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SYCOM PROPERTY FUND - RESULTS
SYCOM PROPERTY FUND
JSE Share Code: SYC
ISIN No.:ZAE000019303
UNAUDITED GROUP RESULTS AND DISTRIBUTION DECLARATION FOR THE SIX
MONTHS
ENDED 30 JUNE 2002
6 months to 6 months to
30 June 2002 30 June 2001
INCOME STATEMENT (R`000) (R`000)
Revenue 109 565 98 182
Rental income 104 889 92 020
Net interest received 4 676 6 162
Expenses 38 649 31 874
Auditors` remuneration 96 61
Property expenses 35 257 28 696
Service charge 3 296 3 117
Net income for the period
from ordinary activities 70 916 66 308
Exceptional items - 1 319
Realised surplus on disposal of
Investment in fixed property - 142
Increase in unrealised surplus
on revaluation of investments
in fixed property companies - 1 177
Net income for the period 70 916 67 627
Net transfers from / (to) reserves 2 675 (1 319)
Transferred to non-distributable
reserve - (1 319)
Transferred from distributable
reserve 2 675 -
Available for distribution 73 591 66 308
Distribution 73 591 66 308
No. 32 of 50,06 cents per
unit paid September 2001 - 66 308
No. 34 of 50,13 cents per
unit proposed August 2002 73 591 -
Units in issue 146 800 132 446
Headline earnings per unit (cents) 48,31 50,06
Earnings per unit (cents) 48,31 51,06
Income distribution per unit (cents) 50,13 50,06
CASH FLOW STATEMENTS
6 months to 6 months to
30 June 2002 30 June 2001
(R`000) (R`000)
Cash Flows from Operating Activities
Cash received from rentals 128 824 95 315
Cash paid to suppliers and service (42 113) (29 081)
providers
Cash generated by operations 86 711 66 234
interest received 4 676 6 124
Cash generated by operating activities 91 387 72 358
Distributions paid (77 877) (52 512)
Net cash inflow from operating 13 510 19 846
activies
Cash flows from investing activities
Purchases of fixed property (10 728) (16 087)
Net cash outflow from investing (10 728) (16 087)
activities
Cash flows from financing activities
New unit issue expenses - (109)
Net cash outflow from financing - (109)
activities
Net increase in cash and cash 2 782 3 650
resources
Cash resources at beginning of the 86 211 75 699
period
Cash resources at end of the period 88 993 79 349
STATEMENT OF CHANGES IN UNITHOLDERS` FUNDS
Capital Non- Distributable Total
distributable reserves
reserve
Investments Retained Major
reserve income maintenance
reserve
6 months to 30
June 2001
Balance at 31 648 951 177 847 - 6 177 832 975
December 2000
Issue of
27 612 723
units
- 29 June 2001 217 776 217 776
Associated share (109) (109)
issue expenses
Net income for 67 627 67 627
period
Realised surplus
on 142 (142) -
disposal of
investment in
fixed
property
Increase in
unrealised surplus
on revaluation of 1 177 (1 177) -
investment in Fixed
property companies
Distribution:
No. 32 of 50,06
cents per unit
paid September
2001 (66 308) (66 308)
Balance at 30
June 866 618 179 166 - 6 177 1 051 961
2001
6 months to 30
June 2002
Balance at 31 979 892 254 910 14 851 1 249 653
December 2001
Net income for 70 916 70 916
period
Transfer from
major
maintenance
reserve 2 675 (2 675) -
Distribution:
No. 34 of 50,13
cents per unit
proposed August (73 591) (73 591)
2002
Balance at
30 June 979 892 254 910 - 12 176 1 246 978
2002
BALANCE SHEET
As at As at
30 Jun 2002 30 Jun 2001
(R`000) (R`000)
Assets
Fixed property 1 228 420 1 025 887
Current assets 99 549 106 980
1 327 969 1 132 867
Unitholders` funds
and liabilities
Capital and reserves 1 246 978 1 051 961
Current liabilities 80 991 80 906
1 327 969 1 132 867
Note:
The interim report has been prepared in accordance with Accounting
Standard AC 127 (Interim Financial Reporting).
1. RESULTS
Sycom`s net distributable income for the six month period ended 30
June 2002 amounted to 50,13 cents per unit, a marginal improvement of
0,13% over the distribution for the same period last year of 50,06
cents per unit.
As at 31 December 2001, major maintenance reserves stood at Rm14,85.
Transfers from the reserve to cover major maintenance expenditure for
the six month period amount to Rm2,68 resulting in a balance of
Rm12,17.
The current net asset value of the Fund stands at 841 cents per unit.
The closing market price of 805 cents per unit at 30 June 2002
represents a discount of 4,3% to net asset value.
