| Thu 7 Aug 2003, 12:45 | | Audited Results For The Year Ended 30 June |
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APA
ApexHi Properties - Audited Results For The Year Ended 30 June 2003
ApexHi PROPERTIES
(Incorporated in the Republic of Souh Africa)
(Registration number 1999/000238/06)
Share code APA ISIN ZAE000033064
Share code APB ISIN ZAE000033072
("ApexHi" or "the company")
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2003
AND QUARTERLY DISTRIBUTION DECLARATION FOR THE THREE MONTHS ENDED 30 JUNE 2003
These results have been audited by the independent auditors, Grant Thornton
Kessel Feinstein. Their unqualified report is available for inspection at the
company"s registered office.
The directors submit their report on the results of the company for the year
ended 30 June 2003 as follows:
INCOME STATEMENT
2003 2002
R"000 R"000
Revenue 597 338 424 472
Property expenses (201 685) (136 680)
Administrative expenses (82 824) (70 307)
Letting cost amortisation/depreciation (3 575) (1 212)
Profit from operations 309 254 216 273
Finance costs (62 127) (40 686)
Profit before debenture interest 247 127 175 587
Debenture interest (247 127) (175 587)
Profit/(Loss) before capital items - -
Capital items 4 033 38 938
Change in fair value of investment properties 4 032 51 355
Goodwill amortisation/impairment (411) (12 118)
Net surplus on disposal of engineering business 798 -
Net deficit on disposal of investment properties (386) (299)
Profit before taxation 4 033 38 938
Deferred capital gains taxation (1 182) (5 891)
Net profit attributable to unit holders 2 851 33 047
Earnings, headline earnings and distribution (cents)
Reconciliation between earnings and headline earnings:
Net profit after taxation 2 851 33 047
Adjusted for:
Goodwill amortisation/impairment 411 12 118
Change in fair value of investment properties
- net of deferred tax (2 850) (45 464)
Net surplus on disposal of engineering business (798) -
Net deficit on disposal of investment properties 386 299
Headline earnings - shares - -
Debenture interest 247 127 175 587
Headline earnings - linked units 247 127 175 587
Headline
Weighted average Earnings earnings Distribution
number of units per unit* per unit per unit
A unit 118 811 057 1,20 102,00 102,00
B unit 118 811 057 1,20 106,00 106,00
Total - year to 30 June 2003 2,40 208,00 208,00
A unit 85 548 251 19,31 102,00 102,00
B unit 85 548 251 19,31 103,25 103,25
Total - year to 30 June 2002 38,62 205,25 205,25
* Earnings per unit represent items of a capital nature, which are not
distributable as debenture interest and in which all units share equally.
ACCOUNTING POLICIES
The financial statements are prepared in accordance with and comply with South
African Statements of Generally Accepted Accounting Practice and the Companies
Act of South Africa, 1973. The accounting policies used in their preparation are
consistent with those used in the annual financial statements for the year ended
30 June 2002.
CONDENSED BALANCE SHEET
2003 2002
R"000 R"000
ASSETS
Tangible assets 2 108 938 1 601 151
Investment properties 2 108 880 1 600 249
Plant and equipment 58 902
Intangible assets - 11 390
Current assets 136 755 75 177
Total assets 2 245 693 1 687 718
EQUITY AND LIABILITIES
Share capital and reserves 266 730 186 018
Non-current liabilities 1 851 694 1 407 557
Debenture capital 1 179 529 913 058
Deferred taxation 7 073 5 891
Non-interest bearing borrowings - 735
Interest bearing borrowings 665 092 487 873
Current liabilities 127 269 94 143
Total equity and liabilities 2 245 693 1 687 718
Net asset value per unit (cents)
Number of units Share Debenture Total
A unit 131 058 795* 101,76 540,00 641,76
B unit 131 058 795* 101,76 360,00 461,76
Total - 30 June 2003 203,52 900,00 1 103,52
A unit 101 450 900 91,67 540,00 631,67
B unit 101 450 900 91,67 360,00 451,67
Total - 30 June 2002 183,34 900,00 1 083,34
* Included are 178 128 A and 178 128 B units that were issued after the balance
sheet date, as consideration for properties acquired before the balance sheet
date. These consideration units will rank for the quarterly distribution.
