| Thu 29 May 2003, 15:02 | | Audited Final Results for the 13 months ended 31 |
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Acucap Properties Limited -
Acucap Properties Limited
Reg no 2001/021725/06
Share Code: ACP
ISIN : ZAE 000037651
Audited Final Results for the 13 months ended 31 March 2003
31 March 2003 28 February 2002
R " 000 R " 000
Abridged Balance Sheet
Assets
Non current assets
Investment properties 912 650 320 450
Current assets 32 568 4 846
Accounts receivable 5 427 3 965
Deferred tax - 509
Cash and cash equivalents 27 141 372
Total assets 945 218 325 296
Equity and liabilities
Shareholders" interest 22 497 (7 009)
Non current liabilities 889 956 325 267
Debentures 395 953 96 974
Loans 478 000 228 293
Deferred tax 16 003 -
Current liabilities 32 765 7 038
Accounts payable 4 132 5 130
Debenture interest payable 28 633 1 908
Total equity and liabilities 945 218 325 296
Abridged Income Statement
for the 13 months ended 31March 2003
13 months ended 12 September 2001
31 March 2003 (date of
incorporation) to
28 February 2002
R"000 R"000
Operating income before interest paid 177 425 4 880
Revenue 129 973 8 803
Net operating expenses (9 285) ( 528)
Revaluation of investment properties 56 737 (3 395)
Interest paid and payable 122 314 9 189
- Debenture holders - post listing - 25 796 -
interim
- Debenture holders - post listing - 28 633 -
final
- Debenture holders - pre listing 1 035 1 908
- Interest paid to financial 63 725 4 037
institutions
- Interest paid to property vendors 3 125 3 244
Income before exceptional items and 55 111 (4 309)
taxation
Exceptional items
Listing costs and costs of raising 9 392 3 306
finance
Profit / (loss) before tax 45 719 (7 615)
Deferred tax (16 512) 509
Net profit / (loss) for the period 29 207 (7 106)
Cents Cents
Earnings / (loss) per share 76.20 (73.20)
Headline loss per share (9.46) (15.10)
Interest Distribution per linked unit 137.32 -
- post listing
- Interim 65.08 -
- Final 72.24 -
Interest Distribution per linked unit 5.67 27.15
- pre listing
Distribution per linked unit 142.99 27.15
Reconciliation of Headline loss to
net profit
Profit / (loss) for the period 29 207 (7 106)
Listing costs 7 393 2 754
Revaluation of investment properties (56 737) 3 395
Deferred tax on revaluation 16 512 (509)
Headline loss (3 625) (1 466)
Abridged Cash flow statement
for the 13 months ended 31March 2003
13 months ended 12 September
31 March 2003 2001 (date of
incorporation)
to 28 February
2002
R"000 R"000
Cash flows from operating activities
Cash generated by operations 135 003 7 677
Interest received 558 365
Interest paid (122 314) (9 189)
Net cash inflow / (outflow) from operating 13 247 (1 147)
activities
Cash flows from investing activities (535 463) (323 845)
Cash flows from financing activities 548 985 325 364
Net cash inflow for the period 26 769 372
Cash and cash equivalents at beginning of 372 -
period
Cash and cash equivalents at end of 27 141 372
period
Abridged Statements of changes in equity
for the 13 months ended 31 March 2003
Shares Share Share Non Accumulated Tot
issued capital Premium Distributable loss
Reserve
Number R"000 R"000 R"000 R"000 R"0
Issue of shares 7 - - - - -
on 12 September
2001
Issue of shares 9 707 125 10 87 - - 97
on 4 February
2002
Net loss for - - - - ( 7 106) (7
the period
Balance at 28 9707 132 10 87 - ( 7 106) (7
February 2002
Issue of shares 19 221 732 19 173 - - 192
on 14 March
2002
Issue of shares 10 706 049 11 96 - - 107
on 26 March
2002
Net profit for - - - - 29 207 29
the period
Transfer to Non-- - - 37 339 (37 339) -
distributable
reserve
Balance at 31 39 634 913 40 356 37 339 (15 238) 22
March 2003
COMMENTS
1. REVIEW OF RESULTS
The financial statements are prepared in accordance with South African
Statements of Generally Accepted Accounting Practice (GAAP) and the requirements
of the Companies Act in South Africa on a basis consistent with that of the
prior period.
KPMG Inc. has audited the financial information set out in this report. Their
unqualified audit report is available for inspection at the company"s registered
office.
