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FVT
FVT
FVT - Fairvest Property Holdings - Reviewed Provisional Consolidated Group
Financial Results for the Year Ended 31 March 2009
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" or "the group")
REVIEWED PROVISIONAL CONSOLIDATED GROUP FINANCIAL RESULTS FOR THE YEAR ENDED
31 MARCH 2009
Reviewed Audited
31 March 31 March
2009 2008
R `000 R `000
CONSOLIDATED
BALANCE SHEET
ASSETS
NON-CURRENT ASSETS 89,685 78,843
Investment property 68,171 59,033
Equipment 4 5
Investment in 18,255 16,888
associate property
companies
Operating lease 3,255 2,917
asset
NON-CURRENT ASSETS
HELD FOR SALE
Investment property - 48,650
held for sale
CURRENT ASSETS 47,156 11,254
Trade and other 965 709
receivables
Cash and cash 46,191 10,545
equivalents
TOTAL ASSETS 136,841 138,747
EQUITY AND
LIABILITIES
EQUITY AND RESERVES
Ordinary share 857 857
capital
Retained income - -
NON-CURRENT 125,594 131,588
LIABILITIES
Linked unit 857 857
debenture capital
Linked unit 123,801 116,952
debentures premium
Long-term - 12,526
liabilities
Deferred taxation 936 1,253
CURRENT LIABILITIES 10,390 6,302
Trade and other 9,523 2,367
payables
Taxation 867 574
Current portion of - 3,361
long-term
liabilities
TOTAL EQUITY AND 136,841 138,747
LIABILITIES
Reviewed Audited
year ended year ended
31 March 31 March
2009 2008
R `000 R `000
CONSOLIDATED INCOME
STATEMENT
GROSS REVENUE 16,027 24,095
Rental income - 15,707 23,940
contractual
- 320 155
straight-line
accrual
TRADING PROFIT 4,459 10,031
Net realised loss - (1,952)
on sale of
investments
Net realised loss - (2,026)
on sale of
investment
properties
Fair value 8,013 19,502
adjustment to
investment
properties
Fair value (6,849) (40,767)
adjustment to
debentures
OPERATING PROFIT / 5,623 (15,212)
(LOSS)
Interest received 3,739 1,202
Debenture interest (7,715) -
Finance charges (360) (3,902)
PROFIT / (LOSS) 1,287 (17,912)
BEFORE TAXATION
Taxation (1,287) 17,912
PROFIT ATTRIBUTABLE - -
TO SHAREHOLDERS
Reviewed Audited
year ended year ended
31 March 31 March
2009 2008
R `000 R `000
CASH FLOW STATEMENT
Cash flow from 5,528 2,139
operating
activities
Cash flow from 46,005 40,600
investing
activities
Cash flow from (15,887) (33,863)
financing
activities
Net increase in 35,646 8,876
cash and cash
equivalents
Cash and cash 10,545 1,669
equivalents at
beginning of period
Cash and cash 46,191 10,545
equivalents at end
of period
Reviewed Audited
year ended year ended
31 March 31 March
2009 2008
R `000 R `000
RECONCILIATION
BETWEEN PROFIT
ATTRIBUTABLE TO
SHAREHOLDERS AND
HEADLINE EARNINGS
Profit attributable - -
to shareholders *
Net realised loss - 1,952
on sale of
investments
Net realised loss - 2,026
on sale of
investment
properties
Fair value (8,013) (19,502)
adjustment to
investment
properties
Fair value 6,849 40,767
adjustment to
debentures
Headline earnings (1,164) 25,243
**
Interest 9.0 -
distribution per
linked unit (cents)
Basic earnings per -
linked unit (cents)
*
Headline earnings (1.4) 29.4
per linked unit
(cents) **
Net asset value per 138.3
linked unit
(cents)***
Net tangible asset 146.4 138.3
value per linked
unit (cents)***
* The linked unit capital structure of the group results in every shareholder
being a debenture holder. The Debenture Trust Deed states that 99.9% of
profits are attributable to debenture holders. As a result the benefit of
improved trading performance is expensed in the income statement as a fair
value adjustment to debentures and debenture interest. This results in no
profit being attributable to ordinary shareholders.
