| Thu 1 Nov 2007, 15:02 | | FPT - Fountainhead Property Trust - Final results |
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FPT
FPT
FPT - Fountainhead Property Trust - Final results for the year ended 30
September 2007
FOUNTAINHEAD PROPERTY TRUST
Short name: FPT
Share code: FPT ISIN: ZAE000097416
Sponsor: Standard Bank
E-mail: fountainhead@standardbank.co.za
Website: www.fountainheadproperty.co.za
FINAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2007
The directors of Fountainhead Property Trust Management Limited, the manager
of Fountainhead Property Trust, submit their report on the audited results of
Fountainhead Property Trust for the year ended 30 September 2007. These
abridged financial statements have been extracted from the audited financial
statements on which KPMG Inc. have issued an unmodified audit opinion and
which are available for inspection at the registered office.
INCOME STATEMENT
2007 2006
R`000 R`000
Income 606 544 539 512
Contractual rental income 599 295 545 248
Straight-line lease adjustment 7 249 (5 736)
Expenses (158 625) (154 665)
Administrative expenses (37 202) (31 394)
Property operating expenses (121 423) (123 271)
Operating profit 447 919 384 847
Net finance costs (13 168) (2 126)
Interest received 27 774 21 476
Interest paid (40 942) (23 602)
Profit on disposal of investment properties 13 371 15 714
Fair value adjustments to investment properties 1 096 390 1 026 133
Profit for the year 1 544 512 1 424 568
Basic earnings per unit (cents) 155.1 143.0
Headline earnings and distribution
income reconciliation
Profit for the year 1 544 512 1 424 568
Less: profit on disposal of investment
properties (13 371) (15 714)
Less: fair value adjustments to investment
properties (1 096 390) (1 026 133)
Headline earnings 434 751 382 721
Less: straight-line lease adjustment (7 249) 5 736
Distribution income 427 502 388 457
Headline earnings per unit (cents) 43.65 38.42
Distribution per unit (cents) 42.92 39.00
Interim distribution per unit (cents) 21.40 19.30
Final distribution per unit (cents) 21.52 19.70
Units in issue 996 043 081 996 043 081
BALANCE SHEET
2007 2006
R`000 R`000
ASSETS
Property assets 6 793 126 5 491 821
Investment properties 6 575 794 5 281 738
Straight-line lease accrual 217 332 210 083
Current assets 304 772 279 015
Trade and other receivables 23 287 24 561
Cash and cash equivalents 281 485 254 454
Total assets 7 097 898 5 770 836
UNITHOLDERS` FUNDS AND LIABILITIES
Unitholders` funds 6 315 086 5 198 076
Capital of the fund 1 933 354 1 933 354
Capital reserve 498 517 470 243
Revaluation reserve 3 665 823 2 584 336
Retained earnings 217 392 210 143
Non-current liabilities
Interest-bearing liability 487 000 299 000
Current liabilities 295 812 273 760
Trade and other payables 81 464 77 540
Unitholders for distribution 214 348 196 220
Total unitholders` funds and liabilities 7 097 898 5 770 836
CASH FLOW STATEMENT
2007 2006
R`000 R`000
Cash effects from operating activities
Profit for the year 1 544 512 1 424 568
Adjustments for:
Straight-line lease adjustment (7 249) 5 736
Interest received (27 774) (21 476)
Interest paid 40 942 23 602
Profit on disposal of investment properties (13 371) (15 714)
Fair value adjustments to investment properties (1 096 390) (1 026 133)
440 670 390 583
Trade and other receivables reduced 1 274 2 411
Trade and other payables raised 3 924 7 596
Cash generated from operations 445 868 400 590
Interest received 27 774 21 476
Interest paid (40 942) (23 602)
Income distributions (409 374) (367 541)
Cash flows from operating activities 23 326 30 923
Cash effects from investing activities
Additions to investment properties (234 147) (160 502)
Proceeds from disposal of investment properties 49 852 76 523
(184 295) (83 979)
Cash effects from financing activities
Long-term loan raised 202 000 123 000
Long-term loan repaid (14 000) (53 000)
188 000 70 000
Net increase in cash and cash equivalents 27 031 16 944
Cash and cash equivalents at 1 October 254 454 237 510