Acucap was listed on 27 March 2002, and the forecast distribution for the year
to 31 March 2003 was 138.06 cents per linked unit. During the year, interest
rates escalated ahead of our projections. The prime overdraft rate increased by
400 basis points to 17%, against Acucap"s forecast for the average prime rate
for the year of 14%. However, net operating income from the properties in the
Acucap portfolio exceeded our forecasts, and as a result, the company has
achieved a distribution of 137.324 cents per linked unit in the twelve months
since listing, comprising an interim distribution of 65.083 cents declared on 8
November 2002, and a final distribution of 72.241 cents approved on 27 May 2003.
The distribution is 0.53% below the forecast, and the directors are satisfied
with this result.
2. DISTRIBUTION
The Board has approved a final distribution of 72.241 cents per linked unit
for the period from 1 October 2002 to 31 March 2003.
3. BORROWINGS
The company has fixed the interest rate on 90% of its borrowings with terms
varying between 2 and 10 years as follows :
Amount % of total Rate (nacm) Expiry of fixed
rates
(R borrowings
million)
50 10.46% 12.73% 1 April 2004
60 12.55% 12.21% 3 January 2005
120 25.10% 12.84% 2 January 2007
100 20.92% 13.34% 15 May 2008
50 10.46% 14.43% 8 October 2009
50 10.46% 14.06% 31 March 2012
48 10.05% Prime less 1.5%
478 100.00%
The company"s weighted average total borrowing costs are tabulated below :
Weighted average cost of borrowings % of Average
borrowings
at fixed rate
rates
As forecast in the Acucap Prospectus 70% 12.94%
Actual for the period to 31 March 2003 91% 13.63%
Estimated for the period to 31 March 2004 90% 13.26%
Management continues to focus on strategies that will optimize the cost of
funding, and this will include re-financing activities aimed at minimizing these
costs.
4. VACANCIES
Vacancies amount to 2.24% of the portfolio by gross rental income, and 2.14% by
gross lettable area. This has not changed materially since listing, and is well
below the 2002 SAPIX / IPD average of 13% by gross lettable area.
5. LEASE EXPIRY PROFILE
The lease expiry profile is reflected below, and it includes the effects of
the Old Mutual acquisitions referred to in point 8 of this results announcement
:
Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Thereafter
National 7.4% 15.7% 16.2% 6.5% 8.4% 45.9%
tenants
Other 28.98% 19.09% 35.29% 9.92% 5.46% 1.26%
TOTAL 14.52% 16.79% 22.47% 7.62% 7.42% 31.18%
6. LIQUIDITY
The company"s unitholder spread, as defined in clauses 4.26 and 4.27 of the
JSE Listing Requirements, reflects 66.87% public ownership. For the twelve
months since date of listing on 27 March 2002, trade in Acucap linked units has
amounted to 58.34% of its market capitalization as at 31 March 2003. No
restrictions are placed on trade in linked units issued to property vendors, and
as the company acquires additional properties, the sale of linked units by
vendors is expected to promote continued liquidity.
7. PROPERTY PORTFOLIO REVALUATION
The property portfolio was revalued by the company"s independent valuers at
31 March 2003, and full details of the changes in the portfolio valuation are
set out in the table below :
Portfolio Revaluation Portfolio Capital Revaluation Portfolio %
cost at listing valuation expenditure at valuation increase
at 28 (R 000"s) at since 31 March at 31 in
February listing listing 2003 March portfolio
2002 (R 000"s) (R 000"s) (R 000"s) 2003 valuation
(R 000"s) (R 000"s) since
listing
856,299 8,451 864,750 3,008 44,892 912,650 5.54
Net asset value (NAV) per linked unit increased from R9.84 at listing to R10.56,
after providing for deferred tax at the normal tax rate of 30%. Standard
practice within the PLS and PUT sectors has been to provide for deferred tax on
revaluation surpluses at 15%, based on the normal tax rate of 30% applied to the
capital gains inclusion rate of 50%. GAAP Statement AC 102, however, requires
deferred tax on the revaluation surplus of investment properties to be provided
at the normal tax rate of 30%, and Acucap has complied with this requirement.
The table below sets out the effect on NAV per linked unit of providing for
deferred tax on the revaluation surplus at the AC 102 required rate of 30%,
compared to the rate of 15% previously applied :
Deferred tax provided Deferred tax provided
at 30% on revaluation at 15% on revaluation
surplus surplus
NAV per linked R10.56 R10.76
unit
at 31 March
2003
NAV per linked R 9.84 R 9.88
unit
at listing
Increase in 7.32% 8.91%
NAV per linked
unit
The change in deferred tax rate recommended by AC 102 has no effect on
distributions to linked unitholders.
