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FVT
FVT
FVT - Fairvest Property Holdings Limited - Unaudited condensed consolidated
group financial results for the six months ended 30 September 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")
UNAUDITED CONDENSED CONSOLIDATED GROUP FINANCIAL RESULTS FOR THE
SIX MONTHS ENDED 30 SEPTEMBER 2009
Unaudited Unaudited Audited
30 30 31
September September March
2009 2008 2009
R `000 R `000 R `000
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
ASSETS
NON-CURRENT ASSETS 80 330 89 685
89 507
Investment property 86 77 441 86 426
426
Equipment 4 5 4
Operating lease asset 3 077 2 3
884 255
CURRENT ASSETS 44 915 44 404 47 156
Trade and other receivables 1 399 2 141 965
Cash and cash equivalents 43 516 42 263 46 191
TOTAL ASSETS 134 422 124 734 136 841
EQUITY AND LIABILITIES
EQUITY AND RESERVES
Ordinary share capital 857 857 857
Retained income - - -
NON-CURRENT LIABILITIES 130 112 122 116 125 594
Linked unit debenture capital 857 857 857
Linked unit debentures premium 128 292 119 971 123 801
Long-term liabilities - - -
Deferred taxation 963 1 288 936
CURRENT LIABILITIES 3 453 1 761 10 390
Trade and other payables 2 626 1 503 9 522
Taxation 827 258 868
Current portion of long-term - - -
liabilities
TOTAL EQUITY AND LIABILITIES 134 422 124 734 136 841
Unaudited Unaudited Audited
30 30 31
September September March
2009 2008 2009
R `000 R `000 R `000
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
GROSS REVENUE 7 771 8 526 16 180
Rental income - contractual 7 664 8 402 15 707
- 107 124 473
straight-line accrual
TRADING PROFIT 2 936 2 141 4 612
Fair value adjustment to - - 7 860
investment properties
Fair value adjustment to (4 492) (426) (6 849)
debentures
OPERATING PROFIT / (LOSS) (1 556) 1 715 5 623
Interest received 1 702 1 371 3 739
Debenture interest - (2 593) (7
715)
Finance charges - (409) (360)
PROFIT / (LOSS) BEFORE TAXATION 146 84 1 287
Taxation (146) (84) (1
287)
COMPREHENSIVE INCOME - - -
ATTRIBUTABLE TO SHAREHOLDERS
CASH FLOW STATEMENTS
Cash (outflow)/inflow from (2 675) 476 5 527
operating activities
Cash inflow from investing - 47 129 47 526
activities
Cash outflow from financing - (15 887) (17
activities 407)
Net increase in cash and cash 31 718
equivalents (2 675) 35 646
Cash and cash equivalents at 46 191 10 545 10 545
beginning of period
Cash and cash equivalents at 43 42 263 46 191
end of period 516
STATEMENT OF CHANGES IN EQUITY
Share Total
capital
R`000 R`000
Balance at 1 April 2008 857 857
Profit for the six months - -
Balance at 30 September 2008 857 857
Profit for the six months - -
Balance at 31 March 2009 857 857
Profit for the six months - -
Balance at 30 September 2009 857 857
STATEMENT OF CHANGES IN LINKED
UNIT DEBENTURES
Linked Linked Total
unit unit
debenture debenture
capital premium
R`000 R`000 R`000
Balance at 1 April 2008 857 116 952 117 809
Net fair value adjustment - 426 426
Debenture interest accrued - 2 593 2 593
Balance at 30 September 2008 857 119 971 120 828
Net fair value adjustment - 6 422 6 422
Payment of debenture interest - (2 593) (2
previously accrued 593)
Balance at 31 March 2009 857 123 800 124 657
Net fair value adjustment 4 492 4 492
Balance at 30 September 2009 857 128 292 129 149
NOTES TO THE FINANCIAL
STATEMENTS
1. Basis of preparation and
accounting policies
The accounting policies applied in the preparation of these condensed
consolidated interim 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 2009. These condensed financial statements as set out in this
report 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 condensed consolidated interim results for the six months ended
30 September 2009 have not been reviewed by the group`s auditors and
have been prepared on the fair value and going concern bases.
2. Reclassification of investment
property
It has been identified that in the prior year results investments in
associate property companies was separately disclosed from
investments in investment property as a result of incorrect
terminology, even though the intended measurement principles were
correctly and consistently applied. To rectify the error, the
investments in associate property companies have been correctly
classified as investment property in the results for the year ended
31 March 2009 and the interim results for the six months ended 30
September 2009.
Unaudited Unaudited Audited
30 30 31
September September March
2009 2008 2009
3. Reconciliation between profit
attributable to shareholders and
headline earnings
Shares are traded as part of
linked units
Profit attributable to - - -
shareholders *
Fair value adjustment to - - (7
investment properties 860)
Fair value adjustment to 4 492 426 6 849
debentures
Headline earnings * 4 492 426 (1
011)
Interest distribution per linked - - 9.0
unit (cents)
Basic earnings per linked unit - - -
(cents) *
Headline earnings per linked 5.2 0.5 (1.2)
unit (cents) *
Net asset value per linked unit 151.6 142.0 146.4
and net tangible asset value per
linked unit (cents)**
* Headline earnings have been presented in accordance with IAS 33.
