| Tue 22 Aug 2006, 15:08 | | iFour - Reviewed financial results for the year en |
|
IFR
IFR
iFour - Reviewed financial results for the year ended 30 June 2006
iFour Properties Limited
(incorporated in the Republic of South Africa)
(Registration number: 2001/016118/06)
Share code: IFR & ISIN: ZAE000039236
(the company)
iFOUR properties limited reviewed financial results for the year ended 30 June
2006
24,8% increase in NET ASSET VALUE per linked unit
continued SUSTAINABLE GROWTH in distribution
vacancy decreased to 2,7%
total return to unitholders of 21,1%
DISTRIBUTION increased by 6,1% to 87,00 cents
PORTFOLIO increased to R2,4 billion
This investor information insertion is aimed at disclosing to the users 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.
investors distributable earnings
Year ended Year ended
30 June 30 June
R000 2006 2005
Revenue 326 590 313 144
Gross rentals received 324 474 306 424
Other income 2 116 6 720
Net property portfolio costs (76 338) (76 355)
Administrative costs (excluding
non-cash items*) (10 386) (8 383)
Interest received 4 773 5 501
Interest paid (excluding non-cash
securitisation expenses*) (114 341) (111 428)
Movement in the fair value of financial
assets at fair value through profit
or loss realised 880
Securitisation profit retention (538)
Investors distributable earnings 131 178 121 941
Weighted average linked units and shares
in issue 150 764 828 148 420 642
Investors distributable
earnings per linked unit (cents) 87,01 82,16
Distribution per linked unit
declared (cents) 87,00 82,00
Number of linked units in issue 150 729 924 150 764 924
RECONCILIATION BETWEEN INVESTORS DISTRIBUTABLE EARNINGS
TO PROFIT FOR THE YEAR
Linked unitholders distributable earnings 131 178 121 941
Revaluation of investment properties 248 748 178 676
Net (loss)/profit on disposal of
investment properties (487) 3 343
Movement in the fair value of derivative
financial instruments 43 821 (62 404)
Movement in the fair value of financial
assets at fair value through profit or
loss unrealised 201
*Amortisation of listing, debenture,
mortgage and securitisation expenses (4 543) (4 209)
Amortisation of deemed debenture
premium 3 182 3 182
Securitisation profit retention 538
Debenture interest distributed to
unitholders (131 178) (121 940)
Taxation deferred (78 975) (42 903)
Taxation normal and capital gains (1 012) (782)
Net profit for the year 210 935 75 442
return to unitholders
Year ended Year ended
30 June 30 June
2006 2005
Opening unit price (cents) 910 615
Closing unit price (cents) 1 015 910
Capital return (cents) 105 295
Distribution for the year (cents) 87 82
Total return (cents) 192 377
Total return for the year (%) 21,1 61
Period high (cents) 1 335 940
Period low (cents) 900 610
abridged consolidated group income statement
Year ended Year ended
30 June 30 June
R000 2006 2005
Revenue 324 474 306 424
Straight-line operating lease adjustment 9 743 27 810
Other income 2 116 6 720
Net property portfolio costs (76 338) (76 355)
Administrative expenses (11 496) (9 874)
Operating profit 248 499 254 725
Net revaluation of investment properties 239 005 150 866
Attributable to straight-line operating
lease adjustment (9 743) (27 810)
Revaluation of investment properties 248 748 178 676
Net (loss)/profit on disposal of investment
properties (487) 3 343
Earnings before financing costs and
taxation 487 017 408 934
Interest received 4 773 5 501
Interest paid (117 774) (114 146)
Movement in the fair value of derivative
financial instruments 43 821 (62 404)
Movement in the fair value of financial
assets at fair value through profit
or loss 1 081
Amortisation of deemed debenture
premium 3 182 3 182
Debenture interest distributed to
unitholders (131 178) (121 940)
Earnings before taxation 290 922 119 127
Taxation deferred (78 975) (42 903)
Taxation normal and capital gains (1 012) (782)
Earnings for the year 210 935 75 442
Reconciliation between earnings/(loss)
and headline earnings
Earnings for the year 210 935 75 442
Adjusted for:
Net revaluation of investment properties
net of taxation (169 694) (107 115)
Net loss/(profit) on disposal of investment
properties net of taxation 416 (2 858)
Amortisation of listing, debenture, mortgage
and securitisation expenses 4 543 4 208
Headline profit/(loss) for shareholders 46 200 (30 323)
Debenture interest distributed to
unitholders 131 178 121 940
Headline earnings for linked unitholders 177 378 91 617
Earnings per linked unit (cents) 226,92 132,99
Headline earnings per linked unit (cents) 117,65 61,73
Diluted earnings per linked unit (cents) 226,92 132,99
Diluted headline earnings per linked unit
based on 150 764 924 units
(2005: 148 420 642 units) (cents) 117,65 61,73
Net asset value per linked unit (cents) 698 559
Earnings per share (cents) 139,91 50,83
Diluted earnings per share 139,91 50,83
Headline earnings/(loss) per share (cents) 30,64 (20,43)
Diluted headline earnings/(loss) per
share based on 150 764 924 units
(2005: 148 420 642 units) (cents) 30,64 (20,43)
Net asset value per share (cents) 208 68
abridged consolidated group balance sheet
As at As at
30 June 30 June
R000 2006 2005
ASSETS
