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FVT
FVT
FVT - Fairvest - Abridged unaudited consolidated group financial interim results
for the six-month period ended 3o September 2007
FAIRVEST PROPERTY HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1998/005011/06)
Share code: FVT ISIN: ZAE000034658
("Fairvest" or "the Company")
ABRIDGED UNAUDITED CONSOLIDATED GROUP FINANCIAL INTERIM RESULTS
FOR THE SIX-MONTH PERIOD ENDED 3O SEPTEMBER 2007
Unaudited Unaudited Audited
6 months 6 months 18
to to months
to
30 Sep 30 Sep 31 Mar
2007 2006 2007
R `000 R `000 R `000
CONSOLIDATED BALANCE SHEETS
ASSETS
NON-CURRENT ASSETS 108 095 123 856 151 950
Property and equipment 88 181 121 710 149 216
Investment in associated 16 575 - -
property companies
Financial assets - 104 -
Accounts receivable 3 339 2 042 2 734
CURRENT ASSETS 10 608 7 392 3 537
Trade and other receivables 1 290 7 162 1 868
Cash and cash equivalents 9 318 230 1 669
TOTAL ASSETS 118 703 131 248 155 487
EQUITY AND LIABILITIES
EQUITY AND RESERVES
Ordinary share capital 857 845 857
Retained income - - -
NON-CURRENT LIABILITIES 114 151 124 555 147 805
Linked unit debentures and 91 493 65 782 77 042
premium
Long-term liabilities 16 560 48 954 51 270
Deferred taxation 6 098 9 819 19 493
CURRENT LIABILITIES 3 695 5 848 6 825
Taxation 1 176 - 1 176
Trade and other payables 2 519 5 848 5 649
TOTAL EQUITY AND LIABILITIES 118 703 131 248 155 487
Unaudited Unaudited Audited
6 months 6 months 18
to to months
to
30 Sep 30 Sep 31 Mar
2007 2006 2007
R `000 R `000 R `000
CONSOLIDATED INCOME
STATEMENTS
GROSS REVENUE 12 869 13 732 39 748
Rental income - contractual 12 469 13 509 39 645
- straight-line accrual 400 223 103
OPERATING (LOSS) / PROFIT -11 402 5 010 20 316
Interest received 716 225 540
Debenture interest - -66 -181
Finance charges -2 709 -3 316 -8 814
(LOSS) / PROFIT BEFORE -13 395 1 853 11 861
TAXATION
Taxation -13 395 1 853 11 861
PROFIT ATTRIBUTABLE TO - - -
SHAREHOLDERS
Unaudited Unaudited Audited
6 months 6 months 18
to to months
to
30 Sep 30 Sep 31 Mar
2007 2006 2007
R `000 R `000 R `000
CASH FLOW STATEMENTS
Cash flow from operating -75 -1 911 4 533
activities
Cash flow from investing 40 600 5 800 9 092
activities
Cash flow from financing -32 876 -7 500 -14 615
activities
Net decrease/increase in cash 7 649 -3 611 -990
and cash equivalents
Cash and cash equivalents at 1 669 3 841 2 659
beginning of year
Cash and cash equivalents at 9 318 230 1 669
end of year
RECONCILIATION BETWEEN PROFIT ATTRIBUTABLE TO SHAREHOLDERS AND
HEADLINE EARNINGS
Shares are traded as part of linked units
Unaudite Unaudited Audited
d
6 months 6 months 18
to to months
to
30 Sep 30 Sep 31 Mar
2007 2006 2007
R `000 R `000 R `000
Profit attributable to - - -
shareholders
Net realised (profit) on sale - - -1 686
of investment
Net realised (profit)/loss on 2 026 -2 689 -3 575
sale of investment properties
Fair value adjustments to - -5 000 -23 728
investment properties
Net fair value adjustments to 14 451 10 061 17 983
debentures
Headline earnings * 16 477 2 372 -11 006
Number and weighted average 85 795 85 795 85 795
number of linked units in 988 988 988
issue
Number and weighted average 85 721 85 795 85 721
number of linked units in 788 988 788
issue excluding treasury
shares
Interest distribution per - - -
linked unit (cents)
Basic earnings per linked unit - - -
(cents)
Headline (loss) / earnings per 19.2 2.8 (12.8)
linked unit (cents) *
Net asset value per linked 107.7 77.7 90.8
unit and net tangible asset
value per linked unit
(cents)**
* 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.
** Linked unit debentures are included in the net asset value
and net tangible asset value calculation.
