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FVT
FVT
FVT - Fairvest Property Holdings Limited - Abridged consolidated group
financial results for the eighteen month-period ended 31 March 2007;
FAIRVEST PROPERTY HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1998/005011/06)
("Fairvest" or "the company")
Share code: FVT ISIN: ZAE000034658
ABRIDGED CONSOLIDATED GROUP FINANCIAL RESULTS FOR THE EIGHTEEN MONTH-
PERIOD ENDED 31 MARCH 2007;
FINANCIAL EFFECTS IN RESPECT OF THE DISPOSALS OF THE NEDBANK CIRCLE
AND MANGROVE CENTRE PROPERTIES; AND
WITHDRAWAL OF CAUTIONARIES
UNAUDITED AUDITED
RESULTS RESULTS
FOR 18- FOR 12-
MONTH MONTH
PERIOD PERIOD
ENDED ENDED
31 MARCH 30
2007 SEPTEMBER
2005
R `000 R `000
CONSOLIDATED BALANCE SHEETS
ASSETS
NON-CURRENT ASSETS 151 950 134 991
Property and equipment 149 216 132 790
Financial assets 0 104
Accounts receivable 2 734 2 097
CURRENT ASSETS 3 537 8 435
Trade and other receivables 1 868 5 776
Amount due from a vendor 0 0
Cash and cash equivalents 1 669 2 659
TOTAL ASSETS 155 487 143 426
EQUITY AND LIABILITIES
EQUITY AND RESERVES
Ordinary share capital 845 845
Retained income 0 0
NON-CURRENT LIABILITIES 142 817 133 300
Linked unit debentures and premium 71 206 59 071
Long-term liabilities 51 270 65 384
Deferred taxation 20 341 8 845
CURRENT LIABILITIES 11 825 9 281
Taxation 1 176 397
Trade and other payables 10 649 6 593
Interest bearing redeemable 0 2 291
debentures
TOTAL EQUITY AND LIABILITIES 155 487 143 426
CONSOLIDATED INCOME STATEMENTS
GROSS REVENUE 39 748 32 421
Rental income - contractual 39 645 31 956
- straight-line 103 465
accrual
Operating costs (30 438) (23 356)
Other revenue net of costs 11 854 (868)
Fair value adjustments - (12 135) (5 003)
debentures
Profit/(loss) on sale of 5 261 (150)
investment property
Fair value adjustment - investment 18 728 4 285
properties
OPERATING PROFIT 21 164 8 197
Interest received 540 182
Debenture interest (181) (218)
Finance charges (8 814) (10 886)
PROFIT BEFORE TAXATION 12 709 (2 725)
Taxation 12 709 (2 725)
PROFIT ATTRIBUTABLE TO 0 0
SHAREHOLDERS
CASH FLOW STATEMENTS
Cash flow from operating 9 427 1 985
activities
Cash flow from investing 6 092 67 949
activities
Cash flow from financing (16 509) (66 686)
activities
Net (decrease)/increase in cash (990) 3 248
and cash equivalents
Cash and cash equivalents at 2 659 (589)
beginning of year
Cash and cash equivalents at end 1 669 2 659
of year
RECONCILIATION BETWEEN PROFIT ATTRIBUTABLE TO SHAREHOLDERS AND
HEADLINE EARNINGS
Shares are traded as part of
linked units
Profit attributable to 0 0
shareholders
Net realised (profit)/loss on sale (5 261) 150
of investment properties
Fair value adjustments to (18 728) (4 285)
investment properties
Net fair value adjustments to 12 135 5 003
debentures
Headline earnings * (11 854) 868
* Headline earnings have been presented in accordance with IAS 33.
Management do not believe that the disclosure presents a meaningful
indicator of sustainable financial performance to the users of these
financial statements due to the capital structure of Fairvest. In
terms of the debenture trust deed, 99.9% of profits are attributable
to linked unit holders, resulting effectively in no profit
attributable to ordinary shareholders. When basic earnings of nil is
adjusted for items specified in circular 07/02, this results in a
headline earnings loss.
