| Thu 7 Feb 2002, 0:00 | | Apexhi Properties - Interim Results |
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APEXHI PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1999/000238/06)
Share code: APA ISIN: ZAE000033064
Share code: APB ISIN: ZAE000033072
("ApexHi" or "the company")
Directors: B H Azizollahoff, M Berman, W E Cesman, G G L Leissner, S Shaw-
Taylor, M Wainer (Chairman)
INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2001 AND QUARTERLY DISTRIBUTION
DECLARATION FOR THE THREE MONTHS ENDED 31 DECEMBER 2001
The directors submit their report on the results of the company for the six
months ended 31 December 2001 together with the audited results for the four-
month period ended 30 June 2001, as follows:
INCOME STATEMENT
Continuing Discontinuing Enterprise
operations operations* as a whole
Reviewed Audited Reviewed Audited Reviewed Audited
six four six four six four
months months months months months months
to to to to to to
31 Dec 30 June 31 Dec 30 June 31 Dec 30 June
2001 2001 2001 2001 2001 2001
R'000 R'000 R'000 R'000 R'000 R'000
Revenue 192 913 55 898 15 912 15 054 208 825 70 952
Property expenses (60 466) (16 369) - - (60 466) (16 369)
Administrative
expenses (25 416) (15 690) (17 327) (18 005) (42 743) (33 695)
Depreciation (494) (189) (215) (413) (709) (602)
Profit/(loss)
from operations 106 537 23 650 (1 630) (3 364) 104 907 20 286
Finance costs (21 644) (1 529) - - (21 644) (1 529)
Interest income 5 356 864 - - 5 356 864
Distributable income 90 249 22 985 (1 630) (3 364) 88 619 19 621
Debenture interest (82 537) (19 621) - - (82 537) (19 621)
Net profit/(loss) after
debenture interest 7 712 3 364 (1 630) (3 364) 6 082 -
Goodwill impairment/
amortisation - - (11 508) (490) (11 508) (490)
Net profit/(loss) before
exceptional items 7 712 3 364 (13 138) (3 854) (5 426) (490)
Exceptional items 335 12 978 - - 335 12 978
(Decrease)/increase
in fair value
of investment
property (800) 12 978 - - (800) 12 978
Surplus on disposal
of investment
property 1 135 - - - 1 135 -
(Loss)/profit
before taxation 8 047 16 342 (13 138) (3 854) (5 091) 12 488
Income tax expense - - - - - -
Net (loss)/profit
for period 8 047 16 342 (13 138) (3 854) (5 091) 12 488
Number of units
in issue - - - - - 26 171 492
Number of "A" units
in issue - - - - 80 505 523 -
Number of "B" units
in issue - - - - 80 505 523 -
*Discontinuing operations include Domayne Property Managers and Domayne
Leasing Consultants which were sold with effect from 1 October 2001.
Enterprise
as a whole
Six months to Four months to
31 December 30 June
2001 2001
R'000 R'000
Calculation of headline earnings
Net (loss)/profit after taxation (5 091) 12 488
Adjusted for:
Goodwill impairment/amortisation 11 508 490
Decrease/(increase) in fair value of
investment property 800 (12 978)
Surplus on disposal of
investment property (1 135) -
Debenture interest 82 537 19 621
Loss from discontinuing operations 1 630 3 364
Headline earnings 90 249 22 985
Weighted number of combined units
in issue - 26 171 492
"A" unit 80 367 878 -
"B" unit 80 367 878 -
Headline earnings per
combined unit (cents) 112,29 87,82
"A" unit 51,00 -
"B" unit 61,29 -
(Loss)/profit per combined unit (cents) (6,33) 47,72
Distribution per combined unit (cents) 102,70 74,97
- First quarter distribution (cents) 51,35 -
"A" unit 25,50 -
"B" unit 25,85 -
- Second quarter distribution (cents) 51,35 -
"A" unit 25,50 -
"B" unit 25,85 -
CONDENSED BALANCE SHEET
Reviewed Audited
31 December 30 June
2001 2001
R'000 R'000
ASSETS
Non-current assets 1 135 800 301 807
Plant and equipment 834 2 984
Goodwill 12 000 28 923
