| Mon 1 Sep 2003, 16:58 | | Final Results for the year ended 30 June 2003 |
|
2003
SPEARHEAD PROPERTY HOLDINGS LIMITED
Registration Number: 1996/005827/06
Share Code: SPE ISIN: ZAE000019162
Final Results for the year ended 30 June 2003
* Core earnings per linked unit up 14.5% to 153 cents
* Distribution per linked unit up 13% to 142 cents
"Spearhead has proved to be one of the top performers in the Real Estate sector
of the JSE Securities Exchange South Africa, over its four-year track record as
a listed company."
Abridged consolidated income statement
Year ended Year ended
30 June 2003 30 June 2002
Audited Audited
R000"s R000"s
REVENUE 58 651 52 832
Operating income 39 620 39 282
Property development income 4 500 -
44 120 39 282
Less: Depreciation 1 036 1 105
Goodwill amortised 16 488 970
Interest rate swaps - marked to market 5 500 -
Net finance costs 20 304 19 693
Profit from operations 792 17 514
Profit on disposal of shares in joint venture 346 -
Loss from associate (19) -
Profit before revaluation 1 119 17 514
Revaluation of investment properties 20 958 5 297
Profit before debenture interest and taxation 22 077 22 811
Debenture interest 23 581 17 592
(Loss)/profit before taxation (1 504) 5 219
Taxation expense 1 886 374
Net (loss)/profit for the year (3 390) 4 845
Linked units in issue (weighted average) 14 693 941 13 528 889
Basic earnings per linked unit (cents) 137.41 165.84
Headline (loss)/earnings per linked unit (cents) (33.70) 3.82
Core earnings per linked unit (cents) 153.24 133.86
Distribution per linked unit (cents) 142.00 125.50
Abridged consolidated balance sheet
Year ended Year ended
30 June 2003 30 June 2002
Audited Audited
R000"s R000"s
Non-current assets 377 488 358 646
Property, plant and equipment 5 106 6 485
Investment properties 340 479 330 561
Goodwill - 16 488
Other financial assets 30 097 4 786
Deferred taxation 1 806 326
Current assets 57 647 26 338
Trade and other receivables 14 621 9 124
Cash and cash equivalents 43 026 17 214
Total assets 435 135 384 984
Equity and liabilities
Equity and non-current liabilities 414 385 359 840
Capital and reserves 29 704 36 858
Debentures 184 783 137 132
Linked unitholders" interest 214 487 173 990
Interest-bearing borrowings 189 735 184 611
Interest rate swap derivative 5 500 -
Deferred taxation 4 663 1 239
Current liabilities 20 750 25 144
Trade and other payables 5 168 16 302
Bank overdraft 1 172 -
Receiver of revenue 80 97
Unitholders for distribution 14 330 8 745
Total equity and liabilities 435 135 384 984
Net asset value per linked unit (rands) 14.60 11.64
Reconciliation of earnings to headline earnings
Before After
taxation Taxation taxation
R000"s R000"s R000"s
Loss for the year (1 504) 1 886 (3 390)
Adjusted for:
Revaluation of investment properties (20 958) (2 909) (18 049)
Goodwill amortised 16 488 16 488
Headline loss (5 974) (1 023) (4 951)
Weighted average
linked units in issue 14 693 941 14 693 941 14 693 941
Headline loss per linked unit (cents) (40.66) (6.96) (33.70)
Reconciliation of headline earnings to core earnings
Before After
taxation Taxation taxation
R000"s R000"s R000"s
Headline loss (5 974) (1 023) (4 951)
Distribution to linked unitholders 23 581 - 23 581
Interest rate swap - marked to market 5 500 1 650 3 850
Fair value adjustment of investments 53 16 37
Core earnings 23 160 643 22 517
Weighted average
linked units in issue 14 693 941 14 693 941 14 693 941
Core earnings per linked unit (cents) 157.62 4.38 153.24
Abridged segmental information
Property Management Unallocated Total
R000"s R000"s R000"s R000"s
Revenue 57 814 837 - 58 651
Segmental result 37 076 508 (40 974) (3 390)
Segment revenue and expenses:
Revenue and expenses that are directly attributable to a segment are allocated
to those segments. Expenses not directly attributable to a segment are allocated
to the unallocated result segment.
Abridged consolidated cash flow statement
Year ended Year ended
30 June 2003 30 June 2002
Audited Audited
R000"s R000"s
Cash generated from operations
before working capital changes 44 450 38 991
Working capital changes (16 631) (8 017)
Net finance costs (39 258) (37 936)
Cash flows from operating activities (11 439) (6 962)
Cash flows from investing activities 5 259 (34 198)
Cash flows from financing activities 30 820 34 709
Net increase/(decrease) in cash and cash equivalents 24 640 (6 451)
Cash and cash equivalents at beginning of period 17 214 23 665
Cash and cash equivalents at end of period 41 854 17 214
movement in unitholders" funds
Year ended Year ended
30 June 2003 30 June 2002
Audited Audited
R000"s R000"s
Unitholders" interest at beginning of period 36 858 34 731
Net profit for the period (3 390) 4 845
Issue of shares 47 12
Share issue costs (711) -
Treasury shares disposed of by subsidiary 2 (1)
Discount on debentures 87 968
Recoupment of discount on debentures (3 189) (3 832)
Realisation of foreign exchange gain - 135
Unitholders" interest at end of period 29 704 36 858
Notes
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 application of AC 133 (Financial Instruments - Recognition and
measurement) requires that interest rate swaps be marked to market at 30 June
2003. This statement requires that unrealised profits or losses be accounted for
in the income statement but will have no effect on distribution per unit.
