Sanlam values Accra Mall at $101m despite its real estate wing posting heavy losses

Accra MallDespite valuing the Accra Mall in Ghana at a little over $101 million, South African financial services group, Sanlam, posted heavy losses in financial year 2015 in its African real estate operations citing deteriorating economic conditions and debt burdens as the main factors for the losses.

However, details of the company’s final accounts are raising serious questions about its tax commitments.

The group says it still intends to grow its investments in Africa, especially in Ghana where it owns and manages the Accra Mall. The group also owns shares in the Enterprise Group in Ghana – in Enterprise Life, 49 per cent, Enterprise Insurance, 40 per cent and Enterprise Trustees, 40 per cent, sources in Ghana have confirmed. Enterprise Trustees is the pensions funds administration wing of the Enterprise group.

Sanlam said the Mall’s trading conditions remained largely resilient, with only a marginal impact on operations from the current economic downturn.

“The small initial retail expansion and the refurbishment of the food court have been completed. The property was independently valued at 31 December 2015 as at $101.4 million excluding vacant land at a cost of $10.5 million,” the company said in its investors report.

Sanlam expects its earnings to pick up this year after the initial phases of the expansion to Accra Mall are completed. This will further cement Accra Mall’s dominant position in the capital’s retail landscape. The second phase of the expansion of the Mall is currently being chalked out.

The company’s real estate activities, which are controlled from South Africa, have a heavy Mauritius connection with an offshore entity of the group based in that country. Sanlam Africa Core Real Estate Investments, the Mauritius entity listed on the Stock Exchange of Mauritius, manages all the real estate investments of the company in Africa.

But the accounts of the company released last week shows the Mauritian entity did not incur any taxation expenses for both 2014 and 2015, all the more despite its profits in 2014. The corporate laws of Mauritius impose a tax rate of 15 per cent on profits.

Officials at the relevant authorities in Mauritius are yet to provide any explanation as to why Sanlam has not fulfilled its tax obligations for these two years or if the group benefits from a tax holiday, which according to accounting professionals in Mauritius would be unlikely.

The net profits attributable to shareholders stood at $4.6 million as at 31 December 2014, however dropping earnings from $8.5 million in 2014 to $2.4 million in 2015 coupled with a heavy impairment on loans of $2.8 million last year are apparently the two major items that contributed to the loss of $4.98 million in 2015.

Sanlam said the worsening economic conditions in the region coupled with local currency depreciation and a considerable rise in country specific interest rates, have constantly affected the Mauritius’ entity’s investments. “The sustained slump in commodity markets, falling growth expectations and concerning sovereign debt burdens have also contributed to weaker local trading conditions,” the group said in its report to the Stock Exchange of Mauritius last week.

By Emmanuel K. Dogbevi, with additional files from correspondents in Mauritius

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