| Wed 5 Nov 2003, 17:10 | | UNAUDITED GROUP RESULTS AND DECLARATION |
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SYCOM PROPERTY FUND MANAGERS LIMITED - UNAUDITED GROUP RESULTS AND DECLARATION
OF THE FIRST INTERIM DISTRIBUTION FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2003
SYCOM PROPERTY FUND MANAGERS LIMITED
(Registration number 1986/002756/06)
JSE share code: SYC
ISIN: ZAE000019303
UNAUDITED GROUP RESULTS AND DECLARATION OF THE FIRST INTERIM DISTRIBUTION FOR
THE SIX MONTHS ENDED 30 SEPTEMBER 2003
6 months 6 months
ended ended
30 Sept 2003 30 Sept 2002
INCOME STATEMENT (R"000) (R"000)
Revenue 132 329 113 516
Rental income 127 091 108 690
Interest received 5 238 4 826
Expenditure 44 375 39 407
Operating income 87 954 74 109
Fair value adjustments - 4 958
Realised deficit on disposal of - (4 875)
investment properties
Unrealised revaluation deficit written - 3 900
back on disposal of investment
properties
Unrealised surplus on revaluation of - 5 933
property
Net income 87 954 79 067
EARNINGS AND DISTRIBUTIONS
Reconciliation of headline earnings to
distributable earnings
Headline earnings (operating income) 87 954 74 109
Net fair value adjustments - 4 958
Earnings 87 954 79 067
Net transfer from/(to) reserves 2 044 (1 888)
Transfer to non-distributable reserve - (4 958)
Transfer from distributable reserve 2 044 3 070
Distribution prepayment received 6 191 -
Distributable earnings 96 189 77 179
Units in issue ("000) 183 356 169 598
Weighted average units in issue ("000) 171 327 152 157
Earnings per unit - cents (weighted 51,34 49,96
average units in issue)
Headline earnings per unit - cents 51,34 46,83
(weighted average units in issue)
Distributable earnings per unit - cents 56,14 50,72
(weighted average units in issue)
Distributable earnings per unit - cents 52,46 48,89
Distributions
No. 34 of 50,13 cents per unit (six - 73 590
months to June 2002)
No. 37 of 52,46 cents per unit 96 189 -
As at As at
BALANCE SHEET 30 Sept 2003 31 Mar 2003
Assets
Investment properties at fair value 1 472 191 1 424 256
Current assets 182 698 60 454
Total assets 1 654 889 1 484 710
Unitholders" funds and liabilities
Capital and reserves 1 542 069 1 420 238
Deferred taxation 501 741
Current liabilities 112 319 63 731
Total unitholders" funds and 1 654 889 1 484 710
liabilities
6 months 6 months
ended Ended
STATEMENT OF CHANGES IN 30 Sept 2003 30 Sept 2002
CAPITAL AND RESERVES (R"000) (R"000)
Balance at beginning of the period 1 420 238 1 249 647
Units issued 123 875 177 724
Net income 87 954 79 067
Distribution prepayment received 6 191 -
Distributions (96 189) (73 590)
Balance at end of the period 1 542 069 1 432 848
6 months 6 months
ended ended
30 Sept 2003 30 Sept 2002
CASH FLOW STATEMENT (R"000) (R"000)
Cash generated by operations 82 716 69 283
Change in working capital 2 298 6 930
Cash generated from operating 85 014 76 213
activities
Net interest received 5 238 4 826
Distributions (44 316) (73 590)
Net cash inflow/(outflow) from 45 936 7 449
operating activities
Units issued 123 876 177 724
Disposal of investment property - 2 524
Additions to investment property (47 935) (230 422)
Net cash outflow from investment and 75 941 (50 174)
financing activities
Distribution prepayment received 6 191
Increase/(decrease) in cash resources 128 068 (42 725)
Cash resources at beginning of the 40 700 58 087
period
Cash resources at end of the period 168 768 15 362
Notes:
1. ACCOUNTING POLICIES
The unaudited results are prepared in accordance with the South African
Statement of Generally Accepted Accounting Practice - Interim Financial
Reporting AC127 and are consistent with those accounting policies used in
the prior period.