3. "Core earnings" has been introduced in the current year which is an accurate
reflection of the group"s cash profits for the year available for distribution.
These results have been audited by Fisher Hoffman PKF (Newlands) Inc. and their
unqualified audit report is available for inspection at the company"s registered
office.
Comment
Financial Performance
Spearhead has again produced another year of above-industry performance,
bucking the sector trends and continuing its unblemished record in reporting
growth in profits and distributions to shareholders.
Net distributable income grew by 13% to R23.6m, which amounted to 142 cents
per unit.
This was achieved by strong growth in rentals and recoveries despite the
weaker letting market, coupled with increased development and trading profits.
Cost growth was controlled at below inflationary levels and vacancies were
maintained at reasonable levels.
Net tangible asset value per unit stands at R14.60 based on South African
Statements of Generally Accepted Accounting Practice and weighted average
calculations, although the actual diluted NAV per unit as at 30 June 2003 is
closer to R12.00.
GOODWILL
The remaining carrying value of the goodwill (16.49m) has been amortised as a
result of a change in the estimated useful life.
PROPERTY Portfolio
Two Cape Town investment properties were purchased during the past year. The
30 000m2 Ottery Hypermarket was acquired for R55.5m on a 14% yield and Plum
Park, a new office park in the suburb of Plumstead, was acquired for R9.3m on a
13.3% yield. Transfer of the Ottery property was effected on 16 July 2003.
The company also acquired the 129 Beach Rd, Mouillie Point property for R46m
in a joint venture with Faircape Property Developers. Construction has begun to
convert it into 80 luxury, sectional-title, beach-front flats.
Development work on the 23 000m2 Spearhead Business Park in Montague Gardens
is continuing successfully with Phase 2 of a total of 3 phases virtually
completed and leasing well.
The R60m NPA House development on Buitengracht Street was succesfully
completed on time and budget. The property is held in joint venture with Swish
Property Developers and Tau Pride.
Three properties were sold during the period: Norwood Corner in Johannesburg
for R3.1m, Lindum Lodge in Sea Point for R3m and Lakeside in Cape Town for
R14.8m.
This follows the company"s strategy of becoming a specialist Western Cape
fund. In time, all remaining Gauteng properties will be sold and much progress
towards that end has been achieved since balance sheet date.
Occupancy levels in the portfolio ended the year at 93%, down from 94% for
the corresponding time last year.
REVALUATION OF PORTFOLIO
The portfolio has been comprehensively revalued by Douglas Property
Valuations as at 30 June 2003, resulting in a fair value upward adjustment of
R20.9 m.
ISSUE OF NEW SPEARHEAD UNITS
In order to raise funds for the acquisition of the Ottery property, 4.7m new
Spearhead vendor units were placed with various investors in April 2003 at a
price of R9.20 per unit. These units were listed on 18 July 2003 which increased
the number of units in issue to 19 045 211.
Prospects
The company is budgeting growth in earnings and distribution per unit at a
conservative level for the forthcoming year although the quantum thereof should
still be ahead of the peer group.
DISTRIBUTION DECLARATION
Notice is hereby given of the declaration of distribution no. 8 in the amount
of 76 cents per linked unit, in respect of the six months to 30 June 2003. The
last date to trade cum distribution will be Friday, 26 September 2003 and the
units will commence trading ex distribution from Monday, 29 September 2003, with
the record date being Friday, 3 October 2003. Payment will be effected on
Monday, 6 October 2003. Unit certificates may not be dematerialised or
rematerialised from Monday, 29 September 2003 to Friday, 3 October 2003, both
days inclusive.
On behalf of the Board
M KAPLAN MN FLAX
Chairman Chief Executive Officer
Cape Town, 1 September 2003
For more information on the company, see: www.spearheadprop.com
SPEARHEAD PROPERTY HOLDINGS LIMITED
Registration Number: 1996/005827/06
Share Code: SPE ISIN: ZAE000019162
Sponsor: Bridge Capital Services (Pty) Limited
Registered Office: 3rd Floor, The Spearhead,
42 Hans Strijdom Avenue, Foreshore,
Cape Town, 8001
Transfer Secretaries: Computershare Limited,
70 Marshall Street, Johannesburg 2001,
PO Box 61051, Marshalltown, 2107
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
Date: 01/09/2003 04:45:10 PM
Produced by the JSE SENS Department
