| Thu 28 Oct 2010, 9:00 | | FPT - Fountainhead Property Trust - Audited final results for the year ended 30 |
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FPT
FPT
FPT - Fountainhead Property Trust - Audited final results for the year ended 30
September 2010
Fountainhead Property Trust
A Collective Investment Scheme in property registered in terms of the
Collective Investment Schemes Control Act, No.45 of 2002 and managed by
Fountainhead Property Trust Management Limited
(Registration number 1983/003324/06)
Share code: FPT
ISIN code: ZAE000097416
("Fountainhead")
AUDITED FINAL RESULTS for the year ended 30 September 2010
* Final distribution of 26.83 cents per unit
* Net asset value of R6.74 per unit
* Gearing of 15%
* Distribution growth of 4% for the year
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 2010. 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.
STATEMENT OF FINANCIAL POSITION
2010 2009
R`000 R`000
ASSETS
Property assets 7 940 044 7 621 090
Investment properties 7 677 024 7 372 551
Straight-line lease accrual 263 020 248 539
Current assets 397 501 380 414
Trade and other receivables 53 874 46 542
Cash and cash equivalents 343 627 333 872
Total assets 8 337 545 8 001 504
UNITHOLDERS` FUNDS AND LIABILITIES
Unitholders` funds 6 719 106 6 708 418
Capital of the fund 1 933 354 1 933 354
Capital reserve 513 837 501 906
Revaluation reserve 4 008 835 4 024 559
Retained earnings 263 080 248 599
Non-current liabilities
Interest-bearing liability 1 225 000 915 000
Current liabilities 393 439 378 086
Trade and other payables 126 201 116 127
Unitholders for distribution 267 238 261 959
Total unitholders` funds and liabilities 8 337 545 8 001 504
STATEMENT OF COMPREHENSIVE INCOME
2010 2009
R`000 R`000
Income 845 963 785 120
Contractual rental income 831 482 768 565
Straight-line lease adjustment 14 481 16 555
Expenses (219 979) (195 004)
Administrative expenses (42 265) (35 921)
Property operating expenses (177 714) (159 083)
Operating profit 625 984 590 116
Net finance costs (72 843) (55 619)
Interest received 25 259 34 658
Interest paid (98 102) (90 277)
Profit on disposal of investment property 1 932 -
Fair value adjustments to investment properties (5 725) 82 528
Profit for the year 549 348 617 025
Total comprehensive income for the year 549 348 617 025
Basic/diluted earnings per unit (cents) 55.15 61.95
Headline earnings and distribution income
reconciliation
Profit for the year 549 348 617 025
Adjust for:
Profit on disposal of investment property (1 932) -
Fair value adjustments to investment properties 5 725 (82 528)
Headline earnings 553 141 534 497
Less: straight-line lease adjustment (14 481) (16 555)
Distribution income 538 660 517 942
Headline earnings per unit (cents) 55.53 53.66
Distribution per unit (cents) 54.08 52.00
Interim distribution per unit (cents) 27.25 25.70
Final distribution per unit (cents) 26.83 26.30
Units in issue 996 043 081 996 043 081
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, except for IAS 1 - Presentation of
Financial Statements, IAS 23 - Borrowing Costs and IFRS 8 - Operating Segments,
which are new standards adopted in the current financial year.
2. DISTRIBUTION PER UNIT
Fountainhead Property Trust`s net distribution income for the six months ended
September 2010 amounts to 26.83 cents per unit, 2 percent greater than the
comparable period last year. The net distribution for the financial year ended
September 2010 is 54.08 cent per unit, which is 4 percent greater than the
comparable period last year.
3. BORROWINGS
The interest-bearing liability comprises:
Term Loan A - a R615 000 000 interest only facility at a rate of prime less 2.3%
payable by 24 June 2012. An additional R125 000 000 of this facility is still
available for access.
Term Loan B - a R250 000 000 interest only facility fixed at a rate of 11.07%
until 15 February 2013. This facility is payable by 24 June 2012, with the fixed
interest rate transferable to any subsequent facility.
Term Loan C - a R200 000 000 interest only facility fixed at a rate of 10.72%
until 22 July 2012. This facility is payable by 22 July 2012.
Term Loan D - a R160 000 000 interest only facility floating at a rate of 1
month JIBAR +2.73% until 22 July 2014. This facility is payable by 22 July 2014.
An additional R40 000 000 of this facility is still available for access.
Blue Route Mall Development Loan Facility - a R788 000 000 interest only
facility floating at a rate of 1 month JIBAR +2.50% until 31 May 2015. This
facility is payable by 31 May 2015. This facility has not yet been accessed.
Interest payments will be capitalised on this facility until the development is
completed.
