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Emira - Audited financial results for the seven months ended 30 June 2004
Emira Property Fund
(A property fund created under the Emira Property Scheme, registered in terms of
the Collective Investment Schemes Control Act)
Share code: EMI
ISIN: ZAE000050712
("Emira")
- Total distributions of 34,01 cents
- Distributions up 4,3% on pre-listing forecast
- NAV rises by 1,1% to 526 cents per PI
- Vacancy decline to 6,1%
- Total assets R1,9 billion
Audited financial results for the seven months ended 30 June 2004
Abridged income statement
Unaudited
One month
Audited results ended
30 June 2004 31 Dec 2003
R"000 R"000
Revenue 179 669 23 166
Property expenses (60 843) (7 822)
Administration and management
expenses (10 940) (1 766)
Depreciation (3 004) (285)
Net income from property rental
operations 104 882 13 293
Change in fair value of investment
properties 86 906 -
Maintenance fund expenses (1 330) -
Listing costs (345) (264)
Operating profit 190 113 13029
Financing costs 20 669 (2 826)
Interest received 8 046 2 172
Net profit for the period 177 490 12 375
Reconciliation between net profit
for the period headline earnings:
Net profit for the period 177 490 12 375
Adjusted for:
Change in fair value of investment
properties 86 906 -
Headline earnings 90 584 12 375
Reconciliation of headline earnings
to distribution per participatory
interest:
Headline earnings 90 584 12 375
Adjusted for:
Amortised borrowing costs 173 -
Maintenance fund expenses 1 330 -
Interim distributions paid to
PI holders (12 373) -
Distribution payable to
participatory interest holders 79 714 12 375
Distribution per participatory
interest 29,29 4,72
Abridged balance sheet at 30 June 2004
Unaudited
One month
Audited at ended
30 June 2004 31 Dec 2003
R"000 R"000
Assets
Non-current assets
Investment properties 1 866 799 1 374 902
Furniture and fittings 34 228 18 736
1 901 027 1 393 638
Current assets
Accounts receivables and
prepayments 4 269 6 963
Maintenance fund 24 104 -
Cash 4 027 332 671
32 400 339 634
Total assets 1 933 427 1 733 272
Equity
Participatory interest holders"
Funds 1 501 747 1 301 207
Non-current liabilities
Borrowings 310 978 386 784
Current liabilities
Short-term portion of borrowings 1 867 2 492
Accounts payable 39 121 30 414
Provision for distributions to
participatory interest holders 79 714 12 375
120 702 45 281
Total equity and liabilities 1 933 427 1 733 272
Statement of changes in equity
for the seven months ended
30 June 2004
Non-
Participatory distributable Retained
interest reserve loss Total
R"000 R"000 R"000 R"000
Issue of
participatory
interest 1 426 468 - - 1 426 468
Participatory
issue cost (10 124) - - (10 124)
Net profit for
the period - - 177 490 177 490
Distribution to
PI holders - - (92 087) (92 087)
Transfer of
maintenance fund
expenses to
non-distributable
reserve - (1 330) 1 330 -
Transfer of
fair value
adjustment to
non-distributable
reserve - 86 906 (86 906) -
Balance at
30 June 2004 1 416 344 85 576 (173) 1 501 747
Abridged cash flow statement
for the seven months ended 30 June 2004
Unaudited
One month
Audited results ended
30 June 2004 31 Dec 2003
R"000 R"000
Cash generated by rental operations 141 063 36 458
Net finance cost (12 623) (654)
Distribution to participatory
interest holders (12 373) -
Cash flow from operating activities 116 067 35 804
Purchase of investment properties (1 779 893) (1 374 902)
Purchase of furniture and fittings (37 232) (18 450)
Increase in maintenance fund (24 104) -
Net cash utilised in investing
activities (1 841 229) (1 393 352)
Issue of participatory interest 1 426 468 1 310 668
Cash utilised for listing costs (10 124) (9 725)
Cash raised from borrowings 310 978 389 276
Increase in short-term portion
of borrowings 1 867 -
Net cash from financing activities 1 729 189 1 690 219
Net change in cash and cash
equivalents 4 027 332 671
Accounting policies
The financial statements are prepared in accordance and comply with South
African Statements of Generally Accepted Accounting Practice. The accounting
policies are consistent with those used in the preparation of the prelisting
statement.
