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ApexHi Properties Limited - REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31
DECEMBER 2003
AND QUARTERLY DISTRIBUTION DECLARATION FOR THE THREE MONTHS ENDED
ApexHi Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 1999/000238/06)
Share code: APA ISIN: ZAE000033064
Share code: APB ISIN: ZAE000033072
("ApexHi" or "the company")
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2003
AND QUARTERLY DISTRIBUTION DECLARATION FOR THE THREE MONTHS ENDED
31 DECEMBER 2003
INCOME STATEMENT
These interim results have been reviewed by the independent auditors, Grant
Thorton. Their unqualified report is available at the company"s registered
office. The directors submit their report on the results of the company for
The six months ended 31 December 2003 as follows:
Reviewed Audited
six months ended year ended
31 December 31 December 30 June
2003 2002 2003
R"000 R"000 R"000
Revenue 324 849 274 981 597 338
- continuing operations 323 007 247 905 552 550
- discontinuing operations 1 842 27 076 44 788
Property expenses (120 437) (84 667) (201 685)
Administrative expenses (13 957) (39 731) (82 824)
- continuing operations (12 614) (14 648) (32 682)
- discontinuing operations (1 343) (25 083) (50 142)
Letting cost amortisation/depreciation (2 855) (729) (3 575)
Profit from operations 187 600 149 854 309 254
continuing operations 187 101 147 861 314 608
discontinuing operations 499 1 993 (5 354)
Finance costs (35 502) (30 056) (62 127)
Profit before debenture interest 152 098 119 798 247 127
Debenture interest (151 889) (116 001) (247 127)
Profit before capital items 209 3 797 -
Capital items (65) (173) 4 033
Change in fair value of investment
properties - - 4 032
Goodwill amortisation/impairment - (305) (411)
Net surplus on disposal of
engineering business - - 798
Net (deficit)/surplus on disposal of
investment properties (65) 132 (386)
Profit before taxation 144 3 624 4 033
Deferred capital gains tax - - (1 182)
Net profit attributable to unit
holders 144 3 624 2 851
Earnings, headline earnings - - -
and distribution (cents)
Reconciliation between earnings and
headline earnings
Net profit after taxation 144 3 624 2 851
Adjusted for :
Goodwill amortisation/impairment - 305 411
Change in fair value of investment
properties (net of deferred tax) - - (2 850)
Net surplus on disposal of
engineering business - - (798)
Deficit/(surplus) on disposal of
investment properties 65 (132) 386
Headline earnings shares 209 3 797
Debenture interest 151 889 116 001 247 127
Headline earnings linked units 152 098 119 798 247 127
Weighted Distribution
number of units per unit
A unit 143 970 616 51,00
B unit 143 970 616 54,50
Total - six months
to December 2003 105,50
A unit 112 338 095 51,00
B unit 112 338 095 52,25
Total six months
to December 2002 103,25
A unit 118 811 057 102,00
B unit 118 811 057 106,00
Total - year to June 2003 208,00
Earnings /(loss) Headline earnings Total earnings
per share* per unit per unit
A unit (0,02) 51,00 50,98
B unit 0,12 54,65 54,77
Total- six months
to December 2003 0,10 105,65 105,75
A unit (0,08) 51,00 50,92
B unit 3,31 55,64 58,95
Total- six months
to December 2002 3,23 106,64 109,87
A unit 1,20 102,00 103,20
B unit 1,20 106,00 107,20
Total- year to June 2003 2,40 208,00 210,40
*Earnings per share include items of a capital nature, which are not
distributable as debenture interest and in which all units share equally.
ACCOUNTING POLICIES
The interim financial statements have been prepared in accordance with South
African Statements of Generally Accepted
Accounting Practice.The accounting policies used in their preparation are
consistent with those used in the annual financial statements for the year
ended 30 June 2003.
CONDENSED BALANCE SHEET Reviewed Reviewed Audited
31 December 31 December 30 June
2003 2002 2003
R"000 R"000 R"000
ASSETS
Tangible assets 2 365 073 1 857 261 2 108 938
Intangible assets - 11 085 -
Current assets 262 584 97 502 136 755
Total assets 2 627 657 1 965 848 2 245 693
EQUITY AND LIABILITIES
Share capital and reserves 376 001 236 717 266 730
Non-current liabilities 2 115 557 1 624 493 1 851 694
Debenture capital 1 396 952 1 076 092 1 179 529
Deferred taxation 7 073 5 891 7 073
Interest bearing borrowings 711 532 542 510 665 092
Current liabilities 136 099 104 638 127 269
Total equity and liabilities 2 627 657 1 965 848 2 245 693
Net asset value per unit (cents)
Number of units Share Debenture Total
A unit 155 216 606* 121,12 540,00 661,12
B unit 155 216 606* 121,12 360,00 481,12
Total- 31 December 2003 242,24 900,00 1142,24
A unit 119 565 445 98,99 540,00 638,99
B unit 119 565 445 98,99 360,00 458,99
Total- 31 December 2002 197,98 900,00 1097,98
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 1103,52
*Included are 4 113 403 A units and 3 633 403 B units that were issued after
the balance sheet date.These consideration units will rank for the quarterly
distribution.
