|
FSP
FSP
Freestone - Reviewed Financial Results For The Year Ended 30 June 2006
Freestone Property Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 2001/011887/06)
Share code: FSP ISIN code: ZAE000060299
("Freestone" or "the company")
REVIEWED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2006
HIGHLIGHTS
* Total distribution for the year up 15% to 61 cents per unit
* Net asset value increased by 49%
* Gearing ratio reduced to 40%
* Total return for the year of 37%
Introduction
Freestone again delivered strong financial results for the year ended 30 June
2006 ("the year") which exceeded the revised forecast made at half-year. This
was achieved due to higher net operating income from the restructured
portfolio and improved occupancy levels as well as a reduction in finance
costs.
The success of the Commercial Mortgage Backed Securitisation ("CMBS")
implemented in June 2006 affirms the confidence of institutional investors in
the strength of Freestone"s portfolio and enabled the company"s gearing ratio
to further reduce to 40%.
Financial results
The board has declared a final distribution of 33,5 cents per linked unit for
the six months to 30 June 2006, equating to a total distribution of 61,0 cents
per linked unit for the year. This represents a year-on-year increase in the
total distribution of 15%.
In spite of the lower trading price recorded on the JSE at 30 June 2006, the
company nevertheless achieved a credible total return of 36,6% for the year -
comprising an income return of 10,9% and capital growth of 25,7%.
Review report
The financial statements set out in this report have been reviewed by Deloitte
& Touche. Their unqualified review report is available for inspection at the
company"s registered office.
Valuation of investment properties
At 30 June 2006 the property portfolio was independently valued by property
experts at R1,6 billion, an increase of R353 million compared to the previous
year. Accordingly the net asset value per combined unit increased by 49% to 660
cents.
Property portfolio
At 30 June 2006, Freestone"s property portfolio comprised 81 properties, 1 075
tenants and a total rentable area of 471 417m2.
The segmental analysis of the portfolio by rentable area is shown below:
KwaZulu- Western Eastern
m2 Gauteng Natal Cape Cape
Retail 44 083 72 763 - 33 557
Offices 125 269 7 856 35 424 -
Industrial 118 596 12 559 - -
Total 287 948 93 178 35 424 33 557
% 61,1 19,8 7,5 7,1
Free
m2 State Total %
Retail - 150 403 31,9
Offices 21 310 189 859 40,3
Industrial - 131 155 27,8
Total 21 310 471 417 100,0
% 4,5 100,0 -
At year-end vacancies by rentable area reduced from 7,0% to 4,3% totalling 20
068m2. During the year leases were concluded over 122 391m2, of which 43%
related to new leases and 57% to renewals. The portfolio lease expiry profile,
detailed below, has further improved as a consequence of enhanced leasing
opportunities:
Lease expiry 30 June 30 June 30 June
m2 Vacant 2007 2008 2009
Retail 4 353 47 173 28 066 22 282
Offices 15 348 44 900 27 097 31 276
Industrial 367 26 767 23 079 27 448
Total 20 068 118 840 78 242 81 006
% 4,3 25,2 16,6 17,2
30 June
Lease expiry 30 June 2011 and
m2 2010 beyond Total
Retail 19 995 28 533 150 402
Offices 15 981 52 896 187 498
Industrial 5 649 50 207 133 517
Total 41 625 131 636 471 417
% 8,8 27,9 100,0
Acquisitions
The following properties were acquired and have all been transferred to
Freestone:
Purchase Forward
Description Province Sector GLA price yield
m2 R"000 %
Montana Value
Centre Gauteng Retail 9 717 29 500 11,5
Mkhize Plaza,
Nqutu KwaZulu-Natal Retail 3 893 12 500 12,3
8 Grader
Road, Spartan Gauteng Industrial 3 818 5 725 11,6
47 725
Sales
The following properties were sold in line with strategy, allowing the company
to free up capital for investment in properties offering sound long-term growth
prospects:
Valuation
Net at
sale 30 June Exit
Description Province Sector price 2005 yield
R"000 R"000 %
Sterling
Place Western Cape Offices 17 000 17 000 7,3
Belle Ombre
Plaza Gauteng Retail 15 430 15 500 11,8
Cuthberts
Building Free State Offices 7 250 7 250 13,3
1 Morris
Street Gauteng Offices 4 700 4 700 9,4
Berkeley
Square KwaZulu-Natal Offices 4 000 4 000 7,4
Fidelity
House KwaZulu-Natal Offices 3 000 2 875 vacant
DNS House KwaZulu-Natal Offices 2 910 2 540 10,2
54 290 53 865
Borrowings
In June 2006 Freestone successfully placed R0,5 billion worth of asset-backed
Notes with institutions through its CMBS Notes issue, effectively fixing the
finance costs on the majority of its debt for seven years. Total borrowings at
year-end amounted to R1,1 billion of which R459,9 million is to be repaid in
August 2006 following the receipt of the proceeds of the CMBS issue. The
company"s gearing ratio further reduced to 40% from 51% in the prior year.
