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Reviewed condensed consolidated results for the year ended 30 June 2012
FAIRVEST PROPERTY HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1998/005011/06)
("Fairvest" or "the company" or "the group")
Linked unit code: FVT
ISIN: ZAE000034658
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2012
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Reviewed Audited Audited
RESTATED RESTATED
30 June 30 June 30 June
2012 2011 2010
R '000 R '000 R '000
ASSETS
NON-CURRENT ASSETS 125,209 100,186 91,622
Investment property 97,079 97,372 88,766
Investment property under construction 27,768 623 -
Equipment 13 17 20
Operating lease asset 349 2,174 2,836
CURRENT ASSETS 31,728 44,692 53,147
Listed investments 3,275 8,450 2,684
Trade and other receivables 3,591 2,401 2,127
Taxation 127 - -
Cash and cash equivalents 24,735 33,841 48,336
Investment property held for sale 6,450 2,150 -
TOTAL ASSETS 163,387 147,028 144,769
EQUITY AND LIABILITIES
EQUITY AND RESERVES
Ordinary share capital 857 857 857
NON-CURRENT LIABILITIES 147,043 138,006 126,555
Linked unit debentures and premium 143,331 136,455 126,400
Deferred taxation 3,712 1,551 155
CURRENT LIABILITIES 15,487 8,165 17,357
Taxation - 35 2,017
Trade and other payables 15,487 8,130 15,340
TOTAL EQUITY AND LIABILITIES 163,387 147,028 144,769
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Reviewed Audited Audited
RESTATED RESTATED
12 months to 12 months to 15 months to
30 June 30 June 30 June
2012 2011 2010
R '000 R '000 R '000
GROSS REVENUE 16,421 17,295 19,801
Rental income - contractual 18,928 17,502 19,541
- straight-line accrual (2,507) (207) 260
OPERATING PROFIT 3,527 5,910 8,962
Fair value adjustment to listed
investments 279 288 12
Fair value adjustment to investment
properties 9,737 10,756 2,340
Fair value adjustment to debentures (6,876) (10,055) (1,052)
Profit on sale of investment property 1,840 - -
Finance cost - (6) (810)
Foreign exchange gains 624 588 -
Investment revenue 2,856 2,256 4,389
Dividends received 353 290 -
PROFIT BEFORE DEBENTURE INTEREST 12,340 10,027 13,841
Debenture interest (9,867) (9,352) (11,832)
PROFIT BEFORE TAXATION 2,473 675 2,009
Taxation (2,473) (675) (2,009)
COMPREHENSIVE INCOME ATTRIBUTABLE TO
SHAREHOLDERS - - -
Profit and total comprehensive income
attributable to:
- Owners of the parent - - -
- Non controlling interest - - -
Reconciliation between profit attributable
to shareholders and headline earnings per
linked unit
Shares are traded as part of linked units
Profit attributable to linked
shareholders* - - -
Fair value adjustment to investment
properties (net of taxation) (7,921) (9,250) (2,012)
Headline and diluted headline loss
attributable to shareholders (7,921) (9,250) (2,012)
Fair value adjustment to debentures 6,876 10,055 1,052
Debenture interest 9,867 9,352 11,832
Headline and diluted headline profit
attributable to linked unitholders 8,822 10,157 10,872
DISTRIBUTION (DEBENTURE INTEREST)*
Interim interest distribution per linked
unit (cents) 5.2 5.0 10.0
Final interest distribution per linked
unit (cents) 6.3 5.9 3.8
Total interest distribution per linked
unit (cents) 11.5 10.9 13.8
EARNINGS PER SHARE
Basic and diluted earnings per share
(cents) ** - - -
Headline and diluted headline loss per
share (cents) ** (9.2) (10.8) (2.3)
Headline and diluted headline earnings per
linked unit (cents) ** 10.3 11.8 12.7
Net asset value per linked unit and net
tangible asset value per linked unit
(cents)*** 168.1 160.1 148.4
Linked unit statistics (excluding treasury
shares)
Linked units in issue 85,795,988 85,795,988 85,795,988
Effective linked units in issue 85,721,986 85,721,986 85,721,986
Weighted average number of linked units 85,721,986 85,721,986 85,721,986
* Debenture interest is calculated on the capital at a variable rate equal to
99.9% of the net profit of the company before taxation, but after adjusting for
extraordinary income and expenditure, capital gains and losses, and capital
expenditure.
