| Thu 22 Apr 2004, 10:30 | | Financial Statements For The Year Ended 30 Sep 03 |
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Fairvest - Reviewed Provisional Consolidated Financial Statements For The Year
Release Date: 22/04/2004 07:00:02 Code(s): FVT
Fairvest - Reviewed Provisional Consolidated Financial Statements For The Year
Ended 30 September 2003
Fairvest Property Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration No. 1998/005011/06)
("Fairvest")
Share code: FVT ISIN: ZAE000034658
REVIEWED PROVISIONAL CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
SEPTEMBER 2003
INCOME STATEMENT
2003 2002
R"000 R"000
Turnover 57 009 46 110
Operating costs (28 930) (17 282)
Other revenue net of costs 14 015 533
Fair value adjustment - debentures 51 465 -
Loss on sale investment property (1 488) -
Change in value of investment properties (7 522) 533
Debt written off (3 600) -
Change in value of financial assets 1 226 -
Loss on sale - shares in subsidiary (5 372) -
Loss on settlement of amount due from
vendor (1 380) -
Financial assets unaccounted for (2 755) -
Fair value adjustment - put options (16 559) -
Operating profit 42 094 29 361
Interest received 733 355
Finance charges (33 992) (18 991)
Debenture interest - (8 901)
Profit before taxation 8 835 1 824
Taxation (8 835) (949)
Profit attributable to shareholders - 875
Earnings per share
Shares are traded as part of linked units. Headline earnings includes fair
value adjustments for debentures.
R"000 R"000
Basic earnings comprises
Net income after taxation - 875
Realised loss on sale of (1 488) -
investment property
Realised loss on sale of
investment property subsidiary (5 372) -
Fair value adjustment to (7 522) 533
investment properties
Capital gains tax thereon (661) (790)
Headline (loss) earnings (15 043) 618
Cents Cents
Basic earnings per share - 0,89
Headline (loss) earnings per
share (13,11) 0,63
Number of shares in issue 114 741 370 98 262 654
Distribution per linked unit
2003 2002
Cents Cents
Distribution per linked unit - 9,06
BALANCE SHEET
2003 2002
R"000 R"000
ASSETS
Non-current assets 280 176 317 772
Property and equipment 277 152 307 856
Financial assets 3 024 9 916
Current assets 3 283 8 141
Trade and other receivables 2 986 5 604
Amount due from a vendor - 2 300
Cash and cash equivalents 297 237
Total assets 283 459 325 913
EQUITY AND LIABILITIES
Equity capital and reserves 1 147 8 528
Ordinary share capital 1 147 983
Non-distributable reserve - 6 670
Distributable reserve - 875
Non-current liabilities 216 033 270 400
Linked unit debentures and 82 347 105 728
premiums 125 054 163 882
Long term liabilities 8 632 790
Deferred taxation
Current liabilities 66 279 46 985
Trade and other payables 8 763 2 644
Vendor liabilities 16 559 26 423
Interest bearing redeemable 2 291 10 744
debentures 31 670 4 464
Short term portion of long term - 2 710
liabilities 6 543 -
Unit holders for distribution 453 -
Loans payable
Taxation
Total equity and liabilities 283 459 325 913
STATEMENT OF CHANGES IN EQUITY
Share Share Distribu- Non- Total
Capital Premium table distribu-
R"00 R"000 reserve table
R"000 reserve
R"000
Balance at 1
October 2001 881 (168) 6 838 7 551
Write-off pre-
acquisition
losses 168 (168) -
Share
consolidation and
par value
reduction (682) 682 -
Linked units
issued 784 784
Listing and issue
costs written off (682) (682)
Profit for year 875 875
Balance at 1
October 2002 983 - 875 6 670 8 528
AC133
transitional
adjustment -
linked debentures (3 058) (3 058)
Fair value
adjustment -
financial assets (4 487) (4 487)
Transfer of non-
distributable
reserve 6 670 (6 670) -
Restated balance
at 1 October 2002 983 - - 983
Share capital
issued to vendors 176 176
Treasury shares (12) (12)
Balance at 30
September 2003 1 147 - - 1 147
STATEMENT OF CHANGES IN DEBENTURES FOR THE YEAR ENDED 30 SEPTEMBER 2003
Linked Linked unit Total
unit debenture R"000
debenture premium
capital R"000
R"000
Share
consolidation and 99 99
par value
reduction
Debentures issued 884 106 060 106 944
Listing and issue
costs written off (1 315) (1 315)
AC133 Fair value
adjustment 3 599 3 599
Balance at 1
October 2002 983 108 344 109 327
Debentures issued
to vendors 176 26 070 26 246
Treasury shares (12) (1 749) (1 761)
AC133 adjustment (51 465) (51 465)
Balance at 30
September 2003 1 147 81 200 82 347
CASH FLOW STATEMENT
2003 2002
R"000 R"000
Cash flows from operating activities (2 695) 481
Cash flows from investing activities 5 543 (337 182)
Cash flows from financing activities (2 788) 329 298
NET INCREASE/(DECREASE) IN CASH AND
CASH EQUIVALENTS 60 (7 403)
Cash and cash equivalents at the
beginning of the year 237 7 640
Cash and cash equivalents at the end
of the year 297 237
COMMENTARY
1.ACCOUNTING POLICIES
The condensed financial statements are prepared in accordance with South African
Statements of Generally Accepted Accounting Practice and the requirements of the
South African Companies Act. The accounting policies are consistent with those
applied in the annual financial statements for the year ended 30 September 2002,
except for the implementation of AC133: Financial Instruments Recognition and
Measurement. The debentures have been restated as a liability in accordance
with the contractual arrangements. The condensed financial statements are
prepared on the basis that the assets of the group are to be realised and the
liabilities settled.