Interest distribution per linked 0 0
unit (cents)
Basic earnings per linked unit 0 0
(cents)
Headline (loss)/earnings per (13.8) 0.9
linked unit (cents) *
Net asset value per linked unit 84.0 69.8
and net tangible asset value per
linked unit (cents)**
**Linked unit debentures are
included in the NAV calculation
STATEMENT OF CHANGES IN EQUITY FOR THE 18 MONTH PERIOD ENDED 31
MARCH 2007
GROUP Share Distribut Total
capital able
reserve
Balance at 1 October 2004 1 162 0 1 162
Share capital repurchased *** (317) 0 (317)
Profit for the year 0 0
Balance at 30 September 2005 845 0 845
Profit for the year 0 0
Balance at 30 September 2006 845 0 845
STATEMENT OF CHANGES IN DEBENTURES FOR THE 18-MONTH
PERIOD ENDED 31 MARCH 2007
GROUP Debenture Linked Total
capital Unit
Debenture
Premium
Balance at 1 October 2004 1 162 68 195 69 357
Debentures repurchased *** (317) (14 972) (15 289)
Net fair value adjustment 5 003 5 003
Balance at 30 September 2005 845 58 226 59 071
Net fair value adjustment 12 135 12 135
Balance at 31 March 2007 845 70 361 71 206
*** These linked units were repurchased during the previous
financial year. The company has performed in respect of those
repurchases agreements, but certain administrative formalities have
not yet been effected by the sellers and their agents, and
accordingly these linked units have not been formally cancelled. The
number of linked units reported above as being currently in issue
excludes the linked units repurchased.
NOTES TO THE FINANCIAL STATEMENTS
Basis of preparation and accounting policies
The group complies with the South African Companies Act and has
adopted International Financial Reporting Standards ("IFRS") for the
reporting period ended 31 March 2007. The effective date of the
group`s transition to IFRS was 1 October 2004. The requirements for
the First Time Adoption of IFRS as required by IFRS1 are clearly
reflected in the company`s statement of changes in equity. The
adjustment has had no effect on prior period profit or equity.
Comparative figures have been audited.
The following significant new accounting policy was applied for IFRS
reporting:
Investment properties - Items of property have consistently been
stated on an annual basis at valuation and accordingly no
adjustments in this regard were necessary.
After consideration of the previous accounting standards, it was
noted that revision was required with regard to the interpretation
of the following standard as previously reported.
Straight-lining of operating rentals received - The change in
accounting interpretation for operating leases has resulted in
rentals received under fixed escalation operating leases being
recognised in the income statement on a straight-line basis over the
term of the lease. Previously, operating lease receipts were
recognised on a cash flow basis based on the interpretation of the
standard that was generally accepted in South Africa. The required
adjustments were made for the period ended 30 September 2005. As
required by IAS 8, operating lease rentals received have been
straight-lined in the results for the 18 months to 31 March 2007.
Salient Features
1. Linked unit statistics
Number of linked units in issue 85 795 988 85 795 988
Weighted average number of linked 85 795 988 96 450 018
units
2. Related party transactions
The group, in the ordinary course of business, entered into various
purchase transactions on an arm`s length basis at market rates with
related parties.
3. Capital commitments
No capital commitments have been
authorised.
Review by BDO Spencer Steward (KZN) Inc.
The provisional financial statements for the 18-month period ended
31 March 2007 have been reviewed by our auditors, BDO Spencer
Steward (KZN) Inc. Their unmodified review report is available for
inspection at the registered office of Fairvest.
COMMENTARY
Fairvest Property Holdings Limited is a property investment holding
company with investments in industrial, commercial and retail
properties in South Africa. Its short-term investment strategy is to
create a property portfolio of significant critical mass through
acquisition of quality, high-yielding properties. Accordingly,
investment opportunities are being evaluated for acquisition on an
on-going basis.
Review of results
The gradual turnaround of the group continued during the period
under review. The property portfolio under management increased
12.4% to R149.2 million and the net asset value per linked unit
increased 20.3% to 84 cents.
In line with its stated strategy of creating a quality, high-
yielding property portfolio, Fairvest sold certain properties and
acquired other properties during the period under review. The
Ambassador House property in Durban and Fairland House in Cape Town
were sold for a total consideration of R16.7 million. The
acquisitions of Palms Office Park Units 215, 216 and 217, located in
Nupen Crescent, Midrand, are in the books for a total carrying cost
of R10.6 million.
Interest distributions
No interest distributions or dividends have been made for the period
under review in respect of the linked units and none are proposed at
this stage, given the gradual turn-around of the group.
Post balance sheet events
As announced on 20 November 2006, the Mangrove Centre and the
Nedbank Circle properties were sold by group subsidiary companies.
Funds have been received in respect of the Nedbank Circle property
and Fairvest is in possession of guarantees for the sale of the
Mangrove Centre property.