Cash and cash equivalents at 30 September 281 485 254 454
STATEMENT OF CHANGES IN UNITHOLDERS` FUNDS
Capital of Capital Revaluation
(R`000) the fund reserve reserve
Balance as at 1 October 2005 1 933 354 421 754 1 588 147
Profit/Total income and
expenses for the year
Profit and revaluation reserve
realised on sale of properties
transferred to capital reserve 48 489 (29 944)
Fair value adjustment on
investment properties
transferred to revaluation reserve 1 026 133
Income distributions
Balance as at 30 September 2006 1 933 354 470 243 2 584 336
Profit/Total income and
expenses for the year
Profit and revaluation reserve
realised on sale of properties
transferred to capital reserve 28 274 (14 903)
Fair value adjustment on
investment properties
transferred to revaluation reserve 1 096 390
Income distributions
Balance as at 30 September 2007 1 933 354 498 517 3 665 823
Total
Retained unitholders`
(R`000) earnings funds
Balance as at 1 October 2005 218 710 4 161 965
Profit/Total income and
expenses for the year 1 424 568 1 424 568
Profit and revaluation reserve
realised on sale of properties
transferred to capital reserve (18 545) -
Fair value adjustment on
investment properties
transferred to revaluation reserve (1 026 133) -
Income distributions (388 457) (388 457)
Balance as at 30 September 2006 210 143 5 198 076
Profit/Total income and
expenses for the year 1 544 512 1 544 512
Profit and revaluation reserve
realised on sale of properties
transferred to capital reserve (13 371) -
Fair value adjustment on
investment properties
transferred to revaluation reserve (1 096 390) -
Income distributions (427 502) (427 502)
Balance as at 30 September 2007 217 392 6 315 086
COMMENTARY
1 BASIS OF PREPARATION AND ACCOUNTING POLICIES
The annual results have been prepared in accordance with International
Financial Reporting Standards (IFRS) and the requirements of the
Collective Investment Schemes Control Act. The accounting policies are
consistent in all material respects with those applied in prior years.
Fountainhead Property Trust`s interest expense policy is to expense
interest on capital projects. If interest were to be capitalised the
interest expense would have reduced by R12.4 million resulting in an
additional distribution of 1.2 cents per unit. This computation has not
been reviewed or reported on by Fountainhead Property Trust`s auditors.
2 DISTRIBUTION PER UNIT
Fountainhead Property Trust`s net distributable income for the financial
year amounts to 42.92 cents per unit, 10 percent greater than the
comparable period last year.
3 CHANGES TO PORTFOLIO
During the year, the following sales were concluded:
Net selling 2006
price valuation Surplus
Property (Rm) (Rm) %
377 Rivonia Boulevard 21 500 13 628 58
271 Oak Avenue 14 000 10 484 34
Fourways Haulage 10 000 8 083 24
Cyrus House 4 352 4 286 2
49 852 36 481 37
4 MAJOR CAPITAL PROJECTS
Significant capital projects and planned projects are:
Kenilworth Centre
Work has commenced on a R56 million project which includes an extension
for a food court and a Game store of 5 000 square metres within the
centre. The addition of a Game store will strengthen the retail mix in
the centre.
Centurion Mall (75% share)
Work is nearing completion on the extension to the Mall, adjoining office
blocks and the new parkade. The expected completion date is December 2007
and the project is expected to generate an initial return of 12 percent.
The Brightwater Commons
Heads of agreement have been signed with two anchor tenants, Woolworths
and Virgin Active, who will occupy 6 183 square metres in phase 3 of the
development. The vacancy will be reduced to 8 067 square metres or 20
percent of the gross lettable area. Management believes this will be the
catalyst for the letting of the balance of phase 3. It is anticipated
that trading for the new anchor tenants will commence in the third
quarter of 2008. A further R90 million is anticipated to complete this
project.
