| Mon 30 Aug 2004, 16:27 | | FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2004 |
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SPEARHEAD - FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2004
SPEARHEAD PROPERTY HOLDINGS LIMITED
Registration number: 1996/005827/06
Share code: SPE
ISIN: ZAE000019162
FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2004
Distribution per linked unit
Up 13% to 160 cents
Operating income
Up 17% to R56m
`Over the five years since its listing, Spearhead has continued to excel through
sharp focus on unit distribution growth and its internal portfolio-management.`
ABRIDGED CONSOLIDATED INCOME STATEMENT
Year ended Year ended
30 June 2004 30 June 2003
% Audited Audited
Change R`000 R`000
REVENUE 15.17 79 955 69 420
Operating income 16.55 56 087 48 121
Profit on sale of investment
properties 1 858 -
Interest rate swaps - marked to market
profit/(loss) 2 771 (5 500)
60 716 42 621
Less: Depreciation (143) (1 036)
Goodwill amortised - (16 488)
Share option costs expensed (2 823) -
Interest paid (24 920) (24 305)
Profit from operations 32 830 792
Profit on disposal of shares in joint
venture - 346
Loss from associate - (19)
Profit before revaluation 32 830 1 119
Revaluation of investment properties 58 274 20 958
Profit before debenture interest and
taxation 91 104 22 077
Debenture interest (30 170) (23 581)
Profit/(Loss) before taxation 60 934 (1 504)
Income taxation expense (7 301) (1 886)
Net profit/(loss) for the period 53 633 (3 390)
Linked units in issue (weighted average) 18 979 416 14 693 941
Basic earnings per linked unit (cents) 441.55 137.41
Headline earnings per linked unit
(cents) 34.20 170.15 126.79
Distribution per linked unit (cents) 12.68 160.00 142.00
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Year ended Year ended
30 June 2004 30 June 2003
Audited Audited
R`000 R`000
Cash generated from operations
before working capital changes 44 389 44 450
Working capital changes (36 292) (21 914)
Net finance costs (44 813) (39 258)
Cash flows from operating activities (36 716) (16 722)
Cash flows from investing activities (35 377) 11 238
Cash flows from financing activities 33 504 29 862
Net (decrease)/increase in cash and cash
equivalents (38 589) 24 378
Cash and cash equivalents at beginning
of period 41 592 17 214
Cash and cash equivalents at end of period 3 003 41 592
ABRIDGED CONSOLIDATED BALANCE SHEET
Year ended Year ended
30 June 2004 30 June 2003
Audited Audited
R`000 R`000
Non-current assets 464 743 369 413
Investment properties 445 202 345 189
Property, plant and equipment 4 405 396
Loans receivable 13 484 22 304
Tenant installations 1 652 1 524
Current assets 80 871 64 623
Trade and other receivables 9 268 13 742
Tenant installations 1 464 1 848
Short-term portion of loans receivable 13 707 -
Investments held for trading 52 781 6 269
Cash and cash equivalents 3 651 42 764
Total assets 545 614 434 036
Equity and liabilities
Equity and non-current liabilities 503 220 412 579
Capital and reserves 80 899 29 704
Debentures 182 930 184 783
Linked unitholders` interest 263 829 214 487
Interest bearing borrowings 226 199 189 735
Interest rate swap derivatives 2 729 5 500
Deferred taxation 10 463 2 857
Current liabilities 42 394 21 457
Trade and other payables 11 628 5 875
Current portion of long-term borrowings 14 243 -
Bank overdraft 648 1 172
Receiver of Revenue 80 80
Unitholders for distribution 15 795 14 330
Total equity and liabilities 545 614 434 036
Net asset value per linked unit (Rands) 13.90 11.44
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital and reserves
Year ended Year ended
30 June 2004 30 June 2003
Audited Audited
R`000 R`000
Unitholders` interest at beginning of period 29 704 36 858
Net profit/(loss) for the period 53 633 (3 390)
Issue of shares - 47
Share issue costs (5) (711)
Treasury shares (acquired)/disposed of by
subsidiary (4) 2
Discount on debentures - 87
Recoupment of discount on debentures (2 429) (3 189)
Unitholders` interest at end of period 80 899 29 704
RECONCILIATION OF EARNINGS TO HEADLINE EARNINGS PER SHARE
Profit Taxation Profit
before after
taxation taxation
R`000 R`000 R`000
Earnings for the period 60 934 7 301 53 633
Adjusted for:
