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IFR
IFR
iFour - Unaudited Interim Results For The Six Months Ended 31 December 2005
iFour Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 2001/016118/06)
Share code: IFR & ISIN: ZAE000039236
("iFour" or "the company")
Unaudited Interim Results For The Six Months Ended 31 December 2005
- Total RETURN of 50% to unitholders
- OCCUPANCIES increased to 96,7%
- DISTRIBUTIONS increased by 6,4% to 41,5 cents
- PORTFOLIO value of R2,2 billion
1. Review of operations
The company continued with its strategy of delivering sustainable growth in
distributions to its unitholders increasing its distribution from 39,00 cents in
the previous interim period to 41,5 cents per linked unit. The total return of
50% to unitholders for the twelve month period to 31 December 2005 consists of a
capital return of 39% and an income return of 11%. In line with its stated
strategy, the company has maintained its lease expiry profile to ensure that
less than 20% of leases expire in any one financial year with 36% of them
expiring beyond December 2009. Occupancy levels increased from 94,8% at 30 June
2005 to 96,7% at 31 December 2005 which has contributed to the increase in the
distributable earnings. The high occupancy level is expected to continue to the
end of the financial year.
2. Securitisation and borrowings
In order to take advantage of the low interest rate environment, the company
replaced its existing interest rate swap agreement expiring in October 2007 with
two new swaps of which R200 million will expire in October 2010 and R130 million
in October 2011.
The company"s aggregate borrowings of R1 billion represent a loan-to-value ratio
of 43% which is in line with the company"s stated policy not to exceed a ratio
of 55%
3. Portfolio review
The property portfolio increased in value from R1,98 billion at 30 June 2005 to
R2,2 billion at 31 December 2005.
The company acquired Ziyabuya Shopping Centre, a 10 829m2 community shopping
centre, for R58,7 million. This shopping centre is located in Kwadezi, Port
Elizabeth with more than 70% of the gross income being generated by national and
regional tenants including Shoprite, Cashbuild, Standard Bank, Absa and First
National Bank. The company also purchased Palm Springs Shopping Centre
measuring 16 554m2 located in Stretford, Orange Farm at a cost of R94,6 million.
Shoprite and Cashbuild are the major anchor tenants. National and regional
tenants account for more than 70% of the gross income of the centre. The centre
has additional bulk for further expansion. Both these shopping centres serve
previously disadvantaged communities and dominate their catchment areas. They
were completed in 2005.
The company also acquired Pelican Park, a brand new industrial midi-factory unit
complex consisting of nine units, with a gross lettable area of 11 191m2. It is
well-situated in the industrial area of Jet Park having good freeway access and
is in close proximity to Johannesburg International Airport. The complex is
fully tenanted with two to ten-year lease agreements escalating between 8% and
10%. The Company purchased the property effective 29 December for a
consideration of R32,9 million.
Two office buildings and an industrial building which did not meet the company"s
investment criteria, were disposed of. A net loss of R0,7 million was incurred
on the disposals which had a total book value of R81,6 million.
The directors have revised the revaluation process to include an internal
revaluation of the portfolio at both 31 December and 30 June each year. These
valuations will be supported by an external valuation of the portfolio at the
same dates so that the entire portfolio is valued by an independent external
valuer over a three year period. Valuations were done on a 10-year discounted
cash flow basis, which is consistent with prior periods.
The portfolio continues to perform well with the revaluation as at 31 December
2005 resulting in a surplus of R145,9 million.
A further two properties in the office sector with a book value of R27,8 million
were disposed of after the interim reporting date and an agreement has been
signed for the sale of Xerox House for R5 million.
Agreements have been concluded for the purchase of a 75% undivided share of
KwaMashu Shopping Centre in KwaZulu Natal for a consideration of R49,7 million
effective 1 March 2006. This 11 000m2 newly developed shopping centre is well
located having a large catchment area. The tenant mix will comprise over 90%
national retailers anchored by Spar and Cashbuild both with 10 year lease
agreements.
