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IFOUR PROPERTIES LIMITED - UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31
DECEMBER 2004
iFour Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 2001/016118/06)
Share code: IFR ISIN: ZAE000039236
(`the company`)
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2004
- DISTRIBUTIONS increased by 5,4% to 39,00 cents
- First COMMERCIAL MORTGAGE BACKED SECURITISATION in South Africa
- REVENUE up by 68%
- OCCUPANCIES of 95,6%
- PORTFOLIO increased to R1,8 billion
Abridged consolidated group income statement
Six months Six months Year
ended ended ended
R`000 31.12.04 31.12.03* 30.06.04
Revenue 150 833 89 600 221 580
Other income 6 720 4 812 7 861
Net property portfolio costs (40 540) (23 807) (58 163)
Administrative costs (5 241) (3 601) (7 434)
Profit from operations 111 772 67 004 163 844
Net revaluation of investment
properties - - 683
Net (loss)/profit on disposal
of investment properties (335) 28 -
Earnings before financing costs
and taxation 111 437 67 032 164 527
Interest received 2 907 1 509 2 893
Interest paid (58 003) (33 938) (80 927)
Movement of the fair value of
interest rate swaps (81 884)** - (8 438)
Debenture interest distributable
to unitholders (57 111) (34 792) (88 320)
Loss before taxation (82 654) (189) (10 265)
Taxation 24 616 (4) 5 737
Loss for the period (58 038)** (193) (4 528)
*Where necessary, comparative figures have been adjusted to conform to changes
in presentation in the current year.
**IMPACT OF AC 133 ON THE RESULTS FOR THE PERIOD
In accordance with the company`s policy to reduce exposure to interest rate
increases, the company has hedged 88% of its loan book as at 31 December 2004
for 3 to 5 year periods. AC 133 requires that loan facilities negotiated for
fixed terms be revalued using the interest rate applicable at the date of the
financial statements. As a consequence of the decline in interest rates this
revaluation adjustment resulted in a book loss of R82 million before tax and a
loss after tax of R58 million for the period. The provision may fluctuate during
the periods of the loans and reduces to zero at the loan repayment dates. This
transaction has no effect on the cash flow of the company or its ability to
finance the distribution to linked unitholders.
Reconciliation between earnings
and headline earnings (R`000)
Loss for the period (58 038) (193) (4 528)
Adjusted for:
Revaluation of investment
properties net of taxation - - (581)
Net loss on disposal of
investment property net of
taxation 284 (24) -
Debenture transaction costs
amortised 1 365 385 1 226
Headline (loss)/earnings for
shareholders (56 389) 168 (3 883)
Debenture interest 57 111 34 792 88 320
Headline earnings for linked
unitholders 722 34 960 84 437
(Loss)/earnings per linked
unit (cents) (0,62) 36,76 75,23
Headline earnings per linked
unit (cents) 0,49 37,15 75,80
Diluted headline earnings per
linked unit based on
148 420 642 units (2003:
94 412 593 units) (cents) 0,49 37,03 75,68
Net asset value per linked
unit (cents) 473 518 507
Loss per share (cents) (39,10) (0,21) (4,07)
Headline (loss)/earnings per
share (cents) (37,99) 0,18 (3,49)
Diluted headline earnings per
share based on 148 420 642 units
(2003: 94 412 593 units)
(cents) (37,99) 0,18 (3,48)
Net asset value per share
(cents) 29,77 60,21 65,00
Segmental information
Primary
segment Industrial Office Retail Other Corporate Total
R`000
Revenue 50 222 51 517 44 657 4 437 - 150 833
Segment
results
Operating
profit 39 426 34 459 32 346 4 062 1 479 111 772
Segment revenue and expenses
Revenue and expenses that are directly attributable to a segment are allocated
to those segments.
Items not directly attributable to a segment are allocated to the corporate
segment.
Accounting policies
The interim financial statements are prepared in accordance with South African
Statements of Generally Accepted Accounting Practice and are consistent with
those applied in prior periods.
Linked unitholders` distributable earnings
This investor information insertion is aimed at disclosing to the users the
basis on which the distribution per weighted average number of linked units in
issue, was calculated.
