| Wed 7 Aug 2002, 0:00 | | Apexhi Properties Limited - Financial Results |
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APEXHI PROPERTIES LIMITED - FINANCIAL RESULTS
(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")
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2002 AND QUARTERLY DISTRIBUTION
ANNOUNCEMENT FOR THE THREE MONTHS ENDED 30 JUNE 2002
The directors submit their report on the results of the company for the year
ended 30 June 2002 as follows:
INCOME STATEMENT
Continuing Discontinuing Enterprise
operations operations* as a whole
12 months 4 months 12 months 4 months 12 months 4 months
ended ended ended ended ended ended
30 June 30 June 30 June 30 June 30 June 30 June
2002 2001 2002 2001 2002 2001
R`000 R`000 R`000 R`000 R`000 R`000
Revenue 372 275 41 862 52 197 26 320 424 472 68 182
Property expenses (136 680) (19 444) - - (136 680) (19 444)
Administrative
expenses (17 138) (2 782) (53 169) (25 068) (70 307) (27 850)
Depreciation/letting
cost amortisation (628) - (584) (602) (1 212) (602)
Profit/(loss)
from operations 217 829 16 866 (1 556) 650 216 273 20 286
Finance costs (48 300) (1 524) (57) (5) (48 357) (1 529)
Interest income 7 450 381 221 483 7 671 864
Profit before
debenture interest 176 979 18 493 (1 392) 1 128 175 587 19 621
Debenture interest (175 587) (19 621) - - (175 587) (19 621)
Profit/(loss) before
capital items 1 392 (1 128) (1 392) 1 128 - -
Capital items 51 056 12 978 (12 118) (490) 38 938 12 488
Change in fair
value of investment
property 51 355 12 978 - - 51 355 12 978
Goodwill amortisation/
impairment - - (12 118) (490) (12 118) (490)
Net deficit on
disposal of investment
properties (299) - - - (299) -
Profit/(loss)
before taxation 52 448 11 850 (13 510) 638 38 938 12 488
Deferred capital
gains taxation (5 891) - - - (5 891) -
Net profit/(loss)
attributable to
unit holders 46 557 11 850 (13 510) 638 33 047 12 488
*Discontinuing operations comprise Domayne Property Managers, Domayne Leasing
Consultants and Domayne Engineering Services. The property management and
leasing divisions were sold with effect from 1 October 2001. Management are
negotiating for the disposal of Domayne Engineering Services.
Earnings and distributions (cents)
Weighted average Total
number of units Share Debenture earnings Distribution
A unit 85 548 251 19,31 102,00 121,31 102,00
B unit 85 548 251 19,31 103,25 122,56 103,25
Total - 12 months
to 30 June 2002 38,62 205,25 243,87 205,25
Total - 4 months
to 30 June 2001 26 171 492 47,72 74,97 122,69 74,97
Earnings per share represent items of a capital nature, which are not
distributable as debenture interest and in which all units share equally.
ABRIDGED CASH FLOW STATEMENT
12 months 4 months
ended ended
30 June 30 June
2002 2001
R`000 R`000
OPERATING ACTIVITIES
Cash from operating activities before
debenture interest
- continuing operations 215 483 32 487
- discontinuing operations (2 226) (6 392)
213 257 26 095
Net finance costs (40 686) (665)
Debenture interest paid (147 116) -
Net cash generated from operating activities 25 455 25 430
INVESTING ACTIVITIES
Net cash utilised in investing activities (1 272 273) (289 921)
FINANCING ACTIVITIES
Issue of A and B units 796 300 261 714
Interest bearing borrowings raised 452 548 37 347
Listing expenses paid - (4 473)
Net cash generated
from financing activities 1 248 848 294 588
Net increase in cash and cash equivalents 2 030 30 097
Cash and cash equivalents at the beginning
of the year 30 097 -
Cash and cash equivalents at
the end of the year 32 127 30 097
ABRIDGED BALANCE SHEET
30 June 30 June
2002 2001
R`000 R`000
ASSETS
Tangible assets 1 601 151 272 884
Investment properties 1 600 249 269 900
Plant and equipment 902 2 984
Intangible assets 11 390 28 923
Current assets 75 177 95 881
Total assets 1 687 718 397 688
UNIT HOLDERS` FUNDS AND LIABILITIES
Share capital and reserves 186 018 34 186
Non-current liabilities 1 407 557 271 543
Debenture capital 913 058 235 543
Deferred taxation 5 891 -
Non-interest bearing borrowings 735 -
Interest bearing borrowings 487 873 36 000
Current liabilities 94 143 91 959
Total unit holders` funds and liabilities 1 687 718 397 688
Net asset value per unit (cents)
Number of units Share Debenture Total
A unit 101 450 900 91,67 540,00 631,67
