| Thu 3 Feb 2005, 14:44 | | AUDITED RESULTS AND INCOME DISTRIBUTION |
|
CAPITAL PROPERTY FUND - AUDITED RESULTS AND INCOME DISTRIBUTION
CAPITAL PROPERTY FUND
Managed by Property Fund Managers Limited
Share code CPL ISIN ZAE000001731
(`Capital` or `the Fund` or `the Group`)
AUDITED RESULTS AND INCOME DISTRIBUTION
Declaration
The directors of Property Fund Managers Limited, management company of Capital,
announce that the audited consolidated results of the Fund for the financial
year ended 31 December 2004 are as follows:
Audited Audited
Year ended Year ended
31 December 31 December
2004 2003
CONSOLIDATED INCOME STATEMENTS R`000 R`000
Net property income 155 721 85 159
Interest 2 241 4 219
157 962 89 378
Trust expenditure 63 602 38 707
Net operating profit 94 360 50 671
Finance charges 11 093 -
Headline earnings 83 267 50 671
Net write-up on revaluation of investment
property 87 803 36 326
Net deficit on disposal of investment property (1 080) (1 956)
Net income before taxation 169 990 85 041
Taxation (2 500) (3 575)
Deferred Capital Gains Taxation (1 312) (3 557)
Current Capital Gains Taxation (1 188) (18)
Net income for the year 167 490 81 466
Reconciliation of net income for the year
to amount available for distribution:
Net income for year 167 490 81 466
Transfer to revaluation reserve (85 303) (32 769)
Transfer from trust capital 1 080 1 956
Transfer from maintenance reserve 3 988 3 523
Amount available for distribution 87 255 54 176
Units in issue 383 449 186 184 616 320
Weighted average number of units in issue 267 463 348 184 616 320
Headline earnings (cents per unit) 31,13 27,44
Earnings (cents per unit) 62,62 44,13
Income distribution (cents per unit) 30,43 29,34
Net asset value (cents per unit) 249 235
CONSOLIDATED BALANCE SHEETS
Assets
Non-current assets
Investment property 1 211 760 425 425
Current assets 30 360 46 997
Total assets 1 242 120 472 422
Unitholders` interest and liabilities
Unitholders` interest 955 376 433 820
Non-current liabilities 185 173 5 285
- Interest bearing borrowings 178 576 -
- Deferred taxation 6 597 5 285
Current liabilities 101 571 33 317
Total unitholders` interest and liabilities 1 242 120 472 422
CONSOLIDATED STATEMENTS OF CHANGES
IN UNITHOLDERS` INTEREST
Capital of Trust 825 765 385 524
Balance at beginning of the year 385 524 311 924
Issue of units 441 321 75 556
Net deficit on disposal of property (1 080) (1 956)
Revaluation reserve 129 611 44 308
Balance at beginning of the year 44 308 11 539
Transfer from distributable reserve 85 303 32 769
Maintenance reserve - 3 988
Balance at beginning of the year 3 988 7 511
Transfer to distributable reserve (3 988) (3 523)
Undistributed income - -
Balance at beginning of the year - -
Net income for the year 167 490 81 466
Net transfers to Trust capital and
non-distributable reserves (80 235) (27 290)
Income distributions (87 255) (54 176)
Total unitholders` interest 955 376 433 820
ABRIDGED CONSOLIDATED
CASH FLOW STATEMENTS
Net cash inflow from operating activities 40 798 3 934
Net cash outflow from investing activities (331 296) (1 971)
Net cash inflow from financing activities 251 581 -
Net (decrease)/increase in cash resources (38 917) 1 963
Cash resources at beginning of year 36 940 34 977
Cash resources at end of year (1 977) 36 940
INCOME DISTRIBUTIONS
Amount available for distribution (cents per
unit) 30,43 29,34
Distribution (cents per unit) 30,43 29,34
Interim 14,80 14,75
Final 15,63 14,59
The comparative figures have been restated to reflect recoveries of operating
costs from tenants in income.
ACCOUNTING POLICIES
The results have been prepared in accordance with South African Statements of
Generally Accepted Accounting Practice. The Group Accounting Policies are
consistent with those applied in the previous year.
In line with the 2003 announcement to exhaust the maintenance reserve by future
maintenance expenditure and the decision to transfer properties from the
subsidiaries to the Fund, the unutilised maintenance reserve of R1,9 million
has been transferred to income and the Board has decided that a maintenance
reserve is no longer required.
AUDIT OPINION
The auditors, KPMG Inc., have issued their opinion on the Group`s financial
statements for the year ended 31 December 2004. A copy of their unqualified
report is available for inspection at the Fund`s registered office.
FINANCIAL RESULTS
Income available for distribution is 30,43 cents per unit (2003: 29,34 cents)
an increase of 3,72% over the previous year. Allowing for the interim
distribution of 14,80 cents per unit (2003:14,75 cents) a final distribution of
15,63 cents per unit (2003: 14,59 cents)will be distributed on 28 February 2005.
