| Tue 3 Sep 2002, 0:00 | | Spearhead Property Holdings Limited - Final Result |
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Spearhead Property Holdings Limited - Final Results for the year ended 30 June
2002
SPEARHEAD PROPERTY HOLDINGS LIMITED
CAUTIONARY ANNOUNCEMENT AND
FINANCIAL HIGHLIGHTS
* Headline earnings per linked unit up 9.9% to 133.86 cents
* Distribution per linked unit up 4.6% to 125.5 cents
* Net Asset value per unit up 7.2% to R12.86 per unit
ABRIDGED CONSOLIDATED INCOME STATEMENT
Audited Audited
30 June 30 June
% 2002 2001
Change R000`s R000`s
REVENUE 52 832 52 711
Operating income 39 282 39 224
Before: Depreciation 1 105 1 090
Goodwill amortised 970 970
Net finance costs 19 693 21 455
Profit before revaluation 17 514 15 709
Revaluation of investment properties 5 297 31 230
Profit before debenture interest 22 811 46 939
Debenture interest 17 592 15 694
Profit before taxation 5 219 31 245
Income taxation expense 374 255
Net profit for the year 4 845 30 990
Linked units in issue (weighted average) 13 528 889 13 478 343
Headline earnings per linked unit (cents) 9.86 133.86 121.85
Distribution per linked unit (cents) 4.58 125.50 120.00
ABRIDGED CONSOLIDATED BALANCE SHEET
Audited Audited
30 June 30 June
% 2002 2001
Change R000`s R000`s
Non current assets 358 646 317 373
Property, plant and equipment 337 046 298 623
Goodwill 16 488 17 458
Other financial assets 4 786 1 064
Deferred taxation 326 228
Current assets 26 338 28 851
Trade and other receivables 9 124 4 186
Forward exchange cover asset - 1 000
Cash and cash equivalents 17 214 23 665
Total assets 384 984 346 224
Equity and liabilities
Equity and Non current liabilities 359 840 317 916
Capital and reserves 36 858 34 731
Debentures 137 132 126 948
Linked unitholders` interest 173 990 161 679
Interest bearing borrowings 184 611 155 420
Deferred taxation 1 239 817
Current liabilities 25 144 28 308
Trade and other payables 16 399 19 429
Unitholders for distribution 8 745 8 879
Total equity and liabilities 384 984 346 224
Net asset value per linked unit including
goodwill (rands) 7.17 12.86 12.00
Net asset value per linked
unit excluding goodwill (rands) 8.80 11.64 10.70
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Audited Audited
30 June 30 June
2002 2001
R000`s R000`s
Cash generated from operations before working
capital changes 38 991 37 026
Working capital changes (8 017) 10 025
Net finance costs (37 936) (35 948)
Cash flows from operating activities (6 962) 11 103
Cash flows from investing activities (34 198) 19 602
Cash flows from financing activities 34 709 (24 231)
Net decrease in cash and cash equivalents (6 451) 6 474
Cash and cash equivalents at beginning of year 23 665 17 191
Cash and cash equivalents at end of year 17 214 23 665
RECONCILIATION OF BASIC EARNINGS TO HEADLINE EARNINGS
Audited Audited
30 June 30 June
2002 2001
R000`s R000`s
Basic earnings 22 437 46 684
Earnings 22 811 46 939
Taxation (374) (255)
Goodwill amortised 970 970
Revaluation of investment property (5 297) (31 230)
Headline earnings 18 110 16 424
STATEMENT OF CHANGES IN EQUITY
Capital and reserves
Share Share Distributable
Capital Premium Reserve Total
R000`s R000`s R000`s R000`s
Balance at 30 June 2000 143 716 (240) 619
Shares held by subsidiary (14) - - (14)
Net profit for the year - - 30 990 30 990
Unrealised loss on foreign
exchange - - (178) (178)
Discount on debentures - - 3 314 3 314
Balance at 30 June 2001 129 716 33 886 34 731
Shares disposed of by
subsidiary 11 - - 11
Net profit for the year - - 4 845 4 845
Discount on debentures - - 968 968
Recoupment of discount on
debentures - - (3 832) (3 832)
Realisation of foreign
exchange gain - - 135 135
Balance at 30 June 2002 140 716 36 002 36 858
NOTE
Accounting Policies
1. The financial statements have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice.
The principal accounting policies adopted in the preparation of these financial
statements are consistent with those of the prior year.