Revaluation of investment properties (58 274) (8 344) (49 930)
Profit on disposal of investment properties (1 858) (279) (1 579)
Headline earnings 802 (1 322) 2 124
Weighted average linked units in issue 18 979 416 - 18 979 416
Headline earnings per share (cents) 4.23 11.19
RECONCILIATION OF HEADLINE EARNINGS PER SHARE TO
HEADLINE EARNINGS PER LINKED UNIT
Profit Taxation Profit
before after
taxation taxation
R`000 R`000 R`000
Headline earnings per share 802 (1 322) 2 124
Adjusted for:
Debenture interest paid 30 170 - 30 170
Headline earnings 30 972 (1 322) 32 294
Weighted average linked units in issue 18 979 416 18 979 416
Headline earnings per linked unit (cents) 163.19 170.15
ABRIDGED SEGMENTAL INFORMATION
Property Management Unallocated Total
R`000 R`000 R`000 R`000
Revenue 79 640 254 61 79 955
Segmental result 63 709 (11 028) 952 53 633
Segment revenue and expenses:
Revenue and expenses that are directly attributable to a segment are allocated
to those segments. Expenses not directly attributable to a segment are allocated
to the unallocated result segment.
NOTES
Accounting policies
1. The financial statements have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice. The principal accounting
policies adopted in the preparation of these financial statements are consistent
with those of the prior year except as indicated in note 2 below.
2. Revenue represents rentals, operating expense recoveries, management fees and
commission from tenants and owners, development income and share trading income.
Revenue for the prior period has been restated to include operating expense
recoveries.
Year ended Year ended
30 June 2004 30 June 2003
Audited Audited
R`000 R`000
Revenue
Rentals and operating expense recoveries 73 251 63 542
Property development income 6 389 4 500
Share dealing income 61 541
Management fees 254 837
79 955 69 420
These results have been audited by Fisher Hoffman PKF (Newlands) Inc. and their
unqualified audit report is available for inspection at the company`s registered
office.
COMMENT
The board is pleased to announce the following results for the year ended 30
June 2004:
Financial performance
Spearhead has enjoyed another fine year as one of the leading JSE listed
property companies.
Over the five years of its existence, the company has continued to outperform
its peers with its sharp focus on unit distribution growth and management
shareholder goal congruency. This clear focus has translated into another set of
annual results that will please linked unitholders.
Distribution per linked unit grew by 13% to 160 cents, up from the previous 142
cents per linked unit. This was achieved by a balanced performance of growth in
rentals and recoveries together with contributions from other areas of the
business.
Basic earnings per linked unit rose sharply by 221% influenced largely by the
unrealised fair value adjustment of R58m in the property portfolio value.
Operating costs within the portfolio were controlled at below inflationary
levels and occupancies were improved to 95%.
Expended through the Income Statement this year in line with recommended best
practice, was an amount of R2.8m for share option costs under the staff share
option scheme.
Net tangible asset value per linked unit at year-end was R13.90 based on the
weighted average number of linked units in issue, which was up from the adjusted
prior year figure of R11.44. The increase is mainly due to the revaluation of
investment properties.
Property portfolio
A number of Cape Town investment properties were purchased during the past year.
They include:
* The 7 200 m2 Wynberg Mews Office Park acquired for R15m on a 14% yield,
Golf-Air Park in Airport Industria for R12.5m on a 13% yield, together with
three hectares of adjoining land at a price of R4.5m for development.
After year-end the following properties have been added to the portfolio:
* the magnificent Century City office block, Knowledge Park acquired for R48m
on an 11.6% yield. Shoprite Claremont, a R12.7m retail centre on a 12%
yield, Platinum Park, a new high-tech warehouse park in Marconi Beam for
R12m on a 13% yield and Maynard Plaza, a 11 000 m2 office building in
Wynberg acquired for R10m on a 10% yield.