Benmore Gardens Shopping Centre
The development is progressing well and completion date is anticipated to
be September 2008. The major change to the centre will be a new Pick `n
Pay store, the relocation of Dischem and the introduction of a Woolworths
Food store, Toyzone and Baby City. A further R25 million has been
committed to create additional parking and retail space. Given the
central location of this property and the pace of residential
developments in the vicinity, management believes the alterations
position the centre for superior earnings growth. Due to better rentals
being achieved than originally anticipated, the incremental net yield on
the total net capital outlay of R85 million is anticipated to be 11.6
percent.
Douglas Roberts Centre
The construction of the parking garage has been completed and the
refurbishment of the office tower is progressing well, with completion
due in May 2008. The R155 million project was approved on the back of a
10 year lease with Murray and Roberts which commenced on 1 October 2007.
The initial rental is based on an 8.5 percent yield on R215 million, with
7 percent per annum escalations. Until the capital commitment is fully
taken up an interim rental based on the spend to date is being paid.
5 SEGMENTAL INFORMATION
September 2007 September 2006
Net Net
Revenue income % of Revenue income % of
Rm Rm total Rm Rm total
Retail 437 354 83 384 297 76
Office blocks 85 63 15 80 61 16
Industrial 55 40 9 61 45 12
Specialised 22 22 5 20 20 5
Corporate - (51) (12) - (35) (9)
Total 599 428 100 545 388 100
6 VACANCY LEVELS
Vacancy levels in terms of rentable area at 30 September were as follows:
2007 2006
Sector % %
Retail 6 8
Office blocks 2 5
Industrial 9 11
Specialised - -
Total 6 8
By value, the vacancies equated to 5 percent of potential rental income,
compared with 6 percent at half year.
In the retail sector 75 percent of the vacancies were contained in The
Boulders and The Brightwater Commons. Approximately half of this vacant
area has been let for future occupation.
There were no significant vacancies in the office sector.
In the industrial sector, the ex-Degussa building in Midrand has been
let, with rental having commenced as from October 2007. Negotiations are
underway to let the ex-Nashua House building in Midrand as from 1
December 2007.
7 PORTFOLIO VALUATIONS
The composition of Fountainhead Property Trust`s portfolio, as valued by
the independent valuer, Rode and Associates CC, as at 30 September 2007,
is as follows:
Value Cents/ Forward % of portfolio
Sector (Rm) unit EY (%) 2007 2006
Retail 5 128 515 7.9 75 76
Office blocks 824 83 9.3 12 12
Industrial 592 59 8.5 9 8
Specialised 249 25 9.4 4 4
Total property 6 793 682 8.1 100 100
Long -term
borrowings (487) (49)
Net current assets 9 1
6 315 634
8 PROSPECTS
The Board anticipates that distributions per unit for the year ending 30
September 2008 will increase between 12 percent and 14 percent compared
with the year ended 30 September 2007. This forecast has not been
reviewed or reported on by Fountainhead Property Trust`s auditors.
9 DISTRIBUTION ANNOUNCEMENT
Notice is hereby given of distribution no. 49 of 21.52 cents per unit for
the six months ended 30 September 2007.
The last date to trade cum the distribution will be Friday, 16 November
2007. The units of Fountainhead Property Trust will commence trading ex-
distribution on Monday, 19 November 2007 and the record date will be
Friday, 23 November 2007. The distribution will be paid on Monday, 26
November 2007.
Unit certificates may not be dematerialised or rematerialised between
Monday, 19 November 2007 and Friday, 23 November 2007, both dates
inclusive.
BY ORDER OF THE BOARD
Fountainhead Property Trust Management Limited
(Reg No 1983/003324/06)
31 October 2007
Directors: WM Kirchmann,
JD Rainier (Managing), VA Christian,
S Shaw-Taylor
Transfer secretaries
Computershare Investor Services 2004 (Pty) Ltd
70 Marshall Street
Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Secretary and registered office
Broll Property Group (Pty) Ltd
Broll House, 27 Fricker Road, Illovo
Johannesburg, 2196
(PO Box 1455, Saxonwold, 2132)
Short name: FPT
Share code: FPT ISIN: ZAE000097416
Sponsor: Standard Bank
E-mail: fountainhead@standardbank.co.za
Website: www.fountainheadproperty.co.za
Date: 01/11/2007 15:02:52 Produced by the JSE SENS Department.
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