The interest rate profile of the facilities at 30 June 2006 is shown below:
Weighted
Amount average % of
Fixed/hedged rate expiry date (Rm) interest rate total
Included under long-term liabilities
Fixed to June 2013 493,8 9,2 76,0
Included under current liabilities 618,2
Floating 459,9 9,8*
Fixed to November 2006 158,3 10,7 24,0
1 112,0
Less: To be repaid in August 2006
following the receipt of the proceeds
of the CMBS issue (459,9) 9,8*
Net borrowings 652,1 9,6 100,0
*Assuming a prime rate of 11,5% p.a.
Linked units in issue
The total number of linked units in issue, after acquisitions, increased to
136 207 895 (2005: 132 388 492).
Directorate
There were no changes to the directorate.
Post balance sheet events
The following properties have been acquired but have not yet been
transferred to Freestone:
Purchase Forward
Description Province Sector GLA price yield
m2 R"000 %
Tin Roof House
Mthatha Eastern Cape Retail 1 278 8 500 11,2
Boxer Super
Store
Kokstad KwaZulu-Natal Retail 1 837 5 560 10,5
The following properties have been sold but not yet transferred:
Valuation
Net at
sale 30 June Exit
Description Province Sector price 2006 yield
R"000 R"000 %
Ligitprops &
Syfrets House KwaZulu-Natal Offices 11 050 11 050 15,3
Carlon Falco Gauteng Offices 6 050 6 050 5,4
Centex Office
Park Gauteng Offices 5 522 5 522 7,1
Prospects
Favourable property prospects together with the company"s robust financial
position bode well for the year ahead.
Recent price volatility in the listed property sector, due primarily to
withdrawals from unit trust portfolios triggered by emerging market concerns
and anticipated higher interest rates, has since abated. Consequently the
current forward yields on listed property offer an attractive opportunity to
investors with appropriate investment horizons, especially where borrowing
rates have been fixed for the foreseeable future.
Freestone"s financial health and underlying rental growth prospects should
enable the company to show continued growth in total distributions to June
2007.
Debenture interest payment
Unitholders are advised that distribution number 10 for the six months ended
30 June 2006 of 33,5 cents per linked unit has been declared.
Last date to trade cum interest Friday, 1 September 2006
Date units start trading ex-interest Monday, 4 September 2006
Record date Friday, 8 September 2006
Payment date Monday, 11 September 2006
Unitholders may not dematerialise or rematerialise their units between
Monday, 4 September 2006 and Friday, 8 September 2006, both dates inclusive.