4. MAJOR CAPITAL PROJECTS
Significant capital projects are:
Blue Route Mall
The construction work on this project commenced during April 2010 with the
demolition of a portion of the existing building and the preparation of the new
mall`s foundation and parking garage. The project is on schedule with an
expected completion date of March 2012.
Centurion Mall
The restructuring of the Pick n Pay space at the mall has commenced. The Trust`s
share of the estimated cost is R45 million at an initial yield of 8%. The
restructuring involves reducing the Pick n Pay area and introducing new stores
to this space, including Pick n Pay Clothing, UFO Furnishers and an upgraded Hi-
Fi Corporation. The expected completion date is mid-2011.
5. ACQUISITION AND DISPOSALS
The Trust has purchased the following properties during the year:
Initial
Sector Building name Location Price yield
Offices 18 The Boulevard Westville, Durban R75 000 000 9.00%
Offices 2 Pybus Road Sandton, Johannesburg R70 000 000 9.62%
Transfer
Sector Building name Location date
Offices 18 The Boulevard Westville, Durban 1 March 2010
Offices 2 Pybus Road Sandton, Johannesburg 13 May 2010
The Trust has successfully negotiated the purchase of an 80% undivided share in
an office building called CK3. The purchase price is R204 million at an expected
initial yield of 9.05%. Transfer is expected to take place during December 2010.
The Trust has sold the following property during the year:
Building Transfer Selling
Sector name Location date price Valuation
Industrial 7 Benbow
Road Epping, Cape Town 7 May 2010 R18 000 000 R16 067 610
Building Transfer Profit on
Sector name Location date sale
Industrial 7 Benbow Road
Epping, Cape Town 7 May 2010 R1 932 390
The Trust has also successfully negotiated the sale of the two office buildings.
Human Rights House is to be sold for R38.5 million, which represents a profit on
sale of R9.8 million.
22 Wellington Road has been sold for R19.5 million, which represents a profit on
sale of R3 million. Transfer was effective in October 2010.
6. SEGMENTAL INFORMATION
September 2010
Net
Revenue income % of
Rm Rm total
Retail 597 465 86
Office blocks 124 99 18
Industrial 81 63 12
Specialised 29 29 6
Corporate - (117) (22)
Total 831 539 100
September 2009
Revenue Net income % of
Rm Rm total
Retail 549 436 84
Office blocks 114 88 17
Industrial 79 62 12
Specialised 26 26 5
Corporate (94) (18)
Total 768 518 100
STATEMENT OF CASH FLOWS
2010 2009
R`000 R`000
Cash effects from operating activities
Profit for the year 549 348 617 025
Adjustments for:
Straight-line lease adjustment (14 481) (16 555)
Interest received (25 259) (34 658)
Interest paid 98 102 90 277
Profit on disposal of investment property (1 932) -
Fair value adjustments to investment properties 5 725 (82 528)
Operating profit before changes in working capital 611 503 573 561
Trade and other receivables increased (7 332) (8 029)
Trade and other payables increased 10 074 9 677
Cash generated from operations 614 245 575 209
Interest received 25 259 34 658
Interest paid (98 102) (90 277)
Income distributions (533 381) (500 014)
Cash inflows from operating activities 8 021 19 576
Cash effects from investing activities
Additions to investment properties (326 266) (186 888)
Proceeds from disposal of investment property 18 000 -
Cash outflows from investing activities (308 266) (186 888)
Cash effects from financing activities
Long-term loan raised 310 000 184 000
Cash inflows from financing activities 310 000 184 000
Net increase in cash and cash equivalents 9 755 16 688
Cash and cash equivalents at beginning of the year 333 872 317 184
Cash and cash equivalents at end of the year 343 627 333 872
STATEMENT OF CHANGES IN UNITHOLDERS` FUNDS
Capital of Capital Revaluation
(R`000) the fund Reserve Reserve
Balance at 1 October 2008 1 933 354 501 906 3 942 031
Total comprehensive income for the year
Profit and total comprehensive
income for the year - - -
Transactions with unitholders,
recorded directly in equity
Fair value adjustment on investment
properties transferred to revaluation reserve 82 528
Income distributions
Total transactions with unitholders - - 82 528
Balance as at 30 September 2009 1 933 354 501 906 4 024 559
Total comprehensive income for the year
Profit and total comprehensive
income for the year - - -
Transactions with unitholders,
recorded directly in equity
Profit and revaluation reserve
realised on sale of property
transferred to capital reserve 11 931 (9 999)
Fair value adjustment on investment
properties transferred to revaluation reserve (5 725)
Income distributions
Total transactions with unitholders - 11 931 (15 724)
Balance as at 30 September 2010 1 933 354 513 837 4 008 835
Total
Retained unitholders`
(R`000) earnings funds
Balance at 1 October 2008 232 044 6 609 335
Total comprehensive income for the year
Profit and total comprehensive
income for the year 617 025 617 025
Transactions with unitholders,
recorded directly in equity
Fair value adjustment on investment
properties transferred to revaluation reserve (82 528) -
Income distributions (517 942) (517 942)
Total transactions with unitholders (600 470) (517 942)
Balance as at 30 September 2009 248 599 6 708 418
Total comprehensive income for the year
Profit and total comprehensive income for the year 549 348 549 348
Transactions with unitholders, recorded
directly in equity
Profit and revaluation reserve
realised on sale of property
transferred to capital reserve (1 932) -
Fair value adjustment on investment
properties transferred to revaluation reserve 5 725 -
Income distributions (538 660) (538 660)
Total transactions with unitholders (534 867) (538 660)
Balance as at 30 September 2010 263 080 6 719 106
7. VACANCY LEVELS
Vacancy levels in terms of rentable area at 30 September were as follows:
Sep 2010 Sep 2009
Sector % %
Retail 5 6
Office blocks 12 7
Industrial 10 8
Specialised - -
Total 7 6
By value, the vacancies equated to 5 percent of potential rental income, the
same as at half-year.
