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FVT
FVT
FVT - Fairvest Property Holdings Limited - Condensed consolidated results for
the 12 months ended 30 June 2011
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 12 months ended 30 June 2011
Condensed consolidated statements of financial position
Audited Audited
30 June 2011 30 June 2010
R`000 R`000
Assets
Non-current assets 100 186 91 622
Investment property 97 372 88 766
Investment property under construction 623
Equipment 17 20
Operating lease asset 2 174 2 836
Current assets 44 692 53 147
Listed investments 8 450 2 684
Trade and other receivables 2 401 2 127
Cash and cash equivalents 33 841 48 336
Investment property held for sale 2 150 -
Total assets 147 028 144 769
Equity and liabilities
Equity and reserves
Ordinary share capital 857 857
Non-current liabilities 138 006 126 555
Linked unit debentures and premium 133 235 124 877
Deferred taxation 4 771 1 678
Current liabilities 8 165 17 357
Taxation 35 2 017
Trade and other payables 8 130 15 340
Total equity and liabilities 147 028 144 769
Condensed consolidated statements of cash flows
Audited Audited
12 months to 15 months to
30 June 2011 30 June 2010
R`000 R`000
Cash (outflow)/inflow from operating
activities (8 991) 4 838
Cash outflow from investing activities (5 504) (2 693)
Net (decrease)/increase in cash and cash
equivalents (14 495) 2 145
Cash and cash equivalents at beginning
of period 48 336 46 191
Cash and cash equivalents at end
of period 33 841 48 336
Condensed consolidated statements of changes in equity
Share Retaine
d
capital income Total
R`000 R`000 R`000
Balance at 1 April 2009 857 - 857
Total comprehensive
income for the period - -
Balance at 30 June 2010 857 - 857
Total comprehensive income for the - -
period
Balance at 30 June 2011 857 - 857
Statements of changes in linked unit debentures
Linked Linked
unit unit
debent debent
ure ure
capita premiu Total
l m
R`000 R`000 R`000
Balance at 1 April 2009 857 123 124 658
801
Net fair value adjustment 219 219
Balance at 30 June 2010 857 124 124 877
020
Net fair value adjustment 8 358 8 358
Balance at 30 June 2011 857 132 133 235
378
Condensed consolidated statements of comprehensive income
Audited Audited
12 months to 15 months to
30 June 2011 30 June 2010
R`000 R`000
Gross revenue 17 295 19 801
Rental income - contractual 17 502 19 541
- straight-line (207) 260
accrual
Operating profit 5 910 8 962
Fair value adjustment to listed 288 12
investments
Fair value adjustment to investment 10 756 2 340
properties
Fair value adjustment to debentures (8 358) (219)
Finance cost (6) (810)
Foreign exchange gains 588 -
Investment revenue 2 256 4 389
Dividends received 290 -
Profit before debenture interest 11 724 14 674
Debenture interest (9 352) (11 832)
Profit before taxation 2 372 2 842
Taxation (2 372) (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 linked - -
shareholders*
Fair value adjustment to investment
properties
(net of taxation) (7 744) (1 685)
Headline and diluted headline loss
attributable
to shareholders (7 744) (1 685)
Fair value adjustment to debentures 8 358 219
Debenture interest 9 352 11 832
Headline and diluted headline profit
attributable to linked unitholders 9 966 10 366
Distribution (debenture interest)
Interim interest distribution per
linked
unit (cents) 5.0 10.0
Final interest distribution per
linked
unit (cents) 5.9 3.8
Total interest distribution per
linked
unit (cents) 10.9 13.8
Earnings per share
Basic and diluted earnings per share - -
(cents)*
Headline and diluted headline loss
per share (cents)* (9.0) (2.0)
Headline and diluted headline
earnings
per linked unit (cents)* 11.6 12.1
Net asset value per linked unit and
net
tangible asset value per linked 156.3 146.6
unit (cents)**
Linked unit statistics (excluding
treasury shares)
Linked units in issue 85 795 988 85 795 988
Effective linked units in issue 85 721 986 85 721 986
Weighted average number of linked 85 721 986 85 721 986
units
* 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.
Other segmental information
Audited Audited
30 June 2011 30 June 2010
Regional profile based on leasable
area
Eastern Cape 29% 29%
Free State 10% 12%
Gauteng 20% 20%
KwaZulu-Natal 41% 39%
Vacancy profile based on gross lease
area
Gross lease area in metres squared
as at
end of period 26 269 27 021
Vacancy area in metres squared 5 653 7 507
Vacancy area as % of gross lease 21.5% 27.8%
area
Regional vacancy profile
Eastern Cape 23% 12%
Free State 0% 25%
Gauteng 62% 52%
KwaZulu-Natal 15% 12%
Condensed consolidated segment report
Reco
n-
cili
ng
item
/
Easter Free KwaZu West (Eli
n lu- ern mi-
Cape State Gaut Natal Cape Nati Tot
eng ons) al
R`000 R`000 R`00 R`000 R`00 R`00 R`0
0 0 0 00
For the
12
months
ended 30
June
2011
Revenue
-
external
8 067 1 036 1 7 398 - - 17
customer 001 502
s
Interseg
mental
- - - - 1 (1 -
revenue 285 285)
Operatin 5 212 (408) (671 4 253 - (2 5
g profit ) 476) 910
Total 36 716 6 459 18 42 - 42 147
assets 463 961 429 028
For the
15
months
ended 30
June
2010
Revenue
-
external
9 145 982 1 8 324 - - 19
customer 090 541
s
Interseg
mental
- - - - 3 (3 -
revenue 866 866)
Operatin 6 919 501 (158 4 133 - (2 8
g profit ) 433) 962
Total 35 361 4 686 16 37 - 51 144
assets 439 243 040 769
Basis of preparation and accounting policies
The accounting policies applied in the preparation of
these audited condensed consolidated results for the
year ended 30 June 2011, 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 except for the adoption of
new and amended IFRS and IFRIC interpretations, these
did not impact on the financial position or
performance of the company but has resulted in
additional disclosures. These audited condensed
consolidated results as set out in this report have
been prepared in accordance with the framework
concepts and the measurement and recognition
requirements of IFRS and the AC 500 standards as
issued by the accounting practices board and
containing the information required by IAS 34:
Interim Financial Reporting", the Companies Act of
South Africa, as amended, and the Listings
Requirements of JSE Limited.
