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FVT
FVT
FVT - Fairvest Property Holdings Limited - Condensed consolidated results for
the six months ended 31 December 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 six months ended 31 December 2011
Condensed consolidated statements of financial position
Unaudited Unaudited Audited
31 December 31 December 30 June
2011 2010 2011
R`000 R`000 R`000
ASSETS
Non-current assets 104 008 91 329 100 186
Investment property 97 372 88 766 97 372
Investment property under
construction 4 673 - 623
Equipment 15 17 17
Operating lease asset 1 948 2 546 2 174
Current assets 45 530 45 356 44 692
Listed investments 2 949 8 280 8 450
Trade and other receivables 2 407 2 543 2 401
Cash and cash equivalents 40 174 34 533 33 841
Investment property held for sale - - 2 150
Total assets 149 538 136 685 147 028
EQUITY AND LIABILITIES
Equity and reserves
Ordinary share capital 857 857 857
Non-current liabilities 140 564 127 376 138 006
Linked unit debentures and premium 134 768 125 772 133 235
Deferred taxation 5 796 1 604 4 771
Current liabilities 8 117 8 452 8 165
Taxation 352 1 143 35
Trade and other payables 7 765 7 309 8 130
Total equity and liabilities 149 538 136 685 147 028
Condensed consolidated statements of comprehensive income
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 December 31 December 30 June
2011 2010 2011
R`000 R`000 R`000
Gross revenue 8 905 8 990 17 295
Rental income - contractual 9 469 8 996 17 502
- straight-line
accrual (564) (6) (207)
Operating profit 2 915 3 318 5 910
Fair value adjustment to listed
investments (29) 619 288
Fair value adjustment to
investment properties - - 10 756
Fair value adjustment to
debentures (1 533) (895) (8 358)
Profit on sale of investment
property 1 840 - -
Finance cost - (6) (6)
Foreign exchange gains 629 85 588
Investment revenue 1 837 1 243 2 256
Dividends received 325 - 290
Profit before debenture interest 5 984 4 364 11 724
Debenture interest (4 461) (4 247) (9 352)
Profit before taxation 1 523 117 2 372
Taxation (1 523) (117) (2 372)
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)
Headline and diluted headline loss
attributable to shareholders - - (7 744)
Fair value adjustment to
debentures 1 533 895 8 358
Debenture interest 4 461 4 247 9 352
Headline and diluted headline
profit attributable to linked
unitholders 5 994 5 142 9 966
Distribution (debenture interest)
Interim interest distribution per
linked unit (cents) 5.2 5.0 5.0
Final interest distribution per
linked unit (cents) - - 5.9
Total interest distribution per
linked unit (cents) 5.2 5.0 10.9
Earnings per share
Basic and diluted earnings per
share (cents)* - - -
Headline and diluted headline loss
per share (cents)* - - (9.0)
Headline and diluted headline
earnings per linked unit
(cents)* 7.0 6.0 11.6
Net asset value per linked unit
and net tangible asset value
per linked unit (cents)** 158.1 147.6 156.3
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 12 months to
31 December 31 December 30 June
2011 2010 2011
R`000 R`000 R`000
Cash inflow/(outflow) from
operating activities 2 122 (8 922) (8 991)
Cash inflow/(outflow) from
investing activities 4 211 (4 881) (5 504)
Net increase/(decrease) in cash
and cash equivalents 6 333 (13 803) (14 495)
Cash and cash equivalents at
beginning of period 33 841 48 336 48 336
Cash and cash equivalents at
end of period 40 174 34 533 33 841
Condensed consolidated statements of changes in equity
Share Retained Total
capital income R`000
R`000 R`000
Balance at 1 July 2010 857 - 857
Total comprehensive income for
the period - -
Balance at 31 December 2010 857 - 857
Total comprehensive income for
the period - -
Balance at 30 June 2011 857 - 857
Total comprehensive income for
the period - -
Balance at 31 December 2011 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 July 2010 857 124 020 124 877
Net fair value adjustment 895 895
Balance at 31 December 2010 857 124 915 125 772
Net fair value adjustment 7 463 7 463
Balance at 30 June 2011 857 132 378 133 235
Net fair value adjustment 1 533 1 533
Balance at 31 December 2011 857 133 911 134 768
Condensed consolidated segment report
Eastern Free Gauteng KwaZulu- Western Reconciling Total
Cape State R`000 Natal Cape items/ R`000
R`000 R`000 R`000 R`000 (elimination
s)
R`000
For the 6
months ended
31 December
2011
Revenue - 4 053 569 788 4 059 - - 9 469
external
customers
Intersegmental - - - - 945 (945) -
revenue
Operating 2 702 369 (150) 2 334 - (2 340) 2 915
profit
Total assets 33 611 6 415 18 400 46 688 - 44 424 149
538
For the 6
months ended
31 December
2010
Revenue - 4 270 489 430 3 807 - - 8 996
external
customers
Intersegmental - - - - 710 (710) -
revenue
Operating 3 116 (143) (562) 2 314 - (1 407) 3 318
profit
Total assets 35 179 4 671 16 602 37 369 - 42 864 136
685
For the 12
months ended
30 June 2011
Revenue - 8 067 1 036 1 001 7 398 - - 17
502
external
customers
Intersegmental - - - - 1 285 (1 285) -
revenue
Operating 5 212 (408) (671) 4 253 - (2 476) 5 910
profit
Total assets 36 716 6 459 18 463 42 961 - 42 429 147
028