2. The results have been audited by Fisher Hoffman PKF (Newlands) Inc. and the
unqualified report is open for inspection at Spearhead`s registered office.
COMMENT
Financial Performance
Financial Performance
Spearhead produced another year of above-average performance, bucking industry
trends and continued its unbroken record in reporting growth in profits before
revaluation and distributions to shareholders.
Net distributable income grew by 12.09% to R17.592m, which amounted to 125.5
cents per unit. This was achieved despite a weaker letting market and increasing
interest rates on the unhedged portion of the company`s debt. Costs were
controlled and occupancies maintained at reasonable levels, while management`s
trading skills were put to the test with positive results.
Net asset value per unit stands at R12.86. This represents an increase of 7.2%
on the previous year. The closing market price of R8.05 per unit at 30 June 2002
represents a discount of 37.40% to net asset value.
Property Portfolio
Three long-lease, single-tenant properties were purchased during the past year:
The McCarthy`s Parow Dealership property on a 6 year lease and 2 Shoprite
properties with 13 year net leases in Strand and Vredenburg, Western Cape. The
total cost of the three properties amounted to R14.63 million with an average
forward yield of 13.5%.
One property for development was also acquired for R5m in a joint
venture with Swish Property Developers and tau Pride. The property,
115 Buitengracht Street, Cape Town is owned in a separate subsidiary company,
Propsyn 30 Ltd. It is being developed for a government department on long-term
lease and will have an eventual development cost of over R60m.
One property was sold during the period being an excess tract of
land measuring 7 867m2 in the Spearhead Business Park development
in Montague Gardens. The profit on the transaction was R941 880
after all costs were deducted. Development work on the Business Park is
continuing successfully with Phase 1 of 3 virtually completed and
leasing well.
Occupancy levels in the portfolio ended the year at 94%, unchanged from the
corresponding time last year.
Revaluation of Portfolio
The portfolio has been revalued by the directors as at 30 June 2002 resulting in
a R5.3m or 1.8% net gain in value.
Post balance sheet events and cautionary announcement
Acquisition of property
The company has entered into an agreement to acquire a property known as Siltek
Park for letting in Montague Gardens at a cost of
R8 000 000.
Disposal of property
The company disposed of one of its properties known as 47 on Strand for an
amount of R16 945 504.
Cautionary Announcement
Details of the above-mentioned acquisition and disposal will be announced in due
course. Shareholders are advised to exercise caution when dealing in Spearhead
linked units, until such time as the announcement is made.
Prospects
The company is budgeting fairly static earnings for the forthcoming year due to
continuing higher costs of finance and expected vacancies inhibiting rental
growth.
The developments under construction will not have any impact on next year`s
results as completion will only occur towards the end of that year.
Distribution declaration
Notice is hereby given of the declaration of distribution no. 6 in respect of
the six months to 30 June 2002 which amounts to 62.5 cents per unit. The last
date to trade cum distribution will be Friday, 27 September 2002 and the units
will commence trading ex distribution from Monday, 30 September 2002, with the
record date being Friday, 4 October 2002. Payment will be effected on Monday, 7
October 2002. Unit certificates may not be dematerialised or rematerialised from
Monday, 30 September 2002 to Friday, 4 October 2002, both days inclusive.
On behalf of the Board
M Kaplan
Chairman
M N Flax
Chief Executive Officer
Sponsor: Bridge Capital
Cape Town
2 September 2002
For more information on the company, see: www.spearheadprop.com
Directors: M Kaplan* (Chairman), MN Flax (Chief Executive Officer),
JE Allie, DB Fabian*, A Groll*, L Hoffman, H Schreuders*, F van Hoogstraten*, DM
Wilder *Non-executive
Registration Number: 1996/005827/06
Share Code: SPE ISIN: ZAE 000019162
Registered Office: 1st Floor, The Spearhead,
42 Hans Strijdom Avenue, Foreshore, Cape Town, 8001
Transfer Secretaries: Computershare Investor Services Limited, Edura,
41 Fox Street, Johannesburg, 2001
PO Box 61051,
Marshalltown, 2107
Date: 03/09/2002 08:05:00 AM Produced by the JSE SENS Department