Segmental information
Retail Office Industrial
Primary segment R"000 R"000 R"000
Revenue
Revenue 55 935 92 165 31 569
Segmental result
Net income from property
rental operations 31 987 55 289 24 662
Depreciation 420 2 160 424
Change in fair value 37 704 35 962 13 240
Other information
Investment properties 645 937 953 046 300 051
Total assets 648 058 955 149 299 207
Accounts payable 5 509 10 761 2 795
Capital expenditure 42 669 21 712 900
Retail Office Industrial
Geographical segments R"000 R"000 R"000
Revenue
- Gauteng 38 176 81 380 18 857
- Western and Eastern Cape 4 132 7 404 4 817
- KwaZulu-Natal - 3 381 7 895
- Free State 13 251 - -
- North West 376 - -
55 935 92 165 31 569
Total assets
- Gauteng 442 431 757 753 173 775
- Western and Eastern Cape 75 301 78 015 49 222
- KwaZulu-Natal - 119 381 76 210
- Free State 110 189 - -
- North West 20 137 - -
648 058 955 149 299 207
Segmental information (continued)
Other Total
Primary segment R"000 R"000
Revenue
Revenue - 179 669
Segmental result
Net income from property
rental operations (7 056) 104 882
Depreciation - 3 004
Change in fair value - 86 906
Other information
Investment properties 1 993 1 901 027
Total assets 31 013 1 933 427
Accounts payable 20 056 39 121
Capital expenditure - 65 281
Other Total
Geographical segments R"000 R"000
Revenue
- Gauteng - 138 413
- Western and Eastern Cape - 16 353
- KwaZulu-Natal - 11 276
- Free State - 13 251
- North West - 376
- 179 669
Total assets
- Gauteng 26 146 1 400 105
- Western and Eastern Cape 2 987 205 525
- KwaZulu-Natal 734 196 325
- Free State 1 146 111 335
- North West - 20 137
31 013 1 933 427
Related parties and related party transactions
Emira is controlled by Momentum Group Limited and ultimately by FirstRand
Limited. At 30 June 2004, Momentum owned 53% of the fund"s participatory
interest and the remaining 47% of the participatory interests are widely held.
The following transactions were carried out with related parties:
Unaudited
One month
Audited at ended
30 June 2004 31 Dec 2003
R"000 R"000
Strategic Real Estate
Managers (Pty) Limited
Expenditure comprising:
asset management fee 5 240 785
Relationship: Fellow subsidiary
company of the FirstRand Group
Rand Merchant Bank, a division of
FirstRand Bank Limited
Expenditure comprising: advisory fee 1 500 1 500
Borrowings 312 845 389 276
Net finance cost 12 450 654
Relationship: Fellow subsidiary
company of the FirstRand Group
RMB Properties (Pty) Limited 13 762 5 364
Expenditure comprising: property
management fee and letting
commissions 9 762 1 364
Promoters fee 4 000 4 000
Relationship: Fellow subsidiary
company of the FirstRand Group
Momentum Group Limited
Purchase of properties at listing 43 208 43 208
Purchase of Boundary Terraces 56 100 56 100
Relationship: Major PI holder
Hawley Road Developments
(Pty) Limited
Purchase of properties at listing 57 347 57 347
Relationship: Fellow subsidiary
company of the FirstRand Group
Momentum Property Investments
(Pty) Limited
Purchase of properties at listing 769 620 769 620
Purchase of Strathmore Park 16 300 -
Purchase of Safecash Technologies 1 500 -
Relationship: Fellow subsidiary
company of the FirstRand Group
The above transactions were carried out on commercial terms and conditions no
more favourable than those available in similar arms-length dealings at market-
related rates.
Comparison to pre-listing forecast
Prelisting
statement
30 June 2004 31 Dec 2003
Revenue 179 669 180 192
Property expenses (60 843) (63 035)
Administration and management expenses (10 940) (9 841)
Depreciation (3 004) (4 552)
Net income from property rental
operations 104 882 102 764
Financing costs 20 669 (13 999)
Interest received 8 046 141
Change in fair value of investment
properties 86 906 -
Maintenance fund expenses (1 330) -
Listing costs (345) (197)
Net profit for the period 177 490 88 709
Participatory interests in issue 285 293 684 272 133 684
Participatory interests in issue
for distribution 272 133 684 272 133 684
Earnings per participatory interest 65,22 32,60
Headline earnings per participatory
interest 33,28 32,60
Distribution earnings per participatory
interest 34,01 32,60
Market capitalisation (R"000) 1 483 527 1 360 668
Market value of investment
properties (R"000) 1 901 027 1 564 954
Net asset value per participatory
interest (cents) 526 496
Listed market price (cents per unit) 520 500
(Discount)/premium to net asset
value (%) (1,1) 1,0
Average vacancy factor (%) 6,1 10,1
Commentary
Results
Emira listed on the JSE Securities Exchange South Africa ("JSE") on 28 November
2003, and Strategic Real Estate Managers is pleased to announce that the pre-
listing forecast for the period under review has been exceeded. Total
distribution achieved of 34,01 cents per participatory interest compared to the
forecast of 32,60 cents contained in Scenario A of the pre-listing statement.
