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FVT
FVT
FVT - Fairvest Property Holdings Limited - Condensed consolidated results for
the six months ended 31 December 2010
Fairvest Property Holdings Limited
Incorporated in the Republic of South Africa
(Registration number: 1998/005011/06)
Linked unit code: FVT
ISIN: ZAE000034658
("Fairvest" or "the Company" or "the Group")
Condensed consolidated results For the six months ended 31 December 2010
Condensed consolidated statements of financial position
Unaudited Unaudited Audited
31 December 30 September 30 June
2010 2009 2010
R`000 R`000 R`000
Assets
Non-current assets 91 329 89 507 91 622
Investment property 88 766 86 426 88 766
Equipment 17 4 20
Operating lease asset 2 546 3 077 2 836
Current assets 45 356 44 915 53 147
Listed investments 8 280 - 2 684
Trade and other receivables 2 543 1 399 2 127
Cash and cash equivalents 34 533 43 516 48 336
Total assets 136 685 134 422 144 769
Equity and liabilities
Equity and reserves
Ordinary share capital 857 857 857
Non-current liabilities 127 376 130 112 126 555
Linked unit debenture capital 857 857 857
Linked unit debentures premium 124 915 128 292 124 020
Deferred taxation 1 604 963 1 678
Current liabilities 8 452 3 453 17 357
Taxation 1 143 827 2 017
Trade and other payables 7 309 2 626 15 340
Total equity and liabilities 136 685 134 422 144 769
Condensed consolidated statements of comprehensive income
Unaudited Unaudited Audited
6 months to 6 months to 15 months to
31 December 30 September 30 June 2010
2010 2009 R`000
R`000 R`000
Gross revenue 8 990 7 771 19 801
Rental income - contractual 8 996 7 664 19 541
- straight-line accrual (6) 107 260
Operating profit 3 318 2 936 8 962
Fair value adjustment to
listed investments 619 - 12
Fair value adjustment to
investment properties - - 2 340
Fair value adjustment to
debentures (895) (4 492) (219)
Foreign exchange gains 85 - -
Finance cost (6) - (810)
Investment revenue 1 243 1 702 4 389
Profit before debenture interest 4 364 146 14 674
Debenture interest (4 247) - (11 832)
Profit before taxation 117 146 2 842
Taxation (117) (146) (2 842)
Comprehensive income
attributable to shareholders - - -
Profit and total comprehensive
income attributable to:
- Owners of the parent - - -
- Non-controlling interest - - -
Reconciliation between profit
attributable to shareholders and
headline earnings per linked unit
Shares are traded as part of
linked units
Profit attributable to
shareholders* - - -
Fair value adjustment to
investment properties - - (2 340)
Fair value adjustment to
debentures 895 4 492 219
Headline and diluted headline
profit/(loss) attributable
to shareholders 895 4 492 (2 121)
Debenture interest 4 247 - 11 832
Headline and diluted headline
profit attributable to
linked unitholders 5 142 4 492 9 711
Distribution (debenture interest)
Interim interest distribution
per linked unit (cents) 5.0 - 10.0
Final interest distribution
per linked unit (cents) - 9.0 3.8
Total interest distribution
per linked unit (cents) 5.0 9.0 13.8
Earnings per share
Basic and diluted earnings
per share (cents)* - - -
Headline and diluted headline
earnings/(loss) per share
(cents)* 1.0 5.2 (2.5)
Headline and diluted headline
earnings per linked unit
(cents)* 6.0 5.2 11.3
Net asset value per linked unit
and net tangible asset value
per linked unit (cents)** 147.6 151.7 146.6
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
linked units 85 721 986 85 721 986 85 721 986
* 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 benefits 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.
** Linked unit debentures are included in the net asset value and net
tangible asset value calculation.