** Headline earnings have been presented in accordance with IAS 33. The linked unit
structure of the group whereby every shareholder is a debenture holder, coupled
with the terms of the Debenture Trust Deed which states that 99.9% of profits
are attributable to debenture holders, results in the benefits of improved
trading which would be ordinarily attributable to shareholders being expensed in
the income statement as a fair value adjustment to debentures and debenture
interest. This results in no profit being attributable to ordinary shareholders.
*** Linked unit debentures are included in the net asset value and net tangible
asset value calculation.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Reviewed Audited Audited
12 months to 12 months to 15 months to
30 June 30 June 30 June
2012 2011 2010
R '000 R '000 R '000
Cash inflow / (outflow) from operating
activities 4,358 (8,991) 4,838
Cash outflow to investing activities (13,464) (5,504) (2,693)
Net (decrease) / increase in cash and cash
equivalents (9,106) (14,495) 2,145
Cash and cash equivalents at beginning of
period 33,841 48,336 46,191
Cash and cash equivalents at end of period 24,735 33,841 48,336
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share Retained
capital income Total
R'000 R'000 R'000
Balance at 1 April 2009 857 - 857
Total comprehensive income for the period - -
Balance at 30 June 2010 857 - 857
Total comprehensive income for the period - -
Balance at 30 June 2011 857 - 857
Total comprehensive income for the period - -
Balance at 30 June 2012 857 - 857
STATEMENTS OF CHANGES IN LINKED UNIT DEBENTURES
Linked unit Linked unit
debenture debenture
capital premium Total
R'000 R'000 R'000
Balance at 1 April 2009 857 123,801 124,658
Restatement 690 690
Restated balance at as 1 April 2009 857 124,491 125,348
Restatement 833 833
Net fair value adjustment 219 219
Balance at 30 June 2010 857 125,543 126,400
Restatement 1,697 1,697
Net fair value adjustment 8,358 8,358
Balance at 30 June 2011 857 135,598 136,455
Net fair value adjustment 6,876 6,876
Balance at 30 June 2012 857 142,474 143,331
CONDENSED CONSOLIDATED SEGMENT REPORT
Eastern Cape Free State Gauteng
FOR THE 12 MONTHS ENDED 30 JUNE
Revenue - external customers 8,121 1,162 1,651
Intersegmental revenue - - -
Operating profit 4,019 568 (5)
Total assets 36,509 7,801 17,850
FOR THE 12 MONTHS ENDED 30 JUNE 2011
Revenue - external customers 8,067 1,036 1,001
Intersegmental revenue - - -
Operating profit 5,212 (408) (671)
Total assets 36,716 6,459 18,463
FOR THE 15 MONTHS ENDED 30 JUNE 2010
Revenue - external customers 9,145 982 1,090
Intersegmental revenue - - -
Operating profit 6,919 501 (158)
Total assets 35,361 4,686 16,439
CONDENSED CONSOLIDATED SEGMENT REPORT continued
Reconci-
ling items
KwaZulu Western / (Elimi-
Natal Cape nations) Total
FOR THE 12 MONTHS ENDED 30 JUNE
Revenue - external customers 7,994 - - 18,928
Intersegmental revenue - 2,264 (2,264) -
Operating profit 2,848 - (3,903) 3,527
Total assets 70,560 - 30,667 163,387
FOR THE 12 MONTHS ENDED 30 JUNE
2011
Revenue - external customers 7,398 - - 17,502
Intersegmental revenue - 1,285 (1,285) -
Operating profit 4,253 - (2,476) 5,910
Total assets 42,961 - 42,429 147,028
FOR THE 15 MONTHS ENDED 30 JUNE
2010
Revenue - external customers 8,324 - - 19,541
Intersegmental revenue - 3,866 (3,866) -
Operating profit 4,133 - (2,433) 8,962
Total assets 37,243 - 51,040 144,769
OTHER SEGMENTAL INFORMATION
Reviewed Audited Audited
30 June 30 June 30 June
2012 2011 2010
Regional profile based on
leasable area
Eastern Cape 30% 29% 29%
Free State 9% 10% 12%
Gauteng 16% 20% 20%
KwaZulu-Natal 45% 41% 39%
Vacancy profile based on gross
lease area
Gross lease area in metres
squared as at end of period 21,436 24,356 25,108
Vacancy area in metres squared * 3,751 3,740 5,594
Vacancy area as % of gross lease
area 17.5% 15.4% 22.3%
Regional vacancy profile
Eastern Cape 0% 23% 12%
Free State 0% 0% 25%
Gauteng 40% 62% 52%
KwaZulu-Natal 60% 15% 12%
* Gross lease area and vacancy in the prior and current periods has been updated to
exclude unlettable areas
Basis of preparation and accounting policies
The accounting policies applied in the preparation of these reviewed condensed
consolidated results for the year ended 30 June 2012, which are based on reasonable
judgements and estimates, are in accordance with International Financial Reporting