By order of the Board
C B Brayshaw M S Aitken
Chairman Director
15 August 2006
CONDENSED INCOME STATEMENT
Reviewed Audited
Year ended Year ended
30 June 2006 30 June 2005
(R"000) (R"000)
Rental income and operating expense recoveries 256 962 208 226
Amortised lease escalations 7 981 9 068
Operating expenses - property rental
operations
and administration costs (106 685) (85 204)
- asset management fees (7 739) (5 404)
Net profit from property rental operations
before interest received and interest paid 150 519 126 686
Interest received 1 892 1 710
Interest paid (61 336) (62 545)
Net profit before taxation, non-trading items
and fair valuation adjustments, including
amortisation of lease escalations 91 075 65 851
Refund on linked units issued cum interest - 11 035
Debenture interest distribution (83 094) (67 818)
Interim (37 457) (28 543)
Final (45 637) (39 275)
Net profit before taxation, non-trading items
and fair valuation adjustments, including
amortisation of lease escalations 7 981 9 068
Non-trading items
Profit on sale of investment properties 425 1 932
Fair valuation adjustments 126 919 (37 962)
Unrealised surplus on fair valuation
of investment properties 352 586 141 130
Amortisation of lease escalations (7 981) (9 068)
Debentures* (244 677) (161 963)
Interest rate swaps* 26 991 (7 896)
Non-interest bearing liabilities - (165)
Net profit/(loss) before taxation 135 325 (26 962)
Taxation - deferred** (85 089) 50
Net profit/(loss) for the year attributable
to linked unitholders 50 236 (26 912)
*IAS 39 requires that the company"s
debentures and
interest rate swap be revalued to their
market value
at the end of the year, which has resulted in
a book
loss of R244,7 million and a book profit of
R27,0 million
respectively for the year. The adjustment,
however,
has no effect on the company"s cashflow or its
distribution to unitholders.
** Taxation represents the notional
tax payable in respect
of the revaluation of the property
portfolio, after taking
into account the estimated tax loss available.
Number of linked units at the
end of the year 136 207 895 132 388 492
Interim distribution - March 27,50 23,50
Final distribution - September 33,50 29,50
Reconciliation between net
profit/(loss) for the
year, headline loss and debenture
interest distribution
Net profit/(loss) for the year attributable to
linked unitholders 50 236 (26 912)
Adjusted for:
Profit on sale of investment properties (425) (1 932)
Unrealised surplus on fair valuation of
investment
properties, net of deferred tax (267 497) (141 130)
Amortisation of lease escalations 7 981 9 068
Debenture interest 83 094 67 818
Headline loss for the year attributable
to linked unitholders (126 611) (93 088)
Adjusted for:
Fair valuation adjustment - debentures 244 677 161 963
- interest rate swaps (26 991) 7 896
- non-interest bearing
liabilities, net of deferred tax - 115
Amortisation of lease escalations (7 981) (9 068)
Debenture interest distribution 83 094 67 818
Earnings per linked unit (weighted
number of linked units in issue)
Weighted number of linked units in issue 135 514 788 100 521 740
Net profit/(loss) for the year attributable to
linked unitholders (cents) 37,07 (26,77)
Headline loss for the year attributable to
linked unitholders (cents) (93,43) (92,60)
CONDENSED CASH FLOW STATEMENT
Cash flow from - operating activities (10 515) 38 810
- investing activities (2 973) (383 433)
- financing activities 491 167 382 330
Increase in cash and cash equivalents 477 679 37 707
Cash and cash equivalents at the
beginning of the year 49 286 11 579
Cash and cash equivalents at the end of the
year 526 965 49 286
CONDENSED BALANCE SHEET
Reviewed Audited
Year ended Year ended
30 June 2006 30 June 2005
(R"000) (R"000)
Assets
Non-current assets 1 615 310 1 248 650
Investment properties 1 594 161 1 248 650
Fair value of interest rate swaps 19 095 -
Deferred taxation 2 054 -
Current assets 583 544 76 350
Investment properties held for sale 22 623 12 150
Trade and other receivables 33 956 14 914
Cash and cash equivalents 526 965 49 286
Total assets 2 198 854 1 325 000
Unitholders" funds and liabilities
Share capital 38 659 36 897
Fair value reserve (36 016) (77 846)
(Accumulated loss)/retained income (2 288) 2 203
Debentures 898 972 625 536
Total unitholders" funds 899 327 586 790
Non-current liabilities 580 978 652 593
Interest-bearing liabilities,
net of expenses 493 835 644 697
Fair value of interest rate swaps - 7 896
Deferred taxation liability 87 143 -
Current liabilities 718 549 85 617
Short-term portion of interest-bearing
liabilities 618 240 -
Trade and other payables 54 672 46 342
Unitholders for interest distribution 45 637 39 275
Total unitholders" funds and liabilities 2 198 854 1 325 000
The split between debt and equity does not
represent the legal substance, but has been
done in order to comply with IFRS.