A reconciliation has been included to illustrate the accounting adjustments
which were not taken into account in calculating the distribution.
Six months Six months Year
ended ended ended
R`000 31.12.04 31.12.03* 30.06.04
Revenue 157 553 94 412 229 441
Gross rentals received 150 833 89 600 221 580
Other income 6 720 4 812 7 861
Net property portfolio costs (40 540) (23 807) (58 163)
Administrative costs
(excluding amortisation of bond
and debenture costs) (3 876) (3 216) (6 208)
Interest received 2 907 1 509 2 893
Interest paid (58 003) (33 938) (80 927)
Linked unitholders` distributable
earnings 58 041 34 960 87 036
Weighted average linked units and
shares in issue 148 420 642 94 112 593 111 387 953
Linked unitholders` distributable
earnings per linked unit (cents) 39,11 37,15 78,14
Distribution per linked unit -
declared (cents) 39,00 37,00 78,00
Number of linked units in issue 150 764 924 124 140 032 143 457 981
Reconciliation between linked
unitholders` distributable earnings
to loss for the period
Linked unitholders` distributable
earnings 58 041 34 960 87 036
Net revaluation of investment
properties - - 683
Net loss on disposal of investment
property (335) 28 -
Movement of fair value in interest
rate swaps (81 884) - (8 438)
Amortisation of bond and debenture
costs (1 365) (385) (1 226)
Debenture interest distributable
to unitholders (57 111) (34 792) (88 320)
Taxation 24 616 (4) 5 737
Net loss for the period (58 038) (193) (4 528)
iFour Properties returns to
linked unitholders
Share price at 31 December 2004 (cents) 800
Opening unit price (cents) - 1 January 2004 656
Capital return (cents) 144
Income return (cents) 78
Total return (cents) 222
Total return for the 12-month period (%) 34
Six month high (cents) 860
Six month low (cents) 610
Abridged consolidated group balance sheet
R`000 31.12.04 31.12.03 30.06.04
ASSETS
Non-current assets
Investment properties 1 846 352 1 447 686 1 721 574
Equipment, furniture and fittings 91 38 104
Loans to share trust participants 14 315 12 563 11 592
Deferred taxation 26 745 - 2 130
Current assets
Accounts receivable and
prepayments 15 900 20 238 24 563
Bank balances and cash 5 563 14 792 20 671
Total assets 1 908 966 1 495 317 1 780 634
EQUITY AND LIABILITIES
Share capital and reserves
Share capital and premium 80 638 46 812 70 843
Accumulated (loss)/profit (35 756) 27 937 22 282
Non-current liabilities
Debenture capital 667 751 567 895 633 629
Interest-bearing borrowings 987 408 787 754 776 475
Fair value of interest rate swaps 90 322 - 8 438
Deferred taxation - 3 635 -
Current liabilities
Trade and other payables 53 274 36 159 44 174
Accounts payable for acquisitions 8 138 - 56 742
Amounts due to vendors - - 1 100
Taxation 23 - 106
Current portion of
interest-bearing borrowings - - 113 301
Unitholders for distribution 57 168 25 125 53 544
Total equity and liabilities 1 908 966 1 495 317 1 780 634
Abridged consolidated group cash flow statement
Six months Six months Year
ended ended ended
R`000 31.12.04 31.12.03 30.06.04
Cash flow from operating activities
Cash generated from operations
before distributions to
unitholders 75 735 43 608 100 968
Distributions to unitholders (53 487) (32 222) (57 331)
Net cash inflow from operating
activities 22 248 11 386 43 637
Cash flow from investing activities
Additions to investment
properties (156 497) (458 812) (614 490)
Decrease in amounts payable for
acquisitions (8 804) - -
Proceeds from disposal of
investment properties 31 382 28 -
Increase in loan to share trust
participants (150) (12 563) (342)
Net cash outflow in investing
activities (134 069) (471 347) (614 832)
Cash flow from financing
activities
Issue of ordinary share capital
and debentures net of transaction
costs (109) 65 152 80 516
Decrease in amounts due to
vendors - (27 090) (27 092)
Increase in long-term borrowings 848 723 409 096 627 826
Less: Repaid during the period (751 901) (15 773) (132 752)
Net cash inflow from financing
activities 96 713 431 385 548 498
Net decrease in cash and cash
equivalents (15 108) (28 576) (22 697)
Cash and cash equivalents at the
beginning of the period 20 671 43 368 43 368
Cash and cash equivalents at the
end of the period 5 563 14 792 20 671
Consolidated group statement of changes in equity
Share Share Accumulated
R`000 capital premium profit Total
Balance at
1 July 2003 58 21 849 26 810 48 717
Linked units issued
to vendors 79 46 443 - 46 522
Share issue costs - (1 933) - (1 933)
Issue of treasury
units 6 4 341 - 4 347
Loss for the year
after distributions
and taxation - - (4 528) (4 528)
Balance at
30 June 2004 143 70 700 22 282 93 125
Linked units issued
to vendors 7 9 853 - 9 860
Share issue costs - (65) - (65)
Loss for the year
after distributions
and taxation - - (58 038)** (58 038)
Balance at
31 December 2004 150 80 488 (35 756) 44 882
1. Review of operations
The increase in the property portfolio from R0,7 billion in September 2003 to
the current R1,8 billion results in comparisons with the previous periods not
being meaningful.
