| Wed 5 Feb 2003, 17:20 | | Sycom Property Fund - Unaudited Group Results And |
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Sycom Property Fund - Unaudited Group results and declaration of a second
interim distribution for the twelve months ended 31 December 2002
SYCOM PROPERTY FUND
JSE share code: SYC ISIN: ZAE000019303
Unaudited Group results and declaration of a second interim distribution for the
twelve months ended 31 December 2002
Directors: TE Sewell (Chairman), GA Nelson (MD), R Abramowitz, MS Aitken, FM
Berkeley, JPD Flanagan, CJV Fleming, LA Meyerowitz, BM Roberts, MJ Watters
6 months ended 12 months ended
31 Dec. 31 Dec. 31 Dec. 31 Dec.
2002 2001 2002 2001
INCOME STATEMENT (R`000) (R`000) (R`000) (R`000)
Revenue 124 199 120 587 233 764 218 763
Rental income 119 410 116 106 224 299 208 126
Interest received 4 789 4 481 9 465 10 637
Expenditure 40 077 34 036 78 726 65 910
Auditors` remuneration 599 451 695 512
Interest paid 276 - 276 -
Property expenses 35 164 30 090 70 421 58 786
Service charge 4 038 3 495 7 334 6 612
Headline earnings 84 122 86 551 155 038 152 853
Exceptional items 8 805 75 744 8 805 77 063
Realised deficit on disposal (9 753) (469) (9 753) (469)
of investment in fixed
properties
Realised surplus on 12 198 - 12 198 1 319
revaluation of newly
acquired properties
Unrealised revaluation 6 360 (444) 6 360 (444)
deficit written back on
disposal of investment in
fixed properties
Unrealised surplus on - 76 657 - 76 657
revaluation of investments
in fixed property companies
Net income for the period 92 927 162 295 163 843 229 916
Net transfer from/(to) (2 590) (84 418) 85 (85 737)
reserves
Transferred to non- (4 682) (75 744) (4 682) (77 063)
distributable reserve
Transferred from/(to) 2 092 (8 674) 4 767 (8 674)
distributable reserve
Net income available for 90 337 77 877 163 928 144 179
distribution (note 3)
Distributions 90 337 77 877 163 928 144 179
No. 32 of 50,06 cents per - - - 66 302
unit paid September 2001
No. 33 of 53,05 cents per - 77 877 - 77 877
unit paid March 2002
No. 34 of 50,13 cents per - - 73 591 -
unit paid July 2002
No. 35 of 53,27 cents per 90 337 - 90 337 -
unit proposed March 2003
Units in issue 169 598 146 800 169 598 146 800
Earnings/Distribution per 53,27 53,05 103,40 103,11
unit - (cents)
Earnings/Distribution per 57,07 55,75 103,56 103,22
unit - cents (weighted
average units in issue)
Headline earnings per unit - 53,14 61,96 97,94 109,43
cents (weighted average
units in issue)
As at As at
31 Dec. 2002 31 Dec. 2001
BALANCE SHEET (R`000) (R`000)
Assets
Fixed property 1 423 430 1 217 692
Current assets 123 046 120 696
Total assets 1 546 476 1 338 388
Unitholders` funds and liabilities
Capital and reserves 1 427 286 1 249 653
Interest bearing borrowings 17 993 -
Current liabilities 101 197 88 735
Total unitholders` funds and 1 546 476 1 338 388
liabilities
STATEMENT OF CHANGES IN
CAPITAL AND RESERVES
Balance at beginning of the period 1 249 653 832 975
Units issued 177 718 330 941
Headline earnings 155 038 152 853
Net transfer from reserves 8 805 77 063
Income distributions (163 928) (144 179)
Balance at end of the period 1 427 286 1 249 653
CASH FLOW STATEMENTS
Cash generated by operations 149 696 142 216
Change in working capital 10 609 (4 778)
Cash generated from operating 160 305 137 438
activities
Interest 9 465 10 637
Distributions paid (151 468) (118 814)
Net cash inflow from operating 18 302 29 261
activities
Issue of units 177 718 -
Borrowings 17 993 -
Disposal of fixed property 59 600 11 500
Additions to fixed property (260 657) (30 485)
(5 346) (18 985)
Increase in cash resources 12 956 10 276
Cash resources at beginning of the 86 211 75 935
period
Cash resources at end of the period 99 167 86 211
Notes
1. ACCOUNTING POLICIES
The interim results are prepared in accordance with Accounting Standard AC127
(Interim Financial Reporting) and are consistent with those accounting policies
used in the prior year.
2. CHANGE IN YEAR END
The year end of the Fund has been changed to 31 March and as a consequence
thereof, there will be a final distribution and the issue of final financial
statements for the 15 months ending 31 March 2003.
3. RECONCILIATION BETWEEN DISTRIBUTABLE EARNINGS AND HEADLINE EARNINGS
6 months 12 months
ended ended
31 Dec. 2002 31 Dec. 2002
(R`000) (R`000)
Headline earnings 84 122 155 038
Net transfer from distributable/major 2 092 4 767
maintenance reserves
Transfer from revaluation reserve * 4 123 4 123
Distributable earnings 90 337 163 928
* Adjustment for loss of income arising out of unavoidable delays in the
registration of transfers of the tranche of five properties acquired during the
year.
