| Mon 30 Dec 2002, 17:22 | | Fairvest - Reviewed Results For The Year Ended 30 |
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Fairvest - Reviewed Results For The Year Ended 30 September 2002 and Further
Cautionary
FAIRVEST PROPERTY HOLDINGS LIMITED
(Formerly Glocash Investments Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1998/005011/06)
Share code: FVT ISIN: ZAE000034658
("Fairvest" or "the group" or "the Company")
REVIEWED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2002 AND FURTHER CAUTIONARY
Group income statement
30 Sept 2002 30 Sept 2001
R`000 R`000
Revenue 46 110 142
Operating costs - property portfolio 15 275
Operating costs - administration 2 335 87
Operating profit 28 500 55
Net capital gain on revaluation of properties 4 023
Profit before interest 32 523 55
Interest received 355 391
Profit before finance charges 32 878 446
Finance charges 18 991
Income before taxation 13 887 446
Taxation 949
Profit attributable to linked unit holders 12 938 446
Headline earnings and distributions
Profit attributable to linked unit holders 12 938
Net capital gain on revaluation of properties 4 023
Profit on sale of business 3 600
Goodwill amortised (328)
Goodwill written-off (3 258)
4 037
Headline earnings and distributions 8 901
Interim distribution 6 191
Final distribution 2 710
Earnings and net asset value per linked unit
Number of linked units in issue 98 262 654
Weighted average number of linked units
in issue 98 262 654
Earnings per linked unit (cents) 13,2
Headline earnings per linked
unit before distribution (cents) 9,1
Distribution per linked unit (cents) 9,1
Net asset value per linked unit (cents) 119,5
Group balance sheet
30 Sept 2002 30 Sept 2001
R`000 R`000
ASSETS
Non-current assets 323 424
Tangible assets 307 856
Intangible assets 3 162
Investments 6 506
Loans 5 900
Current assets 5 651 7 640
Total assets 329 075 7 640
EQUITY AND LIABILITIES
Linked unit holders` equity and reserves 117 418 7 551
Ordinary share capital 983 881
Debenture capital 983
Debenture premium 104 745
Distributable reserves (168)
Non-distributable reserve 10 707 6 838
Non-current liabilities
Mortgage loans 168 346
Current liabilities 43 311 89
Interest bearing
Redeemable debentures 10 744
Non-interest bearing
Distribution to linked unit holders 2 710
Loans (Note) 26 423
Deferred tax 790
Other 2 644 89
Total equities and liabilities 329 075 7 640
Note: Was settled by the issue of shares in October.
Abridged group cash flow statement
Cash flow from operating activities
Cash generated from operations 30 312
Mortgage bond interest paid (16 515)
Debenture interest paid (2 476)
Dividend paid (6 191)
Net cash flow from operating activities 5 130
Net cash outflow from investing activities (142 446)
Net cash inflow from financing activities 137 553
Cash and cash equivalents at the end of the year 237
Group statement of changes in equity
Non-
Distri- distri-
Share Share Debenture Debenture butable butable
Capital premium capital premium reserve reserve Total
R`000 R`000 R`000 R`000 R`000 R`000 R`000
Balance at
1 October 2001 881 - - - (168) 6 838 7 551
Write-off pre-
Acquisition
losses - - - - 168 (168) -
Share
Consolidation
and par value
reduction (781) 682 99 - - - -
Linked units
issued to
vendors 868 - 868 103 791 - - 105 527
Linked units
to be cancelled 15 - 16 2 269 - - 2 300
Listing costs
and issue costs
written-off - (682) - (1 315) - - (1 997)
Profit
attributable to
linked unit
holders - - - - 12 938 - 12 938
Distributions to
linked
unitholders - - - - (8 901) - (8 901)
Transfer to
non-distributable
reserve - - - - (4 037) 4 037 -
Balance at
30 September
2002 983 - 983 104 745 - 10 707 117 418
OVERVIEW OF FINANCIAL RESULTS
The financial statements are prepared in accordance with South African
Statements of Generally Accepted Accounting Practice and the requirements of the
Companies Act in South Africa.
Grant Thornton Kessel Feinstein have reviewed the financial information set out
in this report. Their unqualified review report is available for inspection at
the company`s registered office.
The Board of Directors of Fairvest is pleased to present the reviewed financial
results of the group for the year ended 30 September 2002.
The profit attributable to linked unit holders was R12 938 000 or 13,2 cents per
linked unit.
In spite of the unfavourable property market conditions, high interest rates and
the late transfer of a substantial portion of the property portfolio on 30
September 2002, the group has achieved headline earnings of 9,1 cents per linked
unit.
This excludes the below mentioned R5 450 000 fee payable upon approval of
shareholders.
