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Martprop Property Fund - Reviewed Results And Distribution Declaration
MARTPROP PROPERTY FUND
Share code: MTP
ISIN code: ZAE000037271
www.martprop.co.za
REVIEWED RESULTS AND DISTRIBUTION DECLARATION
The directors of Marriott Property Fund Managers Limited, the management company
of Martprop Property Fund (`Martprop` or `Fund`) submit their report on the
reviewed financial results of the Martprop group for the year ended 31 July
2004.
CONSOLIDATED BALANCE SHEET 31.07.2004 31.07.2003
(R000) (Reviewed) (Audited)
Assets
Non-current assets
Investment properties 1 447 185 1 319 251
Current assets
Trade and other receivables 21 200 12 270
Cash resources and
short-term investments 78 159 9 074
Total assets 1 546 544 1 340 595
Unitholders` funds and
liabilities
Unitholders` funds 1 415 139 1 178 277
Non-current liabilities
Interest bearing borrowings - 65 644
Interest rate swap derivative 2 116 2 700
Deferred capital gains taxation 2 079 6 293
Current liabilities
Trade and other payables 29 617 10 759
Capital gains taxation and
secondary taxation on companies 6 945 -
Distributions payable 90 648 76 922
Total unitholders funds
and liabilities 1 546 544 1 340 595
CONSOLIDATED INCOME STATEMENT
Year to Year to
% 31.07.2004 31.07.2003
(R000) Note change (Reviewed) (Audited)
Revenue
(rental income) 8,5% 212 948 196 210
Net property
income 176 924 158 936
Interest received 5 711 5 491
Interest paid (4 662) (5 016)
Surplus/(deficit)
on revaluation
of interest rate
swap derivative 584 (2 700)
Fund expenses (8 439) (5 777)
Headline
earnings 2 12,7% 170 118 150 934
Capital (deficit)/
surplus on disposal
of investment properties (2 800) 72
Write-up on revaluation
of investment properties 62 668 2 984
Taxation on property
revaluation (3 101) (5 602)
Net profit for the year 226 885 148 388
Units in issue (000) 725 184 641 016
Units in issue
- weighted (000) 697 128 641 016
Net headline earnings
- weighted
(cents per unit) 2 24,40 23,55
Net profit - weighted
(cents per unit) 2 32,55 23,15
Net distributable
income (cents
per unit) 2 3,1% 24,75 24,00
CONSOLIDATED STATEMENT OF CHANGES IN UNITHOLDERS` FUNDS
Year to Year to
31.07.2004 31.07.2003
(R000) (Reviewed) (Audited)
Unitholders` funds at
beginning of year 1 178 277 1 183 735
Capital movements 239 206 (6 600)
Write-up on revaluation
of investment properties 62 668 2 984
Capital (deficit)/surplus on
disposal of investment properties (2 800) 72
Taxation on property revaluation (3 101) (5 602)
Surplus/(deficit) on revaluation
of interest rate swap derivative 584 (2 700)
Loss in investment property
companies carried forward (930) (1 354)
84 167 903 units issued 189 518 -
Transfer to revenue of distribution
prepaid received on units issued (6 733) -
Maintenance reserves
Net transfers (from)/to maintenance
reserves (2 344) 1 142
Revenue movements - -
Net profit for the year 226 885 148 388
Transfers (to)/from capital (56 421) 6 600
Net transfers from/(to)
maintenance reserves 2 344 (1 142)
Unclaimed distributions
written-back repaid (58) -
Transfer from capital of
distribution prepaid received 6 733 -
Available for distribution 179 483 153 846
Distribution attributable to
unitholders (179 483) (153 846)
Unitholders` funds at end of year 1 415 139 1 178 277
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Year to Year to
31.07.2004 31.07.2003
(R000) (Reviewed) (Audited)
Cash inflows from operating activities
Net profit for the year 226 885 148 388
Adjustment for:
Interest received (5 711) (5 491)
Interest paid 4 662 5 016
Write-(up)/down on revaluation
of investment
properties net of taxation (59 567) 2 618
Capital deficit/(surplus) on
disposal of investment properties 2 800 (72)
(Surplus)/deficit on revaluation
of interest rate swap derivative (584) 2 700
Operating profit before working
capital changes 168 485 153 159
Working capital changes 9 558 7 314
Cash generated from operations 178 043 160 473
Interest received 5 711 5 491
Interest paid (4 662) (5 016)
Distributions paid (165 757) (155 087)
Net cash inflow from
operating activities 13 335 5 861
Net cash outflow from
investing activities (68 124) (143 070)
Net cash inflow from financing activities
(Decrease)/increase in interest
bearing borrowings (65 644) 65 644
Units issued 182 785 -
Distribution pre-payment received 6 733 -
Net increase/(decrease) in cash 69 085 (71 565)
Cash resources at beginning of year 9 074 80 639
Cash resources at end of year 78 159 9 074
OTHER INFORMATION
31.07.2004 31.07.2003
(Reviewed) (Audited)
Debt funding facility (R000)
Loan facility 350 000 350 000
Less: Facility utilised - 65 644
Drawdown on facility 17 500 137 144
Facility repaid, available
for re-advance (17 500) (71 500)
Facility available at end of year 350 000 284 356
Adjusted for future capital
commitments and proceeds on disposal (173 101) (49 010)
Capital commitments (223 277) (147 894)
Proceeds on disposal 50 176 98 884
Anticipated available loan facility 176 899 235 346
Capital cash (R000) 8 846 3 556
Vacancy factor (based on lettable area) 4% 7%
Valuation analysis (cents per unit)
Net asset value (including final
distribution yet to be paid) 208 196
Listed market price 225 215
Premium to net asset value 8% 10%
Capitalised interest (R000) 2 998 -
NOTES TO THE FINANCIAL STATEMENTS
1. The group results have been prepared using accounting policies which are in
accordance with South African Statements of Generally Accepted Accounting
Practice and are consistent with those applied in preparation of the audited
financial statements for the prior year.
