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Acucap - Reviewed Interim Results for the 6 months ended 30 September 2003
Acucap Properties Limited
Registration number 2001/021725/06
(Incorporated in the Republic of South Africa)
Share code: ACP ISIN number: ZAE000037651
Reviewed Interim Results for the 6 months ended 30 September 2003
30 31 March 30
September 2003 September
2003 2002
R " 000 R " 000 R " 000
Condensed Balance Sheet
Assets
Non current assets
Investment 966 272 912 650 864 750
properties
Current assets 125 007 32 568 28 203
Accounts receivable 9 312 5 427 4 272
Cash and cash 115 695 27 141 23 931
equivalents
Total assets 1 091 279 945 218 892 953
Equity and liabilities
Shareholders" interest 28 962 22 497 (7 231)
Non current liabilities 1 021 246 889 956 870 220
Debentures 500 342 395 953 395 953
Loans 503 500 478 000 473 000
Deferred tax 17 404 16 003 1 267
Current liabilities 41 071 32 765 29 964
Accounts payable 7 213 4 132 4 168
Debenture interest 33 858 28 633 25 796
payable
Total equity and 1 091 279 945 218 892 953
liabilities
Condensed Income Statement
6 months 13 7 months
ended 30 months ended 30
September ended September
2003 31 March 2002
2003
R"000 R"000 R"000
Operating income before 67 554 177 425 74 369
interest paid
Revenue 68 204 129 973 67 405
Interest received 2 869 558 345
Net operating expenses (5 820) (9 843) (5 226)
Asset management fees paid (2 369) - -
to Acucap Property
Management (Pty) Limited
Revaluation of investment 4 670 56 737 11 845
properties
Interest paid and payable 62 569 122 314 63 722
- Debenture holders - post 33 858 25 796 25 796
listing - interim
- Debenture holders - post - 28 633 -
listing - final
- Debenture holders - pre - 1 035 1 035
listing
- Total interest paid to 33 858 55 464 26 831
debenture holders
- Interest paid to banks 28 711 66 850 36 891
and vendors
Income before exceptional 4 985 55 111 10 647
items and taxation
Exceptional items
Listing costs and costs of - 9 392 9 392
raising finance
Profit before tax 4 985 45 719 1 255
Deferred tax (1 401) (16 512) (1 776)
Net profit / (loss) for the 3 584 29 207 ( 521)
period
Reconciliation of net profit
/ (loss) to headline profit
/ (loss)
Net profit / (loss) for the 3 584 29 207 (521)
period
Listing costs - 7 393 7 393
Revaluation of investment (4 670) (56 737) (11 845)
properties
Deferred tax on revaluation 1 401 16 512 1 776
Headline profit / (loss) 315 (3 625) (3 197)
Interest paid to debenture 33 858 55 464 26 831
holders
Headline linked unit 34 173 51 839 23 634
earnings
6 months 13 7 months
ended 30 months ended 30
September ended September
2003 31 March 2002
2003
Cents Cents Cents
Earnings / (loss) per share 7.97 76.20 (1.32)
Headline profit / (loss) per 0.70 (9.46) (8.07)
share
Headline earnings per linked 68.23 139.67 59.63
unit
Interest Distribution per linked unit -
post listing
- Interim 67.60 65.08 65.08
- Final - 72.24 -
Interest Distribution per - 5.67 5.67
linked unit - pre listing
Condensed Cash flow
statement
6 months 13 7 months
ended 30 months ended 30
September ended September
2003 31 March 2002
2003
R"000 R"000 R"000
Cash flows from operating
activities
Cash generated by 64 436 135 003 75 976
operations
Interest received 2 869 558 345
Interest paid (62 569) (122 (63 722)
314)
Net cash inflow from 4 736 13 247 12 599
operating activities
Cash flows from investing (48 952) (535 (533 025)
activities 463)
Cash flows from financing 132 770 548 985 543 985
activities
Net cash inflow for the 88 554 26 769 23 559
period
Cash and cash equivalents at 27 141 372 372
beginning of period
Cash and cash equivalents at 115 695 27 141 23 931
end of period
Condensed Statement of changes in equity
Shares Share Share Non- Accumulated Total
issued capital Premium Distri- loss
butable
Reserve
Number R"000 R"000 R"000 R"000 R"000
Balance at 1 9707 132 10 87 - ( 7 106) ( 7 009)
March 2002
Issue of 19 221 732 19 173 - - 192
shares on 14
March 2002
Issue of 10 706 049 11 96 - - 107
shares on 26
March 2002
Net loss for - - - - ( 521) ( 521)
the period
Transfer to - - - 7 183 (7 183) -
Non-
distributable
reserve
Balance at 30 39 634 913 40 356 7 183 ( 14 810) ( 7 231)
September
2002
Net profit - - - - 29 728 29 728
for the
period
Transfer to - - - 30 156 (30 156) -
Non-
distributable
reserve
Balance at 31 39 634 913 40 356 37 339 ( 15 238) 22 497
March 2003
Issue of 3 504 925 3 32 - - 35
shares on 30
June 2003
Issue of 6 944 444 7 2 839 - - 2 846
shares on 30
June 2003
Net profit - - - - 3 584 3 584
for the
period
Transfer to - - - 3 269 (3 269) -
Non-
distributable
reserve
Balance at 30 50 084 282 50 3 227 40 608 ( 14 923) 28 962
September
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 and the accounting policies are consistent
with those applied in the previous 13 months ended 31 March 2003
KPMG Inc. has reviewed the financial information set out in this report. Their
unqualified review report is available for inspection at the company"s
registered office.