Net asset value, including debentures,
per linked unit (cents) 660,3 443,2
Net asset value, including debentures,
per linked unit (cents)
assuming no deferred taxation liability 722,7 443,2
Related parties and related party transactions
Freestone"s major unitholder is Momentum Group Limited, a company in the
FirstRand Group. At 30 June 2006 Momentum owned 37% of the units in issue with
the remaining 63% being widely held.
The following transactions were carried out with related parties:
Year ended Year ended
30 June 2006 30 June 2005
(R"000) (R"000)
Freestone Management Company
(Pty) Limited
Expenditure comprising asset management fees 7 739 4 051
Relationship: Appointed fund manager
with effect from 1 November 2004.
Associated company of Corovest Property
Group Limited and RMB Properties (Pty)
Limited.
Corovest Property Group Limited
Expenditure comprising asset management fees - 1 353
Relationship: Joint shareholder of
management company
with effect from 1 November 2004.
Total asset management fees 7 739 5 404
FirstRand Bank Limited
Interest paid 3 983 2 103
Borrowings - 41 000
Relationship: Associated company of
FirstRand Limited group.
Rand Merchant Bank (a division of
FirstRand Limited group)
Fee 4 500 474
Interest paid 19 158 6 675
Borrowings 808 391 184 681
Relationship: Associated company
of FirstRand Limited group.
RMB Properties (Pty) Limited
Expenditure comprising property management
and letting fees 4 839 3 324
Relationship: Associated company of
FirstRand group; Joint shareholder of
management company with effect
from 1 November 2004
Hyprop Investments Limited
Acquisition of investment properties - 57 000
Relationship: M S Aitken and P J Thurling
are directors of both the company and
Hyprop Investments Limited
The above transactions were carried out on commercial terms and conditions, no
more favourable than those available in similar arm"s-length dealings at market
related rates.
