Presenter: Lindsay Williams  Guest(s): Wilfred Robinson 

Recently listed on the JSE Alternative Exchange (AltX) leisure and golf estate development company Acc-Ross exceeds profit forecasts as set out in the company’s listing prospectus. With Acc-Ross chief operating officer Wilfred Robinson, and Richard Hirsch from Standard Bank Equities and Derivatives

LINDSAY WILLIAMS: Acc-Ross Holdings listed on AltX not that long ago - if you drive down any other major arterial road in Gauteng you’ll see their posters with a picture of Ernie Els. I haven’t really had a chance to look at the results - apart from the fact that the loss before taxation was R17.4-million, and the loss after taxation was R7.8-million. It says: “The directors are pleased to report that the profit forecast as set out in the company’s prospectus, as well as the revised profit forecast have both been exceeded.” Wilfred, I’m sorry to be cynical, and you must prove me wrong here - a couple of fund managers say you’re a little bit too small for them, but they will give you a chance - but the brokers say they’re not so sure. They say because your revenue and profits were primarily generated by the transfer of phase one of the Gardener Ross Golf Estate - and the sale of 20 stands for R30-million - they’d rather steer clear of you. Can you maybe give us a better indication of what Acc-Ross does?

WILFRED ROBINSON: I’ve only been here a few weeks - so it’s a bit of a baptism of fire obviously, but I’ll do my best. We’re primarily a developer of leisure resorts, and residential lifestyle estates - I think the market needs to get to full grips with our business, and where the value is unlocked. We have a number of developments - the Gardener Ross development was the primary generator of our revenue and income in this period, but as you know Lizard Point on the Vaal Dam is our next big development, and we’re looking at a development call The Bay at Hartbeespoortdam which should also come on stream in the next period. Gardener Ross is way ahead of schedule - in fact phase two is going to be released shortly…

LINDSAY WILLIAMS: Do you actually own these developments, or are you in partnership with other people? Exactly what is your holding?

WILFRED ROBINSON: Gardener Ross - we have a minority shareholder there, but we are the majority shareholder with 90% - so the majority of that cash that’s going to be released now is going to become our cash engine to fund these future developments. So the future is looking pretty good from the perspective that we own these properties - the rights are in place, and the cash is either being generated primarily by Investec who fund the developments as our profit-share partner - and then of course some cash is going to be generated from Gardener Ross.

LINDSAY WILLIAMS: Talking about cash generated, it says in your cash flow statement review: “Cash generated by operations increased from 31 August 2005 by just R4.7 million.” The reason I mention that is if one is reading this for the first time, and one didn’t quite have a handle on what your business is - which you’re trying to explain to us now - and one looks at the fact that most of your revenue comes from the sale of 20 stands for R30-million and one says that the share listed at 50 cents, then went to about R1.30 and is now down at about 30 cents, there’s a good deal of scepticism about your future prospects and all your eggs being in the golf estate basket...

WILFRED ROBINSON: Correct. The R30-million was just from 20 stands, but the whole R180-million in sales was obviously a whole lot more stands - that was just an element of the sales. I’m sorry if that’s a bit misleading.

LINDSAY WILLIAMS: Future prospects - that’s what we really want to know. It’s a very high-profile company - if you’re driving along between this office and Fourways you see Acc-Ross everywhere - I just want to know if there’s any substance to the JSE listing?

WILFRED ROBINSON: We’re not being subtle are we?

LINDSAY WILLIAMS: I just want to know if there’s anything beneath those billboards?

WILFRED ROBINSON: Absolutely. If one has to look at how we generate our income, it’s obviously from the acquisition of land, getting the rights to that land - and then developing residential and golfing estates primarily with Retief Goosen and Ernie Els. Those are the two signature players on our estates…

LINDSAY WILLIAMS: Wilfred, you’ve had a “baptism of fire” for the last few weeks - does that mean that the previous chief operating officer has left - what’s the situation?

WILFRED ROBINSON: No, I think the exciting thing about Acc-Ross is that it was previously an aggregation of some entrepreneurial activities by a variety of partners that pulled this together into a listed entity - the challenge now is to grow and implement proper corporate governance given it’s now in the public eye as a listed entity, and not just a small entrepreneurial endeavour. Hence the appointment of myself as the chief operating officer - and we are making other appointments as we speak to strengthen the management team, bring in strong corporate governance, due process, quality, procedures, etcetera - things that don’t exist in smaller entrepreneurial entities.

LINDSAY WILLIAMS: It’s a difficult going from entrepreneurial to JSE listing. One property fund manager said Acc-Ross was too small - they’d never attract institutional shareholders. Acc-Ross at the time of listing said they anticipated sales of R1-billion in 2007. Jaco Verster didn’t come on Classic Business Day - having been scheduled for many hours to be on with us - I just think that perhaps there’s something not quite right about this?

RICHARD HIRSCH: I think it was quite a tough interview for Wilfred - I think he’s been there a short time. What was the listing price? R1?

LINDSAY WILLIAMS: It went to 50 cents and then up to nearly R1.30 in the next couple of days. On the other hand it’s listed on the JSE - if they come on the radio they must be prepared. I think the chief executive should take the blame.

RICHARD HIRSCH: I think you’ve got to learn a lesson - if you think back to 1998 or 1999 in the market, a lot of those listings really shouldn’t have been on the JSE main board. Investors out there really have to be careful - there’s going to be a lot of listings that come to this market because we’re in such a bullish phase. I think there are stricter regulations now to get on to the JSE or AltX - but just be very careful in what you’re investing in that’s come to the market.

LINDSAY WILLIAMS: Would you buy it?

RICHARD HIRSCH: Most definitely not, but I would buy Madison which is coming next week.