As disclosed in note 17.2.2 of the company"s 2003 annual financial statements,
the management company had agreed to underwrite Acucap"s first year forward
yield by contributing an amount limited to its first year management fee for
this purpose. From 1 April 2003, however, normal asset management fees have been
levied in terms of the asset management agreement.
Despite incurring these fees for the first time, Acucap has shown growth of 3.9%
in distributions over the same period last year, resulting in a distribution per
linked unit of 67,60 cents (2002 : 65,08 cents). The Board is pleased with this
result, which is attributable to focused management and the continued sound
performance of the property portfolio.
2. DISTRIBUTION
The Board has approved an interim distribution of 67,60 cents per linked
unit for the period from 1 April 2003 to 30 September 2003.
3. BORROWINGS
At the last year end, 91% of borrowings were subject to fixed interest rates.
This has reduced to 75% at 30 September 2003 by a combination of fixed rate
unwinding and exposure to new prime-linked borrowings. As the prime overdraft
rate has declined, this has reduced the company"s overall weighted average
borrowing cost for the six month period under review to 13.0%, and assuming no
further changes in the prime rate, the cost of funding for the remaining six
months of the financial year will be 12.6%. Management continues to focus on
strategies to optimize the cost of funding, including re-financing activities
aimed at minimizing these costs.
4. VACANCIES
Vacancies amount to 4.0% of the portfolio by gross rental income, and 3.3% by
gross lettable area. This has increased from the vacancy at 31 March 2003,
mainly as a result of the expiry of leases covering 4,000 m2 at the Atterbury
Office Park in Pretoria during August and September 2003. As at September 2003,
the tenant void at Atterbury accounted for 52% of the vacancy by income and 50%
of the vacancy by GLA. As referred to in point 10. below, however, a new tenant
has been secured to take up this space on a long-term lease, and the directors
anticipate that vacancies will have once again reduced by the time Acucap
reports for the year ending 31 March 2004.
5. LEASE EXPIRY PROFILE
The lease expiry profile is reflected in the following table. The letting
activities at Atterbury Office Park previously referred to, as well as the
premature renewal of all but one of the leases expiring in March 2004 at the
Village Square in Randfontein, have both contributed to a significant
lengthening in the expiry profile. The strong national tenant component of the
portfolio has been maintained, preserving both its capital value, and its
ability to deliver sustained income growth. At 31 March 2003, 67% of the
portfolio income was derived from national tenants, and this has remained fairly
constant at 66% as at 30 September 2003
Vacant Mar-04 Mar-05 Mar-06 Mar-07 Mar- Mar-09
08 thereafte
r
Rental income
National 0.0% 5.3% 10.0% 15.4% 6.3% 10.5 6.9% 45.7%
%
Line 5.3% 16.4% 22.3% 33.1% 14.1% 5.6% 2.9% 0.3%
Total 1.8% 9.1% 14.2% 21.4% 8.9% 8.8% 5.5% 30.2%
GLA
National 0.0% 4.0% 6.3% 8.9% 6.0% 15.5 13.3% 45.8%
%
Line 4.9% 16.2% 27.2% 26.5% 15.3% 6.4% 3.2% 0.2%
Total 1.6% 8.1% 13.3% 14.8% 9.1% 12.5 9.9% 30.6%
%
6. LIQUIDITY AND UNITHOLDER PROFILE
In the six months to 30 September 2003, trade in Acucap linked units has
amounted to an annualised 36% of the weighted average number of units in issue.