CONDENSED CASH FLOW STATEMENT Reviewed Reviewed Audited
six months six months year
ended ended ended
31 December 31 December 30 June
2003 2002 2003
R"000 R"000 R"000
OPERATING ACTIVITIES
Cash from operating activities
- continuing operations 198 292 142 678 322 931
- discontinuing operations 4 402 1 785 1 223
202 694 144 463 324 154
Finance costs (35 502) (30 056) (62 127)
Debenture interest paid (139 371) (102 154) (227 503)
Net cash from operating
activities 27 821 12 253 34 524
INVESTING ACTIVITIES
Continuing operations
- purchase of investment
properties including
capitalised
transaction and letting costs (261 491) (259 957) (523 522)
- proceeds on disposal of
investment properties 2 449 3 450 15 318
- proceeds on sale of
engineering business - - 12 591
- net purchase of plant and
equipment (13) (200) (326)
Net cash utilised in investing
activities (259 055) (256 707) (495 939)
FINANCING ACTIVITIES
Issue of A and B units 326 550 210 109 344 332
Interest bearing borrowings
raised 46 440 54 637 177 219
Net cash from financing
activities 372 990 264 746 521 551
Net increase in cash at bank 141 756 20 292 60 136
Cash at bank at the beginning
of the period 92 263 32 127 32 127
Cash at bank at the end of the
period 234 019 52 419 92 263
STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 December 2003
Share Share Capital
capital premium reserve
R"000 R"000 R"000
Balance at 1 July 2002 20 140 463 801
Issue of ordinary shares 4 47 071
Net profit for the period
Realised deficit on disposal
of investment properties (515)
Net surplus on disposal of
investment properties 132
Balance at
31 December 2002 24 187 534 418
Balance at 1 July 2003 26 218 318 2 381
Issue of ordinary shares 5 109 122
Net profit for the period
Realised surplus on disposal
of investment properties 135
Net deficit on disposal of
investment properties (65)
Balance at
31 December 2003 31 327 440 2 451
Revaluation Accumulated Total
reserve loss
R"000 R"000 R"000
Balance at 1 July 2002 57 342 (12 608) 186 018
Issue of ordinary shares 47 075
Net profit for the period 3 624 3 624
Realised deficit on disposal -
of investment properties 515
Net surplus on disposal of
investment properties (132) -
Balance at
31 December 2002 57 857 (9 116) 236 717
Balance at 1 July 2003 58 226 (12 221) 266 730
Issue of ordinary shares 109 127
Net profit for the period 144 144
Realised surplus on disposal
of investment properties (135) -
Net deficit on disposal of
investment properties 65 -
Balance at
31 December 2003 58 091 (12 012) 376 001
SEGMENTAL INFORMATION
Business segments 31 December 2003
Office Retail Industrial
R"000 R"000 R"000
Revenue 210 183 95 079 13 955
Property expenses (78 287) (37 504) (4 646)
Administrative expenses - - -
Letting cost amortisation/depreciation (2 432) (386) (27)
egment operating result 129 464 57 189 9 282
inance costs - - -
Debenture interest - - -
Net deficit on disposal of investment
properties (65)
129 399 57 189 9 282
Other information
Investment properties 1 510 743 731 506 122 763
Other assets - - -
otal assets - - -
Total liabilities - - -
Total
investment Corporate Land
properties costs trading
R"000 R"000 R"000
Revenue 319 217 128 3 662
Property expenses (120 437) - -
Administrative expenses - (10 392) (2 222)
Letting cost amortisation/depreciation (2 845) (10) -
egment operating result 195 935 (10 274) 1 440
inance costs - (35 527) 25
Debenture interest - (151 889) -
Net deficit on disposal of investment
properties (65) - -
195 870 (197 690) 1 465
Other information
Investment properties 2 365 012 61 -
Other assets 30 652 215 145 12 145
otal assets 2 395 664 215 206 12 145
Total liabilities 1 592 095 653 477 4 305
operations Total
R"000 R"000
Revenue 1 842 324 849
Property expenses - (120 437)
Administrative expenses (1 343) (13 957)
Letting cost amortisation/depreciation - (2 855)
egment operating result 499 187 600
inance costs - (35 502)
Debenture interest - (151 889)
Net deficit on disposal of investment properties - (65)
499 144
Other information
Investment properties - 2 365 073
Other assets 4 642 262 584
otal assets 4 642 2 627 657
Total liabilities 1 779 2 251 656
Geographical segments 31 December 2003
Bloemfontein Cape Town Durban
CBD CBD CBD
R"000 R"000 R"000
Revenue 9 551 7 793 30 546
Property expenses (3 727) (1 953) (15 206)
Letting cost
amortisation/depreciation (10) (58) (80)
Segment operating result 5 814 5 782 15 260
Other information
Investment properties 75 462 68 730 226 977
Total
Johannesburg Pretoria Other investment
CBD CBD areas properties
R"000 R"000 R"000 R"000
Revenue 89 660 38 060 143 607 319 217
Property expenses (33 965) (12 938) (52 648) (120 437)
Letting cost
amortisation/depreci
ation (210) (1 600) (887) (2 845)
Segment operating
result 55 485 23 522 90 072 195 935
Other information
Investment properties 528 556 315 642 1 149 645 2 365 012
RELATED PARTY TRANSACTIONS
During the period, the company, in the ordinary course of business, entered
into various transactions with related parties. These transactions occurred
under terms that are no less favourable than those arranged with third
parties.