** Headline earnings have been presented in accordance with IAS 33. Headline
earnings are calculated after adding back the improved trading performance,
which is reflected as a fair value adjustment to debentures, and deducting the
appreciation in the property portfolio.
*** Effective linked units are included in the net asset value and net
tangible asset value calculation
STATEMENT OF
CHANGES IN
EQUITY
Share capital Total
R`000 R`000
Balance at 1 857 857
April 2007
Profit for the - -
year
Balance at 31 857 857
March 2008
Profit for the - -
year
Balance at 31 857 857
March 2009
STATEMENT OF
CHANGES IN
LINKED UNIT
DEBENTURES
Linked unit Linked unit Total
debenture debenture
capital premium
R`000 R`000 R`000
Balance at 1 857 76,185 77,042
April 2007
Net fair value - 40,767 40,767
adjustment
Balance at 31 857 116,952 117,809
March 2008
Net fair value - 6,849 6,849
adjustment
Balance at 31 857 123,801 124,658
March 2009
NOTES TO THE FINANCIAL STATEMENTS
Basis of preparation and accounting policies
The accounting policies applied in the preparation of these consolidated
provisional results, which are based on reasonable judgements and estimates,
are in accordance with International Financial Reporting Standards ("IFRS")
and are consistent with those applied in the annual financial statements for
the year ended 31 March 2008. These consolidated provisional results have been
prepared in terms of IAS 34 - Interim Financial Reporting, the Companies Act
of South Africa, as amended, and the Listings Requirements of JSE Limited.
These consolidated provisional results for the year ended 31 March 2009 have
been reviewed by the group`s auditors and have been prepared on the fair value
and going concern bases. The review report is available for inspection at the
company`s registered office.
Salient Features
Reviewed Audited
31 March 31 March
2009 2008
1. Linked unit
statistics
Linked units in 85,795,988 85,795,988
issue
Effective number of 85,721,986 85,721,986
linked units in
issue
Weighted average 85,721,986 85,721,986
number of linked
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.
SEGMENTAL
INFORMATION
Reviewed Audited
31 March 31 March
2009 2008
Sectoral profile
based on income
receivable
Commercial 95% 81%
Residential 5% 19%
Sectoral profile
based on gross
lease area ?
Commercial 100% 85%
Residential 0% 15%
Regional profile
based on income
receivable
Eastern Cape 43% 31%
Free State 4% 3%
Gauteng 17% 45%
KwaZulu-Natal 36% 21%
Regional profile
based on gross
lease area ?
Eastern Cape 30% 11%
Free State 9% 3%
Gauteng 21% 71%
KwaZulu-Natal 40% 15%
Tenant profile
based on income
receivable
A-grade tenant 44% 27%
B-grade tenant 13% 16%
C-grade tenant 43% 57%
Tenant profile
based on gross
lease area ?
A-grade tenant 37% 17%
B-grade tenant 9% 16%
C-grade tenant 54% 67%
Vacancy profile
based on gross
lease area ?
Gross lease area in 25,850 73,127
metre squared
Vacancy area in 8,275 25,548
metre squared
Vacancy area as % 32% 35%
gross lease area
Regional vacancy
profile based on
gross lease area ?
Eastern Cape 6% 2%
Free State 15% 5%
Gauteng 52% 81%
KwaZulu-Natal 27% 12%
Sectoral vacancy
profile based on
gross lease area ?
Commercial area 100% 100%
? gross lease area
is based on metre
squared as at the
end of the year
COMMENTARY
Fairvest is a property investment holding company with investments in
commercial and residential properties in South Africa. Its short-term
investment strategy is to create a property portfolio of significant critical
mass through the acquisition of quality, high-yielding properties.
