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Provisional reviewed condensed consolidated results for the year ended 30 June 2013
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")
Provisional reviewed condensed consolidated results for the year ended 30 June 2013
Highlights
- R349 million new equity raised
- 18 properties acquired and transferred during the year
- Property Portfolio exceeds 100 000 m2
- Increased market capitalisation from R107.2 million to R503.7 million
- Achieved forecasted distribution of 6.00 cents per linked unit
- Conversion to a REIT approved by JSE with effect from 1 July 2013
Condensed consolidated statements of financial position
Audited
Reviewed Audited Restated
30 June 30 June 30 June
2013 2012 2011
R'000 R'000 R'000
ASSETS
Non-current assets 774 810 125 209 100 186
Investment property 770 307 97 079 97 372
Investment property under construction - 27 768 623
Equipment 354 13 17
Operating lease asset 4 149 349 2 174
Current assets 10 269 31 728 44 692
Listed investments - 3 275 8 450
Trade and other receivables 7 506 3 591 2 401
Taxation 59 127 -
Cash and cash equivalents 2 704 24 735 33 841
Investment property held for sale - 6 450 2 150
Total assets 785 079 163 387 147 028
EQUITY AND LIABILITIES
Equity and reserves
Ordinary share capital 3 598 857 857
Non-current liabilities 743 363 147 043 138 006
Linked unit debentures and premium 543 309 143 331 136 455
Interest-bearing borrowings 200 047 - -
Deferred taxation 7 3 712 1 551
Current liabilities 38 118 15 487 8 165
Taxation - - 35
Trade and other payables 38 118 15 487 8 130
Total equity and liabilities 785 079 163 387 147 028
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Audited
Reviewed Audited Restated
12 months 12 months 12 months
to 30 June to 30 June to 30 June
2013 2012 2011
R'000 R'000 R'000
Gross revenue 54 184 16 421 17 295
Rental income - contractual 50 376 18 928 17 502
- straight-line accrual 3 808 (2 507) (207)
Operating profit 31 520 3 527 5 910
Fair value adjustment to listed investments 284 279 288
Fair value adjustment to investment properties 67 745 9 737 10 756
Fair value adjustment to debentures (57 407) (6 876) (10 055)
Profit on sale of investment property - 1 840 -
Finance cost (7 048) - (6)
Foreign exchange gains 42 624 588
Investment revenue 4 998 2 856 2 256
Dividends received - 353 290
Profit before debenture interest 40 134 12 340 10 027
Debenture interest (27 255) (9 867) (9 352)
Profit after debenture interest 12 879 2 473 675
Capital raising expenses (16 126) - -
(Loss)/Profit before taxation (3 247) 2 473 675
Taxation 3 247 (2 473) (675)
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) (67 745) (7 921) (9 250)
Headline and diluted headline loss attributable
to shareholders (67 745) (7 921) (9 250)
Fair value adjustment to debentures 57 407 6 876 10 055
Debenture interest 27 255 9 867 9 352
Headline and diluted headline profit attributable
to linked unitholders 16 917 8 822 10 157
Distribution (debenture interest)*
Special distribution per linked unit (cents) 3.71 - -
Interim interest distribution per linked unit (cents) 0.86 5.20 5.00
Final interest distribution per linked unit (cents) 6.00 6.30 5.90
Total interest distribution per linked unit (cents) 10.57 11.50 10.90
Earnings per share
Basic and diluted earnings per share (cents)** - - -
Headline and diluted headline loss per share (cents)** (32.1) (9.2) (10.8)
Headline and diluted headline earnings
per linked unit (cents)** 8.0 10.3 11.8
Net asset value per linked unit and net tangible
asset value per linked unit (cents)*** 151.9 168.1 160.1
Linked unit statistics (excluding treasury shares)
Linked units in issue 359 762 307 85 795 988 85 795 988
Effective linked units in issue 359 762 307 85 721 986 85 721 986
Weighted average number of linked units 210 840 698 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 12 months 12 months
to 30 June to 30 June to 30 June
2013 2012 2011
R'000 R'000 R'000
Cash (outflow)/inflow from operating activities (1 859) 4 358 (8 991)
Cash outflow to investing activities (567 995) (13 464) (5 504)
Cash inflow from finance activities 547 823 - -
Net decrease in cash and cash equivalents (22 031) (9 106) (14 495)
Cash and cash equivalents at beginning of period 24 735 33 841 48 336
Cash and cash equivalents at end of period 2 704 24 735 33 841
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share Retained
Capital income Total
R'000 R'000 R'000
Balance at 1 July 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