Six months ended Year ended
31 December 30 June
2003 2003
R"000 R"000
Board representation, financier
and unit holder : Standard Bank
Bond administration fees 388 934
Non-executive director"s fees 25 30
Finance costs 38 054 71 798
Borrowings 711 532 665 092
ApexHi Manco Trust
The Trust is the asset manager of the company.
Certain of the directors of the company
are beneficiaries and/or trustees of the Trust
Asset management fee (0,5% p.a.of the market
capitalisation plus borrowings of the company) 6 744 10 311
The beneficiaries of the trust at 31 December
2003 are:
Madison Property Fund Managers (Pty) Limited
(30 June 2003: Corpcapital Investments) 57% 57%
Mvelaphanda Holdings 25% 25%
ApexHi management 18% 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-
(30 June 2003: Corpcapital Investments) 57% 57%
Mvelaphanda Holdings 25% 25%
ApexHi management 18% 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 Chief Executive Officer and building operational staff.
COMMENTS
1. REVIEW OF OPERATIONS
Results
Earnings for the six months to December 2003 were in line with expectations
and the first quarter"s distribution of 52,75 cents (25,50 cents per A unit
and 27,25 cents per B unit) has been maintained in the second quarter,
resulting in a distribution for the first half of 105,5 cents (51 cents per
A unit and 54,5 cents per B unit).
The results for the second half of the year are likely to be similar to the
first half.
Acquisitions and disposals
During the period under review, 14 properties were acquired at an average yield
before gearing of 15,9%. The purchase consideration of R247,1 million was
settled by the issue of 14 477 404 combined units at an average combined
price of R13,15 and R56,8 million cash. Two properties were disposed for a
total consideration of R2,4 million and proceeds were used to reduce debt.
These transactions have boosted the portfolio to 221 properties valued at
R2,4 billion and a lettable area of 1 749 953m2 represented by 53% offices,
30% retail and 17% industrial. Approximately 69% of the space in the portfolio
is let to A-grade tenants i.e government, parastatals and large listed
companies. Properties located in the CBD"s of Johannesburg, Pretoria and Durban
represent 45% of the total lettable area and vacancies in these areas represent
51% of the total vacancy.
The directors consider the investment property at 31 December 2003 to be fairly
valued. An independent valuation of the entire portfolio will be undertaken at
30 June 2004.
General issue of units for cash
ApexHi issued 9 680 407 A and B units to a number of public unit holders (who
are not related parties) pursuant to a general authority to issue units for
cash.
The units were issued at a combined price of:
R13,85 in respect of 1 132 000 A and 1 132 000 B units; and R14,10 in respect of
8 548 407 A and 8 548 407 B units.
The new units rank pari passu with the existing units in issue from the date
of their issue.
The R136 million raised will be utilised to settle R98,3 million of the
purchase price payable in respect of the Shops for Africa acquisition and the
balance will fund other acquisitions.
Letting activity
Leases covering 134 522m2 were concluded during the period of which 99 137m2
represents renewals. 72% of leases that expired during the period were renewed
while the balance has been made up by new leases totalling 35 385m2 in order to
maintain vacancies levels of 15%.