B unit 101 450 900 91,67 360,00 451,67
Total - 30 June 2002 183,34 900,00 1 083,34
Total - 30 June 2001 26 171 492 130,62 900,00 1 030,62
STATEMENT OF CHANGES IN EQUITY
Share Share Capital Revaluation 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 ordinary
shares 15 118 770 - - - 118 785
Net profit for
the period - - - - 33 047 33 047
Realised surplus on
disposal of
investment properties - - 1 100 (1 100) - -
Net deficit on disposal
of investment properties - - (299) - 299 -
Transfer to revaluation
reserve (net of
deferred taxation) - - - 45 464 (45 464) -
Balance at 30 June 2002 20 140 463 801 57 342 (12 608) 186 018
SEGMENTAL INFORMATION
BUSINESS SEGMENTS
Discon- Adjust-
Inves- tinuing ments-
tment oper- Corp- Land inter
properties ations orate trading divisions Total
R`000 R`000 R`000 R`000 R`000 R`000
Revenue 362 729 72 414 2 174 7 372 (20 217) 424 472
Segment result
Segment operating
result 225 452 (1 556) (9 794) 2 171 - 216 273
Goodwill amortisation
impairment - (12 118) - - - (12 118)
Change in fair
value of investment
properties 51 355 - - - - 51 355
Net deficit on
disposal of investment
properties (299) - - - - (299)
Debenture interest - - (175 587) - - (175 587)
Interest income 1 140 221 6 297 13 - 7 671
Finance costs - (57) (47 889) (411) - (48 357)
Segment result before
taxation 277 648 (13 510) (226 973) 1 773 - 38 938
OTHER INFORMATION
Total assets 1 825 210 21 479 1 537 392 8 425 (1 704 788) 1 687 718
Total liabilities 1 556 509 18 341 1 624 986 6 652 (1 704 788) 1 501 700
ACCOUNTING POLICIES
The financial statements have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice. The accounting policies
used in their preparation are consistent with those used in the financial
statements for the four months ended 30 June 2001, except for the treatment of
significant letting costs (tenant installation costs and lease commissions)
which are now being amortised over the period of the lease. The prior period`s
figures have not been restated as the effect of the change is not material.
COMMENTS
1. REVIEW OF OPERATIONS
Results
In its first full year of operation, ApexHi has met the key objectives it set
i.e. to deliver a distribution of R1,02 per A unit, and R1,03 per B unit to unit
holders and to significantly grow its portfolio, which has increased in value
from R270 million to R1,6 billion.
Listing of the unique A and B unit structure
In September 2001, ApexHi converted its units into separate A and B units. At
the time of the conversion, unit holders received one A unit and one B unit for
every original ApexHi unit held.
Acquisitions
In line with the company`s objectives to grow the portfolio in order to limit
the risk on individual properties and improve the lease profile of the
portfolio, a number of high-yielding properties were acquired in two tranches.
In the first tranche, 94 properties were acquired in July 2001 for R850,1
million, increasing the property portfolio to a total value of R1,1 billion.
In a second tranche, in February 2002, ApexHi acquired a further 68 properties
for R460,1 million, increasing the portfolio value to more than R1,6 billion.
At the end of June 2002, the property portfolio comprised 173 buildings,
covering a total gross lettable area of more than 1,2 million square metres.
Disposals
During the period under review, the following properties were sold:
Net Surplus/
proceeds (Deficit)
Property Purchaser R`000 R`000
The Parktonian Hotel Existing hotel operator 8 000 -
Wilsons Wharf (vacant land) Ithala 5 400 (1 139)
32 Diagonal Street PC Training College 2 061 1 060
Empire Place Redefine Income Fund 52 000 -
Adverto House Hentiq 2963 (Pty) Limited 1 000 (220)
Total 68 461 (299)
In addition to the disposal of properties, the property management and leasing
interests in Domayne Property Solutions were sold to Broll Property Group for
R7,8 million. A five-year agreement with Broll for the property management of
the ApexHi portfolio was concluded, thus ensuring continuity of service to
ApexHi`s portfolio. ApexHi still owns Domayne Engineering Services, which
contributed a profit of R1 million in the period under review. However, in line
with the company`s objective of focusing on asset management, it is intended to
dispose of Domayne Engineering Services in due course.
