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Capital Property Fund - Final audited results and income distribution
declaration
Capital Property Fund
("Capital" or the "Fund")
Share Code: CPL
ISIN: ZAE000001731
(A portfolio in Capital Property Trust Scheme, a Collective Investment Scheme in
Property established in terms of the Collective Investment Schemes Control Act,
No 45 of 2002 managed by Property Fund Managers Limited ("PFM"))
(Incorporated in the Republic of South Africa)
(Registration No. 1980/009531/06)
CPF Capital Property Fund
Managed by Property Fund Managers Ltd
Final audited results and income distribution declaration
The directors of Property Fund Managers Limited, the management company of
Capital, announce that the audited consolidated results of the Fund for the year
ended 31 December 2005 are as follows:
1 PREPARATION AND ACCOUNTING POLICIES
The financial statements are prepared in accordance with International Financial
Reporting Standards (IFRS), the requirements of the Companies Act in South
Africa and the Collective Investment Schemes Control Act. The effects of
accounting policy changes resulting from IFRS compliance are not material.
Comparative figures for the year ended 31 December 2004 have been restated to
comply with the new interpretation of IAS 17 on leases which requires that
rental income under operating leases be recognised in the income statement on a
straight-line basis over the term of the lease. KPMG Incorporated has audited
the financial information set out in this report. Their unqualified audit report
is available for inspection at the Fund"s registered office.
2 TOTAL DISTRIBUTION
Capital"s total distribution for the 12 months ended 31 December 2005 amounts to
34,53 cents per unit (2004: 30,43 cents). The interim distribution was 16,52
cents for the six months ended 30 June 2005 (2004: 14,80 cents), an increase of
11,6%, and the final distribution is 18,01 cents for the six months ended 31
December 2005 (2004: 15,63 cents), an increase of 15,2%. The total distribution
represents growth of 13,5% over the distribution for the 12 months ended 31
December 2004.
3 PORTFOLIO COMMENTARY
General
Trading conditions in all sectors and geographical areas of the Capital
portfolio remain positive. Retail centres are participating in the strong retail
trading environment and industrial rentals have increased significantly in 2005.
Demand for office space in well-located growth nodes has been improving steadily
resulting in a significant decrease in the vacancies in this sector. The overall
portfolio vacancies have declined from 7% to 3% over the last 12 months.
At the end of December 2005, the Fund comprised 65 properties. By value 31% are
offices, 36% are retail and 33% are industrial properties. Geographically 45%
are located in Gauteng, 37% in the Western Cape, 11% in KwaZulu-Natal, with the
balance in the Eastern Cape, Limpopo and Free State provinces.
Acquisitions
The following properties were acquired in 2005:
1 Mutsindo Mall, Thohoyandou, in Limpopo province was purchased for R46,25
million at a yield in excess of 11%. The retail centre is anchored by national
tenants.
2 Robertville Industrial, Robertville, in Gauteng was purchased for R10,1
million at a yield in excess of 10%. It is tenanted by a production unit of
Wetherlys, which is part of the Ellerine"s Group, and has good upside on rental
reversions in the future.
3 The Ridge Shopping Centre, Honeydew, in Gauteng was purchased for R34 million
at a yield in excess of 10%. It is a new development in a vibrant residential
node and is anchored by Spar.
In addition, Capital has also aligned itself with reputable developers in order
to acquire properties in new industrial developments:
i Four industrial units at Corporate Park, Midrand, in Gauteng are being
developed by RMB Properties. The purchase price is R34 million payable on
completion of the project in April 2006 and there is a rental guarantee for the
first year giving an initial yield of 11,75%.
ii Capital has entered into a joint venture with Acucap Properties Limited and
Improvon, a highly respected and successful industrial property developer. This
industrial site consists of 38 hectares of prime industrial land in Midrand with
highway frontage at a total cost of R98 million. The bulk rights on this land
consist of 152 000 square metres available for industrial development.