This was achieved despite a delay in the transfer of a number of properties. All
properties contained in the prelisting statement have now been transferred to
the fund.
Acquisitions
During the period under review the fund concluded acquisitions totalling R181
million, at an average ungeared yield of 12,3%. These acquisitions were settled
by way of cash raised on listing, debt, as well as the issue of new
participatory interests of 13 160 000 at an issue price of 500 cents. These
acquisitions are in line with the objectives of the fund of acquiring properties
that are yield-enhancing as well as achieving a greater geographical spread.
Letting
Approximately 20 552 m2 has been let in the past seven months. The overall
vacancy has improved to 6,1% from 10,1% at listing. Reduced vacancies should
contribute positively to the fund in the ensuing period.
Vacancy spread:
December 2003 June 2004
GLA* m2 % Vacant GLA* m2 % Vacant
Industrial 25 303 13,6 14 015 7,6
Offices 24 783 11,0 16 532 7,0
Retail 4 973 3,7 3 959 2,8
Total 55 059 10,1 34 506 6,1
*GLA - gross lettable area
Revaluation of investment properties
The fund obtained directors" valuations, performed by registered valuers
employed by RMB Properties (Pty) Ltd. The valuation of R1, 901 million has given
rise to a change in fair value in the income statement totalling R86,9 million
or 4,6 %. The fund is committed in having all properties valued externally on a
rotational basis once every three years. The first external valuations are
scheduled for December 2004.
Debt
In terms of the trust deed, the fund"s aggregated indebtedness may not exceed an
amount equal to 30% of the gross value of the underlying assets of the fund. At
year-end, total borrowings were at R311 million, equal to 16,4% of total assets.
Of the total borrowings, R226 million (73%) is fixed at an average rate of 9,98%
expiring in two and four years. The remaining floating portion attracts interest
at prime less 2%.
The fund has recently secured additional facilities totalling R151 million for
further acquisitions.
Prospects
The outlook for the coming year is positive. Refurbishments undertaken at
certain retail properties have now been completed and are expected to deliver
enhanced returns. Reduced vacancies in the industrial and office sectors will
also contribute positively to further growth.
Acquisitions concluded to date have been yield-enhancing and have also enhanced
the fund"s composition on a geographical and sectoral basis. Management will
continue with this acquisition strategy where possible.
Audited opinion by independent auditors
The funds" financial statements have been audited by PricewaterhouseCoopers Inc.
whose unqualified audit opinion is available for inspection at Emira"s
registered address.
Distribution
Notice is hereby given that a cash distribution of 29,29 cents per participatory
interest has been declared payable to participatory interest holders on Monday,
4 October 2004.
Last day to trade cum distribution Thursday, 23 September 2004
Participatory interest trade
ex distribution Monday, 27 September 2004
Record date Friday, 1 October 2004
Payment date Monday, 4 October 2004
Share certificates may not be dematerialised or rematerialised between Monday,
27 September 2004 and Friday, 1 October 2004 both days inclusive.
By order of the Board
C Middlemiss
Company secretary
James Templeton
Chief Executive Officer
Ben van der Ross
Chairman
Sandton
6 September 2004
Property Fund Manager
Strategic Real Estate Managers (Pty) Limited
Directors of the fund manager
B J van der Ross (Chairman)*, J W A Templeton (Chief executive officer), L
Barnard*, L Basson*, B T Jackson*, M S B Neser*, W K Schultze
*Non-executive director
Registered address: 6 Protea Place South, Sandton, 2146
Transfer secretaries: Computershare Investor Services 2004 (Pty) Ltd
70 Marshall Street, Johannesburg, 2001
Merchant bank and sponsor
Rand Merchant Bank
Corporate Finance
Date: 06/09/2004 05:00:59 PM Supplied by www.sharenet.co.za
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