The second phase of Sebokeng Plaza is being developed for the company. This
5430m2 development to be anchored by Shoprite is expected to be completed in May
2006. The estimated cost of the development will be R25,7 million.
The above shopping centre acquisitions and expansions will result in iFour
having approximately 21% of its portfolio by value situated in previously
disadvantaged areas.
4. Prospects
With present occupancy levels expected to be maintained, and the outlook for the
economy remaining positive, it will enable iFour to continue to expand whilst at
the same time delivering sustainable growth in distributions and value to linked
unitholders.
5. Distribution declaration per linked unit
Notice is hereby given that a distribution of 41,50 cents (2004: 39,00 cents)
has been declared and approved by the board of directors for the period ended 31
December 2005. Please refer to the "Investors distributable earnings" insert
for the basis of the calculation of distributable earnings.
DISTRIBUTION TIMETABLE
Event Date
a. Last date to trade cum distribution Friday, 31 March 2006
b. Linked units trade ex distribution Monday, 3 April 2006
c. Record date for unitholders to
participate in the distribution Friday, 7 April 2006
d. Payment of distribution to unitholders Monday, 10 April 2006
e. Linked unit certificate may not be Monday, 3 April 2006 to
dematerialised or rematerialised
between Friday, 7 April 2006
(both days inclusive)
On behalf of the board
J J Groenewald
Secretary
22 February 2006
Directors: A J W L Richards (Chairman), J L Nunes (Managing)*, Dr C P de Leeuw,
J A A Diepenbroek, J B Gibbon, C M Hutchison, R C Johnson (British), K M
Mokoape, E P M Moses, U J van der Walt.
* Executive
For more information go to our website www.ifour.co.za
INVESTORS"DISTRIBUTABLE EARNINGS
This Investor information is aimed at disclosing the basis on which the
distribution 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 Dec 05 31 Dec 04 30 Jun 05
Revenue 157 855 157 553 313 144
Gross rentals received 157 497 150 833 306 424
Other income 358 6 720 6 720
Net property portfolio costs (36 816) (40 275) (75 755)
Administrative expenses (excluding
non-cash items*) (5 279) (4 141) (8 983)
Interest received 1 627 2 907 5 501
Interest paid (excluding
non-cash securitisation
expenses*) (54 762) (58 003) (111 428)
Securitisation profit
retention - - (538)
Linked unitholders
distributable earnings 62 625 58 041 121 941
Weighted average linked units
and shares in issue 150 764 924 148 420 642 148 420 642
Linked unitholders"
distributable earnings
per linked unit (cents) 41,54 39,11 82,16
Distribution per linked unit
- declared (cents) 41,5 39,0 82,0
Number of linked units in
issue 150 764 924 150 764 924 150 764 924
RECONCILIATION BETWEEN LINKED UNITHOLDERS"
DISTRIBUTABLE EARNINGS TO PROFIT FOR THE PERIOD
Linked unitholders"
distributable earnings 62 625 58 041 121 941
Revaluation of investment
properties 145 902 - 178 676
Net (loss)/profit on disposal
of investment properties (737) (335) 3 343
Movement of fair value of
derivative financial
instruments (9 307) (81 884) (62 404)
*Amortisation of listing,
debenture, mortgage and
securitisation expenses (2 270) (1 365) (4 209)
Debenture interest distributed
to unitholders (62 567) (57 111) (121 940)