BULKING UP TRANSACTION
As communicated to unitholders in the circular dated 30 July 2004, 65
properties were acquired for R760 million payable in cash and units with effect
from 1 August 2004. Sales of 24 properties were effected in 2004. The benefits
of these transactions are beginning to flow through the restructured portfolio
which is now better equipped to provide enhanced earnings growth.
Property Fund Managers Limited (`PFM`), the management company of Capital, has
been significantly restructured with Resilient Capital (Pty) Limited, Old
Mutual and Shanduka Properties (Pty) Limited acquiring the shareholding of PFM.
Shanduka, a black empowerment company chaired by Cyril Ramaphosa, has the
controlling stake.
PORTFOLIO COMMENTARY
Agreements of sale have been concluded on a further 23 properties at R78
million. Transfer of these will occur in 2005 and will be accounted for in that
financial year, upon transfer of properties.
At the end of December 2004 the Fund comprised 99 properties. By value 41% are
offices, 23% are retail, 32% are industrial and 4% are other types of property.
Geographically 51% are located in Gauteng, 32% in the Western Cape, 10% in
KwaZulu-Natal with the balance in the Eastern Cape, Mpumalanga and Free State.
During the last quarter Management has focused on bedding down the new
acquisitions and ensuring that the property administration of these properties
is seamlessly moved over to the Fund`s property management providers. Vacancies
have decreased from 13% in August to 7% at year-end.
PORTFOLIO VALUATION
The entire property portfolio, other than those properties for which agreements
of sale have been concluded, has been valued by an independent valuer.
The portfolio value is R1 211 760 000 at 31 December 2004.
Net asset value equates to 249 cents per unit (2003: 235 cents per unit), an
increase of 5,9% over 2003.
BORROWINGS
Borrowings at 31 December 2004 were R178,6 million.
UNITS IN ISSUE
To facilitate the acquisition of the 65 properties 198 832 866 new Capital
units were issued during the year, increasing the units from 184 616 320 to
383 449 186 units at 31 December 2004.
ANNUAL REPORT
Capital`s annual report will be posted to unitholders during March 2005.
FUTURE STRATEGY
PFM manages the Fund in order to create wealth for its unitholders by
diversifying the portfolio, properly managing any risk associated with PFM`s
investment strategy and consistently generating a total rate of return that is
in excess of inflation.
This is achieved by optimising net rental growth, constantly enhancing the
lease profile of individual buildings and managing the property and tenant mix,
which results in the appreciation of the underlying portfolio value.
The new management team of PFM has embarked on an aggressive restructuring of
the portfolio.
Many smaller, multi-tenanted properties have been sold, as they are unsuitable
for a fund such as Capital, and have been, or will be, replaced with higher
value retail and industrial buildings with significant leases and national
tenants.
Further initiatives and projects have been undertaken to improve recoveries on
the entire portfolio, reduce the operating costs, enhance the accountability of
Capital`s property managers and improve buildings to the exacting standard that
Management of PFM has set as a benchmark. The result in the short, medium and
long term will be an enhancement of the income generating ability of the
portfolio and consequent increase in its net asset value.
Capital`s future strategy is to further balance the portfolio by investing in
retail developments tenanted by national retailers and anchored by one of the
large supermarket chains. Currently, detailed investigations are being
conducted by the team to find suitable properties that are correctly priced and
complement the overall strategy. At the same time, the team is evaluating
certain large industrial parks for acquisition.
OUTLOOK
The effect of the acquisitions and sales in 2004 has resulted in an improvement
in the quality of the Fund`s portfolio, which is expected to improve earnings.
Management are confident that the growth in the distribution of the Fund will be
greater than the market average for 2005.
INCOME DISTRIBUTION DECLARATION
Notice is hereby given that a cash distribution, number 43, of 15,63 cents
(2003: 14,59 cents) per unit (`the distribution`) has been declared payable to
unitholders recorded in the register of the Fund at the close of business on
the record date, being Friday, 25 February 2005. Unitholders are advised that
the last day to trade `cum` the distribution will be on Friday, 18 February
2005. The units will trade `ex` distribution as from Monday, 21 February 2005.
Payment will be made on Monday, 28 February 2005. Unit certificates may not be
dematerialised or rematerialised during the period Monday, 21 February 2005 to
Friday, 25 February 2005, both days inclusive.
On behalf of the Board
Johannesburg
2 February 2005
REGISTERED OFFICE:
1st Floor, Capital Place,
2 Lone Close,
Lonehill, 2062
PO Box 89, Lonehill, 2062
TRANSFER SECRETARIES:
COMPUTERSHARE INVESTOR SERVICES 2004 (PTY) LTD,
70 Marshall Street,
Johannesburg, 2001
(P O Box 61051, Marshalltown 2107)
Property Fund Managers Ltd
Managers of Capital Property Fund