Condensed consolidated statements of cash flows
Unaudited Unaudited Audited
6 months to 6 months to 15 months to
31 December 30 September 30 June
2010 2009 2010
R`000 R`000 R`000
Cash (outflow)/inflow from
operating activities (8 922) (2 675) 4 838
Cash outflow from investing (4 881) - (2 693)
activities
Net (decrease)/increase in cash
and cash equivalents (13 803) (2 675) 2 145
Cash and cash equivalents at
beginning of period 48 336 46 191 46 191
Cash and cash equivalents at
end of period 34 533 43 516 48 336
Condensed consolidated statements of changes in equity
Share Retained Total
capital income R`000
R`000 R`000
Balance at 1 April 2009 857 - 857
Total comprehensive income for the - -
period
Balance at 30 September 2009 857 - 857
Total comprehensive income for the - -
period
Balance at 30 June 2010 857 - 857
Total comprehensive income for the - -
period
Balance at 31 December 2010 857 - 857
Statements of changes in linked unit debentures
Linked unit Linked unit Total
debenture debenture R`000
capital premium
R`000 R`000
Balance at 1 April 2009 857 123 801 124 658
Net fair value adjustment 4 492 4 492
Balance at 30 September 2009 857 128 293 129 150
Net fair value adjustment (4 273) (4 273)
Balance at 30 June 2010 857 124 020 124 877
Net fair value adjustment 895 895
Balance at 31 December 2010 857 124 915 125 772
Condensed consolidated segment report
Eastern Free Gauteng KwaZulu- Western Recon- Total
Cape State R`000 Natal Cape ciling R`000
R`000 R`000 R`000 R`000 items/
Elimina-
tions
R`000
For the 6
months
ended 31
December
2010
Revenue - 4 270 489 430 3 807 - - 8 996
external
customers
Inter- - - - - 710 (710) -
segmental
revenue
Operating 3 116 (143) (562) 2 314 - (1 407) 3 318
profit
Total 35 179 4 671 16 602 37 369 - 42 864 136 685
assets
For the 6
months
ended 30
September
2009
Revenue - 3 649 376 424 3 215 - - 7 664
external
customers
Inter- - - - - 1 517 (1 517) -
segmental
revenue
Operating 3 180 220 (124) 1 791 - (2 131) 2 936
profit
Total 30 761 6 570 19 936 33 635 - 43 520 134 422
assets
For the 15
months
ended 30
June 2010
Revenue - 9 145 982 1 090 8 324 - - 19 541
external
customers
Inter- - - - - 3 866 (3 866) -
segmental
revenue
Operating 6 919 501 (158) 4 133 - (2 433) 8 962
profit
Total 35 361 4 686 16 349 37 243 - 51 040 144 679
assets
Other segmental information
Unaudited Unaudited Audited
31 December 30 September 30 June
2010 2009 2010
R`000 R`000 R`000
Regional profile based on
lettable area
Eastern Cape 29% 30% 29%
Free State 12% 9% 12%
Gauteng 20% 21% 20%
KwaZulu-Natal 39% 40% 39%
Vacancy profile based on
gross lease area
Gross lease area in metres
squared as at end of 27 021 25 850 27 021
period
Vacancy area in metres 5 044 8 031 7 507
squared
Vacancy area as % of gross
lease area 19% 31% 28%
Regional vacancy profile
Eastern Cape 16% 6% 11%
Free State 0% 16% 25%
Gauteng 66% 56% 52%
KwaZulu-Natal 18% 22% 12%
Basis of preparation and accounting policies
The accounting policies applied in the preparation of these condensed
consolidated interim results for the six months ended 31 December 2010, 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 15 months ended 30
June 2010. These condensed consolidated results as set out in this report
have been prepared in accordance and containing the information required by
IAS 34 - Interim Financial Reporting, the AC 500 standards as issued by the
Accounting Practices Board, 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 31
December 2010 have been prepared in accordance with the historic cost basis,
except for the measurement of investment properties, linked units and certain
financial assets and financial liabilities which are stated at fair value.
The financial results are presented in Rands, which is Fairvest`s functional
and presentation currency.
These condensed consolidated interim results for the six months ended 31
December 2010 have not been reviewed by the Group`s auditors and have been
prepared on the fair value and going concern basis.