Securitisation profit
retention - - 538
Taxation - deferred (42 312) 24 616 (43 685)
Net profit/(loss) for the
period 91 334 (58 038) 72 260
RETURN TO UNITHOLDERS
12 months 12 months
ended ended
31 Dec 05 31 Dec 04
Opening unit price (cents) 795 656
Closing unit price (cents) 1 105 800
Capital return (cents) 310 144
Distribution for the period (cents) 84,5 78
Total return (cents) 394,5 222
Total return for the period (%) 50 34
Interim period high (cents) 1 105 860
Interim period low (cents) 900 610
ABRIDGED CONSOLIDATED GROUP INCOME STATEMENT
Six months Six months Year
ended ended ended
R"000 31 Dec 05 31 Dec 04 30 Jun 05
Revenue 157 497 150 833 306 424
Straight-line operating lease
adjustment (857) 8 609 27 810
Other income 358 6 720 6 720
Net property portfolio costs (36 816) (40 275) (75 755)
Administrative expenses (5 833) (5 506) (10 474)
Operating profit 114 349 120 381 254 725
Net revaluation of investment
properties 146 759 (8 609) 150 866
Attributable to straight-line
operating lease adjustment 857 (8 609) (27 810)
Revaluation of investment
properties 145 902 - 178 676
Net (loss)/profit on disposal
of investment properties (737) (335) 3 343
Earnings before financing
costs and taxation 260 371 111 437 408 934
Interest received 1 627 2 907 5 501
Interest paid (56 478) (58 003) (114 146)
Movement of the fair value of
derivative financial
instruments (9 307) (81 884) (62 404)
Debenture interest distributed
to unitholders (62 567) (57 111) (121 940)
Earnings/(loss) before
taxation 133 646 (82 654) 115 945
Taxation - deferred (42 312) 24 616 (43 685)
Earnings/(loss) for the
period 91 334 (58 038) 72 260
Reconciliation between
earnings/(loss) and headline earnings
R"000
Earnings/(loss) for the peiod 91 334 (58 038) 72 260
Adjusted for:
Net revaluation of investment
properties net of taxation (104 199) - (107 115)
Net loss/(profit) on disposal
of investment properties net
of taxation 630 284 (2 858)
Amortisation of listing,
debenture, mortgage and
securitisation expenses 2 270 1 365 4 209
Headline loss for
shareholders (9 965) (56 389) (33 504)
Debenture interest distributed
to unitholders 62 567 57 111 121 940
Headline earnings for linked
unitholders 52 602 722 88 436
Earnings/(loss) per linked
unit (cents) 102,08 (0,62) 130,84
Headline earnings per linked
unit (cents) 34,89 0,49 59,58
Diluted earnings/(loss) per
linked unit (cents) 102,08 (0,62) 130,84
Diluted headline earnings per
linked unit based on
150 764 924 units (2004:
148 420 642 units) (cents) 34,89 0,49 59,58
Net asset value per linked
unit (cents) 620 473 559
Earnings/(loss) per share
(cents) 60,58 (39,1) 48,69
Diluted earnings/(loss) per
share 60,58 (39,1) 48,69
Headline loss per share
(cents) (6,61) (37,99) (22,57)
Diluted headline loss per
share based on 150 764 924
units (2004: 148 420 642
units) (cents) (6,61) (37,99) (22,57)
Net asset value per share
(cents) 177 30 117
SEGMENTAL INFORMATION
Primary segment Corporate
R"000 Industrial Office Retail Other unallocated Total
Revenue 48 929 51 787 53 079 3 702 - 157 497
Straight-line
operating
lease
adjustment 831 (2 953) 1 315 (50) - (857)
Segment results
Earnings before
financing costs
and taxation 38 423 37 988 40 781 3 489 139 690 260 371
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.