The distribution per linked unit of 39,00 cents is a 5,4% increase over the
corresponding distribution for the period ended 31 December 2003.
Other income consists mainly of transaction fees paid by Pangbourne Properties
Limited in respect of its acquisition of the eThekwini property portfolio per
Pangbourne`s circular to shareholders dated 24 August 2004.
2. Securitisation and borrowings
The company successfully achieved the first Commercial Mortgage Backed
Securitisation (`CMBS`) in South Africa in November 2004. The advantages of this
form of debt financing include the diversification of funding sources and in the
longer term, the lowering of cost of debt finance.
The securitisation programme resulted in the repayment of R320 million and R480
million of borrowings from Standard Bank and Absa Bank, respectively, which was
funded by way of an issue of bonds which are listed on the Bond Exchange of
South Africa.
Moody`s Investor Services rated 71% of the R800 million bond issue Aaa.za. R330
million of the bonds mature on 1 October 2007 and R470 million matures on 1
October 2009.
The company`s aggregate borrowings of R987 million represents a loan-to-value
ratio of 53% which is in line with the company`s stated policy not to exceed a
ratio of 55%.
3. PORTFOLIO REVIEW
The property portfolio increased from R1,7 billion in 30 June 2004 to R1,8
billion at 31 December 2004. Six properties to the value of R153,9 million
(four of which are in the retail sector) were transferred during the period
under review. Four properties to the value of R31,7 million, which did not meet
the company`s investment criteria, were disposed of. In line with the company`s
strategy, retail usage increased from 25% to 29% and office usage decreased from
37% to 34% since 30 June 2004 from 30 June 2004.
The portfolio is re-valued at the end of each financial year. No account has
been taken of the movement in the property market and its effect on valuations.
4. PROSPECTS
Property fundamentals remain positive and management expect the distribution to
be 82 cents per linked unit for the 2005 year as previously stated in the 2004
annual report.
5. DISTRIBUTION DECLARATION PER LINKED UNIT
Notice is hereby given that a distribution of 39,00 cents (2003: 37,00 cents)
has been declared and approved by the board of directors for the period ended 31
December 2004.
Distribution timetable
Event Date
a. Last date to trade `cum` distribution Friday, 1 April 2005
b. Linked units trade `ex` distribution Monday, 4 April 2005
c. Record date for unitholders to
participate in the distribution Friday, 8 April 2005
d. Payment of distribution to unitholders Monday, 11 April 2005
e. Linked unit certificate may not be Monday, 4 April 2005 to
dematerialised or rematerialised Friday, 8 April 2005
(both days inclusive)
On behalf of the board
J J Groenewald 2nd Floor
Secretary 382 Jan Smuts Avenue, Craighall
16 February 2005
Directors: A J W L Richards (Chairman), J L Nunes (Managing)*, A M A Campbell,
Dr C P de Leeuw, J A A Diepenbroek, J B Gibbon, R C Johnson (British), E P M
Moses, U J van der Walt *Executive
Date: 16/02/2005 03:32:32 PM
Produced by the JSE SENS Department
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