Standards ("IFRS") and are consistent with those applied in the annual financial
statements for the year ended 30 June 2011 except for the early adoption of IAS 12
(Amended) Income taxes. Restatements in the prior years are as a result of early
adoption of IAS 12. Any other new and amendments to IFRS and IFRIC interpretations did
not impact on the financial position or performance of the company but has resulted in
additional disclosures.These reviewed condensed consolidated results as set out in
this report have been prepared in accordance and containing the information required
by IAS 34 Interim Financial Reporting, the AC 500 standards as issued by the
Accounting Practices Board, the Companies Act of South Africa 71 of 2008, and the
Listings Requirements of JSE Limited.
Restatement of comparatives
During the period under review, the group has early adopted the amended IAS12 - Income
Taxes. This amendment is effective for annual periods beginning on or after 1 January
2012. IAS 12 has been updated to include a rebuttable presumption that deferred tax on
investment property measured using the fair value model in IAS 40 should be determined
on the basis that its carrying amount will be recovered through sale. This resulted in
a change to the rate of deferred taxation from 28% to the capital gains tax inclusion rate.
The effect of the changes are summarized as follows:
30 June 30 June
2011 2010
R'000 R'000
Condensed consolidated statement of financial position
Decrease in deferred taxation (3,220) (1,523)
Increase in linked unit debenture premium 3,220 1,523
Condensed consolidated statement of comprehensive income
Increase in fair value adjustment to debentures 1,697 833
Decrease in deferred taxation (1,697) (833)
Earnings per share and headline earnings per share
Decrease in headline and diluted headline loss per share (1.8) (0.3)
Increase in headline and diluted headline earnings per linked unit 0.2 0.6
Increase in net asset value per linked unit and net
tangible asset value per linked unit 3.8 1.8
These reviewed condensed consolidated results for the year ended 30 June 2012 have
been prepared in accordance with the historic cost basis, except for the measurement
of investment properties, debentures and certain financial assets and financial
liabilities which are stated at fair value.
The financial results are presented in Rands, which is Fairvest's functional and
presentation currency and have been prepared on a going concern basis.
The condensed consolidated financial results have been reviewed by the company's
auditors, BDO South Africa Inc, in accordance with International Standards on Review
Engagements 2410. They expressed an unmodified review opinion on the financial
information for the year ended 30 June 2012. A copy of their report is available for
inspection at the company's registered office. Any reference to future financial
performance included in this announcement has not been reviewed or reported on by the
company's auditors.
Estimates and critical judgements
Except for the measurement of investment properties, debentures and certain financial
assets and financial liabilities the financial statements do not include any material
estimates.
The investment in related shareblock company, which constitutes the commercial portion
of a mixed used building are classified as investment property and measured at fair
value.
COMMENTARY
Introduction
Fairvest is a property investment holding company with investments in commercial
properties in South Africa. The group appointed a new asset management company in
October 2011, which is in the process of implementing a significant growth strategy
for the group, focussing on retail assets in non-metropolitan areas servicing the
lower LSM market.
Linked unit holders are referred to the company's detailed announcement dated 17 July
2012 regarding the SA Corporate Real Estate Property Portfolio Acquisition, the Put
Option Acquisition and the Isolenu Property Portfolio Acquisition. The acquisitions
will change the group materially. The quality of assets and sustainability of income
will be significantly enhanced as a result of the acquisition. Further announcements
on the transaction containing the proforma financial effect and the forecast financial
information will be made shortly and a detailed circular will be distributed to linked
unitholders in due course .