A number of non-core properties were also sold during the year:
Two Gauteng properties:
* Sammy Marks Square (R37m) and Hyde Park Auto (R12m) were disposed of in
line with the strategy to become a Western Cape specialist fund.
* De Wet Centre (R14.5m) and Rosebank Cinerama (R5m) were sold while CashBank
House (R17m) in the Cape Town CBD was sold after year-end.
Spearhead is busy with the development of a number of commercial, retail and
industrial properties for long-term investment. They include the final phase
(8 000 m2) of the successful Spearhead Business Park in Montague Gardens, the
initial phases of the planned 37 000 m2 mixed-use Sable Square development in
Milnerton, final phases of the newly acquired Platinum Park in Marconi Beam and
the new Golf-Air Park near the Cape Town airport.
Addditional development work at existing properties: Ottery Hypermarket Centre,
79 Roeland Street and Old Oak Shopping Centre was started during the year and
development continues.
The company also acquired the R21m Wembley Square, Gardens property in joint
venture with Faircape Property Developers. Construction has begun on the
property to convert it into 180 pre-sold, sectional-title apartments and a
separate 9 000 m2 commercial and retail building. Construction is almost
complete on the South Seas, Mouille Point development and the luxury flats will
be handed over to buyers before the end of the 2004 calendar year.
Occupancy levels in the portfolio ended the year at 95%, an improvement on the
94% for the corresponding time last year.
Debt
The company ended the year with a Debt ratio of 47%, down from the previous year
and total long-term debt at year-end amounted to R226m.
Fixed rate hedges are in place for 60% of the long-term debt and the weighted-
average cost of finance was 11.83% at year-end.
Investments held
A number of holdings in listed property funds were on the company`s balance
sheet at year-end.
They included a large holding in Arnold Properties (subsequent to year-end the
share price has increased from 76 cents to 84 cents). Also held were Prima and
Apex-Hi A & B units (Ex Shops For Africa units) - both sold subsequent to year-
end at a combined profit of R3,7m.
Linked unitholders` capital
The issued share capital at 30 June 2004 comprised 19 045 211 linked units.
On 14 July 2004 the company issued 785 144 linked units to vendors resulting
from the acquisition of Knowledge Park and on 21 July 2004 a further 714 286
linked units were issued for cash.
On 21 August 2004 the company issued 250 000 linked units to the vendors of
Platinum Park.
Prospects
Continued lower interest rates and strong occupancies is allowing the company to
budget growth in earnings and distributions per linked unit for the forthcoming
year at a level in line with past performance. It is also expected that good
contributions from trading and development projects will flow through in the
2005 and 2006 financial years to the benefit of the company.
DISTRIBUTION DECLARATION
Notice is hereby given of the declaration of distribution No. 10 in respect of
the six months to 30 June 2004, which amounts to 80 cents per linked unit. The
last date to trade cum distribution will be Thursday, 23 September 2004 and the
linked units will commence trading ex distribution from Monday, 27 September
2004, with the record date being Friday, 1 October 2004. Payment will be
effected on Monday, 4 October 2004. Unit certificates may not be dematerialised
or rematerialised from Monday, 27 September 2004 to Friday, 1 October 2004, both
days inclusive.
On behalf of the Board
M KAPLAN M N FLAX Sponsor:
Chairman Chief Executive Officer Bridge Capital
Cape Town
30 August 2004
For more information on the company, see: www.spearheadprop.com
SPEARHEAD PROPERTY HOLDINGS LIMITED:
Registered Office: 3rd Floor, The Spearhead, 42 Hans Strijdom Avenue, Foreshore,
Cape Town, 8001
Registration number: 1996/005827/06 Share code: SPE ISIN: ZAE000019162
Directors: M Kaplan (Chairman), M N Flax (Chief Executive Officer), J E Allie, D
B Fabian, A Groll, L Hoffman, H Schreuders, F van Hoogstraten, D M Wilder
Transfer Secretaries:
Computershare Investor Services 2004 (Pty) Limited, Ground Floor, 70 Marshall
Street, Johannesburg, 2001 PO Box 61051, Marshalltown, 2107
Sponsor: Bridge Capital Services (Pty) Limited
Date: 30/08/2004 04:23:17 PM Produced by the JSE SENS Department