The linked unit structure of the group whereby every shareholder is a
debenture holder, coupled with the terms of the Debenture Trust Deed
which states that 99.9% of profits are attributable to debenture
holders, results in the benfits of improved trading which would be
ordinarily attributable to shareholders being 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 in the comparative period included an expense for
provision for interest distributions to debenture holders of 3 cents
per share.
** Linked unit debentures are included in the net asset value and net
tangible asset value calculation
4. Linked unit statistics
(excluding treasury shares)
Linked units in issue 85 795 988 85 795 988 85 795
988
Effective linked units in issue 85 721 986 85 721 986 85 721
986
Weighted average number of 85 721 986 85 721 986 85 721
linked units 986
5. 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.
6. Capital commitments
No capital commitments have
been authorised.
SEGMENTAL INFORMATION
Group
Commercial Residential
R`000 R`000 R`000
For the six months ended 30
September 2009
Segment revenue 7 771 - 7 771
Segment result 4 638 - 4 638
Segment assets 134 422 - 134 422
Segment liabilities 4 416 - 4 416
For the six months ended 30
September 2008
Segment revenue 7 790 736 8 526
Segment result 371 139 510
Segment assets 124 734 - 124 734
Segment liabilities 3 049 - 3 049
For the year ended 31 March 2009
Segment revenue 15 444 736 16 180
Segment result 7 995 139 8 134
Segment assets 136 841 - 136 841
Segment liabilities 11 326 - 11 326
Unaudited Unaudited Audited
30 30 31
September September March
2009 2008 2009
Sectoral profile based on gross
lease area
Commercial 100% 100% 100%
Regional profile based on income
receivable
Eastern Cape 47% 40% 43%
Free State 4% 4% 5%
Gauteng 6% 25% 18%
KwaZulu-Natal 43% 31% 34%
Regional profile based on gross
lease area
Eastern Cape 30% 29% 30%
Free State 9% 9% 9%
Gauteng 21% 21% 21%
KwaZulu-Natal 40% 41% 40%
Tenant profile based on income
receivable
A-grade tenant 48% 36% 39%
B-grade tenant 19% 17% 10%
C-grade tenant 33% 47% 51%
Tenant profile based on gross
lease area
A-grade tenant 31% 32% 37%
B-grade tenant 13% 18% 9%
C-grade tenant 56% 50% 54%
Vacancy profile based on gross
lease area
Gross lease area in metres 25 850 26 265 25 850
squared as at end of period
Vacancy area in metres squared 8 031 8 940 8 275
Vacancy area as % gross lease 31% 34% 32%
area
Regional vacancy profile
Eastern Cape 6% 6% 6%
Free State 16% 14% 15%
Gauteng 56% 45% 52%
KwaZulu-Natal 22% 35% 27%
Sectoral vacancy profile
Commercial area 100% 100% 100%
COMMENTARY
Fairvest 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 group continued to produce pleasing results. The net asset value
per linked unit increased 4% from 146.4 cents as at 31 March 2009 to
151.6 cents as at 30 September 2009.
Revenue declined by 9%. However, if revenue previously derived from
Nedbank Circle and Mangrove Beach Centre properties which were sold
in the comparative period is excluded, revenue improved by 11% to
R7.8 million. Trading profits improved by 37% largely as a result of
the disposal of the underperforming properties.
As the properties are valued annually in March, the property
portfolio under management remained unchanged at R86.4 million
largely as a result of renovations and improved occupancy in certain
of the properties.
The balance sheet of the group remains strong with cash and cash
equivalents of R43.5 million. Fairvest is well-positioned to take
advantage of opportunities that may arise in the present uncertain
economic conditions.
Interest distributions and
dividends
Interest on debentures has been calculated in terms of the Debenture
Trust Deed. However in line with the company`s policy of declaring
annual interest distribution and dividends, no interest
distributions or dividends have been declared for the six month
period under review in respect of the linked units.
Subsequent events
The directors of Fairvest are not aware of any material matter or
circumstance that has occurred between 30 September 2009 and the
date of this report.
Directorate
There has been no change to the board of directors. Owing to
insufficient independent non-executive directors the audit committee
has been suspended and its functions are fulfilled by the board.
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
T.A. Bell
Chairman
13 November 2009
Directors
Executive Non-
executive
T A Bell (Chairman) T P
Botsis
K J Peter (Financial Director) D A
Johnston
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
PO Box 18, Umhlanga Rocks, 4320
Transfer secretaries
Computershare Investor Services
(Proprietary) Limited
Ground Floor, 70 Marshall Street,
Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Auditor
BDO Spencer Steward (KZN) Inc.
Sponsor
Merchantec Capital
Date: 13/11/2009 09:24:01 Produced by the JSE SENS Department.
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