In the retail sector 62 percent of the vacancies were contained in The
Brightwater Commons, The Boulders Shopping Centre and at Centurion Mall.
Vacancies have improved compared to the prior financial year.
The office sector had a vacancy of 12 percent which is primarily situated in
Grayston Ridge, AMR Office Park and The Ambridge. This sector remains under
pressure.
The industrial sector had a vacancy of 10 percent. Approximately 26 percent of
the total vacant industrial area has been let for future occupation.
8. LEASE EXPIRY PROFILE
The lease expiry profile by rentable area as at 30 September 2010 is as follows
(%):
Building Vacant 2011 2012 2013
Retail 5 20 15 13
Offices 12 24 25 7
Industrial 10 40 20 28
Specialised 0 0 0 0
Total 7 25 17 15
Building 2014 2015 >2015
Retail 14 18 15
Offices 2 9 21
Industrial 2 0 0
Specialised 0 0 100
Total 9 11 16
9. PORTFOLIO VALUATIONS
The composition of Fountainhead Property Trust`s portfolio, as valued by the
independent valuer, Rode and Associates CC, as at 30 September 2010, is as
follows:
Forward
Sector Value (Rm) Cents/unit EY (%)
Retail 5 884 591 8.3
Office blocks 1 178 118 8.7
Industrial 590 59 10.9
Specialised 288 29 10.7
Total property 7 940 797 8.6
Long-term borrowings (1 225) (123)
Net current assets 4 -
6 719 674
% of portfolio
Sector 2010 2009
Retail 74 76
Office blocks 15 13
Industrial 7 8
Specialised 4 3
Total property 100 100
Long-term borrowings
Net current assets
The net asset value of R6.74 per unit is the same as at 30 September 2009.
10. PROSPECTS
It is anticipated that the distribution per unit for the year ending 30
September 2011 will increase by approximately 3 percent compared with the
financial year ended 30 September 2010. This is based on the Board`s assessment
of the current economic climate and the short-term dilution of the Blue Route
Mall redevelopment. Excluding the Blue Route Mall redevelopment, the benefit of
which will accrue in the future, the anticipated distribution growth would have
been approximately 6 percent. The above forecast information has not been
reviewed or reported on by Fountainhead Property Trust`s auditor.
11. INCOME DISTRIBUTION ANNOUNCEMENT
Notice is hereby given of distribution No. 55 of 26.83 cents per unit for the
six months ended 30 September 2010.
The last date to trade cum distribution will be Friday, 12 November 2010. The
units of Fountainhead Property Trust will commence trading ex-distribution on
Monday, 15 November 2010 and the record date will be Friday, 19 November 2010.
The distribution will be paid on Monday, 22 November 2010.
Unit certificates may not be dematerialised or rematerialised between Monday, 15
November 2010 and Friday, 19 November 2010, both dates inclusive.
BY ORDER OF THE BOARD
Fountainhead Property Trust Management Limited
(Reg No 1983/003324/06)
27 October 2010
Directors: WM Kirchmann (Chairman), AE Raubenheimer (Managing),VA Christian,
HY Laher, DS Ogbu, JD Rainier, SJ Segar, S Shaw-Taylor
Transfer secretaries:
Computershare Investor Services (Pty) Limited
70 Marshall Street
Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Secretary and registered office:
Broll Property Group (Pty) Limited
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: 28/10/2010 09:00:02 Produced by the JSE SENS Department.
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