Non-current assets
Investment properties 2 212 548 1 911 732
Straight-line operating lease asset 78 211 68 468
Investment properties at fair value 2 290 759 1 980 200
Equipment, furniture and fittings 77 81
Loans to share trust participants 16 160 16 113
Current assets
Investment properties held for sale 107 273
Financial assets at fair value through
profit or loss 5 102
Trade and other receivables 34 556 18 881
Cash and cash equivalents 53 533 56 078
Total assets 2 507 460 2 071 353
EQUITY
Capital and reserves
Share capital and premium 10 819 7 992
Retained earnings 302 295 94 542
Total equity 313 114 102 534
LIABILITIES
Non-current liabilities
Debenture capital and premium 738 882 740 954
Linked unitholders interest 1 051 996 843 488
Other non-current liabilites
Borrowings 1 104 503 965 553
Derivative financial instruments 44 021 87 842
Deferred income tax liabilities 119 749 40 774
1 268 273 1 094 169
Current liabilities
Borrowings 57 508 8 543
Trade and other payables 59 946 59 460
Current income tax liabilities 1 012 786
Unitholders for distribution 68 725 64 907
187 191 133 696
Total equity and liabilities 2 507 460 2 071 353
abridged consolidated group cash flow statement
Year ended Year ended
30 June 30 June
R000 2006 2005
Net cash (utilised)/generated from
operating activities (12 407) 33 227
Net cash utilised in investing activities (173 669) (95 503)
Net cash generated from financing
activities 183 531 97 683
Net (outflow)/inflow of cash and cash
equivalents (2 545) 35 407
Cash and cash equivalents at the beginning
of the year 56 078 20 671
Cash and cash equivalents at the end
of the year 53 533 56 078
consolidated group statement of changes in equity
Share Share Retained
R000 capital premium earnings Total
Balance at 1 July 2004
as previously stated 143 70 700 22 282 93 125
IFRS Adjustments:
Amortisation of deemed
debenture premium 3 718 3 718
Reallocation to share
premium (3 718) (3 718)
Amortisation of deemed
debenture premium 3 718 3 718
Reallocation to debenture
premium (69 695) (69 695)
Units issued 7 7
Transfer of amortisation of
deemed debenture premium 3 182 (3 182)
Share issue costs (63) (63)
Profit for the year after
distributions and taxation 75,442 75,442
Balance at 30 June 2005 150 7,842 94,542 102,534
Transfer of amortisation of
deemed debenture premium 3 182 (3 182)
Treasury units held by
consolidated entities (355) (355)
Profit for the year after
distributions and taxation 210,935 210,935
Balance at 30 June 2006 150 10,669 302,295 313,114
segmental information
Primary Indus-
segment R000 trial Office Retail Other Corporate Total
Revenue 100 316 98 061 119 027 7 070 324 474
Straight-line
operating lease
adjustment 3 468 195 6 133 (53) 9 743
Segment results
Earnings before
financing costs
and taxation 148 843 141 883 189 514 16 203 (9 426) 487 017
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.
notes to the financial statements
1. Basis of preparation
The consolidated financial statements of the group have been prepared in
accordance with International Financial Reporting Standards (IFRS).
Opening retained earnings has been restated to take into account the
reallocation of share premium to debenture premium, the associated amortisation
of deemed debenture premium through retained earnings, and the subsequent
transfer of deemed debenture premium to the share premium account in the
statement of changes in equity.
2. 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.
3. Review report
PricewaterhouseCoopers Inc has reviewed the results for the year ended 30 June
2006 and their report is available for inspection at the companys registered
office.
1. overview
iFour has continued to deliver on its commitment to provide sustainable growth
in distributions to its linked unitholders by increasing its distribution to 87
cents from 82 cents in the previous year. This is an increase of 6,1%.
Revenue was increased by 5,8% to R324,5 million and the portfolio occupancies
are now at 97,3%. Direct property portfolio costs were successfully contained at
the same level as the previous year at R76,3 million.
Other income of R2,1 million relates primarily to distributions received on the
Paramount Properties Limiteds linked units. These units were received as part
of the payment for the MTN building which was sold during the year.
2. borrowings
Although borrowings increased by 19% to R1,17 billion, interest paid increased
by only 3% on the previous period from R114,1 million to R117,8 million. This
was achieved by taking advantage of the low interest rate environment during the
year.
Existing interest rates swap agreements were replaced with two new swaps of
which R200 million will expire in October 2010 and R130 million in October 2011.
As at 30 June 2006 the company had R800 million of its borrowings hedged to
reduce its exposure to interest rate increases. Gearing is at 49% which is
within the companys mandate of 55%.
3. portfolio review
Four acquisitions, amounting to R243 million, were made during the year under
review. Three of these are newly developed decentralised rural retail centres
and the fourth a new industrial midi unit complex.