2. PROPERTY PORTFOLIO
Further to the cautionary announcement dated 12 June 2002, Sycom has
entered into various independent agreements in terms of which five
office properties are to be acquired, the details of which are as
follows:
Property Location Vendor Price Major Area Lease
(R`m) tenant(s) (m2) Expiry
Hewlett Rivonia Ombindi 41,000 Hewlett 9 645 May 2006
Packard (Pty) Ltd Packard
SA
15 Bryanston Acme 40,150 Cisco 2 500 June 2004
Georgian Property Systems
Crescent
Developme Boogertma
nts n
(Pty) Ltd Krige 3 817 Sept 2006
Architect
s
Fleishman- 459 Aug 2004
Hillard
Buildings Sunninghi Equity 46,673 Denel 7 619 Aug 2007
1& 2 ll Estates
Arivia.ko (Pty) Ltd
m
Business
Park
260 Ferndale Friedshel 29,900 Azisa 6 118 Sep 2008
Surrey f 125 (Pty) Ltd
Ave
(Pty) Ltd
Advocates Sandton Friedshel 55,100 Various 6 766 April
` f 98 Advocate 2008
Chambers
(Pty) Ltd Groups
Advocates 650 Dec 2012
` Society
library
--------
-
Total 212,823
--------
-
In terms of the agreements governing the acquisitions, Sycom has the
option to settle the purchase considerations by either the issue and
placement of new Sycom units with third parties or by means of cash.
To this end, in conjunction with Nedcor Investment Bank, a book build
exercise was undertaken with selected institutions to place Sycom
units. The outcome of this exercise has resulted in a take-up of
approximately Rm153 worth of Sycom units at an issue price of R7,80
per unit. These units, which will be issued and listed on the JSE
Securities Exchange with effect from Monday, 19 August 2002 will
consequently not qualify for the dividend to 30 June 2002 but will
rank pari passu for dividend distributions from this date onwards.
The balance of the purchase price will be settled by drawing down
from a recently negotiated Rm400 loan facility granted to Sycom. A
final announcement on the exact number of Sycom units to be issued
will be made in due course.
The average forward yield of these properties is 14,04% and the
transaction is earnings neutral in the short term given the funding
structure. As the acquisition price of each of the properties is
below their independently appraised market values, the aggregate
effect on the net asset value per unit of the Fund is positive. The
acquisitions are in line with Sycom`s strategy of achieving a
balanced portfolio of large, quality, well-located commercial office
and retail properties capable of providing sustained income and
capital growth. Given that these properties have no vacancies and
have good covenant tenants under fixed escalation leases with a
number of years still to run, the transaction will have a positive
effect on future earnings growth.
The agreement of sale entered into in respect of Sycom`s portion of
Sammy Marks` Square (retail and office complex - Pretoria CBD), still
requires certain suspensive conditions to be met. In addition
agreements of sale have recently been concluded in respect of
Southdale Shopping Centre (Southdale, Johannesburg), Morning Glen
Shopping Centre (Morningside Manor, Sandton) and Rank Xerox House
(Offices - Sunnyside, Pretoria), all of which still have certain
suspensive conditions to be met. These properties have all previously
been earmarked for sale as they no longer fit the Fund`s investment
criteria and the proceeds, if all these sales are concluded, will
amount to Rm157,50.
At 30 June 2002 the Fund`s capital balance stood at Rm10,36. These
funds are committed to various projects, which include:
Southgate Mall (Southgate, Jhb) - Rm9,57 as residual payments in
respect of Sycom`s contribution to an Rm80,0 refurbishment and
extension of this shopping centre.
Harrowdene Office Park (Woodmead, Sandton) - Rm5,98 in respect of a
project to bury the high tension overhead powerlines which currently
traverse this property, thereby enhancing the lettability of this
park.
Any shortfall will be funded either from the proceeds of property
sales or debt.
The letting market, particularly in the office sector continues to
show signs of stress and although the implementation of focused
marketing initiatives has met with some success, the overall results
have been fairly muted. As a consequence, vacancy levels have
deteriorated from 11,1% to 12,8% over the six-month period although
recent lettings, post the half-year, have resulted in an improvement
to 11,8%.
3. PROSPECTS
Over the next twelve months, the portfolio has a relatively low
expiry profile of 12,0% by area with the office component having the
largest exposure. While management retains an intensive focus on
tenant retention, coupled with ongoing marketing campaigns and a
refurbishment programme for a number of the Fund`s buildings, this is
unlikely to result in a significant improvement in vacancy levels in
the short term.
Given the weaker market conditions, growth in distributions for the
year to 31 December 2002 is likely to be nominal.
4. Change in year end
The Fund has made application to the relevant authorities to change
its year end to March. If approved, a second interim income
distribution will be made for the period 1 July to 31 December 2002
with a final distribution for the 15 month period to 31 March 2003.
5. DISTRIBUTION DECLARATION
Notice is hereby given of the declaration of distribution No.34 in
respect of the six months to 30 June 2002 of 50,13 cents per unit.
The last date to trade cum distribution will be Friday, 16 August
2002 and the units will trade ex-distribution from the commencement
of business on Monday, 19 August 2002. The record date is Friday, 23
August 2002 and payment will be made to unitholders on Monday, 26
August 2002. Unitholders may not dematerialise or rematerialise their
units between Monday, 19 August 2002 and Friday,
23 August 2002, both days inclusive.
By order of the Board
NIB PROPERTY FUND MANAGERS LIMITED
(Registration number 1986/002756/06)
Registered Office:
Ground Floor, Corovest House
Grayston Ridge Office Park
Cnr Grayston Drive and Katherine Street
Sandown, 2146
PO Box 4795, Rivonia, 2128
Auditors:
Deloitte & Touche
Deloitte & Touche Place
The Woodlands
Woodlands Drive
Woodmead, Sandton
Transfer Secretaries:
Computershare Investor Services Limited
11 Diagonal Street,
Johannesburg, 2001
PO Box 1053, Johannesburg, 2000
1 August 2002
Date: 02/08/2002 08:29:12 AM Produced by the JSE SENS Department
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