2. INTEREST BEARING BORROWINGS
The fund has signed surety in favour of its bankers, in respect of a loan
granted to its wholly owned subsidiary company Fairy Glen Properties (Pty)
Ltd, on which no amount was owing at the end of September 2003.
3. PRIMARY OPERATIONAL SEGMENTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2003
Retail Office Fund Total
Rental income 57 700 69 391 - 127 091
Interest 447 427 4 364 5 238
Total revenue 58 147 69 818 4 364 132 329
Expenditure 18 136 21 531 4 708 44 375
Net income 40 011 48 287 (344) 87 954
Investment properties at 622 170 850 021 - 1 472 191
fair value
Current assets 1 806 9 553 171 339 182 698
Deferred taxation 403 98 - 501
Current liabilities 3 935 4 406 103 978 112 319
Net assets 619 638 855 070 67 361 1 542 069
COMMENTS
1. RESULTS
Sycom"s distributable income for the six months ended 30 September 2003
amounted to 52,46 cents per unit, an improvement of 7,3% over income of
48,89 cents per unit for the same period in the previous year. While the
performance of the Fund has generally been in line with expectations,
earnings were enhanced by payments received from tenants in respect of
settlements negotiated for early termination of leases over the Fund"s
Boart building. As previously reported, this building together with the
adjoining FNB building is presently undergoing a major refurbishment.
As at 31 March 2003, major maintenance reserves stood at Rm15,20. Transfers
from the reserve to cover major maintenance expenditure for the six-month
period amount to Rm2,04 resulting in a balance of Rm13,16.
2. OPERATIONS
While the high level of vacancies in the decentralised office market
continues to negatively impact on achievable rentals and occupancy levels,
there are signs of recovery with increased letting activity in this sector.
The Fund"s office vacancy levels have seen some improvement over the past
six months to levels of approximately 13% which will fall to around 9,8%
after the transfer of eleven buildings which have been sold. Of the
remaining ten office buildings, six are fully let on reasonably long-term
leases, with aggressive marketing and leasing strategies being implemented
on the remaining four.
The Fund"s retail portfolio has continued to perform well with net income
generally exceeding budget. Despite the high level of interest rates during
the first half of this year, retail spending remained fairly robust with
most retailers reporting favourable turnover figures. Vacancies within the
retail portfolio remain low at 1,6% on average resulting in an overall
vacancy level for the Fund of 9,4%.
3. PROPERTY PORTFOLIO
Construction of the Fund"s new 15 500m2, Rm152 office building on the Cape
Town foreshore commenced in May 2003 and is on programme for completion by
the end of October 2004. As previously reported, 72% of the offices have
been pre-let of which 7 000m2 comprises a 10 year lease with attorneys
Sonnenberg Hoffman Galombik (SHG).
The redevelopment of the Fund"s FNB and Boart buildings in Fredman drive,
Sandton has commenced and is due for completion in November 2004. As
previously reported, the refurbishment will cost approximately Rm112 and
the new combined building will offer 21 400m2 of A-grade accommodation. At
this early stage, heads of terms for a 7 year lease over a minimum of
12 000m2 have been agreed with a major tenant.
Details for a further Rm156 expansion of the Somerset Mall Shopping Centre
of which the Fund owns a 50% undivided share, are being finalised. This
will provide a further 18 200m2 of rentable space and is programmed to be
complete by November 2004, boosting the centre to a total rentable area of
69 500m2. The extension, which is anticipated to show an initial yield of
around 13,0% has been driven by tenant demand and includes a new
entertainment component.