Total comprehensive income for the period - - -
Disposal of treasury units 1 - 1
Linked units issued 2 740 - 2 740
Balance at 30 June 2013 3 598 - 3 598
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 July 2010 857 125 543 126 400
Net fair value adjustment - 10 055 10 055
Balance as 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
Net fair value adjustment - 57 407 57 407
Disposal of treasury units 1 - 1
Linked units issued 2 740 339 830 342 570
Balance at 30 June 2013 3 598 539 711 543 309
CONDENSED CONSOLIDATED SEGMENT REPORT
Recon-
ciling
Kwa- items/
Eastern Free Gau- Zulu- Western (Elimina-
Cape State teng Natal Cape tions) Total
R'000 R'000 R'000 R'000 R'000 R'000 R'000
FOR THE 12 MONTHS ENDED 30 JUNE 2013
Revenue external customers 8 345 1 283 9 228 17 496 14 024 - 50 376
Intersegmental revenue - - - - 191 (191) -
Operating profit 6 334 815 5 946 14 262 10 324 (6 161) 31 520
Total assets 38 872 8 452 195 849 290 114 243 820 7 972 785 079
FOR THE 12 MONTHS ENDED 30 JUNE 2012
Revenue - external customers 8 121 1 162 1 651 7 994 - - 18 928
Intersegmental revenue - - - - 2 264 (2 264) -
Operating profit 4 019 568 (5) 2 848 - (3 903) 3 527
Total assets 36 509 7 801 17 850 70 560 - 30 667 163 387
FOR THE 12 MONTHS ENDED 30 JUNE 2011
Revenue external customers 8 067 1 036 1 001 7 398 - - 17 502
Intersegmental revenue - - - - 1 285 (1 285) -
Operating profit 5 212 (408) (671) 4 253 - (2 476) 5 910
Total assets 36 716 6 459 18 463 42 961 - 42 429 147 028
OTHER SEGMENTAL INFORMATION
Reviewed Audited Audited
30 June 30 June 30 June
2013 2012 2011
Regional profile based on leasable area
Eastern Cape 6.4% 30.0% 29.5%
Free State 1.9% 9.1% 9.7%
Gauteng 28.8% 15.7% 20.1%
KwaZulu-Natal 32.0% 45.2% 40.7%
Western Cape 30.9% 0.0% 0.0%
Vacancy profile based on gross lease area
Gross lease area in metres squared as at end
of period* 100 578 21 436 24 356
Properties held 28 10 11
Vacancy area in metres squared* 9 023 3 751 3 740
Vacancy area as % of gross lease area 9.0% 17.5% 15.4%
Regional vacancy profile
Eastern Cape 0.0% 0.0% 23.3%
Free State 0.0% 0.0% 0.0%
Gauteng 37.2% 40.5% 62.1%
KwaZulu-Natal 46.4% 59.5% 14.6%
Western Cape 16.4% 0.0% 0.0%
* 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 2013, 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 2012. Any other new 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 SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council, the Companies Act of South Africa 71
of 2008, and the Listings Requirements of JSE Limited.
These reviewed condensed consolidated results for the year ended 30 June 2013 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.
Review opinion
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 2013. 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.
COMMENTARY
Introduction
Fairvest's objective is to build a retail focused property fund weighted toward non-metropolitan shopping centres
and including convenience, community and regional shopping centres servicing the lower LSM market in high-growth
nodes close to commuter networks.
Fairvest's application to the JSE for Real Estate Investment Trust ("REIT") status was approved on 3 July 2013.
The conversion to a REIT is effective from 1 July 2013.
2013 marked the start of the 'new' Fairvest with the transfer of 18 properties during the first quarter of
2013 taking the property portfolio from 10 smaller assets to a portfolio of 28 assets valued at R770.3 million.
Strategies as communicated previously to linked unitholders are starting to crystallise as is evident from
our results.
Acquisitions and associated capital raising activities
Linked unitholders are referred to the company's circular, including revised listings particulars ("RLP"),
issued on 5 October 2012 regarding the SA Corporate Real Estate Acquisition, the Put Option Acquisition and
the Isolenu Acquisition. Under the vendor consideration placement undertaken to part fund these acquisitions, the
company limited the capital raised to R250 million, raised through the issue of 203 252 033 new ordinary linked
units at R1.23 per ordinary linked unit. These units were issued and listed on the JSE on 3 December 2012.
Linked unitholders are referred to the SENS announcements regarding the Sebokeng Plaza and Nyanga Junction
acquisitions. These acquisitions were funded via a vendor consideration placement, raising R99 million, issuing
70 714 286 linked units at R1.40 per ordinary linked unit.