4. PRIMARY OPERATIONAL SEGMENTS FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2002
Retail Office Warehouse Fund Total
Rental income 115 984 107 553 762 - 224 299
Interest 758 454 8 253 9 465
Total revenue 116 742 108 007 762 8 253 233 764
Expenditure 35 432 34 849 778 7 667 78 726
Headline earnings 81 310 73 158 (16) 586 155 038
Net transfers from 1 197 370 - 7 323 8 890
reserves
Distributable income 82 507 73 528 (16) 7 909 163 928
Fixed property 618 682 799 248 5 500 - 1 423 430
Borrowings - 17 993 - - 17 993
Current assets 4 595 5 513 72 112 866 123 046
Current liabilities 2 084 6 281 92 92 740 101 197
Net assets 621 193 780 487 5 480 20 126 1 427 286
COMMENTS
RESULTS
Sycom`s net distributable income for the twelve months ended 31 December 2002
amounted to 103,40 cents per unit, a nominal improvement of 0,28% over the
previous year`s distribution of 103,11 cents per unit.
The net asset value of the Fund stands at 842 cents per unit. The closing market
price of 880 cents per unit at 31 December 2002 represents a premium of 4,5% to
net asset value.
As at 31 December 2001, major maintenance reserves stood at Rm14,85. Transfers
from the reserve to cover major maintenance expenditure for the twelve-month
period amount to Rm3,83 and amounts written back on sold properties totalled
Rm0,94 resulting in a balance of Rm10,08.
PROPERTY PORTFOLIO
As reported in previous announcements, the Fund acquired five office properties
totalling Rm212,8 in August 2002. The purchase consideration was settled by way
of the issue of 22 797 998 new Sycom units at 780 cents per unit and the balance
of Rm34,9 by way of existing capital cash resources and drawing down from the
Rm400 loan facility raised by Sycom. In addition, a further office building was
acquired in December 2002 also by way of existing cash and borrowings, the
details of which are as follows:
Price Area
Property Location Vendor (R`m) Major (m2) Lease
Tenant(s) Expiry
Noland River Rhodes 19,50 Nolands 1 557 May 2007
House Park Square
Mowbray Shareblock Maitland 526 May 2005
Trust
(Pty) Ltd Whirlpool 314 Oct 2005
Celestis 371 Sep 2007
Broker
The forward yield of this property is 13,1% and the transaction is earnings
neutral.
Whilst the consequence of an oversupplied office market negatively impacted
returns from the existing office portfolio, the effect of the new acquisitions
was earnings enhancing. The retail portfolio however generally performed to
expectations.
During the course of the year, the following properties were sold:
Area Sale Price Book Value
Property Type (m2) Location (R`m) (R`m)
Sammy Retail 13 197 Pretoria 57,00 57,5
Marks` CBD
Square
Offices 5 385
Rank Xerox Offices 4 755 Sunnyside 2,60 3,50
Pretoria
In addition, offers to purchase Southdale Shopping Centre (Southdale,
Johannesburg) and Morning Glen Shopping Centre (Morningside Manor, Sandton) have
been received and are presently being considered. A further seven minor
properties have been earmarked for sale as they no longer fit the Fund`s
investment criteria.
The sale of Sammy Mark`s Square is seen as a significant step in further
reshaping the Fund, which is strategically focusing on investments in regional
shopping centres as the retail component, and large office properties with good
covenant tenants. To this end, a number of prospective large acquisitions are
presently under consideration.
Sycom has commenced utilisation of its Rm400 loan facility to fund various
acquisitions and capital projects and to this end, Rm17,75 had been utilised at
year-end. Residual proceeds of Rm12,01 from the sale of properties have been
received post the year-end and commitments have been made to capital projects
totalling Rm12,71.
While vacancy levels across the portfolio as a whole deteriorated from 11,1% to
12,8% of rentable area over the first six months, the recent acquisition of
properties with no vacancy and disposal of properties with high vacancies have
resulted in overall vacancy levels improving to 9%.
PROSPECTS
The letting market, particularly in the office sector has been characterised by
oversupply and poor take-up for some time now. However, with building activity,
particularly speculative development having largely abated, vacancy levels
appear to have stabilised, albeit at high levels. Industry opinion is that given
current take-up rates the oversupply could continue to impact most office
markets for a further period of two to three years before the market reaches a
normalised vacancy level of around 6%.
The retail sector however remains buoyant, with most national retailers
reporting strong year-on-year growth in retail sales to December 2002.
Over the next twelve months the portfolio has a relatively low expiry profile of
12,9% by area with the office and retail sectors being 12,0% and 14,4%
respectively. Management continues to focus on tenant retention, coupled with
ongoing marketing campaigns and refurbishment programmes for a number of the
Fund`s buildings and although this is unlikely to result in immediate benefits,
the medium term prospects for improved occupation levels are positive.
Overall, growth in annualised distributions for the fifteen-month period to 31
March 2003 is likely to remain nominal, with improved prospects thereafter.
DISTRIBUTION DECLARATION
Notice is hereby given of the declaration of distribution No. 35 in respect of
the six months to 31 December 2002 of 53,27 cents per unit. The last date to
trade cum distribution will be Friday, 21 February 2003 and the units will trade
ex-distribution from the commencement of business on Monday, 24 February 2003.
The record date is Friday, 28 February 2003 and payment will be made to
unitholders on Monday, 3 March 2003. Unitholders may not dematerialise or
rematerialise their units between Monday, 24 February 2003 and Friday, 28
February 2003, both days inclusive.
5 February 2003
By order of the Board
NIB PROPERTY FUND MANAGERS LIMITED
(Registration number 1986/002756/06)
Registered Office:
1st Floor, Building 2
Freestone Park
135 Patricia Road
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
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Date: 05/02/2003 05:09:14 PM Produced by the JSE SENS Department