The Fund has concluded an agreement for the acquisition of a 70% undivided
share in a 15ha site for the construction of a new Rm312 regional shopping
centre in Paarl. The development, which is adjacent to the N1 motorway,
will provide approximately 35 500m2 of rentable space. Anchored by Pick "n
Pay and Woolworths, the centre has a high proportion of national retailers
occupying approximately 80% of the rentable area. The project is due for
completion in September 2005 and is expected to show an initial yield of
12%
The previously reported conditional offer for the purchase of eleven of the
Fund"s buildings has been finalised. The total consideration for these
properties is Rm157,0 compared to their current book value of Rm170,95.
Transfer of the properties is expected towards the end of the year and
given the application of the sale proceeds towards the aforementioned
development projects, this transaction will not have a material effect on
the Fund"s earnings for the current financial year.
The sale of these buildings effectively concludes a seven-year process of
disposal of buildings that no longer fit the Fund"s investment criteria.
Sycom will then have a focused portfolio of seventeen properties (including
the new acquisitions and developments). It is management"s view that these
remaining properties have the right profile to provide the Fund with
sustainable growth in earnings and capital values into the future.
4. FUNDING
During the period under review, the Fund embarked on a capital raising
exercise. As previously announced, this resulted in the issue and listing
of 13 758 239 new Sycom units on 8 September 2003 at an issue price of
R9.10 per unit, thereby raising Rm125,2 and which placement was
specifically linked to the SHG development. At 30 September the Fund had
available capital (including capital raised through the new issue) of
Rm70,0. Net proceeds from the sale of the eleven buildings will amount to
Rm153,9. Sundry capital obligations total Rm12,8 and the remaining capital
commitments in respect of the aforementioned acquisitions and developments
over the next 21 months amounts to Rm518,5. This results in a residual
funding requirement of Rm307,4 which is adequately covered by way of the
Fund"s Rm400 loan facility.
5. PROSPECTS
Although there are signs of improvement in the office letting market, given
projected demand, a sustained upturn is unlikely until the latter part of
2004. The Fund"s office vacancy of around 9,8% (after the disposals) is
likely to remain fairly stable over the next 12 months and exposure to
expiring leases over this period is relatively low at 10,1% of rentable
area.
The benefits of tax relief, a stronger rand, lower inflation and a
reduction in interest rates are all likely to have a positive effect on
consumer spending and retail property generally which is likely to continue
outperforming other property types. The Fund"s exposure to expiring retail
leases over the next twelve months is low at 6,4% of rentable area.
Overall, growth in distributions for the twelve-month period to 31 March
2004 is still likely to be in line with previous expectations.
6. RESTRUCTURE
As previously announced the Fund is in the process of restructuring by
transferring a number of properties from the fixed property companies to
the Fund itself. At present approximately 50% of the properties are
awaiting transfer in the deeds office and it is envisaged that the majority
of properties will be transfered by 31 March 2004.
7. DISTRIBUTION DECLARATION
Notice is hereby given of the declaration of distribution No.37 in respect
of the six months to 30 September 2003 of 52,46 cents per unit. The last
date to trade cum distribution will be Friday, 21 November 2003 and the
units will trade ex-distribution from the commencement of business on
Monday, 24 November 2003. The record date is Friday, 28 November 2003 and
payment will be made to unitholders on Monday, 1 December 2003. Unitholders
may not dematerialise or rematerialise their units between Monday,
24 November 2003 and Friday, 28 November 2003, both days inclusive.
By order of the Board
Sycom PROPERTY FUND MANAGERS LIMITED
(Registration number 1986/002756/06)
5 November 2003
Directors of Sycom Property Fund Managers Limited:
TE Sewell* (Chairman), GA Nelson (MD), R Abramowitz*, MS Aitken*, FM Berkeley*,
JPD Flanagan*, CJV Fleming, LA Meyerowitz*, MJ Watters* * Non-executive
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 Limited
70 Marshall Street,
Johannesburg, 2001
PO Box 61051,
Marshalltown 2107
Date: 05/11/2003 05:04:14 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