This represents a net income yield of 16,5% on the current market price.
THE PORTFOLIO PERFORMANCE
As at financial year end the property portfolio, including the Gorfil properties
transferred on 30 September 2002, was R307 721 533. However, the group`s
property portfolio totalled R226 684 000 until the last day of the financial
year on which the Gorfil Portfolio was transferred.
The turnover for the period under review was R46 110 000 (R21 026 000 to 31
March 2002).
The net property yield on the property investments at cost was 12,6%.
The finance costs during the financial year were R18 991 000.
The total expense ratio was 38,2% leaving an operating margin of 61,8%. Most of
the expenditure in respect of maintenance and repairs occurred during the first
eight months of the financial year and concentrated on properties subsequently
disposed of. It is therefore, expected that the operating margin will increase
above 70% during the current financial year.
The operating margin was achieved in spite of the existing vacancies in certain
properties, most of which have now been disposed of. Subsequent to the financial
year the following properties were disposed of:
Selling Price
Proprint House - Durban R8 904 000
Kempton City - Kempton Park R37 100 000
Mangrove - Durban R11 448 000
Mitri House - Durban R2 459 200
Nedbank Circle - Durban R16 055 270
Ambassador - Durban R2 013 940
Total R77 980 410
The aforesaid transactions will, upon approval by shareholders, result in a fee
payable to Fairvest of R5 450 000. In this event, the Board will consider
payment of a special distribution to linked unit holders equal to the above
amount.
The vacancy factor of the portfolio as at September 2002 was 15,2 per cent of
the gross lettable area.
The following property transactions were cancelled during the financial year:
1. Duro Pressings - Aeroton
2. Duro Pressings - Port Elizabeth
3. Duro Pressings - Babalegi
4. The Goodman Galleries - Rosebank
A revised agreement is being finalised in order to reinstate the acquisition of
The Goodman Galleries property, which is held by Avonshore (Pty) Ltd.
The transfer and bond registration of the North Downs office property in
Bryanston is currently being finalised.
The Gorfil Property Portfolio was transferred to the group on 30 September 2002.
The cost of this portfolio was R81 037 000. The group, however, did not receive
any income from this portfolio during the financial year.
The loss of net rental income as a result of the aforesaid late transfer, which
involved 11 deeds offices countrywide, is estimated at approximately R4 million.
INTEREST RATE MANAGEMENT
The group was listed during December 2001 when interest rates started increasing
in tandem with the then decline of the Rand. Although it is an accepted strategy
of Fairvest to fix 75% of the cost of its borrowings, it became apparent that it
was to the benefit of the group not to fix the borrowing rate in light of the
sudden peak of the interest rate cycle.
The recent performance of the Rand and long-term interest rates indicate that it
will soon be possible for Fairvest to fix the vast majority of its interest
bearing debt at lower levels.
As a consequence of the interest rate increases during 2002, the headline
earnings of the group were adversely affected to the extent of approximately
R5,5 million.
MANAGEMENT
The financial management of Fairvest was transferred from Durban to Johannesburg
in June 2002, while the property management of Fairvest was transferred in July
2002 to Primo Property Services (Pty) Ltd. The DRP Administration business was
disposed of for R3,6 million and the goodwill on its acquisition amounting to
R3,2 million was written-off.
PROSPECTS
The group anticipates that the acquisition of the property portfolio contained
in the announcement of 12 November 2002, together with the underlying strength
of the remaining Fairvest Portfolio, will contribute to enhanced earnings during
the forthcoming financial year.
FURTHER CAUTIONARY ANNOUNCEMENT
Fairvest linked unit holders are advised that the negotiations announced on 12
November 2002, involving the acquisition of a property portfolio totalling R420
million are proceeding and a detailed announcement will be made in January 2003.
Further negotiations with another listed property company are also in progress.
These transactions will have a positive impact on earnings and may enhance the
price of the Company`s linked units.
Accordingly, Fairvest linked unit holders are advised to exercise caution when
dealing in the Company`s linked units until a further announcement is made.
DISTRIBUTION
A distribution of 2,9 cents per linked unit has been declared.
The last date for unit holders to trade cum the distribution on the JSE
Securities Exchange South Africa is Friday 7 February 2003.
Linked units will trade ex the distribution from Monday 10 February 2003.
The record date for Fairvest unit holders to participate in the distribution has
accordingly been set for Friday 14 February 2003.
Payment date for the dividend is Monday 17 February 2003.
Certificates may not be dematerialised or rematerialised from certificated to
electronic form or vice versa between Monday 10 February and Friday 14 February
2003, both days inclusive.
By order of the Board
Sandton
30 December 2002
Sponsor: LPC Manhattan
Date: 30/12/2002 05:10:00 PM Produced by the JSE SENS Department
