannesburg and later completed the Business Advisors Programme at WBS‑Centre for Developing Business. He holds an MBA from the University of Pretoria as well as a B.Th in Ethics from UNISA. He has received sponsorship from the Department of Transport for part of the degree Honors B.Comm (Logistics) at UNISA which he completed. Sandile has prepared and presented conference papers for IPSA, Supply Chain Council and SAPICS. He spent seven years in the retail sector with Caltex Oil and Zenex Oil where he gained experience in business planning, oil retail and general management. He has also worked as group operations managerfortheJSElisted,DonGroup.Heispresentlynon-executivedirectorofJSElistedAfleaseGold, Matodzi Resources, ConvergeNet Holdings and Emergent Properties and is a member of the Institute of Directors.
Lindikhaya Welile Sipoyo – Non-executiveMr Lindikhaya Sipoyo is currently the president of Isingqi Investment Holdings (Pty) Ltd and comes from a six year stint of heading up the Information and Communication department in the Parliament of the Republic of South Africa, focusing in Provincial and Municipal Liaison. He has morethantenyearsexperienceinfinancialmanagementandprojectmanagement.Healsoholdsa Postgraduate Diploma in Management from the University Of Cape Town Graduate School Of Business, a Postgraduate Diploma in Development Communication, Wits University. Parliamentary ManagementDiploma,RIPAInstituteofManagement,UKandaPostGraduateCertificateinPublicAdministration Special Masters degree program (MPA Special), with the University of Stellenbosch , School of Public Administration. He also has business interests in the following companies namely as CEO of Imbewu Mineral Resourses which have interests in platinum and diamond explorations; JBB Property Development Holdings, a lifestyle property estate development company; Miganu Property Holdings, a BEE shareholder of the Growthpoint Property Group managed by Investec and isalsoaTrusteeoftheMantobaTrustwhichisabeneficiaryoftheBathoBonkeCapitalBBBEE,aMvelaphandaGroup–ABSASharesbeneficiary.
Tham-Tham Nomathamsanda Ndziba – Non-executiveMs Tham‑Tham Ndziba holds a Diploma in Business Studies from Commercial Careers College in Zimbabwe as well as a CIS Diploma. Ms Ndziba’s career covers a broad spectrum in the financialandcommunicationsfields.Shestartedoffhercareerasfinancialadministratorfor the ANC Women’s League, director of communications for Alexander Forbes in their NBC Division, managing director of Sinamuva Global Communications, executive director of ABASA who assist up and coming black accountants. In 2005/2006 she was also appointed as executive director to the Institute of Black Property Practitioners (SAIBPP). Presently she deals in business initiatives and is director and shareholder in the following companies: CEO Ummango Investment Holdings, Director of Mining Resources, Director and shareholder of Udingo Holdings, Lumekani Development (construction and project management) & Lumekani Properties (property and brokerage), Storm (corporate designs).
Abridged Curriculum Vitae
Norman Theodore Noland - Non-executiveNorman has completed two post‑graduate degrees: one at Wits University in 1989, and the other at UNISA in 1991(SAQA level 7 – Honours Degree). He obtained distinction for his Thesis on Strategic Planning and is also an Associate Financial Planner with the Financial Planning Institute of South Africa. He has over 40 years ofexperienceinthefinancialservicesindustry.Since leaving Standard Bank in 1995 he has been involved in acquiring and establishing a number of businesses, both locally and internationally in the financial services, leisure, tourism andIT sectors. Prior to 1995 he was employed for 15 years in the Standard Bank Group and before that held senior positions in smaller South African Banks and Building Societies. He started his career at Old Mutual. His directorships in past years have embraced companies in South Africa, Mauritius, Switzerland, Germany, Luxembourg, Guernsey, Jersey and Isle of Man. Included in this extensive list of directorships are: deputy Chairman of Stock Exchange of Mauritius listed Private Equity and Financial Services Holding Company as well as Trinity Financial Group (TFG). Executive Chairman of Dale Capital Partners Group, the financial services divisionof TFG. Non‑Executive Directorship of Mauritian Bank, AfrAsia Bank Limited and Chairman of Dale International Trust Limited. Until 31 July 2008 he held the responsibility as the deputy Chairman of the Sekunjalo Investment Group.
Sandile Swana – Non-executiveSandile was born in Johannesburg and matriculated at St John’s College, Umtata. He completed a B.Comm under the Anglo American
Rockwell, Cape Town
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Forusebycertificatedand“ownname”registereddematerialisedshareholdersoftheCompany(“shareholders”)attheannualgeneralmeetingofshareholdersofQUEENSGATEtobeheldintheboardroom,attheCompany’sregisteredoffice,ArcayHouseII,Number3AnerleyRoad,Parktown,Johannesburg, 2193 at 11h00 on Thursday, 14 January 2010 (“the annual general meeting”).