STATEMENT OF CHANGES IN EQUITY
Reva- Accu-
Share Share Capital luation mulated
capital premium reserve reserve loss Total
R"000 R"000 R"000 R"000 R"000 R"000
Balance at 1 July 2002 20 140 463 801 57 342 (12 608)186 018
Issue of ordinary shares 6 77 855 77 861
Net profit for year 2 851 2 851
Realised surplus on disposal of
investment properties 1 966 (1 966) -
Net deficit on disposal of
investment properties (386) 386 -
Transfer to revaluation reserve
net of deferred taxation 2 850 (2 850) -
Balance at 30 June 2003 26 218 318 2 381 58 226 (12 221)266 730
CASH FLOW STATEMENT
2003 2002
R"000 R"000
OPERATING ACTIVITIES
Cash generated from operating activities
- continuing operations 322 931 215 483
- discontinuing operations 1 223 (2 226)
324 154 213 257
Finance costs (62 127) (40 686)
Debenture interest paid (227 503) (147 116)
Net cash generated from operating activities 34 524 25 455
INVESTING ACTIVITIES
Continuing operations
- Purchase of investment properties including
capitalised transaction and letting costs (523 522) (1 347 616)
- Proceeds on disposal of investment properties 15 318 68 461
- Proceeds on sale of engineering business/property
services business 12 591 7 785
Goodwill 11 354 5 415
Plant and equipment 1 237 2 370
- Net purchase of plant and equipment (326) (903)
Net cash utilised in investing activities (495 939) (1 272 273)
FINANCING ACTIVITIES
Issue of A and B units 344 332 796 300
Interest bearing borrowings raised 177 219 452 548
Net cash from financing activities 521 551 1 248 848
Net increase in cash at bank 60 136 2 030
Cash at bank at beginning of year 32 127 30 097
Cash at bank at end of year 92 263 32 127
SEGMENTAL INFORMATION
Business segments
Investment Discontinuing Corporate Land Adjustments
properties operations costs trading inter-
divisions Total
R"000 R"000 R"000 R"000 R"000 R"000
Revenue 533 978 56 413 1 474 17 098 (11 625) 597 338
Segment result
Segment operating
result 317 449 6 271 (19 042) 4 576 - 309 254
Goodwill amortisation/
impairment - (411) - - - (411)
Change in fair value
of investment
properties 4 032 - - - - 4 032
Net surplus on
disposal of
engineering business - 798 - - - 798
Net deficit on
disposal of
investment
properties (386) - - - (386)
Debenture interest - - (247 127) - - (247 127)
Finance costs - 357 (62 510) 26 - (62 127)
321 095 7 015 (328 679) 4 602 - 4 033
Other information
Total assets 2 144 888 12 528 2 070 778 10 025(1 992 526)2 245 693
Total liabilities 1 537 716 3 27 2 426 850 3 650(1 992 526)1 978 963
RELATED PARTY TRANSACTIONS
During the year, the company, in the ordinary course of business, entered into
various transactions with related parties. These transactions occurred under
terms that were no less favourable than those arranged with third parties.
2003 2002
R"000 R"000
Board representation: Corpcapital
Promoters" fees 1 972 15 090
Asset management fees - 2 000
Corporate finance and other fees 402 1 540
Non-executive directors" fees 60 60
Board representation, financier and unit holder: Standard Bank
Bond administration fees 934 4 337
Non-executive directors" fees 30 20
Finance costs 71 798 42 500
Properties purchased from Standard Bank - 72 612
Borrowings 665 092 489 895
Unitholder: Redefine Income Fund
Redefine is an investment of Corpcapital in which Corpcapital has significant
influence.
Administration commission received - 660
Leasing commission received - 186
Properties purchased from Redefine Income Fund - 164 113
Property sold to Redefine Income Fund - 52 000
ApexHi-Manco Trust
The trust is the asset manager of the company. Certain of the directors and
Corpcapital Investments (Pty) Ltd are beneficiaries and/or trustees of the
trust.
Asset management fee (0,5% p.a. of the market capitalisation plus borrowings
of the company) 10 311
The beneficiaries of the trust at 30 June 2003 are:
Corpcapital Investments 57%
Mvelaphanda Holdings 25%
ApexHi management 18%
The agreement between the company and the trust is for five years commencing
1 July 2002, with six months" notice required thereafter. There are no
performance-based incentive fees paid to the trust. The trust bears all salary
and related costs of the staff employed by the company, with the exception of
the CEO and Domayne Engineering staff.
COMMENTS
1. REVIEW OF OPERATIONS
Results
The year under review has been particularly successful, with the delivery of
a return that exceeded expectations. A total distribution of 102 cents per A
unit and 106 cents per B unit was achieved.
Acquisitions and disposals
In line with the company"s objective to grow the portfolio to manage risk and
improve the lease profile, 42 high-yielding properties were acquired during the
year under review, boosting the portfolio to 209 properties worth more than R2,1
billion, with a lettable area of 1 593 392 square metres.
