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Strong showing forecast on eve of Bonatla listing
PROPERTY INVESTMENT
BONATLA Property Holdings, the first property investment group to come to the JSE for about three years, should excite property investors when it lists on Wednesday with borrowing used to finance growth in the portfolio. The profit forecast, subject to number of imponderables, suggests an 80% compound increase a year over the next three years. Bonatla, meaning performance or strength in Northern Sotho, will not be raising finance through the listing, but has rather paid the vendors of the properties R55.3-million in cash and issued 38.6-million ordinary shares at 200c a share and 8.3-million debentures at the same price. An additional 2.5-million shares and R660 000 in cash were issued in terms of a restraint of trade and confidentiality agreement.
To fund the cash payment and increase working capital, additional mortgage bonds of R58.7-million were raised, taking the total bond figure to R110.9-million. The 24 commercial and industrial properties in Gauteng valued at R229.8-million are held for income earning potential, says MD Niki Vontas.
The forecast for the year to next September suggests operating profit of R20.5-million which, after mortgage interest of R19.7-million, minimal interest received and a small tax charge, will leave attributable profit of R998 000, which will be distributed in the form of dividends and interest on debentures of 2c a share. Projections for 1999 and 2000 on the same basis, provide attributable profit of R1.3-million and R2.7-million with dividends rising to 3c and 6.1c respectively. These forecasts are, however, on the basis that vendors do not redeem debentures for cash or convert on a one-for-one basis in October 1998 and 1999 or January 2000. Auditor Kessel Feinstein says that the information presented in the pre-listing statement is consistent with the accounting policies normally adopted by Bonatla and its subsidiaries. It says, however, that, "since the forecast is based on assumptions concerning future events, actual results may vary from the forecast which has been presented and the variations may be material. Accordingly, we express no opinion on whether or not the forecast will be achieved."
Vontas says a major feature of the company will be its ability to bridge the gap between listed property investments on the JSE and industrial shares by intelligently using financial gearing. With R85-million in share capital, the intention is to increase the property portfolio to R500-million to R600-million in two years. A one percentage point drop in mortgage rates will save the company about R1-million a year, says Vontas. Bonatla will utilise borrowings to enhance the income and capital growth of the portfolio, subject to individual properties being geared only to the extent allowed by their sustainable cash flow. Vontas has a 20.1% stake in the company. Primedia and Murray and Roberts Contractors are major shareholders.
VLC Properties will be paid fees of between 1.5% and 5% of gross income collected plus VAT. The fee, however, will not be less than 3% of gross income if this is less than R2.4-million a month. VLC will also receive R50 000 a month, subject to adjustment, for secretarial and accounting functions.
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