Other segmental information
Unaudited Unaudited Audited
31 December 31 December 30 June
2011 2010 2011
R`000 R`000 R`000
Regional profile based on leasable
area
Eastern Cape 26% 29% 29%
Free State 10% 12% 10%
Gauteng 21% 20% 20%
KwaZulu-Natal 43% 39% 41%
Vacancy profile based on gross
lease area
Gross lease area in metres squared as
at end of period 24 967 27 021 26 269
Vacancy area in metres squared 4 922 5 044 5 653
Vacancy area as % of gross lease area 19.7% 18.7% 21.5%
Regional vacancy profile
Eastern Cape 0% 16% 23%
Free State 12% 0% 0%
Gauteng 67% 66% 62%
KwaZulu-Natal 20% 18% 15%
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 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 year ended 30 June
2011 except for the adoption of new and amended IFRS and IFRIC
interpretations, these did not impact on the financial position or performance
or performance of the company but has resulted in additional disclosures.
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 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.
These condensed consolidated interim results for the six months ended 31
December 2011 have not been reviewed by the Group`s auditors and have been
prepared on the fair value and going concern basis.
The Group`s auditors have not reviewed nor reported on any of the comments
relating to future distributions
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. The Group appointed a new asset
management company in October 2011, which is in the process of implementing a
significant growth strategy for the Group, focusing on retail assets in non-
metropolitan areas and lower LSM sector.
Review of results
Revenue has continued to increase during the period under review, however the
tenancy of the two largest tenants in the portfolio is under risk which could
have a significant impact on the net asset value and future distributions of
the Group. The distributions for current full year to 30 June 2012 would
likely remain in line with the previous period, however the inability to
conclude renewals of the leases mentioned would significantly impact
distributions for the six months ended 31 December 2012 and future periods.
Negotiations are ongoing.
The number of properties in the portfolio reduced to 10 during the period
under review, as one vacant property was disposed of. During the period under
review R4.1 million was spent on the new A-grade development with a further
R41.4 million of capital committed. The project is scheduled to be completed
by November 2012 with occupation by the tenant in December 2012. The
development is fully let and the completed project will enhance the quality of
the assets and the yield of the portfolio.
Revenue increased by 5.3% to R9.5 million during the period under review and
if revenue previously derived from CAPAB House which was sold in the current
period is excluded, revenue increased by 11.2%. Vacancies decreased from 21.5%
in the previous year to 19.7% as a result of the sale of a vacant property.
Operating profit decreased by 12.1% to R2.9 million during the period under
review. By taking into account the IFRS adjustments, operating profits
increased by 4.9%.
During the period under review Fairvest sold shares held in the Australian
listed property sector to the value of R6.111 million (AU$0.772 million)
resulting in a realised gain of R1.159 million. These surplus funds will be
utilised in the development currently under way.
The Group therefore declares an interim distribution of 5.2 cents per linked
unit for the six months ended 31 December 2011.
Interest distributions and dividends
Interest on debentures has been calculated in terms of the debenture trust
deed. An interim interest distribution of 5.2 cents per linked unit has been
declared for the six months ended 31 December 2011. The distribution is
payable to linked unitholders registered in the books of the Company at the
close of business on Friday, 13 April 2012. No dividend has been declared for
the period in respect of the linked units.
Last date to trade linked units cum
interest payment Wednesday, 4 April 2012
Linked units commence trading ex interest
payment Thursday, 5 April 2012
Record date Friday, 13 April 2012
Payment date Monday, 16 April 2012
Linked units may not be dematerialised or rematerialised between Thursday, 5
April 2012 and Friday, 13 April 2012, both days inclusive.
Directorate
D Wilder was appointed as an executive director on 22 September 2011, with A
Marcus appointed as his alternate to the board.
Subsequent events
The directors of Fairvest are not aware of any material matter or circumstance
arising between 31 December 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
15 March 2012
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
Non-executive: JF du Toit (Chairman), M Epstein, PJ van der Merwe#,
LW Andrag#
# independent
www.fairvest.co.za
These condensed consolidated results were prepared by the Financial Director,
BJ Kriel.
Date: 15/03/2012 15:00:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
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