Letting activity for the period is summarised as follows:
Total Unlettable Lettable
area (m2) area (m2) area (m2)
Portfolio at
1 July 2003 1 637 521 41 960 1 595 561
Properties
acquired 158 124 - 158 124
Properties
disposed (3 732) - (3 732)
1 791 913 41 960 1 749 953
Increase in
vacancy - - -
Leases expired
during period - - -
Total lettings
during period - - -
- Renewals - - -
- New lettings - - -
Portfolio at
31 December 2003 1 791 913 41 960 1 749 953
Vacant Let
area % area (m2) %
1 July 2003 242 584 15 1 352 977 85
Properties
acquired 15 378 10 142 746 90
Properties
disposed (3 229) 87 (503) 13
254 733 15 1 495 220 85
Increase in
vacancy 2 926 - (2 926) -
Leases expired
during period 137 448 - (137 448) -
Total lettings
during period (134 522) - 134 522 -
Renewals (99 137) 99 137
New lettings (35 385) - 35 385 -
Portfolio at
31 December 2003 257 659 15 1 492 294 85
Gearing
Borrowings equate to 30% of the value of the property portfolio and interest
rates have been fixed on 84% of these borrowings at various maturity dates not
extending beyond May 2008. In October, the company renegotiated rates
resulting in a weighted average all inclusive rate of 12,68%.
Liquidity, trading volumes and share price
Trading volumes remain high with more than 47,6 million of the A units trading
over the period, equating to 33% of the weighted average units in issue while
50,9 million B units, equating to 35% traded over the same period.
Share price over the period:
Month A unit B unit
High December 874 cents 770 cents
Low September 714 cents 568 cents
2. POST-BALANCE SHEET EVENTS
Acquisitions
- The Shops for Africa por tfolio
Agreement has been reached for the acquisition of 14 shopping centres from
Shops for Africa for R415,3 million at an initial yield of 14,7%. The purchase
consideration will be settled by the issuing of 12 986 050 ApexHi A and B
units at a combined issue price of R13,50 and R240 million in cash. The cash
portion will be funded from cash raised in the general issue of units for cash
and gearing.
The acquisition, subject to unit holder approval, will be revenue enhancing and
reduce risk by enhancing the size, diversity and geographical footprint of the
a combined issue price of R13,50 and R240 million in cash. The cash portion
will be funded from cash raised in the general issue of units for cash and
gearing.
The acquisition, subject to unit holder approval, will be revenue enhancing and
reduce risk by enhancing the size, diversity and geographical footprint of the
portfolio. The acquisition of the 146 000m2 retail portfolio reduces the
exposure to office space to 48%, improves the balance of the portfolio and
spreads the risk more appropriately. The transaction takes effect on
1 April 2004.
Other acquisitions
ApexHi has also entered into agreements for the purchase of the following
properties at an average yield before gearing of 17,8%.
Property Location Purchase price (R)
Palm Court Johannesburg 20 835 000
North End Port Elizabeth 19 800 000
Thohoyandou & Acornhoek Thohoyandou & Acornhoek 15 250 000
Chai Properties Johannesburg 13 239 010
6 Durban Club Place Durban 11 500 000
Perm Uitenhage Uitenhage 6 800 000
87 424 010
The purchase consideration in respect of the above will be settled by the
issue of 3 730 275 combined units at an average issue price of R13,33 and cash
of R37,7 million. The cash portion will be settled out of proceeds resulting
from the general issue of units for cash.
Disposals
Sale to Gauteng Regional Government Agreement has been reached for the disposal
of four Johannesburg CBD properties namely: 78 Fox, 37 Sauer, 30 Simmonds and
Sage Life Towers to the Gauteng Regional Government for R154,4 million.
Other disposals
Agreement has been reached for the disposal of the following
properties:
Property Location Selling price (R)
SB Chambers Pretoria 7 900 000
Nedbank Pretoria 5 100 000
Perm Pretoria 4 000 000
6 Skiedlood Isando 3 100 000
331 Smith (Consumer Credit) Durban 950 000
Village Mall Durban 950 000
Perm Brakpan 150 000
22 150 000
Proceeds on the disposals will be used to repay debt.
DISTRIBUTION
The board has resolved that unit holders are entitled to receive interest
distribution number 11 in respect of the quarter 1 October 2003 to 31 December
2003 of 25,50 cents per A unit and 27,25 cents per B unit.
Last date to trade cum interest Friday, 27 February 2004
Units will trade ex interest Monday, 1 March 2004
Record date Friday, 5 March 2004
Payment of interest distribution number 11 Monday, 8 March 2004
There may be no dematerialisation or re-materialisation of the A and B
units between Monday, 1 March 2004 and Friday, 5 March 2004, both days
inclusive.
By order of the Board
G G L Leissner
Chief Executive Officer
Johannesburg
12 February 2004
DIRECTORS: M Wainer (Chairman), G G L Leissner* (Chief Executive Officer),
J F Bihl, W E Cesman, D J Feinblum*, W M Kirchmann,
S Shaw-Taylor, C van Wyk* *Executive Independent
Date: 12/02/2004 03:39:16 PM Produced by the JSE SENS Department
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