Estimates
The financial statements do not include any material estimates.
Commentary
Introduction
Fairvest is a property investment holding company with investments in
commercial properties in South Africa. Its 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 ongoing basis.
Change of financial year end
During the previous financial period the Group changed their financial year
end from 31 March to 30 June. Consequently the comparative interim reporting
period is the six months ended 30 September 2009 which is the most recent
comparable interim reporting period.
Review of results
During the period under review revenue continued to increase as vacancies
reduced to 19%, off which 7% is an unlettable property and 5% relates to
properties being refurbished, bringing the effective vacancies to below 10%.
We continue with projects to enhance the current portfolio through
refurbishments and some general maintenance, however, new opportunities are
continually evaluated to utilise excess cash and increase the gearing of the
Group.
The Group declared an interim distribution of 5.0 cents per linked unit for
the six months ended 31 December 2010. The net asset value per linked unit
increased from 146.6 cents as at 30 June 2010 to 147.6 cents as at 31
December 2010.
Revenue increased by 15.7% to R8.99 million largely as a result of reduced
vacancies. Trading profits increased by 13.0% to R3.3 million largely as a
result of cost containment and streamlining of operations, in spite off
general maintenance projects to the value of R1.5 million which reduced
trading profits. These projects are ongoing and will have a further impact on
the full year`s trading profits.
The number of properties in the portfolio has remained unchanged during the
period under review at 11 as we continue to focus on extracting value out of
the current portfolio. The value of the portfolio remained unchanged since 30
June 2010 as the properties are valued at year end, however we do not expect
negative revisions being made to the properties at year end.
An additional R4.9 million has been invested in the listed property sector in
Australia during the six months under review. Listed investments increased by
9.2% to R8.3 million since 30 June 2010.
With R34.5 million of available cash resources and a debt free balance sheet
the Group remains well positioned to take advantage of opportunities in the
current market.
Interest distributions and dividends
Interest on debentures has been calculated in terms of the Debenture Trust
Deed. An interim interest distribution of 5.0 cents per debenture unit has
been declared for the six months ended 31 December 2010 and is payable to
linked unitholders registered in the books of the company at the close of
business on Friday, 25 March 2011. No dividend has been declared for the
period in respect of the linked units.
Last date to trade linked units
cum interest payment Friday, 25 March 2011
Linked units commence trading ex interest payment Monday, 28 March 2011
Record date Friday, 1 April 2011
Payment date Monday, 4 April 2011
Linked units may not be dematerialised or rematerialised between Monday, 28
March 2011 and Friday, 1 April 2011, both days inclusive.
Directorate
LW Andrag was appointed as an independent non-executive director on 1
December 2010.
Subsequent events
The directors of Fairvest are not aware of any material matter or
circumstance arising between 31 December 2010 and this report which may
materially affect the financial position of the Group or the results of its
operations.
Appreciation
We extend our appreciation to our directors, management and staff for their
valued efforts as well as our advisers and linked unitholders for their
continuing belief in and support of Fairvest.
For and on behalf of the board
JF du Toit
Chairman
BJ Kriel
Chief Executive Officer and Financial Director
10 March 2011
Cape Town
Registered office:
1st Floor East Wing, The Palms, 145 Sir Lowry Road, Cape Town, 8001
PO Box 4083, Durbanville, 7551
Transfer secretaries:
Computershare Investor Services 2004 (Proprietary) Limited
Ground Floor, 70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Auditor:
BDO South Africa Incorporated Registered Auditors
Sponsor:
PSG Capital (Proprietary) Limited
Company Secretary:
SecCorp Secretarial Services (Proprietary) Limited
Property managers:
Blend Property Management (Proprietary) Limited
Directors:
Executive:
BJ Kriel (Chief Executive Officer and Financial Director)
Non-executive:
JF du Toit (Chairman), M Epstein, PJ van der Merwe#, LW Andrag#
# independent
Date: 10/03/2011 13:56:49 Produced by the JSE SENS Department.
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