FINANCIAL EFFECTS
The table below sets out the pro-forma effects of the disposals of
the Mangrove Centre and Nedbank Circle properties on the unaudited
results of the group for the 18-month period ended 31 March 2007.
The pro forma financial effects, which are the responsibility of the
directors, reflect the impact that these property disposals might
have had on:
- the earnings per linked unit and headline earnings per linked
unit, had the disposals taken place on 1 October 2005;
- the net asset value per linked unit and the net tangible asset
value per linked unit, had the disposals taken place on 31 March
2007.
The pro forma financial effects, which are the responsibility of the
directors, are provided for illustrative purposes only and, because
of their pro forma nature, may not fairly present Fairvest`s
financial position, changes in equity, results of operations or cash
flows.
Before the After the % change
disposals disposal
of the
Mangrove
Centre
property
Earnings per linked unit (cents) 0 0 nil
Headline earnings per linked unit (13.8) (8.0) (42.0)%
(cents)
Net asset value per linked unit 84.0 84.9 1.1%
(cents)
Net tangible asset value per 84.0 84.9 1.1%
linked unit (cents)
CONTINUED Before the After the % change
disposals disposal
of the
Nedbank
Circle
property
Earnings per linked unit (cents) 0 0 nil
Headline earnings per linked unit (13.8) (8.1) (41.3)%
(cents)
Net asset value per linked unit 84.0 86.0
(cents) 2.4%
Net tangible asset value per 84.0 86.0
linked unit (cents) 2.4%
CONTINUED Before the After % change
disposals both
disposals
Earnings per linked unit (cents) 0 0 nil
Headline earnings per linked unit (13.8) (2.6) (80.9)%
(cents)
Net asset value per linked unit 84.0 86.6
(cents) 3.1%
Net tangible asset value per 84.0 86.6
linked unit (cents) 3.1%
Notes:
1. The "Before" column refers to the financial performance for the
18-months ended 31 March 2007 as reported above.
2. The "After" columns assume that the property disposals had been
effected on 1 October 2005, are based on the weighted average number
of linked units in issue and takes into account the effect of the
following:
2.1 receipt of the disposal consideration on 1 October 2005;
2.2 settlement of the mortgage bonds against the relevant
properties, the reversal of interest payments and bond redemption
payments and any amounts estimated to be due in terms of the
respective disposal adjustment accounts on transfer;
2.3 elimination of trading;
2.4 transaction costs;
2.5 estimated capital gains tax; and
2.6 incorporation of an after-tax interest received calculated at
the average prime rate of interest for the 18-month period of 8.0%
per annum on the net cash arising from the property disposals.
3. The earnings per linked unit is unchanged owing to the
corresponding fair value adjustment to debentures.
4. The calculation of net asset value and net asset value per
linked unit in the "After" columns, assumes that the disposals were
effected on 31 March 2007, are based on the number of linked units
in issue on 31 March 2007 and takes into account the receipt of the
disposal proceeds, transaction costs, applicable capital gains tax,
amounts estimated to be due in terms of the respective disposal
adjustment accounts on transfer and settlement of the respective
mortgage bond balances at 31 March 2007 in respect of the disposal
properties.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENTS
Linked unit holders are advised that the cautionary announcement
pursuant to the delayed disclosure of the pro forma financial
effects of the abovementioned disposals of the Nedbank Circle and
Mangrove Centre properties, last renewed on 14 June 2007, is hereby
withdrawn. Linked unit holders are also advised that the cautionary
announcement issued on 30 April 2007 and renewed on 14 June 2007
regarding negotiations in progress is hereby withdrawn. Accordingly,
linked unit holders of Fairvest are no longer required to exercise
caution in their dealings in Fairvest securities.
Appreciation
We extend our appreciation to our directors, management and staff
for their valued efforts as well as our advisors, financiers and
shareholders for their continuing belief in and support of Fairvest.
For and on behalf of the board:
Directors
T A Bell (Chairman)
T P Botsis
D A Johnson
A B Platt
Company Secretary
J A Lupton, ACIS
Registered office
9th Floor, Protea Hotel, Cnr Lighthouse Road and Chartwell Drive,
Umhlanga Rocks, 4319
(P O Box 18, Umhlanga Rocks, 4320)
Transfer secretaries
Computershare Investor Services 2004 (Proprietary) Limited
Ground Floor, 70 Marshall Street,
Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Auditor
BDO Spencer Steward (KZN) Inc
Sponsor
Merchant Sponsors (Proprietary)
Limited
Date: 06/07/2007 16:32:01 Produced by the JSE SENS Department.
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