I/We (full names) __________________________________________________________________________________
of (insert address) __________________________________________________________________________________
being the holder/s of ______________________ ordinary shares of 0.1 cent each in QUEENSGATE appoint (see note 1 and 2):
1. _______________________________________________ or failing him, ________________________________________________________________
2. _______________________________________________ or failing him, ________________________________________________________________
3. the Chairman of the annual general meeting.
as my/our proxy to act for me/us and on my/our behalf at the annual general meeting which will be held for the purpose of considering, and if deemedfit,passing,withorwithoutmodification,theresolutionstobeproposedthereatandatanyadjournmentthereofandtovoteforand/oragainst the resolutions and/or abstain from voting in respect of the shares registered in my/our name/s, in accordance with the following instructions (see note 3):
Number of votes (one vote per share)
for Against Abstain
Ordinary resolution number 1 ‑ Annual Financial Statements
Ordinary resolution number 2 – Director appointment (NT Noland)
Ordinary resolution number 3 – Director retirement and re‑election (S Swana)
Ordinary resolution number 4 – Director retirement and re‑election (Ms TN Ndziba)
Ordinary resolution number 5 – Director retirement and re‑election (LW Sipoyo)
Ordinary resolution number 6 – Auditors re‑appointment and remuneration
Ordinary resolution number 7 – Non‑executive directors’ remuneration
Ordinary resolution number 8 – Placing unissued shares under the control of the directors
Ordinary resolution number 9 – General authority to allot and issue shares for cash
Special resolution number 1 – Increase in authorised share capital
Special resolution number 2 – Change in main object and purpose of the Company
QUEENSGATE HOTELS & LEISURE LIMITED(Incorporated in the Republic of South Africa)(Registration number 1998/013649/06)Share code: QHL ISIN code: ZAE000113718(“QUEENSGATE” or “the Company”)
FORM OF PROXY(for use by certificated and “own name dematerialised” shareholders only)
Signed at ___________________________________________________ on ___________________________________________________________ 2010
Signature ___________________________________________________
Assisted by me (where applicable) _________________________________________________________________________________________________
Name __________________________________________________________________________________________________________________________
Capacity _______________________________________________________________________________________________________________________
Signature ___________________________________________________
(Please print in BLOCK LETTERS)
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Certificatedshareholdersanddematerialisedshareholderswith “own name” registrationIf you are a certificated shareholder or havedematerialised your shareswith “ownname” registration and you are unable to attend the annual general meeting of QUEENSGATE shareholders to be held at 11h00 on Thursday, 14 January 2010 at the registeredofficeoftheCompanyatArcayHouseII,Number3AnerleyRoad,Parktown,Johannesburg, 2193 and wish to be represented thereat, you must complete and return this form of proxy in accordance with the instructions contained herein and lodge it with, or post it to, the transfer secretaries, namely Computershare Investor Services (Pty) Ltd, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107), so as to be received by them no later than 10h00 on Tuesday, 12 January 2010.
Dematerialised shareholders other than those with “own name” registrationIf you hold dematerialised shares in QUEENSGATE through a CSDP or broker other than with an “own name” registration, you must timeously advise your CSDP or broker of your intention to attend and vote at the annual general meeting or be represented by proxy thereat, in order for your CSDP or broker to provide you with the necessary authorisation to do so, or should you not wish to attend the annual general meeting in person, you must timeously provide your CSDP or broker with your voting instruction in order for the CSDP or broker to vote in accordance with your instruction at the annual general meeting.
Notes1. Each member is entitled to appoint one or more proxies (who need not be a
member of the Company) to attend, speak and, on a poll, vote in place of that member at the annual general meeting.
2. A member may insert the name of a proxy or the names of two alternative proxies of the member’s choice in the space provided, with or without deleting “the Chairman of the annual general meeting”. The person whose name stands firstontheformofproxyandwhoispresentattheannualgeneralmeetingwillbe entitled to act as proxy to the exclusion of those whose names follow.
3. A member’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by that member in the appropriate box/es provided. Failure to comply with the above will be deemed to authorise the Chairperson of the annual general meeting, if he/she is the authorised proxy, to vote in favour of the ordinary resolutions at the annual general meeting, or any other proxy to vote or to abstain from voting at the annual general meeting as he/shedeemsfit,inrespectofallthemember’svotesexercisablethereat.
4. A member or his/her proxy is not obliged to vote in respect of all the ordinary shares held or represented by him/her but the total number of votes for or against the resolutions and in respect of which any abstention is recorded may not exceed the total number of votes to which the member holder or his/her proxy is entitled.
5. Forms of proxy must be lodged with the transfer secretaries, of the Company by not later than 10h00 on Tuesday, 12 January 2010.