2. Headline earnings and distribution attributable to unitholders
Year to Year to
31.07.2004 31.07.2003
(Reviewed) (Audited)
R000 CPU# R000 CPU
Net profit for the year
(earnings)* 226 885 32,55 148 388 23,15
Adjustments for:
Capital deficit/(surplus)
on disposal of
investment properties 2 800 (72)
Write-(up)/down on
revaluation of investment
properties net of
taxation (59 567) 2 618
Headline earnings* 170 118 24,40 150 934 23,55
(Surplus)/deficit on
revaluation of interest
rate swap derivative (584) 2 700
Net transfers from/(to)
maintenance reserves 2 344 (1 142)
Unclaimed distributions
written-back repaid (58) -
Losses in investment
property companies
carried forward 930 1 354
Distributable income 172 750 153 846
Distribution pre-payment
received 6 733 -
Distribution attributable
to unitholders** 179 483 24,75 153 846 24,00
* Weighted earnings and weighted headline earnings are based on a weighted
number of units of 697 127 804 units for the year ended 31 July 2004.
** Distribution per unit is based on 725 183 772 units in issue at 31 July
2004.
# CPU - cents per unit
3. Primary operational segments for the year ended 31 July 2004
Industrial Office Retail Fund Group
Business segment R000 R000 R000 R000 R000
Income statement
Revenue 145 674 29 722 37 552 - 212 948
Net property income 126 927 18 587 31 410 - 176 924
Interest received 2 917 598 710 1 486 5 711
Interest paid - - - (4 662) (4 662)
Fund expenses - - - (8 439) (8 439)
Surplus on revaluation
of interest rate swap
derivative - - - 584 584
Net capital deficit
on disposal of
investment properties (1 700) (1 100) - - (2 800)
Write-up/(down) on
revaluation of
investment properties 51 162 (4 406) 15 912 - 62 668
Taxation on property
revaluation (2 871) (196) (34) - (3 101)
Net profit for
the year 176 435 13 483 47 998 (11 031) 226 885
Balance sheet
Investment properties 1 017 130 138 020 292 035 - 1 447 185
Current assets 54 410 9 983 21 703 13 263 99 359
Total assets 1 071 540 148 003 313 738 13 263 1 546 544
Interest rate
swap derivative - - - 2 116 2 116
Deferred capital
gains taxation 2 079 - - - 2 079
Trade and other
payables 4 437 1 581 1 276 22 323 29 617
Taxation 6 257 356 332 - 6 945
Distribution payable - - - 90 648 90 648
Total liabilities 12 773 1 937 1 608 115 087 131 405
REVIEW BY INDEPENDENT AUDITORS
Martprop`s auditors, Deloitte & Touche and David Strachan and Tayler have
reviewed the preliminary financial results of the group for the year ended 31
July 2004. Their unqualified report is available for inspection from the group`s
secretary.
COMMENTS
1. Results
Martprop`s net distributable income for the year amounts to 24,75 cents per unit
(2003: 24,00 cents per unit) resulting in an increase in distributions of 3,1%
over last year. Accordingly, the directors of the management company are pleased
to announce a final distribution of 12,50 cents per unit (2003: 12,00 cents per
unit) for the six months ended 31 July 2004. This represents growth of 4,2% over
the corresponding period last year.
The results for the year incorporate the acquisition of two properties for R79,7
million, developments of R103,3 million, the disposal of thirty properties for
R115,6 million and new equity raised of R182,8 million, resulting in headline
earnings of R170,1 million, 12,7% up on last year. Taking into account the issue
of 84,2 million new units on 1 December 2003, this translates into headline
earnings of 24,40 cents per unit on a weighted basis or growth of 3,6% over last
year`s headline earnings of 23,55 cents per unit.