STATEMENT OF CHANGES IN EQUITY FOR THE SIX-MONTH PERIOD ENDED 30
SEPTEMBER 2007
GROUP Share Distributa Total
capital ble
reserve
Balance at 30 September 2005 845 - 845
Profit for the year - - -
Shares not repurchased 12 - 12
Balance at 31 March 2007 857 - 857
Profit for the period - - -
Balance at 30 September 2007 857 - 857
STATEMENT OF CHANGES IN DEBENTURES FOR THE SIX-MONTH PERIOD ENDED
30 SEPTEMBER 2007
GROUP Debentur Linked Total
e Unit
capital Debenture
Premium
Balance at 30 September 2005 845 58 226 59 071
Shares not repurchased 12 -24 -12
Net fair value adjustment 17 983 17 983
Balance at 31 March 2007 857 76 185 77 042
Net fair value adjustment 14 451 14 451
Balance at 30 September 2007 857 90 636 91 493
NOTES TO THE FINANCIAL
STATEMENTS
Basis of preparation and accounting policies
The abridged unaudited consolidated interim financial statements
for the six-month period ended 30 September 2007 have been
prepared in compliance with the Listing Requirements of JSE
Limited, International Financial Reporting Standards ("IFRS") (in
particular International Accounting Standard 34 - Interim
Financial Reporting) and the South African Companies Act, 1973
(Act 61 of 1973), as amended. The accounting policies applied in
the presentation of the abridged unaudited consolidated interim
financial statements are consistent with those applied in the
preparation of the financial statements for the eighteen-month
period ended 31 March 2007. This report has been prepared on the
fair value and going concern basis.
Salient features
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.
Mr Trevor Botsis, a non-executive director of Fairvest, has an
indirect beneficial interest in the amount of R500 000 plus value
added tax thereon, in the property broking commission, payable by
the property broker concerned, in relation to the disposal of the
Kempton City property.
2. Capital commitments
No capital commitments have been authorised.
COMMENTARY
Fairvest Property Holdings Limited is a property investment
holding company with investments in 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 turnaround of the group continued during the period under
review with the net asset value per linked unit increasing 18.6%
to 107.7 cents compared to the results for the 18-month period to
31 March 2007. The property portfolio under management decreased
to R88.2 million as the Nedbank Circle and Mangrove Beach Centre
properties were sold and the investments in Polpoint and Mangrove
Beach Centre shareblock companies were not consolidated for the
reason that Fairvest Property Holdings Limited does not have
management control over those shareblock companies.
Cash and cash equivalents improved significantly from R1.7 million
to R9.3 million largely as a result of the receipt after 31 March
2007 of the proceeds from the sale of properties contracted in the
previous financial period. The reduction in debt financing from
R51.3 million to R16.5 million resulted in debt financing, as a
percentage of the remaining property portfolio value, reducing
from 34% to 19% during the six-month period reported on herein.
Post balance sheet events
As announced on 7 September 2007, the sale of the Kempton City
property is subject to approval by linked unitholders. After 30
September 2007, the purchaser of the abovementioned property
furnished Fairvest with written proof of bond approval and
guarantees for the remainder of the purchase price. In terms of an
amendment to the original agreement, the only remaining conditions
have been changed to resolutive conditions relating to JSE
approval and approval by linked unitholders in general meeting by
29 February 2007. A circular will be posted to linked unitholders
in due course.
Financial effects in respect of the sale of the Kempton City
property
The table below sets out the pro forma effects of the disposal of
the Kempton City property on the unaudited results of the group
for the 6-month period ended 30 September 2007. The pro forma
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.
The pro forma financial effects reflect the impact that the
property disposal might have had on:
the earnings per linked unit and headline earnings per linked unit
had the disposal taken place on 1 October 2006;
the net asset value per linked unit and the net tangible asset
value per linked unit had the disposal taken place on 30 September
2007.
Before After %
the the change
disposal disposal
Earnings per linked unit - - nil
(cents)
Headline earnings per linked
unit (cents) 19.2 19.3 0.5%
Net asset value per linked
unit (cents) 107.7 121.8 13.1%
Net tangible asset value per
linked unit (cents) 107.7 121.8 13.1%
Notes
1. The "Before" column refers to the financial performance for
the 6-month period ended 30 September 2007.
2. The calculation of the earnings per linked unit and
headline earnings per linked unit in the "After" column assumes
that the property disposal had been effected on 1 October 2006,
that 85 721 788 linked units were in issue (i.e. excluding
treasury shares) during the reporting period and takes the
following into account:
2.1 receipt of the disposal consideration on 1 October 2006;
2.2 settlement of the mortgage bond against the relevant
property, the reversal of interest payments and bond redemption
payments and any amounts estimated to be due in terms of the
adjustment account on transfer;
2.3 elimination of trading;
2.4 transaction costs;
2.5 estimated capital gains tax; and
2.6 incorporation of after-tax interest received calculated at
the average after-tax prime rate of interest for the 6-month
period of 9.0% per annum on the net cash arising from the
aforesaid disposal.
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 tangible asset
value per linked unit in the "After" column, which assumes that
the disposal was effected on 30 September 2007, are based on the
number of linked units in issue on 30 September 2007 (excluding
treasury shares), 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 disposal
adjustment account on transfer and the settlement of the
respective mortgage bond balances at 30 September 2007, in
respect of the disposal property.
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.
Withdrawal of cautionary
Linked unit holders are referred to the cautionary announcement
dated 3 August 2007 which was renewed on 7 September 2007 and
again on 5 November 2007, and are advised that as the pro forma
financial effects of the abovementioned disposal of the Kempton
City property have been finalised and are included in this
announcement, caution is no longer required to be exercised by
linked unitholders when dealing 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 Property Holdings Limited.
For and on behalf of the
board:
Directors
T A Bell (Chairman)
T P Botsis
D A Johnson
A B Platt
J F du Toit
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: 07/12/2007 17:54:02 Produced by the JSE SENS Department.
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