These audited condensed consolidated results for the
year ended 30 June 2011 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.
Estimates
The financial statements do not include any material
estimates.
Auditors` report
The audited financial results for the year ended 30
June 2011 set out above have been extracted from the
Group`s annual financial statements which have been
audited by BDO South Africa Inc. A copy of their
unmodified audit opinion on the consolidated annual
financial statements and on the audited condensed
consolidated results is available for inspection at
the Company`s registered offices.
Annual general meeting
The annual general meeting of linked unitholders of
Fairvest will be held at its registered office on
Thursday 17 November 2011 at 11:00.
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.
Change of financial year-end
During the previous reporting period Fairvest
Property Holdings Limited and its subsidiaries
changed their year-end from 31 March to 30 June.
Consequently the comparative reporting period
represents 15 months whilst the current period
represents 12 months, thus the amounts are not
entirely comparable between 2011 and 2010.
Review of results
2011 marked the end of the consolidation phase of the
Fairvest property portfolio. The current portfolio is
now poised for growth. Management is in the process
of implementing a new investment strategy and key
executives will be appointed.
As mentioned in our 2010 Annual Report and interim
results for the six months ended 31 December 2010, we
continue to enhance our current portfolio through
extensive maintenance projects. In the short-term,
these projects will significantly impact on our
turnover growth and operating profits, while the
projects are concluded, however we are confident that
these projects will realise the full potential of our
current portfolio. During the period under review the
value of these projects were R2.9 million which
reduced our operating profits and distributions
accordingly.
The net asset value per linked unit increased from
146.6 cents to 156.3 cents. The increase is largely
as a result of an increase in the valuations of the
property portfolio as well as gains on the listed
property investments.
The number of properties in the portfolio has
remained unchanged during the period under review at
11. During the period under review a new development
commenced on one of our current properties. After
year-end one unoccupied property was disposed of.
During the period, the property portfolio under
management increased from R88.8 million to R97.3
million mainly as a result of improved occupancies
and maintenance projects adding value to the current
properties.
Revenue decreased by 12.7% to R17.3 million during
the period under review, however the current
financial period comprised of 12 months compared to
15 months in the previous year. Annualised revenue
increased by 5.9% as vacancies continue to decrease.
Vacancies decreased from 27.8% in the previous year
to 21.5%, of which 5.0% relates to an unoccupied
property that was sold after year end, 7.3% to an
untenantable property and 3.5% to a property being
refurbished, bringing the effective vacancies to 5.7%
of the gross leasable area.
Operating profit decreased by 34.1% to R5.9 million
during the period under review. Annualised operating
profit decreased by 11.2%. By taking into account the
one-off expenses incurred on maintenance projects, as
mentioned earlier, operating profits increased by
22.8%.
In March 2011 an interim distribution of 5.0 cents
per linked unit for the six months ended 31 December
2010 was paid; and together with the final interest
declaration of 5.9 cents per linked unit, brings the
total distribution to 10.9 cents (2010: 13.8 cents)
per linked unit for the period, a decrease of 21.0%
from the prior year. Annualised distribution
decreased by 1.3% from the prior year mainly because
of one off expenses incurred.
During the period under review Fairvest invested a
further R4.881 million (AU$0.734 million) in the
Australian listed property sector. R3.936 million
(AU$0.952 million) was invested in 321 519
Growthpoint Australia shares and R0.945 million
(AU$0.142 million) in 141 000 Cromwell Property Group
shares. Listed property investments increased by
R1.185 million during the period under review as a
result of favourable exchange rates and increases in
the values of the share prices.
Interest distributions and dividends
Interest on debentures has been calculated in terms
of the Debenture Trust Deed. A final interest
distribution of 5.9 cents per linked unit has been
declared bringing the total distribution to linked
unit holders to 10.9 cents for the year ended 30 June
2011. The distribution is payable to linked
unitholders registered in the books of the Company at
the close of business on Friday, 28 October 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, 21 October 2011
Linked units commence trading ex interest payment Monday, 24 October 2011
Record date Friday, 28 October 2011
Payment date Monday, 31 October 2011
Linked units may not be dematerialised or rematerialised between Monday 24
October 2011 and Friday 28 October 2011, both days inclusive.
Directorate
LW Andrag was appointed as an indepedent non-
executive director on 1 December 2010. D Wilder was
appointed as an executive director on 22 September
2011, with A Marcus appointed as his alternate on the
board.
Subsequent events
The directors of Fairvest are not aware of any
material matter or circumstance arising between 30
June 2011 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 BJ Kriel
Chairman Chief Executive Officer and
Financial Director
29 September 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 (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)**,
D Wilder, A Marcus *
* Alternate director to D Wilder
Non-executive: JF du Toit (Chairman), M Epstein, PJ
van der Merwe #
LW Andrag #
# independent
These condensed consolidated results were prepared by
the Financial Director, BJ Kriel
www.fairvest.co.za
The full annual accounts will be available on our
website, or the printed version at our registered
office or on request.
Date: 29/09/2011 16:30:01 Produced by the JSE SENS Department.
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