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SYC
SYC
Sycom - Unaudited Group Results and Declaration of the Interim Distribution
SYCOM PROPERTY FUND MANAGERS LIMITED
(Registration number 1986/02756/06)
JSE SHARE CODE: SYC
ISIN NO: ZAE000019303
UNAUDITED GROUP RESULTS AND DECLARATION OF THE INTERIM DISTRIBUTION FOR THE SIX
MONTHS ENDED 30 SEPTEMBER 2006
The directors of Sycom Property Fund Managers Limited, the management company of
Sycom Property Fund (Sycom) or (the Fund), submit their report on the
unaudited results of Sycom for the six months ended 30 September 2006.
INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 Sep 06 30 Sep 05 31 Mar 06
(R"000) (R"000) (R"000)
Revenue 209 023 167 968 340 013
Rental income 186 951 142 104 310 547
Straight-line rental 9 680 10 460 23 880
adjustment
Unrealised surplus on 5 915 - -
revaluation of asset
swap
Interest received 6 477 15 404 5 586
Expenditure 84 515 56 717 102 468
Administration 10 057 8 227 17 904
expenses
Interest paid 21 672 12 342 7 159
Property expenses 52 786 36 148 77 405
Operating income 124 508 111 251 237 545
Fair value adjustment (1 411) 218 201 361 165
Realised deficit on - ( 106) ( 703)
disposal of
investment in fixed
property companies
Realised surplus / 3 727 - ( 656)
(deficit) on disposal
of investment
property
Unrealised surplus on 10 457 228 767 386 404
revaluation of
investment property
Unrealised surplus on (5 915) - -
revaluation of asset
swap
Straight-line rental (9 680) (10 460) (23 880)
adjustment
NET INCOME BEFORE 123 097 329 452 598 710
TAXATION
TAXATION (10 457) - -
Earnings 112 640 329 452 598 710
EARNINGS AND DISTRIBUTIONS
Reconciliation of headline earnings to distributable earnings
Headline earnings 114 051 111 251 237 545
(operating income
after taxation)
Fair value adjustment (1 411) 218 201 361 165
Earnings 112 640 329 452 598 710
Net transfer to non- (3 727) (228 661) (385 045)
distributable reserve
Distributable 108 913 100 791 213 665
earnings
Units in issue ("000) 183 356 183 356 183 356
Earnings per unit - 61.43 179.49 326.53
cents
Headline earnings per 62.20 60.67 129.55
unit - cents
Distributable 59.40 54.97 116.53
earnings per unit -
cents
Distributions
No. 41 of 54.97 cents - 100 791 100 791
per unit
No. 42 of 61.56 cents - - 112 874
per unit
No. 43 of 59.40 cents 108 913 - -
per unit
108 913 100 791 213 665
Balance Sheet
As at As at As at
30 Sep 2006 30 Sep 2005 31 Mar 2006
(R"000) (R"000) (R"000)
Assets
Property portfolio 2 987 864 2 612 387 2 982 689
Investment property 2 845 798 2 216 396 2 588 955
Development property - 274 065 261 348
Straight-line rental 142 066 121 926 132 386
adjustment
Current assets 116 042 95 843 112 654
Total assets 3 103 906 2 708 230 3 095 343
Unitholders" funds and liabilities
Capital and reserves 2 368 025 2 207 914 2 364 298
Interest bearing 526 539 365 466 541 501
liability
Deferred taxation 10 457 - -
Current liabilities 198 885 134 850 189 544
Total unitholders" 3 103 906 2 708 230 3 095 343
funds and
liabilities
Net asset value per 1 291 1 204 1 289
unit (cents per
unit)
STATEMENT OF CHANGES IN CAPITAL AND RESERVES
6 months 6 months 12 months
ended ended ended
30 Sep 06 30 Sep 05 31 Mar 06
(R"000) (R"000) (R"000)
Balance at beginning 2 364 298 1 979 253 1 979 253
of the period
Earnings 112 640 329 452 598 710
Distributions (108 913) (100 791) (213 665)
Balance at end of 2 368 025 2 207 914 2 364 298
the period
CASH FLOW STATEMENT
6 months 6 months 12 months
ended ended ended
30 Sep 06 30 Sep 05 31 Mar 06
(R"000) (R"000) (R"000)
Cash generated by 124 108 98 500 206 720
operations
Change in working (5 912) (10 961) 13 402
capital
Cash generated from 118 196 87 539 220 122
operating activities
Net interest (paid) (15 195) 2 724 5 586
/ received
Distributions (112 874) (104 220) (205 011)
Net cash (outflow) / (9 873) (13 957) 20 697
inflow from
operating activities
Disposal of property 59,118 30 900 -
Additions to ( 42 830) ( 189 470) ( 336 541)
property
Net cash inflow / 16 288 ( 158 570) ( 336 541)
(outflow) from
investment
activities
(Decrease) / ( 14 962) 187 291 363 326
increase in
borrowings
Net cash (outflow) / ( 14 962) 187 291 363 326
inflow from
financing activities
Net (decrease) / ( 8 547) 14 764 47 482
increase in cash
resources
Cash resources at 84 148 36 666 36 666
beginning of the
period
Cash resources at 75 601 51 430 84 148
end of the period
NOTES
1. ACCOUNTING POLICIES
The interim results have been prepared in accordance with International
Financial Reporting Standards ("IFRS") (IAS 34), the requirements of the
Companies Act (Act 61 of 1973) and the requirements of the Collective
Investment Schemes Control Act of 2002 and are consistent with those
accounting policies used in the prior year.