Investment property 1 122 966 269 900
Current assets 124 539 95 881
Total assets 1 260 339 397 688
UNITHOLDERS' FUNDS AND LIABILITIES
Capital and reserves 69 823 34 186
Non-current liabilities 1 093 956 271 543
Debenture capital 724 550 235 543
Interest bearing borrowings 369 406 36 000
Current liabilities 96 560 91 959
Total unitholders' funds
and liabilities 1 260 339 397 688
Net asset value
per combined unit (cents) 987 1 030
STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS
Revalu-
Share Share Capital ation Accumulated
capital premium reserve reserve loss Total
R'000 R'000 R'000 R'000 R'000 R'000
Balance at
30 June 2001 5 21 693 - 12 978 (490) 34 186
Issue of linked
ordinary shares 11 54 502 - - - 54 513
Share issue and
listing expenses - (13 785) - - - (13 785)
Net loss for period - - - - (5 091) (5 091)
Transfer from
revaluation reserve - - - (800) 800 -
Transfer to
capital reserve - - 1 135 - (1 135) -
Balance at
31 December 2001 16 62 410 1 135 12 178 (5 916) 69 823
CONDENSED CASH FLOW STATEMENT
Reviewed Audited
Six months to Four months to
31 December 30 June
2001 2001
R'000 R'000
OPERATING ACTIVITIES
Cash from operating activities
before debenture interest
- continuing operations 89 539 28 867
- discontinuing operations (2 668) (2 090)
Debenture interest paid (60 819) -
Net cash from operating activities 26 052 26 777
INVESTING ACTIVITIES
Continuing operations
- purchase of investment properties
including capitalised
transaction costs (862 866) (256 922)
- disposal of investment properties 10 135 -
- sale of discontinuing operations/
(purchase) of property
service businesses 7 457 (29 413)
- purchase of plant and equipment (601) (3 586)
Net cash utilised in
investing activities (845 875) (289 921)
FINANCING ACTIVITIES
Issue of "A" and "B" units 543 520 261 714
Long-term borrowings raised 333 406 36 000
Listing expenses paid (13 785) (4 473)
Net cash from financing activities 863 141 293 241
Net increase in cash and
cash equivalents 43 318 30 097
Cash and cash equivalents at
beginning of period 30 097 -
Cash and cash equivalents at
end of period 73 415 30 097
SEGMENTAL INFORMATION
BUSINESS SEGMENTS
Investment Discontinuing Engineering Corporate Land
properties operations services costs
trading
R'000 R'000 R'000 R'000 R'000
Revenue 169 549 18 864 22 844 - 520
Segment result
Segment result 109 084 (1 415) 1 191 (3 516) 272
Depreciation - (215) (494) - -
Goodwill
impairment - (11 508) - - -
Change in fair value of
investment property (800) - - - -
Surplus on disposal of
investment property 1 135 - - - -
Debenture interest - - - (82 537) -
Interest received 1 168 - 65 4 121 2
Interest paid - - - (21 557) (87)
110 587 (13 138) 762 (103 489) 187
OTHER INFORMATION
Total assets 1 149 574 88 021 11 417 1 107 991 8 025
Total liabilities 1 028 962 98 207 10 655 1 149 543 7 838
SEGMENTAL INFORMATION - Continued
BUSINESS SEGMENTS
Adjustments-
inter-
divisions Total
R'000 R'000
Revenue (2 952) 208 825
Segment result
Segment result - 105 616
Depreciation - (709)
Goodwill
impairment - (11 508)
Change in fair value of
investment property - (800)
Surplus on disposal of
investment property - 1 135
Debenture interest - (82 537)
Interest received - 5 356
Interest paid - (21 644)
- (5 091)
OTHER INFORMATION
Total assets (1 104 689) 1 260 339
Total liabilities (1 104 689) 1 190 516
ACCOUNTING POLICIES
The interim financial statements have been prepared in accordance with SA
Statements of GAAP. The accounting policies used in their preparation are
consistent with those used in the annual financial statements for the four
months ended 30 June 2001.