CONDENSED STATEMENT OF CHANGES IN EQUITY AND UNITHOLDERS" FUNDS
Retained income/
Share Fair value (accumulated
(R"000) capital reserve loss)
GROUP
Balance at 30 June 2004 3 031 (39 934) (8 797)
Issue of share capital
and debentures 33 866 - -
Net loss for the year - - (26 912)
Transfer of unrealised
gain on fair valuation
of investment properties - 141 130 (141 130)
Adjustment in respect of
amortised lease escalations - (9 068) 9 068
Transfer of unrealised
loss on fair valuation
of debenture capital - (161 963) 161 963
Transfer of unrealised
loss on fair valuation
of interest rate swaps - (7 896) 7 896
Transfer of unrealised
loss on fair valuation
of non interest-
bearing liabilities - (165) 165
Taxation adjustment - 50 (50)
Balance at 30 June 2005 36 897 (77 846) 2 203
Issue of share capital
and debentures 1 762 - -
Adjustment between
debt and equity - - (12 897)
Net profit for the year - - 50 236
Transfer of unrealised
gain on fair valuation
of investment properties - 352 586 (352 586)
Adjustment in respect
of amortised
lease escalations - (7 981) 7 981
Transfer of unrealised
loss on fair valuation
of debenture capital - (244 677) 244 677
Transfer of unrealised
profit on fair valuation
of interest rate swaps - 26 991 (26 991)
Taxation adjustment - (85 089) 85 089
Balance at 30 June 2006 38 659 (36 016) (2 288)
Total Unitholders"
(R"000) equity Debentures funds
GROUP
Balance at 30 June 2004 (45 700) 158 782 113 082
Issue of share capital
and debentures 33 866 304 791 338 657
Net loss for the year (26 912) - (26 912)
Transfer of unrealised
gain on fair valuation
of investment properties - - -
Adjustment in respect of
amortised lease escalations - - -
Transfer of unrealised
loss on fair valuation
of debenture capital - 161 963 161 963
Transfer of unrealised
loss on fair valuation
of interest rate swaps - - -
Transfer of unrealised
loss on fair valuation
of non-interest
bearing liabilities - - -
Taxation adjustment - - -
Balance at 30 June 2005 (38 746) 625 536 586 790
Issue of share capital
and debentures 1 762 15 862 17 624
Adjustment between
debt and equity (12 897) 12 897 -
Net profit for the year 50 236 - 50 236
Transfer of unrealised
gain on fair valuation
of investment properties - - -
Adjustment in respect
of amortised
lease escalations - - -
Transfer of unrealised
loss on fair valuation
of debenture capital - 244 677 244 677
Transfer of unrealised
profit on fair valuation
of interest rate swaps - - -
Taxation adjustment - - -
Balance at 30 June 2006 355 898 972 899 327
PRIMARY OPERATIONAL SEGMENTS
FOR THE YEAR
ENDED 30 JUNE 2006
(R"000) Gauteng KwaZulu-Natal Western Cape
Rental income and
operating expense recoveries 145 696 54 693 27 682
Amortised lease escalations 1 640 4 522 1 036
Operating expenses (67 027) (23 710) (12 839)
Net profit before
finance costs 80 309 35 505 15 879
Investment properties
at fair value 924 093 325 465 193 900
(R"000) Free State Eastern Cape Total
Rental income and
operating expense recoveries 12 798 16 093 256 962
Amortised lease escalations 336 447 7 981
Operating expenses (5 558) (5 290) (114 424)
Net profit before
finance costs 7 576 11 250 150 519
Investment properties
at fair value 81 200 92 126 1 616 784
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The annual financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and the Companies Act of
South Africa, 1973. IFRS 1 - First time adoption of International Financial
Reporting Standards has been applied.
Due to the fact that the adoption of IFRS had no effect on the comparative
amounts, a reconciliation has not been prepared.
The preliminary financial statements have been prepared in accordance with IFRS,
specifically IAS 34, applicable to preliminary financial reporting and the
Companies Act of South Africa, 1973. The accounting policies used in the
preparation of these results are consistent with those used in the annual
financial statements for the year ended 30 June 2005.
Registered office
Freestone Park, 135 Patricia Road, Sandton, 2196.
Freestone Property Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 2001/011887/06)
Share code: FSP ISIN code:ZAE000060299
("Freestone" or "the company")
Directors
C B Brayshaw (Chairman)*#, M S Aitken,
B H Kent*#, P G Kotze*#, W K Schultze,
P J Thurling, R P S van der Bos
* non-executive # independent
www.fsprops.co.za
Date: 15/08/2006 10:57:15 AM Produced by the JSE SENS Department
| Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information. | |||||||||||||
| Other Profile Group sites: FundsData Online (unit trust data) | Profile Group corporate site | |||||||||||||
| [ Terms of Use | Privacy Policy | PAIA manual | FAQs/Help | Site Map | © Copyright Reserved 2026 ] | |||||||||||||
|
|||||||||||||