Developments will not be done on risk, but for tenants who sign appropriate
leases. In terms of the signed agreement, Capital and Acucap have each secured a
20% stake in a R600 million to R800 million development opportunity, with
Improvon retaining a majority 60% interest and taking the lead developer role.
The property is likely to be developed in four phases, the first of which will
commence towards the end of 2006, subject to tenant demand.
Sale of properties
In total 38 properties were disposed of and transferred during the course of
2005 for a combined value of R195,4 million as part of the divestment by Capital
out of non-core properties. The profit on disposal, which amounted to R7
million, has been transferred to Trust Capital. While the terms have been agreed
and the due diligences completed, eight properties to the value of R48,2 million
have been sold but not transferred as at 31 December 2005. These properties have
been reflected as properties held for sale in the balance sheet at year-end.
Extensions and refurbishments
Construction has started on the development of additional parking, the
refurbishment of the lobbies and the reconfiguration of the retail area on the
ground floor at 2 Long Street, Cape Town. The construction is expected to be
completed in June 2006 and the parking ratio will then be of an acceptable
standard.
Work is now complete on the additional parking at 66 Park Lane in the commercial
hub of Sandton.
The upgrade of West Street, Durban, at a total cost of R5 million, is continuing
and includes the replacement of the central air-conditioning units and repairs
to the roof. Escalators are to be installed to create first floor retail space,
which will be occupied by Ackerman"s until 2012. The work has started and will
be completed in early April 2006.
4 PORTFOLIO VALUATION
Capital"s policy is to have all its properties revalued by an independent valuer
on an annual basis at the financial year-end. The value of the portfolio at 31
December 2005 was R1,457 billion.
5 STRATEGY
Capital"s strategy remains consistent in replacing older, underperforming
buildings with properties that have sound fundamentals and long-term growth
potential. In addition, the management team is investigating opportunities to
acquire good properties across all sectors with positive growth prospects, as
well as aligning itself with reputable developers in order to acquire properties
in new developments.
6 OUTLOOK
The board of PFM forecasts that the total distribution per unit will be
approximately 37 cents for the year ending 31 December 2006. This forecast has
not been reviewed by the Fund"s auditors.
The positive growth in the property sector is expected to continue in 2006.
Capital"s management team remains focused on extracting further value from the
existing portfolio and looking for new opportunities that balance the portfolio
by acquiring properties with sound fundamentals, good growth prospects and
resilient income-earning characteristics.
7 INCOME DISTRIBUTION
Notice is hereby given that a distribution of 18,01 cents per unit has been
declared payable to the unitholders recorded in the books of Capital at the
close of business on the record date, Friday, 24 February 2006. Unitholders are
advised that the last day to trade "cum" the distribution will be Friday, 17
February 2006. The units will trade "ex" the distribution as from Monday, 20
February 2006. Payment will be made on Monday, 27 February 2006. Unit
certificates may not be dematerialised or rematerialised during the period
Monday, 20 February 2006 to Friday, 24 February 2006, both days inclusive.