Six properties were disposed of for a total consideration of R15,3-million,
realising a deficit on carrying value of R0,38-million. In addition to these
disposals and in line with the stated objectives of the management team, ApexHi
sold the lift and escalator maintenance contracts of Domayne Engineering
Services to Otis for R7,3-million and the air-conditioning business to
management and third parties for R4-million.
Letting activity
Leasing activity for the year under review can be summarised as follows:
Total area Unlettable* Lettable
(m2) area (m2) area (m2)
Portfolio at 1 July 2002 1 203 784 - 1 203 784
Properties acquired 460 132 41 960 418 172
Properties sold (28 564) - (28 564)
1 635 352 41 960 1 593 392
Leases expired during year - - -
Total lettings during year - - -
- Renewals - - -
- New lettings - - -
Portfolio at 30 June 2003 1 635 352 41 960 1 593 392
Vacant % Let %
Area (m2) vacant area (m2) let
Portfolio at 1 July 2002 165 434 14 1 038 350 86
Properties acquired 56 517 14 361 655 86
Properties sold (2 910) 10 (25 654) 90
219 041 14 1 374 351 86
Leases expired during year 221 575 - (221 575) -
Total lettings during year (197 890) - 197 890 -
- Renewals (131 757) - 131 757 -
- New lettings (66 133) - 66 133 -
Portfolio at 30 June 2003 242 726 15 1 350 666 85
*Represents "mothballed" office space.
The increase in the vacancy percentage can be attributed mainly to Lear
vacating 6 684 square metres in Creation, our industrial building in Brits and
Mercantile Registrars vacating 14 662 square metres in 11 Diagonal Street in
Johannesburg. The space vacated by Lear is still unlet, while 4 523 square
metres of the space vacated by Mercantile Registrars has been let.
Revaluation of properties by external valuers
ApexHi"s entire property portfolio has been valued by external registered
valuers at 30 June 2003. The valuation of the portfolio at R2,1-billion has
given rise to a revaluation surplus in the income statement of R4-million.
Liquidity and trading volumes
Significant trading volumes have been maintained, with more than 42% of the
company"s units in issue being traded during the year. Approximately 45,8-
million of A units traded, equating to 39% of the weighted average units in
issue while 55,1-million B units, equating to 46% traded in the same period.
2. POST-BALANCE SHEET EVENTS
Acquisitions
ApexHi has entered into agreements for the purchase of the following properties
at an average yield before gearing of 16,14%:
Property Location Purchase price (R)
Melville Shops Johannesburg 6 300 000
Commissioner House Belville 12 100 000
Nunnerleys Johannesburg 6 488 168
111 Commissioner Street Johannesburg 54 000 000
Playtex Durban 11 000 000
Fedsure Bloemfontein 13 411 179
Department of Forestry/
Home Affairs King William"s Town 13 500 702
MegaPark Bloemfontein 13 100 000
Shepstone & Whiley Durban 11 000 000
Shell House Durban 35 000 000
Game Klerksdorp Klerksdorp 31 500 000
Shorburg Building Pretoria 22 500 000
Chai Properties Johannesburg 13 239 019
243 139 068
The purchase consideration in respect of the above will be settled by the
issue of 13 690 631 combined units at an average issue price of R13,26 and cash
of R61,6-million. The cash portion will be funded out of borrowings.
Disposals
Agreements have been reached for the disposal of 52 Andries Street and 61
Gale Street for R2,4-million. Proceeds will be used to repay debt.
3. FUTURE PROSPECTS
In the year ahead, assuming the company achieves its target lettings and
despite no contributions from engineering and significantly reduced
contributions from land trading, distributions are expected to be in line with
those for the year ended 30 June 2003.
DISTRIBUTION
The board has resolved that unit holders are entitled to receive interest
distribution number 9 in respect of the quarter 1 April 2003 to 30 June 2003 of
25,50 cents per A unit and 27,25 cents per B unit.
* Last date to trade cum interest Friday, 22 August 2003
* Units will trade ex interest Monday, 25 August 2003
* Record date Friday, 29 August 2003
* Payment of interest distribution number 9 Monday, 1 September 2003
There may be no dematerialisation or re-materialisation of the A and B units
between Monday, 25 August 2003 and Friday, 29 August 2003, both dates inclusive.
By order of the Board
G G L Leissner (Chief Executive Officer)
7 August 2003
DIRECTORS: M Wainer (Chairman), G G L Leissner* (Chief Executive Officer),
W E Cesman, D J Feinblum*, W M Kirchmann#, S Shaw-Taylor,
C van Wyk* * Executive Independent
A presentation on the company"s results will be held in Johannesburg on Thursday
28 August 2003.
For further information please contact Sandra Mason on (011) 880-2271.
Date: 07/08/2003 12:00:29 PM Produced by the JSE SENS Department
