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ARNOLD PROPERTY FUND LIMITED - RESULTS FOR THE PERIOD FROM 30 AUGUST 2001 TO 30
JUNE 2002
ARNOLD PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2001/011887/06)
Share code ARP ISIN ZAE000031720
("A-Prop" or "the Company")
RESULTS FOR THE PERIOD FROM 30 AUGUST 2001 TO 30 JUNE 2002
INCOME STATEMENT
Unaudited
Pro rata
forecast
Actual the per
Reviewed prospectus
for the for the
period period
ended ended
30 June 30 June
2002 2002
(R`000) (R`000)
Net income before interest 89 323 90 656
Net interest paid 58 682 59 367
Net income for the period before debenture interest 30 641 31 289
Debenture interest (30 641) (31 289)
Net income for the period before capital items -
Unrealised surplus on revaluation of investment properties 6 486
Retained income transferred to revaluation reserve 6 486
Number of linked units 125 399 065
Distribution per linked unit (cents) 24,4
Forward yield based on a 200 cent linked unit (%) 14,6%
BALANCE SHEET
Assets
Fixed property - at cost 843 045
Accounts receivable 12 448
Cash 3 830
Total Assets 859 323
Unit holders` funds and liabilities
Share capital and share premium 12 369
Debenture capital 225 718
Revaluation reserve 6 486
Long-term loans 537 130
Vendor loans 49 015
Accounts payable 10 611
Unit holders for distribution 17 994
Total unit holders` funds and liabilities 859 323
Net asset value per linked unit (cents) 195,0
ABRIDGED CASH FLOW STATEMENT
Cash flow from operating activities 28 804
Cash flow from investing activities (836 560)
Cash flow from financing activities 811 586
Change in cash and cash equivalents 3 830
Cash and cash equivalents at beginning of period -
Cash and cash equivalents at end of period 3 830
CHANGES IN UNIT HOLDERS` INTEREST
Unit holders` interest at the beginning of the period -
Changes in share capital and share premium 12 369
Changes in debentures 225 718
Net income for the period 37 127
Interest distributed and distributable (30 641)
Unit holders` interest at the end of the period 244 573
COMMENTS
1. REVIEW OF OPERATIONS
* Results
A-Prop`s net income before distribution to unit holders for the period 30
August 2001 to 30 June 2002 results in earnings of 24,4 cents per linked unit.
This is in line with the reduced pro rata forecast earnings figure of 24,4 cents
per linked unit.
The pro rata forecast earnings of 25,0 cents per linked unit has been reduced
to 24,4 cents per linked unit as a result of the following adjustments:
- firstly, a change in the purchase price of the Harrowgate property where a
deferred cash payment due in the 2003 financial year was changed to linked units
issued during the year ended 30 June 2002; and
- secondly, an amendment in the payment of the asset management fee to cash only
as the JSE Securities Exchange South Africa would not permit the issue of linked
units as part payment of this fee without specific prior shareholder approval.
The results have been prepared in accordance with South African Standards of
Generally Accepted Accounting Practice. The accounting policies used are
consistent with those stated in the Company`s listing prospectus except for the
valuation of investment properties which are now revalued in terms of AC135.
Capital expenditure for the period amounted to R837m. There are no capital
commitments at 30 June 2002. No segmental report has been prepared as it is not
considered relevant.
The financial information set out in this report has been reviewed by the
Company`s auditors, Deloitte & Touche. A copy of their review report is
available to unit holders for inspection at the Company`s registered office.
* Property portfolio
The current climate of high interest rates and the price expectations of
vendors has made the acquisition of properties which will enhance both earnings
and the quality of A-Prop`s portfolio difficult to achieve.
A-Prop is in the process of negotiating potential acquisitions with a number
of vendors which, if successful, will increase A-Prop`s portfolio and help the
company to achieve its longer-term objectives of growing its portfolio and its
market capitalisation through the acquisition of quality properties.
The Company has taken transfer of all properties other than Jayhold Centre,
referred to as the Nqutu property in the prospectus. Economic effect has been
given to this acquisition from date of listing, in accordance with the agreement
between A-Prop and the vendors. Transfer will take place shortly.
* Lease Renewals
General market conditions are creating pressure on renewal rates. It is A-
Prop`s philosophy to retain tenants where possible, even though this may impact
negatively on earnings in the short term.
* Vacancies
Vacancy levels by area comprise 6 percent of the portfolio. Whilst this is
higher than at the time of A-Prop`s listing, it is below the market average.
2. A-PROP UNITS
No trading restrictions were placed on the linked units issued to the vendors
of properties making up the listed property portfolio. As a consequence,
liquidity has been high with 45,1 million or 36,4 per cent of the linked units
having traded during the period to 30 June 2002.
3. INTEREST RATE MANAGEMENT
88 percent of A-Prop`s long-term debt was fixed at the time of listing at a
weighted average cost of approximately 13,3 percent. 30 percent of the debt
remains fixed until 31 August 2003 and the balance of 58 percent until 31 August
2006. The decision to fix interest rates has limited A-Prop`s exposure to
interest rate fluctuations over the next four years.
4. PROSPECTS
General market conditions remain tough, particularly in the oversupplied
office market, but also across the portfolio in general. The pressure on rentals
is being compounded by the high costs associated with filling vacancies and
renewing existing leases.
Every effort is being made to retain existing tenants and to fill vacancies
and A-Prop expects to maintain annualised income for the period to 30 June 2003.
5. INTEREST DISTRIBUTION - NUMBER 2
Unitholders are advised that Distribution No.2 in respect of the period 1
January 2002 to 30 June 2002 of 14,2 cents per unit has been declared.
Last date to trade cum interest: Friday, 6 September
Date units commence trading ex-interest: Monday, 9 September
Record date: Friday, 13 September
Payment date (on or about): Monday, 16 September
Unitholders may not dematerialise or rematerialise their units between Monday,
9 September 2002 and Friday, 13 September 2002, both days inclusive.
By order of the Board
P J A CUNNINGHAM R M KAPLAN
Chairman Managing Director
Johannesburg
23 August 2002
Date: 22/08/2002 05:31:46 PM Produced by the JSE SENS Department