Palm Springs Shopping Centre
iFour took transfer of this 16 554 m2 community shopping centre in December 2005
at a cost of R96,3 million. The centre is situated in close proximity to the N1
highway and is located in Orange Farm. It has an excellent mix of 58 tenants
with over 76% of these being nationals. The anchors are a 2 500 m2 Shoprite and
1 800 m2 Cashbuild on ten year leases. The tenant mix includes major fashion,
furniture, services, food brands and banks on five year leases.
The second phase, amounting to 3 500 m2, is currently under construction to
house tenants such as Standard Bank, First National Bank, Capitec Bank, Lewis
Stores and Best Electric. A petrol station is being developed for Total.
Ziyabuya Shopping Centre
The 11 264 m2 community centre was transferred in August 2005 at a cost of R61,8
million. The centre is situated in one of the Nelson Mandela metros fastest
growing areas near Port Elizabeth. It is on the corner of the N6 national road
and Makhwenkwe Street which leads into Kwadesi township. Tenants include major
national brands as well as four of the major banking groups. The anchor tenants
are Shoprite and Cashbuild. A second phase of 606 m2 was completed at the end of
October 2005 and includes a Total Service Station. The space occupied by
national tenants amounts to 70%.
KwaMashu Shopping Centre
In March 2006, iFour acquired a 75% undivided share in the 11 070 m2 KwaMashu
community centre at a cost of R51,7 million. The centre is well located,
approximately 100 meters from the railway station and taxi rank in the
residential area of KwaMashu near Durban. It has in excess of 80% nationals and
is anchored by a 3 359 m2 Super Spar and a 1 320 m2 Cashbuild.
Pelican Park
This is an 11 191 m2 new midi unit industrial complex costing R32,9 million and
consists of nine units all of which are fully let. The development is well
situated in the industrial area of Jet Park having good access to the R21 and
N12 highways and is in close proximity to the Johannesburg International
Airport.
Disposals
In line with the companys investment strategy, six properties were identified
as not meeting the companys investment criteria and were sold during the period
under review. Properties valued at below R10 million without long-term growth
prospects and that have regular high vacancy levels were disposed.
Capital projects
iFour has successfully upgraded the undermentioned four properties:
Sebokeng Plaza, which is situated in Sebokeng South, Vereeniging, has been
doubled in size from 5 566 m2 to 11 354 m2 with a R27,4 million extension, which
was completed in April 2006. The tenants that have been secured in this new
extension are 80% nationals and include a 1 800 m2 Shoprite on a ten year lease.
Fourways Value Mart, which is centrally located in the Fourways node with good
visibility from Witkoppen Road, has undergone a refurbishment costing R4,65
million. The upgrade has sparked new life into the centre and this is evident in
the demand for space and the increased rentals being achieved.
A R6,9 million refurbishment of the office block situated at 308 Kent Road in
Randburg has enabled the company to secure a ten year lease with an
international call centre company. This has added R27,7 million to the value of
the property.
Grand Central Shopping Centre in Eerste Rivier, Cape Town is currently
undergoing improvements to an existing common area which was previously
unlettable in order to accommodate a new 750 m2 Jet Store. The total cost on
completion of the improvement is expected to be R1,8 million.
4. prospects
The value of equity in the listed property market has traditionally been
impacted by the interest rate environment and sentiment in the country. Interest
rates looks set to move higher, influenced by high oil prices, strong consumer
credit demand, the deficit in the balance of payments and the world interest
rate environment look set to move higher.
The economy remains strong, business confidence is high and there is political
will to see gross domestic product growth of 6%. New opportunities for
expansion, the demand for rentable space and increasing rentals underpin
managements confidence. Provided this momentum can be maintained the company is
well placed to grow its portfolio and to continue to deliver increased
distributions to its linked unitholders during the coming year.
5. distribution declaration per linked unit
Notice was given of the declaration of the final distribution of 45,5 cents per
linked unit for the year ended 30 June 2006 in an announcement dated 26 June
2006. Linked unitholders are also referred to the announcement dated 22 February
2006 in which the interim distribution of 41,5 cents per unit for the six months
ended 31 December 2005 was announced. The aggregate distribution for the
financial year ending 30 June 2006 is therefore 87,0 cents per linked unit
(2005: 82,0 cents).
final distribution timetable
Event Date
a. Last date to trade cum distribution Friday, 29 September 2006
b. Linked units trade ex distribution Monday, 2 October 2006
c. Record date for unitholders to
participate in the distribution Friday, 6 October 2006
d. Payment of distribution to unitholders Monday, 9 October 2006
e. Linked unit certificate may not be
dematerialised or rematerialised between Monday, 2 October 2006 to (both days
inclusive) Friday, 6 October 2006
On behalf of the board
JJ Groenewald 2nd Floor
Secretary 382 Jan Smuts Avenue,
Craighall, Johannesburg
22 August 2006
For more information go to our website at website www.ifour.co.za
Directors: AJWL Richards (Chairman), JL Nunes (Managing)*,
Dr CP de Leeuw, JB Gibbon, CM Hutchison, RC Johnson (British),
KM Mokoape, EPM Moses, UJ van der Walt *Executive
Date: 22/08/2006 03:08:27 PM Produced by the JSE SENS Department