2. PRIMARY OPERATIONAL SEGMENTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006
Retail Office Fund Total
(R"000) (R"000) (R"000) (R"000)
Rental income 99 323 87 628 186 951
Straight-line 5 012 4 668 9 680
rental adjustment
Unrealised 5 915 5 915
surplus on
revaluation of
asset swap
Interest 436 311 5 730 6 477
Total revenue 104 771 92 607 11 645 209 023
Expenditure 28 343 24 442 31 730 84 515
Operating income 76 428 68 165 (20 085) 124 508
Fair value (1 411)
adjustments
Taxation (10 457)
Earnings 112 640
Property 1 621 991 1 365 873 - 2 987 864
portfolio
Investment 1 568 883 1 276 915 - 2 845 798
property
Straight-line 53 108 88 958 - 142 066
rental adjustment
Current assets 26 747 10 788 78 507 116 042
Loan - - (526 539) (526 539)
Deferred taxation (3 197) (7 260) - (10 457)
Current (11 748) (68 432) (118 705) (198 885)
liabilities
Net assets 1 633 793 1 300 969 (566 737) 2 368 025
COMMENTS
1. Results
Sycom"s distributable income for the six months ended 30 September 2006
amounted to 59.40 cents per unit, an improvement of 8.05% over net
income of 54.97 cents per unit for the same period in the previous
year. The current distributable income is in line with expectations.
The property portfolio will only be valued at the year end and the net
asset value of the Fund currently stands at 1 291 cents per unit. The
closing market price of 1 620 cents per unit at 30 September 2006
represents a premium of 25.5% to net asset value.
2. Operations
Our two new shopping malls, Vaal Mall and Paarl Mall, are performing
well with good trading densities being achieved. Vaal Mall opened
slightly later than anticipated and this has affected the budgeted
income for the period under review. In the short term management is
critically analysing operating expenses throughout the portfolio and
expect to affect material savings. In the longer term each property
will be reviewed to determine whether additional value can be
extracted. The retail portfolio has a vacancy of 1600m2 and the office
portfolio 4693m2. All the vacant space is lettable.
3. Developments
All developments undertaken by the Fund are now completed and further
investment and development opportunities are being investigated.
4. Interest rate swaps
As part of our risk strategy of minimising interest rate risk, an
agreement has been concluded with our bankers for an interest rate swap
of Rm100 fixed at 7.86% for three years and a further Rm100 fixed at
7.97% for five years
5. Property Disposals
An agreement was concluded for the sale of the Azisa building in
Randburg for Rm66,0 net effective on registration on 4 October 2006.
This represents an exit yield of 10.5% and a surplus over book value of
Rm25,9.
6. Funding
At 30 September 2006 the Fund"s capital borrowings amounted to Rm523,6.
Outstanding development commitments and sundry capital expenditure
amount to Rm79,2. Outstanding net proceeds from the sale of properties
amount to Rm71,3 which will result in a funding requirement of Rm531,5
and which is well within the Fund"s existing loan facility of Rm650 and
its permissible borrowing capacity of Rm896.
7. Change in Control of Management Company
Sycom Property Fund Managers Limited (SPFM) is the manager of Sycom in
terms of the Collective Investment Schemes Control Act, 2002. On 17 May
2006 unitholders were advised of the disposal by Grapnel Property Group
(Pty) Limited, the ultimate shareholder of SPFM, of its interests in
SPFM to Parkdev (Pty) Limited subject to certain conditions being
fulfilled. All such conditions have been met and the sale became
effective 1 July 2006.
8. Prospects
With all the development work completed the next period will be the
first reporting period where all the properties contribute to earnings.
Agreement has been reached with the co-owner for Parkdev to take over
the management of Somerset Mall, Woodlands Office Park and Fourways
Crossing Retail Centre. Parkdev now manages nine regional malls and
the portfolio should see a reduction in operating expenses due to the
benefits of scale that should be achieved. It is still anticipated that
growth on earnings for the full year will exceed that of the prior
year.
9. Distribution Declaration
Notice is hereby given of the declaration of distribution No.43 in
respect of the six months to 30 September 2006 of 59,4 cents per unit.
The last date to trade cum distribution will be Friday, 1 December 2006
and the units will trade ex-distribution from the commencement of
business on Monday, 4 December 2006. The record date is Friday, 8
December 2006 and payment will be made to unitholders on Monday 11
December 2006. Unitholders may not dematerialise or rematerialise their
units between Monday, 4 December 2006 and Friday, 8 December 2006, both
days inclusive.
By order of the Board
Directors of Sycom Property Fund Managers Limited: T E Sewell* (Chairman), N F
J Haasbroek (Chief Executive Officer), F M Berkeley*, J P D Flanagan*, C J
V Fleming*, G A Nelson*, L Norval, Y Omar*
* Non - executive
Registered Office: Sponsor: Transfer Secretaries:
Mertech Building Nedbank Capital Computershare Investor
Services 2004 (Pty) Ltd
Glenfield Office Park Sponsor Unit 70 Marshall
Street
Cnr Genl Louis Botha & 135 Rivonia Johannesburg,
Road 2004
Glenwood Road Sandton PO Box 61051
Faerie Glen 2196 Marshalltown,
2107
P O Box 39068
Faerie Glen, 0043
17 November 2006
Date: 17/11/2006 07:56:24 AM Produced by the JSE SENS Department
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