Details of Acucap unitholder spread are as follows :
30 September 2003 31 March 2003
Total number of 998 790
unitholders
Number of unitholders
owning more that 5% of 5 7
units in issue
Number of institutions
controlling 5 4
more than 10% of units
in issue
Number of institutions
controlling 1 3
more than 15% of units
in issue
Percentage of units
controlled by 15.2% 27.7%
the largest
institutional
unitholder
7. NAV OF THE PROPERTY PORTFOLIO
An external valuation of the property portfolio was last conducted in
March 2003. In view of declining interest rates and property capitalization
rates over recent months, the directors estimate that the NAV per linked unit
will be in excess of the R10.56 reported at the last year end. The company"s
practice is to obtain external valuations of the property portfolio on an annual
basis, and in terms of this practice, the portfolio will once again be
externally revalued at 31 March 2004. Acquisitions are stated at fair value, and
where this differs from the purchase price, the revaluation or impairment is
reflected in income, net of deferred tax at the normal rate of 30%.
8. ACQUISITIONS
During the period under review, Acucap concluded an agreement with the
Keystone Investments group for the acquisition of the 39,000 m2 Kempton Park
Mall, to be linked with Acucap"s existing 20,500 m2 Kempton Park Checkers Hyper
to create a regional shopping centre of approximately 60,000 m2, anchored by
Checkers Hyper, Pick `n Pay, Woolworths and Edgars. The development is due for
completion in October 2004, and transfer is most likely to occur in February
2005, with an estimated purchase price of R220 million, based on a forward yield
of 12.8% on net income. This acquisition is anticipated to be both yield and NAV
enhancing, and will take Acucap"s property portfolio to a value of approximately
R1.2 billion. Details of the acquisition were set out in the company"s
announcement of 19 September 2003.
9. SEGMENTAL RESULTS
Segmental results are set out in the table below :
6 months 7 months
ended 30 ended 30
September September
2003 2002
R"000 R"000
Gauteng
Revenue 48 477 50 055
Net operating ( 2 874) ( 2 897)
expenses
Operating income 45 603 47 158
Cape
Revenue 19 727 17 350
Net operating ( 2 137) ( 2 234)
expenses
Operating income 17 590 15 116
Total
Revenue 68 204 67 405
Net operating ( 5 011) ( 5 131)
expenses
Operating income 63 193 62 274
allocated
Reconciliation to
operating income
Revenue 68 204 67 405
Operating expenses ( 5 011) ( 5 131)
Operating income 63 193 62 274
allocated
Revaluation of 4 670 11 845
investment
properties
Unallocated ( 3 178) ( 95)
operating expenses
Interest received 2 869 345
Operating income 67 554 74 369
for the period
10. PROSPECTS
Management has continued to operate with a dual focus, firstly to optimize
the income earning and growth potential of existing properties through specific
re-development and re-tenanting activities, and secondly to look for
opportunities to acquire good quality properties that are fairly priced and can
be expected to contribute to sustained growth in distributions. In this regard,
management has been open to acquiring, on a turnkey basis, new developments that
offer strong growth potential. Typically there is a longer lead time for such
developments to contribute to income, and in this regard, the financial effects
of the Kempton Park project referred to earlier will only reflect fully in the
financial year to March 2006.
As far as the company"s second half performance is concerned, management has
successfully concluded a number of initiatives to :
deal with vacancies;
improve the lease expiry profile of portfolio; and
maintain the strong national tenant component of the portfolio.
Nevertheless, whilst the retail sector continues to outperform office and
industrial property, evidence is emerging that the nominal growth in retail
sales for the current year will not be as high as the growth that the retail
sector produced in the same period last year, largely as a result of lower
retail inflation. In addition, whilst the Atterbury vacancy has been resolved,
the new lease will only commence after the completion of a substantial
refurbishment and tenant installation program. Although growth in distributions
for the second half is therefore expected to be more muted than first half
growth, management nevertheless maintains its outlook for moderate overall
growth for the year from 1 April 2003 to 31 March 2004.
11. PAYMENT OF DEBENTURE INTEREST
Notice is hereby given that an interim distribution of 67,60 cents per linked
unit has been approved in respect of the six month period ended 30 September
2003. The last date to trade the linked units cum-distribution will be Friday, 5
December 2003 and will trade ex-distribution from Monday, 8 December 2003. The
record date will be Friday, 12 December 2003 and distributions will be made to
unit holders on Monday, 15 December 2003.
Linked unit certificates may not be dematerialised or rematerialised between
Monday, 8 December and Friday, 12 December 2003 both days inclusive.
On behalf of the Board
BS KANTOR PA THEODOSIOU
(Chairman) (Managing Director)
30 October 2003
Registered Office
Suite A11 Westlake Square
Westlake Drive
Westlake
CAPE TOWN
Transfer secretaries:
Computershare 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: 30/10/2003 05:40:10 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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