2. Property portfolio
During the year under review the Fund continued to sell underperforming assets
and a total of thirty properties were sold for a combined value of R115,6
million. The net disposal prices of these properties gave rise to a small loss
on their carrying values, but the sales represented a significant improvement in
the quality of the portfolio. A number of CBD fringe office buildings in Durban
and Cape Town, which had laboured under high vacancies and operating expenses
for several years, were included and their disposal and reinvestment of the
proceeds will contribute positively to future earnings.
The occupancy of the portfolio has benefited from the improved property market
conditions as well as the portfolio activity. At year end the vacancy factor had
improved to 4% from the 7% level at the beginning of the year.
The Fund made two acquisitions during the year. A 30 000m2 warehousing and
distribution facility in Jet Park, let to the Fuel Group, was acquired for R63,1
million at an initial yield of 13,1% and an 8 000m2 warehouse in Aeroport was
acquired at an initial yield of 12,8%. Three developments are due for completion
by the end of September 2004 and these will boost the Fund`s profile.
Stellenbosch Square is a community shopping centre located in a prime area of
the Cape Winelands and will offer the residents of Stellenbosch and surrounding
communities an upmarket retail experience. On completion, this development is
budgeted to yield 12,4%. The redevelopment of the Tokai Pick `n Pay Centre in
Cape Town, at a yield of 11,2%, will provide a new 3 000m2 corporate store for
Pick `n Pay and 4 400m2 of line shops. This property is jointly owned with SA
Retail Properties Limited. In Centurion, Martprop is finalising the development
of a 10 000m2 warehouse for the Fuel Group at a cost of R25 million at an
initial yield of 12,25%.
Martprop has announced the acquisition of an undivided half share in Musgrave
Centre, Durban from Rycklof-Beleggings (Pty) Limited for R187,5 million which
will be funded out of the debt facility available. Transfer of the property is
anticipated to be early September 2004 and is subject to the approval of the
Competition Commission, which is pending. The centre enjoys a prominent profile
in an exclusive residential area and, at an initial yield of 11,4% offers
attractive income growth potential.
3. Funding
The new equity of R182,8 million raised in December 2003 was used to discharge
existing debt and finance the acquisition and development of properties referred
to above. A notional prepaid distribution of R6,7 million was also collected
from the subscribers of the new equity, which compensated unitholders at the
date of issue in respect of income for the first four months ended 30 November
2003, due to the new units ranking pari-passu with existing units for the
interim distribution.
At year end Martprop had no debt. The capital commitments of R223,3 million at
year end for acquisitions and developments will be discharged through
borrowings. Following the settlement of these commitments and the receipt of
proceeds on disposal of properties, for which sale agreements have been
concluded, Martprop`s debt will be approximately 11,9% of the portfolio value.
4. Restructure of the Fund
As reported previously the Fund is in the process of taking transfer of
approximately 83% of its properties in value from the underlying subsidiary
companies in terms of the rationale to restructure the Fund. The effective date
of the restructure is 1 August 2003 and it is expected that a significant
portion of these transfers will be completed within the next six months with the
entire process being completed by the end of the 2005 financial year.
Unitholders will benefit from cost economies and any future gain on the sale of
the properties will be exempt from both capital gains taxation and secondary
taxation on companies in the Fund
5. Future prospects
Distributable income for the 2005 financial year is expected to show growth. The
portfolio will benefit by the increased exposure to the buoyant retail sector
and this will underpin the positive returns expected from the Fund`s industrial
properties.
DISTRIBUTION DECLARATION AND IMPORTANT DATES
Notice is hereby given of the declaration of distribution no. 19 in respect of
the income distribution period 1 February 2004 to 31 July 2004. The distribution
amounts to 12,50 cents per unit.
Last date to trade
cum distribution Thursday, 16 September 2004
Units will trade ex-distribution Friday, 17 September 2004
Record date to participate in
the distribution Thursday, 23 September 2004
Payment of distribution Monday, 27 September 2004
Unit certificates may not be dematerialised or re-materialised between Friday,
17 September 2004 and Thursday, 23 September 2004 both days inclusive.
MARRIOTT PROPERTY SERVICES (PTY) LIMITED
SECRETARIES
27 August 2004
Registered office
Marriott at Kingsmead,
Kingsmead Office Park
Durban 4001
PO Box 207, Durban 4000
Transfer secretaries
Computershare Investor Services 2004 (Pty) Limited
9th Floor, 70 Marshall Street
Johannesburg 2001
PO Box 61051, Marshalltown 2107
Tel: (011) 370-5000
Auditors
Deloitte & Touche
2 Pencarrow Crescent
Pencarrow Park
La Lucia Ridge Office Estate
La Lucia 4051
David Strachan & Tayler
19th Floor
320 West Street
Durban 4001
Sponsor
Exchange Sponsors (Pty) Limited
39 First Avenue
Hyde Park 2196
Date: 26/08/2004 04:16:35 PM Produced by the JSE SENS Department
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