By order of the Board
Johannesburg
2 February 2006
Restated
Audited Audited
Year Year
ended ended
31 December 31 December
2005 2004
Consolidated income statements R000 R000
Recoveries and contractual rental income 224 836 153 306
Straight lining of rental income 7 663 5 461
Total income 232 499 158 767
Expenditure 81 238 61 187
Net operating profit 151 261 97 580
Net finance charges 11 186 8 852
140 075 88 728
Net write-up on revaluation of investment
property 326 506 82 342
Net profit/(loss) on disposal of investment
property 6 972 (1 080)
Net income before taxation 473 553 169 990
Taxation (16 622) (2 500)
Deferred capital gains taxation (16 622) (1 312)
Current capital gains taxation - (1 188)
Net income for the year 456 931 167 490
RECONCILIATION OF NET INCOME FOR THE YEAR
TO HEADLINE EARNINGS AND AMOUNT AVAILABLE
FOR DISTRIBUTION
Net income for the year 456 931 167 490
Transfer to revaluation reserve (309 884) (79 842)
Transfer (to)/from trust capital (6 972) 1 080
Headline earnings 140 075 88 728
Straight lining of rental income adjustment (7 663) (5 461)
Transfer from maintenance reserve - 3 988
Amount available for distribution 132 412 87 255
Units in issue 383 449 186 383 449 186
Weighted average number of units in issue 383 449 186 267 463 348
Headline earnings (cents per unit) 36,53 33,17
Earnings (cents per unit) 119,16 62,62
Income distribution (cents per unit) 34,53 30,43
Net asset value (cents per unit) 334 249
Consolidated balance sheets
Assets
Non-current assets
Investment property 1 409 281 1 133 705
Current assets 79 787 108 415
- Properties held for sale 48 202 78 055
- Trade and other receivables 31 495 17 605
- Cash on deposit 90 12 755
Total assets 1 489 068 1 242 120
Unitholders" interest and liabilities
Unitholders" interest 1 279 895 955 376
Non-current liabilities 94 260 185 173
- Interest-bearing borrowings 71 041 178 576
- Deferred taxation 23 219 6 597
Current liabilities 114 913 101 571
- Trade and other payables 105 235 86 839
- Bank overdraft 9 678 14 732
Total unitholders" interest and liabilities 1 489 068 1 242 120
Consolidated statements of changes in unitholders" interest
Capital of Trust 832 737 825 765
Balance at beginning of the year 825 765 385 524
Issue of units - 441 321
Net profit/(loss) on disposal of property 6 972 (1 080)
Revaluation reserve 422 315 112 431
- As previously stated 44 308
- Straight-line adjustment (11 719)
Restated balance at beginning of the year 112 431 32 589
Transfer from distributable reserve 309 884 79 842
Maintenance reserve - -
Balance at beginning of the year - 3 988
Transfer to distributable reserve - (3 988)
Undistributed income 24 843 17 180
- As previously stated -
- Straight-line adjustment 11 719
Restated balance at beginning of the year 17 180 11 719
Net income for the year 456 931 167 490
Net transfers to trust capital and
non-distributable reserves (316 856) (78 762)
Transfer from maintenance reserve - 3 988
Income distributions (132 412) (87 255)
Total unitholders" interest 1 279 895 955 376
Abridged consolidated cash flow statements
Net cash inflow from operating activities 4 506 40 798
Net cash inflow/(outflow) from investing
activities 95 418 (331 296)
Net cash (outflow)/inflow from financing
activities (107 535) 251 581
Net decrease in cash and cash equivalents (7 611) (38 917)
Cash and cash equivalents at beginning of
the year (1 977) 36 940
Cash and cash equivalents at end of the year (9 588) (1 977)
Segmental analysis 2005
Retail Commercial Industrial Unallocated Total
Total income 70 965 86 397 75 137 - 232 499
Net income for
the year 177 385 163 270 155 177 (38 901) 456 931
Segmental analysis 2004
Total income 31 238 61 099 61 422 5 008 158 767
Net income for
the year 33 962 68 413 77 240 (12 125) 167 490
Capital commitments
Authorised and contracted 73 807 965
Authorised and not yet contracted 712 2 028
Income distributions
Amount available for distribution (cents per unit) 34,53 30,43
Distribution (cents per unit) 34,53 30,43
Interim 16,52 14,80
Final 18,01 15,63
The final distribution of 18,01 cents, being number 45 for Capital Property
Fund, has been declared in respect of the income distribution period 1 July 2005
to 31 December 2005.
Registered Office
1st Floor, Capital Place,
2 Lone Close,
Lonehill, 2062
(PO Box 89, Lonehill, 2062)
Transfer Secretaries
Computershare Investor Services 2004 (Proprietary) Limited,
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Date: 03/02/2006 07:00:14 AM Supplied by www.sharenet.co.za
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