6. The completion and lodging of this form of proxy will not preclude the relevant member from attending the annual general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such member wish to do so.
7. Any alterations or corrections to this form of proxy must be initialled by the signatory/ies.
8. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy unlesspreviouslyrecordedbytheCompany’stransferofficeorwaivedbytheChairperson of the annual general meeting.
9. The Chairperson of the annual general meeting may reject or accept any proxy form which is completed and/or received other than in accordance with these instructionsandnotes,providedthathe/sheissatisfiedastothemannerinwhich a member wishes to vote.
Designed by Profit Partnership – 011 532-4000 – More than just paper and ink™
Financial communications – Arcay Financial Communications (Pty) Ltd
AdministrationQUEENSGATE Hotels & Leisure Limited(Registration number 1998/013649/06)
COMPANY SECRETARY AND REGISTERED OFFICEArcay Client Support (Pty) Ltd(Registration number 1998/025284/07)Arcay House II3 Anerley RoadParktown, 2193
PO Box 62397Marshalltown, 2107
Tel +27 11 480 8500Fax +27 11 480 8556
TRANSFER SECRETARIESComputershare Investor Services (Pty) Ltd(Registration number 2004/003647/07)70 Marshall StreetJohannesburg, 2001
PO Box 61051Marshalltown, 2107
DESIGNATED ADVISORArcay Moela Sponsors (Pty) Ltd(Registration number 2006/033725/07)Arcay House II3 Anerley RoadParktown, 2193
PO Box 62397Marshalltown, 2107
AUDITORSNolands Chartered Accountants (SA)(Registration number 2000/004145/21)Noland House, River ParkRiver LaneMowbrayCape Town, 7700
PO Box 2881Cape Town, 8000
QUEENSGATE Divisions
QUEENSGATE
Business and Asset Management
QUEENSGATE
Hotel Management
QUEENSGATE
Hotels & Leisure Limited
Hotels
Wellness
Restaurants
Conferencing
QUEENSGATE Business Development
~ Identifies, secures and places strategic investments
~ Provides technical assistance and project management
~ Catalyst between the developer and investor
QUEENSGATE Business and Asset Management
~ Invests in businesses in the hotel and leisure industry
~ Leases and operates hotel and leisure assets
~ Operates hotels for own account in most instances
QUEENSGATE
Business Development
Restaurants
Wellness
IT
QUEENSGATE
Brands
1996~ acquires controlling stake in Villa Via
Hotel, Granger Bay, Cape Town
1997~ launches the first South African hotel fund
for the German market
2001~ rebrands Villa Via Hotel to
Radisson SAS Hotel, located at the
Cape Town Waterfront
~ negotiates a master franchise for
Southern Africa for Radisson SAS
~ sells interest in master franchise to
Mvelaphanda Holdings whilst retaining
control of the hotel
2002~ acquires 170 room hotel on
Greenmarket Square, Cape Town
~ acquires 30% stake in Tinga Private
Game Lodge, Mpumalanga Province
2003~ opens Cape Town Hollow Hotel and
incorporates the first Amici Restaurant
~ renovates Greenmarket Square Hotel
and rebrands the premises to Park Inn
~ launches Famous Butchers Grill in
the Park Inn
2005~ creates QUEENSGATE Wellness
Holdings and ONEwellness brand
2006~ acquires Hollow on the Square, Cape Town
~ forms exclusive relationship with MCT
(German promoter of property funds)
2007~ opens first ONEwellness operation in
Radisson Hotel, Cape Town
~ acquires the Avenue Hotel, Cape Town
2008~ concludes BEE deal with
Mvelaphanda Holdings
~ places Hollow on the Square and
Avenue Hotel in MCT funds
~ signs The Alphen Hotel in
Constantia, Cape Town
~ lists QUEENSGATE Hotels & Leisure
on the JSE’s AltX
2009~ developing four new hotels:
Cape Town – three
Pretoria – one
~ aquires The Rockwell All Suite Hotel,
Cape Town and acquires QUEENSGATE
Business Development
QUEENSGATE Hotels & Leisure LimitedNoland House 1st floor, River Park, River Lane, Mowbray, 7700, Cape Town
PO Box 5642, Cape Town, 8000, South Africa
Tel: +27 (0) 21 681 6666
Fax: +27 (0) 681 6652
Email: [email protected]
www.queensgate.co.za
2009 Annual Report
QU
EENSG
ATE Hotels &
Leisure Limited – 2009 A
nnual Report
VISIONTo be the premier listed leisure company in 2010 and beyond, internationally renowned as an innovative BEE entity providing lucrative leisure investment opportunities.
MISSION To provide exceptional and consistent performance to all stakeholders through investment and services in the leisure industry by introducing cutting edge systems, technology and product engineering.