COMMENTS
1. REVIEW OF OPERATIONS
Results
ApexHi has recorded a distributable income of R88,6 million or 110,3 cents
per combined unit (51,0 cents per "A" unit and 59,3 cents per "B" unit) for
the period under review. A distribution of R41,2 million or 51,35 cents per
combined unit (25,5 cents per "A" unit and 25,85 cents per "B" unit) has
been paid for the quarter ended 30 September 2001 and a further distribution
equal to that of the first quarter is being declared.
The directors are confident that the forecast distribution for the full
year of 205 cents per combined unit (102 cents per "A" unit and 103 cents
per "B" unit) should be achieved.
Acquisitions
During the period under review, 94 properties were acquired for a purchase
consideration of R854,6 million which was settled by the issue of 53,1
million "A" and "B" units of R10,00 and borrowings of R322,9 million. Two
properties were disposed of for R10,1 million and a profit of R1,1 million
was realised on the disposal. At 31 December 2001, the total portfolio
comprised 107 properties with approximately 808 000 m2 of lettable area, 51%
of which is offices, 25% retail and 24% industrial.
The directors consider the investment property at 31 December 2001 to be
fairly valued.
Vacancies
The total vacancy factor in the portfolio has reduced from 19% to 13% during
the period under review as a result of new lettings and the enhanced lease
profile from the new acquisitions. When properties are acquired, no value is
attributed to vacant space.
Borrowings
It is the company's policy to fix interest rates on the bulk of its
borrowings. At 31 December 2001, total borrowings amounted to R369,4 million
with rates fixed on R150,0 million at 11,85% until July 2003 and on a
further R150,0 million at 12,15% until July 2004. Earnings are therefore
protected against any increases in interest rates in the short term.
Financial Structure
On 1 July 2001, ApexHi units were split into "A" and "B" units. This
innovative structure has been very well received by the market and trading
volumes in both counters have far exceeded the sector average.
2. DISCONTINUing OPERATION
On 13 September 2001, the company announced the sale of Domayne Property
Managers and Domayne Leasing Consultants to Broll Property Group for R7,8
million effective 1 October 2001. The disposal is consistent with the
company's long-term strategy of focusing on its core business of focused
property asset management.
3. THE PROPERTY MARKET
The market for retail, office and industrial space is over supplied in
almost all nodes within South Africa. Notwithstanding the fact that new
development has slowed dramaticaly, it will take a number of years before
equilibrium in the market is achieved.
As a result of the oversupply, rental levels, particularly at the top end
of the market, have fallen considerably. ApexHi is less exposed to these
pressures given that a large portion of the properties in its portfolio are
in areas where rental levels are already low.
While commercial tenants continue to migrate from the main CBD areas, the
emphasis in ApexHi's CBD portfolio, which represents 38% by area of the
total portfolio, is on properties which are tenanted by Government and
Parastatals who remain committed to these locations.
4. POST-BALANCE SHEET EVENTS
Disposal
Subsequent to the period under review, Wilsons Wharf was sold for R5,5
million, which equates to the carrying value at balance sheet date. The full
proceeds will be used to reduce debt.
Cautionary
Further to the cautionary of 23 January 2002, ApexHi unitholders are advised
to continue to exercise caution when dealing in their units until such time
as a further announcement is made, which is anticipated to be within the
next 10 days.
DISTRIBUTION ANNOUNCEMENT
Unit holders are advised that Distribution No. 3 in respect of the period 1
October 2001 to 31 December 2001 of 25,50 cents per "A" unit and 25,85 cents
per "B" unit has been declared. The last date to trade cum interest will be
Friday, 22 February 2002 and the units will commence trading ex-interest
from the commencement of business on Monday, 25 February 2002. The record
date is Friday, 1 March 2002 and payment will be made to unitholders on or
about Monday, 4 March 2002. There may be no
rematerialisation/dematerialisation orders processed between Monday 18
February and Friday 1 March 2002, both days inclusive
By order of the Board
G G L Leissner
Chief Executive
Johannesburg
8 February 2002
The interim report for ApexHi has been reviewed by the independent auditors,
Deloitte & Touche. The unqualified report is available for inspection at the
company's registered office.
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