8. ACQUISITIONS
Subsequent to the year end, a subsidiary of the company concluded an
agreement of sale with Old Mutual Properties for the acquisition of two
industrial properties. Board approval for the acquisition was given in February
2003. Details of the transaction are set out below :
8.1 Vendor Old Mutual Life Assurance Company (South Africa)
Limited
8.2 Description (1) Old Mutual Mini Units, erf 160, City Deep
Extension 7, measuring 4.8969 hectares in extent
(2) Epping Industrial Park, erf 32480, Cape Town,
measuring 4.8070 hectares in extent
8.3 Consideration R44,829,690 (forty four million eight hundred and
twenty nine thousand six hundred and ninety rand)
paid in cash
8.4 Cash raised R26,840,000 (twenty six million eight hundred and
forty thousand rand) by way of loan from Absa Bank
Limited; and
R17,989,690 (seventeen million nine hundred and
eighty nine thousand six hundred and ninety rand)
by way of an issue of 1,798,969 (one million seven
hundred and ninety eight thousand nine hundred and
sixty nine) Acucap linked units at R10 per linked
unit, to be issued on the first day that linked
units trade ex-distribution on 23 June 2003
8.5 Effective date The effective date of the transaction is the date
of transfer, which is anticipated to be by the end
of May 2003
8.6 Effect on NAV Historic NAV per linked unit pre-acquisition R9.84
Pro-forma historic NAV per linked unit post-
Acquisition R9.85
8.7 Effect on
Earnings Historic distribution per linked unit pre-
acquisition 137.32c
Pro-forma historic distribution per linked unit
post-acquisition 138.74c
9. PROSPECTS
Management has maintained its focus on the acquisition of good quality
properties that will contribute to sustained growth in distributions and to the
long term growth in the market value of the company"s property portfolio. In
addition, management will continue to engage in activities to optimize the
income earning and growth potential of existing properties in the portfolio.
The retail sector continues to outperform office and industrial property, and
expected growth in consumer spending and retail sales should help sustain this
trend in the year ahead. Acucap will therefore maintain its overweight position
in the retail sector for the period under review to March 2004. Fundamentals in
the office market remain weak, with vacancy levels substantially unchanged for
the last nine months. The continued trend amongst many office tenants towards
the consolidation of space has weakened demand, but rising building costs and a
sharp decline in plans completed have stemmed the growth in oversupply. Acucap
remains cautious about the office sector, yet remains open to longer term growth
opportunities in this as in all sectors of the market. The group has just
entered the industrial market through the Old Mutual acquisitions referred to
above, and will continue to seek selected opportunities in this area as rentals
start to show evidence of firming and vacancies decline.
Economic fundamentals look satisfactory for the 2003 / 2004 year even as
dramatic changes in the exchange value of the rand complicate the tasks of
managers, particularly those producing goods for export and in competition with
imports. Declining inflation and higher wage settlements from the prior year,
together with the wealth effect created by rising residential house prices, and
income tax cuts for individuals in the 2003 National Budget, should support
growth of around 2.5% in the GDP. The continued strength of the rand, however,
may dampen these prospects in the absence of significant relief from lower
interest rates and a moderately weaker rand. Acucap remains generally positive
about the economic outlook, but we do not foresee a rapid improvement in
property fundamentals over the next year. We are gratified that the rand and
especially the dollar value of securitised real estate has held up so well in
the face of rand strength. We think that past performance of this kind must be
good for the future of securitised property as an investment class.
We are of the view that declining interest rates will continue to support
the listed property sector, where starting yields continue to track the long-
bond rate. We expect the prime lending rate to decline over the second half of
2003, and for long-bond rates to sustain the lower levels which they have
reached.
In light of the above, we are forecasting a moderate growth in
distributions for the financial year ending 31 March 2004.
10. PAYMENT OF DEBENTURE INTEREST
Notice is hereby given that a final distribution of 72.241 (seventy two comma
two four one) cents per linked unit has been approved in respect of the six
month period ended 31 March 2003. The last date to trade the linked units cum-
distribution is 20 June 2003 and the record date will be 27 June 2003. The
linked units will start trading ex-distribution from 23 June 2003. Distributions
will be made to unit holders on Monday 30 June 2003.
Linked unit certificates may not be dematerialised or rematerialised between
Monday 23 June and Friday 27 June 2003 both days inclusive.
On behalf of the Board
BS KANTOR PA THEODOSIOU
(Chairman) (Managing Director)
29 May 2003
Registered Office
Suite A11 Westlake Square
Westlake Drive
Westlake
CAPE TOWN
Transfer secretaries:
Computershare Investor Services Limited
70 Marshall Street
JOHANNESBURG
http://www.acucap.co.za
info@acucap.co.za
Directors: Prof BS Kantor (Chairman), PA Theodosiou* (Managing Director), FM
Berkeley, D de Beer, RC Frolich, MJ Lindeque, HJ Mocke, JH Rens*, B Stevens, UJ
van der Walt, NDC Whale
* Executive
Date: 29/05/2003 02:30:06 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