Review of results
The number of properties in the portfolio reduced to 10 during the year under review,
as one vacant property was disposed of. During the year under review R23.0 million was
spent on the development of a new A-grade single tenant office block with a further
R20.0 million of capital committed. The project is scheduled for completion by
November 2012 on time and on budget with occupation by the tenant in December 2012.
The completed project will enhance the quality of the yield and asset value of the
current portfolio.
Fairvest has commenced the redevelopment of the Blue Heights Shopping Centre,
scheduled for completion by the end of the first quarter 2013. This project will
position the asset to attract quality tenants and secure a more sustainable income.
During the period, the value of the property portfolio under management increased to
R103.5 million and the investment property held for sale in the previous period was
sold. The investment property held for sale in the current period was sold after year
end.
Revenue increased by 8.1% to R18.9 million and if revenue previously derived from
CAPAB House which was sold in the previous period is excluded, revenue increased by
12.2%.
Vacancies increased from 15.4% (restated to exclude unlettable space) in the previous
year to 17.5%. The increase is as a result of the redevelopment of Blue Heights
Shopping Centre which accounts for 59.5% of the vacant space and should that be
excluded, the vacancy decreased to 7.1%.Operating profit decreased by 12.1% to
R2.9million during the period under review. By excluding IFRS rental straight-line accrual
adjustments, operating profits increased by 4.9%.
During the period under review Fairvest sold shares held in the Australian listed
property sector to the value of R6.111 million (AU$0.772 million) resulting ina
realised gain of R1.159 million. These surplus funds were utilised in the development
currently under way.
The group therefore declares a final distribution of 6.3 cents per linked unit for the
six months ended 30 June 2012, bringing the total distribution for the year to
11.5 cents per linked unit, an increase of 5.5% The restated net asset value increased from
160.1 cents per share to 168.1 cents per share.
Interest distributions and dividends
Interest on debentures have been calculated in terms of the Debenture Trust Deed. The
final interest distribution of 6.3 cents per linked unit is payable to linked
unitholders registered in the books of the company at the close of business on Friday,
5 October 2012. No dividend has been declared for the period in respect of the linked
units.
Last date to trade linked units cum interest payment Friday, 28 September 2012
Linked units commence trading ex interest payment Monday, 1 October 2012
Record date Friday, 5 October 2012
Payment date Monday, 8 October 2012
Linked units may not be dematerialised or rematerialised between Monday, 1 October
2012 and Friday, 5 October 2012, both days inclusive.
Directorate
D Wilder was appointed as an executive director on 22 September 2011, with A Marcus
appointed as his alternate to the board.
In accordance with paragraph 7.F.6(c) of the
JSE Limited Listing Requirements, linked unitholders of Fairvest are hereby advised
that Mr Pieter van der Merwe, an independent non-executive director of Fairvest, has
been appointed as the Lead Independent Director with immediate effect.
Subsequent events
The investment property held for sale was disposed of after year end. The directors of
Fairvest are not aware of any other material matter or circumstance arising between 30
June 2012 and this report which may materially affect the financial position of the
Group or the results of its operations.
Appreciation
We extend our appreciation to our directors, management and staff for their valued
efforts as well as our advisers and linked unitholders for their continuing belief in
and support of Fairvest.
For and on behalf of the board
J Fdu Toit B J Kriel
Chairman Chief Executive Officer and Financial Director
10 September 2012
Directors Executive: BJ Kriel (Chief Executive Officer and Financial Director), Darren
Wilder, Adam Marcus Non-executive: JF du Toit (Chairman), M Epstein, PJ van der Merwe
(Lead Independent Non-executive)#
LW Andrag# # independent
Company Secretary
SecCorp Secretarial Services (Proprietary) Limited
Registered office
1st Floor East Wing, The Palms, 145 Sir Lowry Road, Cape Town, 8001
PO Box 4083, Durbanville, 7551
Transfer secretaries
Computershare Investor Services 2004 (Proprietary) Limited
Ground Floor, 70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Auditor
BDO South Africa Incorporated
Registered Auditors
Property managers
Sponsor
PSG Capital (Proprietary) Limited
Preparer of financial statements
BJ Kriel
FAIRVEST PROPERTY HOLDINGS LIMITED Incorporated in the Republic of South Africa
(Registration number: 1998/005011/06) Linked unit code: FVT ISIN: ZAE000034658
("Fairvest" or "the company" or "the group")
Date: 12/09/2012 04:44:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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