The Sebokeng Plaza, Nyanga Junction, Score Nyanga and Pick n Pay Vereeniging assets have transferred since we
reported on our interim results in March 2013, bringing the total GLA for the portfolio to 100 578 m2.
Review of results
Fairvest board of directors are pleased to announce a distribution of 6.00 cents per linked unit for the six months
ended 30 June 2013 and further to the distribution of 3.71 cents declared for the five months to 30 November 2012
and 0.86 cents for the one month to 31 December 2012.
As per guidance provided at our previous results presentation, the distribution achieved for the six months ended
30 June 2013 of 6.00 cents per linked unit is in line with the company's circular, including revised listing
particulars ("RLP") issued on 5 October 2012. The forecast distribution was achieved in spite of delays in
transfers in assets in the SA Corporate portfolio. This was achieved through favourable renewals and conservative
estimates in our initial forecasting assisted by the further acquisitions made during the period.
During the period under review the company successfully completed the new CHEP head office development and the
significant redevelopment of Westville Junction. These assets are secured by long leases with national tenants,
which significantly adds to the quality of the portfolio and tenant base.
Of the 9.0% vacant space, 2.2% is represented by assets currently being redeveloped and 3.0% by a vacant warehouse
acquired as part of the SA Corporate portfolio acquisition, bringing the effective vacancy percentage to 3.8%.
We expect the vacancy percentage to decrease as the redevelopments are completed with some positive letting
after year end.
The total property portfolio increased from R131.3 million in June 2012 to R770.3 million in June 2013 as a
result of the 18 new assets acquired.
Fairvest sold the remainder of the Australian and South African listed property shares during the period under
review resulting in a realised gain of R0.98 million. The funds were utilised in the redevelopment completed
during the period.
Prospects
As reported in our circular issued in October 2012, updated for the updated actual capital structure, the forecast
distribution for 12 months to 30 June 2014 of 14.06 cents per linked unit remains achievable. These forecasts are
the responsibility of the board of Fairvest and have not been reviewed or reported on by the auditors.
We will continue to focus on growing the portfolio through strategic value-enhancing acquisitions, coupled with
a focus on improving the quality of the portfolio through the acquisition of larger centres that dominate in the
area in which they are located.
Looking forward, growth in distributions will be delivered through the implementation of strong operational controls,
tenant optimisation, rental escalations and the reduction of vacancies.
Interest distributions and dividends
Interest on debentures has been calculated in terms of the Debenture Trust Deed. The final interest distribution of
6.0 cents per linked unit is payable to linked unitholders registered in the books of the company at the close of
business on Friday, 11 October 2013. No dividend has been declared for the period in respect of the linked units.
Last date to trade linked units cum interest payment Friday, 4 October 2013
Linked units commence trading ex interest payment Monday, 7 October 2013
Record date Friday, 11 October 2013
Payment date Monday, 14 October 2013
Linked units may not be dematerialised or rematerialised between Monday, 7 October 2013 and Friday, 11 October 2013,
both days inclusive.
Directorate
KR Moloko was appointed as an independent non-executive director on 1 February 2013.
Subsequent events
Linked unitholders are referred to the company's SENS announcement dated 29 August 2013 advising to exercise caution
when trading in the company's linked units as the company is in advanced negotiations regarding the acquisition of a
portfolio of further properties. The directors of Fairvest are not aware of any other material matter or circumstance
arising between 30 June 2013 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
Fairvest Property Holdings Limited
19 September 2013
Cape Town
DIRECTORS:
Executive:
Darren Wilder (Chief Executive Officer), BJ Kriel (Chief Financial Officer), Adam Marcus (Chief Operating Officer)
Non-executive:
JF du Toit (Chairman), PJ van der Merwe (Lead Independent Non-executive)#, M Epstein#, LW Andrag#, KR Moloko# #Independent
COMPANY SECRETARY: SecCorp Secretarial Services Proprietary Limited
REGISTERED OFFICE: Office 18003, 18th Floor, Triangle House, 22 Riebeek Street, Cape Town, 8001,
Postnet Suite 30, Private Bag X3, Roggebaai, 8012
TRANSFER SECRETARIES: Computershare Investor Services Proprietary Limited, Ground Floor,
70 Marshall Street, Johannesburg, 2001, PO Box 61051, Marshalltown, 2107
AUDITOR: BDO South Africa Incorporated, Registered Auditors
SPONSOR: PSG Capital Proprietary Limited
PREPARER OF FINANCIAL STATEMENTS: BJ Kriel
www.fairvest.co.za
Date: 19/09/2013 03:22:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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