Leasing
In order to ensure a sustainable income stream for investors, a major focus of
ApexHi is the letting of vacant space and the retention of existing tenants.
ApexHi secured leasing transactions covering 133 913 m2 of space, in the 12
months ended June 2002. Of the 180 527 m2 expiring in the year ending June 2003,
62 168 m2 is at an advanced stage of negotiation.
Of the total lettable area of 1 227 743 m2, 516 436 m2 (42%) is located in the
major metropolitan CBD`s and Braamfontein. At 30 June 2002, 97 000m2 (19%) of
this space was vacant. Negotiations on vacant space covering 33 000 m2 in the
CBD`s are currently at an advanced stage. Government constitutes the major
tenant in the CBD`s and the average length of a government lease is
approximately five years. Government is committed to the CBD`s and it is
ApexHi`s experience that government will renew existing leases and take up
additional space.
Of the 1 065 219 m2 let, 820 218 m2 (77%) is let to A-grade tenants. These
tenants include: all levels of government and parastatals 236 222 m2 (29%); JSE
listed financial institutions 147 342 m2 (18%) including ABSA, Mutual & Federal,
Nedcor and Standard Bank; and major JSE listed companies 434 715 m2 (53%)
including Anglogold, Edgars, Foschini, JD Group, Shoprite and Woolworths.
During the period under review the leased area of the portfolio has increased
from 81,48% to 86,76%, an improvement of 6,5% and at the same time the average
length of the lease profile has been extended from 3 years to 4,5 years.
It should be noted that when buildings are acquired, no value is attributed to
vacant space so any additional take up of vacant space in the portfolio enhances
the income stream to benefit unit holders.
At 30 June 2002, there was 162 542 m2 of vacant space in the portfolio. If a net
rental of R15/m2 per month is applied, this equates to a potential R29,25
million of additional net income per annum.
2. POST BALANCE SHEET EVENTS
Acquisitions
Subsequent to the year under review, ApexHi acquired the following properties:
Purchase price
Property Location R`000
Jewel City Johannesburg 65 000
The Vineyard Stellenbosch 16 043
Nedbank Centre Vereeniging 1 929
Sage Towers Johannesburg 37 800
Total 120 772
Management agreement
A trust, ApexHi Manco Trust, has been established, the beneficiaries being
Corpcapital Investments Limited (51%), Mvelaphanda (25%) and ApexHi management
(24%). ApexHi has, with effect from 1 July 2002, outsourced the asset management
function previously performed by Corpcapital Bank to the trust. The trust will
be responsible for the management of ApexHi and will employ all ApexHi staff
with the exception of the CEO and the staff employed by Domayne Engineering
Services.
The formation of the trust has introduced a substantial and important
empowerment element into ApexHi and has provided ApexHi management a financial
incentive relative to the performance of the company. The management fees will
be in line with accepted industry standards.
3. FUTURE PROSPECTS
It is ApexHi`s intention to continue to grow the size of the property portfolio.
In the forthcoming financial year, ApexHi expects its distributable income per
unit to be in line with the distributable income per unit for the year ended 30
June 2002.
DISTRIBUTION
The board has resolved that unit holders are entitled to receive interest
distribution No. 5 in respect of the period 1 April 2002 to 30 June 2002 of
25,50 cents per A unit and 25,70 cents per B unit.
* The last date to trade cum interest Friday, 23 August 2002
* Units will trade ex interest Monday, 26 August 2002
* Record date Friday, 30 August 2002
* Payment of Interest Distribution No. 5 Monday, 2 September 2002
Unit holders may not dematerialise or re-materialise their linked units between
Monday, 26 August 2002 and Friday, 30 August 2002, both dates inclusive.
DIRECTORS: M Wainer (Chairman), G G L Leissner* (Chief Executive Officer), B H
Azizollahoff (British)*
(Managing Director), M Berman, W E Cesman, S Shaw-Taylor
*Executive
These results have been audited by Grant Thornton Kessel Feinstein and their
unqualified audit report is available for inspection at the company`s registered
office.
Date: 07/08/2002 05:54:00 PM Produced by the JSE SENS Department