Financial instruments
Financial instruments are stated at fair value. The adoption of the fair value
basis gives rise to fair value adjustments to financial instruments. Those
adjustments are recognised in the income statements. The adoption of the fair
value basis also gives rise to an adjustment to opening retained income at 1
October 2002.
Deferred taxation
Deferred taxation is provided using the balance sheet liability method based on
temporary differences. Temporary differences are differences between the
carrying amount of assets and liabilities for financial reporting purposes and
their tax base. The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of assets and
liabilities. Deferred taxation relating to fair value adjustments in the current
year is charged to the income statement. Deferred taxation relating to
cumulative fair value adjustments to financial instruments at 1 October 2002 has
been adjusted in opening retained income.
Fairvest"s auditors, Grant Thornton, have issued a qualified review report on
the results. Their report is available for inspection at the company"s
registered office. The qualification relates to the matters set out in the
following two paragraphs.
2.INVESTMENT IN BONATLA PROPERTY HOLDINGS LIMITED
During the course of the audit it was brought to the attention of the directors
that verification of the existence and ownership of the company"s investment in
Bonatla Property Holdings Limited ("Bonatla") was proving difficult.
As at the date of publication, the existence and ownership of 4 920 512 Bonatla
linked units has not been verified. Furthermore, the capital reduction of 50c
per share paid by Bonatla has not been received by the company.
In the light of these circumstances the directors have considered it prudent to
fully provide against the 4 920 512 Bonatla linked units in the financial
statements in order for the company to be in a position to publish its results
for the year ended 30 September 2003.
The directors of Fairvest view the situation in a most serious light and a
resolution has been passed authorising the appointment of forensic auditors to
investigate the position regarding the above mentioned 4 920 512 Bonatla linked
units.
Shareholders will be kept informed of developments.
3.ACQUISITION OF PROPERTY FROM GORFIL BROTHERS (PTY) LIMITED
At a general meeting held during December 2001, the company agreed to acquire a
R79,3 million property portfolio from Gorfil Brothers (Pty) Limited. The
purchase consideration was settled by the assumption of mortgage bond facilities
of R52,9 million and the issue of 17 615 616 Fairvest linked units at a value of
R26,4 million. Shareholders also agreed to the granting of put options to the
vendors for the amount of the linked units issued. In terms of these put
options, if Mr NG Vontas was unable to meet the put option obligations, the
company was obliged to meet them. This has resulted in the company making a fair
value adjustment of R16,599 million.
As at 30 September 2003, these obligations had not been met by Mr NG Vontas or
Fairvest. In terms of a settlement agreement reached on 9 March 2004 that has
subsequently been made an Order of the High Court, Fairvest is required to
repurchase 17 615 616 Fairvest linked units from the vendors for an estimated
outstanding amount of R24,4 million plus interest. The vendors also have to be
released from a R10 million securing deposit.
To effect the repurchase and settlement of the estimated amount owing of R34,4
million, Fairvest will dispose of properties to the value of R107,9 million,
resulting in the repayment of mortgage bonds to the value of R53,4 million, the
realisation of R35,4 million in cash and the repurchase of linked units to the
value of R19,1 million. Following the above transactions, Fairvest will own
the R10 million securing deposit. The above transactions are subject to the
approval of the JSE Securities Exchange South Africa and Fairvest linked unit
holders.
4.RELATED PARTY TRANSACTIONS
During the year an amount of R3,6 million owed by a director, Mr NG Vontas, for
the purchase of a property management company was written off. This was due to
the subsequent cancellation of the purchase agreement.
A director of the company, Mr TP Botsis, is part of the consortium which
purchased a hotel property situated in Umhlanga Rocks from the Company. The
transaction was sanctioned by the Board of Directors and was done at market
value. This transaction is to be ratified by unitholders
5.SUBSEQUENT EVENTS
It remains the intention of the directors to rationalise the group"s operations
in order to maximise shareholder value.
By order of the board
Johannesburg
Directors: RS Wilkinson (Non-Executive Chairman), NG Vontas (Executive), NB Read
(Non-Executive), AB Platt (Non-Executive), TP Botsis (Non-Executive), DA
Johnston (Non-Executive)
Registered office: 1st Floor, 43 Wierda Road West, Wierda Valley, Sandton
Company Secretary: Corporate Governance cc
Sponsor: Imara Corporate Finance South Africa (Pty) Ltd