ABRIDGED CONSOLIDATED GROUP BALANCE SHEET
R"000 31 Dec 05 31 Dec 04 30 Jun 05
ASSETS
Non-current assets
Investment properties** 2 240 223 1 846 352 1 980 200
Equipment, furniture and
fittings 94 91 81
Loans to share trust
participants 16 202 14 315 16 113
Deferred income tax asset - 26 745 -
Current assets
Cash and cash equivalents 13 613 5 563 56 078
Trade and other receivables 27 372 15 900 18 881
Accounts receivable - disposals 36 000 - -
Total assets 2 333 504 1 908 966 2 071 353
EQUITY
Share capital and reserves
Share capital and premium 80 640 80 638 80 640
Retained earnings 185 876 (35 756) 94 542
LIABILITIES
Non-current liabilities
Debenture capital 668 860 667 751 668 306
Interest-bearing borrowings 958 337 987 408 965 553
Derivative financial instruments 97 149 90 322 87 842
Deferred income tax liabilities 83 085 - 40 774
Current liabilities
Trade and other payables 58 889 53 274 59 460
Accounts payable for
acquisitions 127 424 8 138 -
Current income tax liabilities 786 23 786
Current portion of interest-
bearing borrowings 9 796 - 8 543
Unitholders for distribution 62 662 57 168 64 907
Total equity and liabilities 2 333 504 1 908 966 2 071 353
**The effect of the straight-line operating lease adjustment of (R857) (2004: R8
609) is included in the value of investment properties. The cumulative effect of
the straight-line operating lease adjustment included in investment properties
is R67 611 (2004: R49267).
ABRIDGED CONSOLIDATED GROUP CASH FLOW STATEMENT
Six months Six months Year
ended ended ended
R"000 31 Dec 05 31 Dec 04 30 Jun 05
Cash flows from operating
activities
Cash generated from operations
before distributions to
unitholders 53 578 75 735 143 804
Distributions to unitholders (64 812) (53 487) (110 577)
Net cash (outflow)/generated from
operating activities (11 234) 22 248 33 227
Cash flows from investing
activities
Additions to Investment
properties (195 709) (156 497) (158 260)
Additions to equipment, furniture
and fittings (29) - (6)
Net proceeds from the sale of
investment properties 80 851 31 382 81 653
Increase in accounts receivable
- disposals (36 000) - -
Increase/(decrease) in accounts
payable for acquisitions 127 424 (8 804) (16 942)
Increase in loans to share trust
participants (89) (150) (1 948)
Net cash used in investing
activities (23 552) (134 069) (95 503)
Cash flows from financing
activities
Issue of ordinary share
capital and debentures
net of transaction costs - (109) (109)
Increase in interest-bearing
borrowings - 848 723 882 068
Less: Repaid during the period (7 679) (751 901) (784 276)
Net cash (outflow)/inflow from
financing activities (7 679) 96 713 97 683
Net (decrease)/increase in cash
and cash equivalents (42 465) (15 108) 35 407
Cash and cash equivalents at the
beginning of the period 56 078 20 671 20 671
Cash and cash equivalents at the
end of the period 13 613 5 563 56 078
CONSOLIDATED GROUP STATEMENT OF CHANGES IN EQUITY
Share Share Retained
R"000 capital premium earnings Total
Balance at
1 July 2004 143 70 700 22 282 93 125
Linked units issued
to vendors 7 9 853 - 9 860
Share issue costs - (63) - (63)
Profit for the year
after distributions
and taxation - - 72 260 72 260
Balance at
30 June 2005 150 80 490 94 542 175 182
Profit for the period
after distributions
and taxation - - 91 334 91 334
Balance at
31 December 2005 150 80 490 185 876 266 516
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
The unaudited interim financial report has been prepared in accordance with
International Financial Reporting Standards ("IFRS"), IAS34 - Interim Financial
Reporting and the requirements of the South African Companies Act 1973.
IFRS 1 - First-time adoption of International Financial Reporting Standards has
been applied in the preparation of the interim financial report.
The Accounting policies framework has changed to IFRS but no material changes
have been made to the opening balance sheet at 1 July 2004. Adjustments were
made to the comparative period to comply with IAS17 - Leases which had no impact
on opening retained earnings.
2. Related party transactions
Related party transactions concluded during the reporting period were concluded
at arm"s length terms as would be negotiated between unrelated willing parties.
A related party transaction was posted on SENS on 9 January 2006.
3. Deferred taxation
Deferred taxation on the property revaluations has been provided at the normal
taxation rate of 29% and not at the capital gains taxation rate of 14,5% that
will actually be paid.
Date: 22/02/2006 01:40:29 PM Produced by the JSE SENS Department