Accordingly, investment properties are being evaluated for acquisition
purposes on an on-going basis.
Review of results
The group continued to produce pleasing results. Over the last five years,
Fairvest achieved 228% compound growth and was voted number 1 in the Sunday
Times Top 50 Return on Equity.
The net asset value per linked unit increased from 138.3 cents to 146.4 cents
equating to a compound growth of 27% per annum over the last two years. This
increase in net asset value has resulted from the disposal of underperforming
properties and an improvement in the property portfolio under management.
During the year, the property portfolio under management increased from R59.0
million to R68.2 million largely as a result of renovations and improved
occupancy in certain of the properties.
The decline in revenue and trading profits is largely attributable to the
disposal of Nedbank Circle and Mangrove Beach Centre properties in the 2008
financial year and the disposal of Kempton City and Broadway Nordic properties
in the current year. Excluding the property disposals, revenue declined 3%.
Operating profit increased R20.8 million from a loss of R15.2 million to
profit of R5,6 million.
The proceeds from the disposal of Kempton City and Broadway Nordic properties
were utilized to settle all outstanding property debt financing which resulted
in a significant reduction in interest paid from R3.9 million to R0.4 million.
Interest on debentures has been calculated in terms of the Debenture Trust
Deed. As the company has returned to profitability, an interest payment of 9
cents per debenture unit, equating to R7,7 million, has been declared for the
year ended 31 March 2009 and is payable to linked unitholders registered in
the books of the company at the close of business on Friday, 31 July 2009.
The Group reported no profit attributable to ordinary shareholders and a
headline loss of R1.1 million (profit R25.2 million) for reasons explained in
Reconciliation between profit attributable to shareholders and headline
earnings above.
The receipt of proceeds from the sale of investment properties resulted in a
significant improvement in cash and cash equivalents from R10.5 million to
R46.2 million and a reduction in debt financing from R15.9 million to nil.
The strong balance sheet of the group has positioned it well to take advantage
of opportunities that are arising in the present uncertain economic
conditions.
Interest distribution and dividend
Interest on debentures has been calculated in terms of the Debenture Trust
Deed. As the company has returned to profitability, an interest payment of 9
cents per debenture unit has been declared for the year ended 31 March 2009
and is payable to linked unitholders registered in the books of the company at
the close of business on Friday, 31 July 2009. No dividend has been declared
for the year in respect of the linked units.
Last date to trade linked units cum interest payment Friday, 24 July 2009
Linked units commence trading ex interest payment Monday, 27 July 2009
Record date Friday, 31 July 2009
Payment date Monday, 3 August 2009
Linked units may not be dematerialised or rematerialised between Monday 27
July 2009 and Friday 31 July 2009, both days inclusive.
Directorate
The board appointed Mrs Karen J Peter as its Financial Director, effective 27
October 2008 after the audit committee considered the suitability of her
appointment.
Appreciation
We extend our appreciation to our directors, management and staff for their
valued efforts as well as our advisers, financiers and shareholders for their
continuing belief in and support of Fairvest.
For and on behalf of the board:
24 June 2009
Durban
Directors
T A Bell (Chairman) K J Peter (Financial Director)
T P Botsis # A B Platt
D A Johnston #$ J F du Toit #
# non-executive
$ independent
Company Secretary
J A Lupton, ACIS
Registered office
9th Floor, Protea Hotel
Corner Lighthouse Road and Chartwell Drive
Umhlanga Rocks
4319
(P.O. Box 18, Umhlanga Rocks, 4320)
Transfer secretaries
Computershare Investor Services (Proprietary) Limited
Ground Floor
70 Marshall Street
Johannesburg
2001
(P.O. Box 61051, Marshalltown, 2107)
Auditors
BDO Spencer Steward (KZN) Inc.
Sponsor
Merchantec (Proprietary) Limited
Date: 24/06/2009 17:49:02 Produced by the JSE SENS Department.
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