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FREEDOM PROPERTY FUND LTD - Consolidated Reviewed Interim Financial Results For The 6 Month Period Ending 31 August 2014

Release Date: 24/11/2014 17:50
Code(s): FDP     PDF:  
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Consolidated Reviewed Interim Financial Results For The 6 Month Period Ending 31 August 2014

Freedom Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration No. 2012/129186/06)
Share code: FDP ISIN: ZAE000185260
("Freedom" or "the Company" or "the Group")

CONSOLIDATED REVIEWED
INTERIM FINANCIAL RESULTS
FOR THE 6 MONTH PERIOD ENDING 31 AUGUST 2014

HIGHLIGHTS:
-   COMBINED REVENUE STREAMS UP ON FORECAST
-   NAV AT 123 CENTS PER SHARE BEFORE REVALUATIONS AND ENHANCEMENT OF INCOME
-   INITIAL FUNDING SUCCESSFULLY SECURED
-   DEVELOPMENT PIPELINE PROJECTS AHEAD OF SCHEDULE

The directors of Freedom present the consolidated reviewed interim financial results of the Company and its
subsidiaries (all wholly owned) for the 6 month period ending 31 August 2014 ("the interim period"). These results
reflect the first trading period of Freedom.

The first 11 weeks since the listing to 31 August 2014 has been an exciting period for the board and management
of Freedom, with a focus on setting up the necessary management structures and systems to manage and
implement the acquired projects thus optimising value for all stakeholders.

In line with Freedom's strategy on listing, the Company is positioned as a capital growth fund and not a Real
Estate Investment Trust ("REIT"). The strategy is to develop the properties in the portfolio to be held and leased
out. Freedom is therefore ideally positioned to eventually convert to a REIT structure. The capital growth
component of Freedom's shares is therefore positioned for exponential growth over a period of time, as the
Company develops the existing pipeline of projects.

1. FINANCIAL RESULTS

   1.1. Comparative Results
        Freedom was established specifically to acquire selected properties and list on the JSE Limited ("JSE"),
        as set-out in the pre-listing statement dated 5 June 2014 ("pre-listing statement"). The various
        acquisitions, being subject to listing approval, became effective at various times between 1 March 2014
        and the listing date of 12 June 2014. The results for the interim period ended 31 August 2013 therefore
        provide no meaningful comparison as these reflect the status of the company prior to the acquisitions
        having become effective.
 
   1.2. Revenues
        Revenues from investment properties achieved for the 6 month interim period totalled R12 616 919,
        versus a forecast of R19 816 760 for the 12 months ending 28 February 2015 as set out in Annexure 1
        of the supplementary circular dated 5 June 2014 i.e. during the 6 month interim period Freedom has
        already achieved 64% of the forecast revenues for the financial year. This has largely been driven by
        the focus of growing the revenue base at Steelpoort Industrial, which is effectively 100% owned by
        Freedom through Kadoma Investments (Pty) Ltd ("Kadoma"). As highlighted below (see Operations -
        Para 2.1), Freedom is currently developing a further 8 050m(2) of industrial facilities and will continue to
        do so as demand requires. The acquisition of Kadoma was effective from 1 March 2014, providing the
        majority of the Company's income and contributing a full 12 month's revenues reflected in the forecast
        revenues to 28 February 2015.
 
        In preparing the projections for the year ending 28 February 2015, management's immediate outlook
        for revenues from the sale of development properties (stock of serviced stands) was not high as it was
        expected that marketing initiatives would take some time to implement. The forecast revenues of
        R8 483 922 for the year have to date been exceeded significantly with sales totalling R26 972 295
        during the 6 month interim period (it should be noted that this includes an amount of R12 million from
        the sale of the Elm Drive property, which was considered to be outside of Freedom's strategy to focus
        resources on developing major projects for rental purposes).
 
        The following table provides a comparison of actual revenues generated by Freedom during the 6
        month interim period and forecasts for the 12 month period ending 28 February 2015 as set out in Annexure 1
        of the supplementary circular dated 5 June 2014:
   
                                                  Reviewed for the       Forecast for the
                                                   6 months ending       12 months ending
                                                    31 August 2014       28 February 2015
        
        
        Revenue – Investment Property Income            12 616 919             19 816 760
        
        Revenue – Development Property                  26 972 295              8 483 922
        
        Cost of Sales                                 (20 197 490)            (2 899 479)
        
        Gross Profit                                    19 391 724             25 401 203

   1.3. Headline Earnings
        The expenses incurred in establishing Freedom subsequent to listing have been higher than
        anticipated. The result of the unexpected momentum in sales of properties (in excess of 40 sales in the
        11 weeks between listing and 31 August 2014), mainly in the Miami Village project located in
        Lampiesbaai, has however ensured that Freedom's earnings are in line with projections with headline
        earnings of R5 020 515 for the 6 month interim period, amounting to approximately 50% of the
        projected headline earnings for the 12 months ending 28 February 2015 (projected at R10 647 780).
    
   1.4. Expenses
        As outlined above, listing expenses and costs relating to the establishment of the company have been
        higher than expected. These are however non-recurring costs and all accrued during the interim period.
        It is also recorded that a significant portion of operational costs were inherited through acquisition and
        related to Kadoma which includes Steelpoort Industrial. Management was required to step into the
        operations and refine the cost structures to ensure that value is optimised from these valuable property
        assets. A platform has been created to ensure opportunities at Steelpoort Industrial and Tweefontein
        Residential are maximised (see Operations – Para 2.2).
    
   1.5. Net Asset Value ("NAV")
        The statement of financial position largely mirrors the pro forma financials prepared for the pre-listing
        statement and supplementary circular dated 5 June 2014, which reflected the position had all
        acquisitions executed by Freedom been effective on 28 February 2014. It is however worth highlighting
        that the NAV per Freedom Share at 123 cents does not take into account any revaluation of assets
        subsequent to further development and enhancement of income, specifically at Steelpoort Industrial
        (The last independent valuation of the properties acquired by Freedom was dated 1 February 2014 and
        a revaluation will be conducted for the Company's year-end financial results to 28 February 2015).
        While gearing has grown on the Statement of Financial Position of the Company (see Borrowings –
        para 4), the majority of this funding is being applied to develop Freedom's assets and unlock value for
        stakeholders in terms of the Company's strategy as a capital growth fund.
    
   1.6. Dividends
        No dividends have been declared for the period. The Company will continue with its stated policy of
        retaining generated cash, which will be applied to developing the various properties owned by Freedom
        to ensure capital growth and create shareholder value.
        
        The dividend policy will be reviewed on a continual basis in line with the strategy of developing property
        assets to be held for leasing. Once the base of income producing assets has grown significantly, as
        anticipated in line with the Company's strategy, then the dividend policy will be reviewed accordingly.

2. OPERATIONS
   The Company's prospects and strategy have been outlined in detail in the pre-listing statement.
   Management are confident that the broad short to medium term strategies and related operations for the
   various properties acquired are well underway to being implemented successfully in unlocking value for
   Freedom's stakeholders. In terms of the pre-listing statement and strategy for the year ending 28 February
   2015, all projects have already commenced or been committed to by 31 August 2014.

   In line with Freedom's strategy, the following existing projects are being focussed on and merit specific
   mention at this stage:

   2.1. Steelpoort Industrial
        Steelpoort is a mining town in Limpopo Province's platinum belt experiencing rapid development with a
        number of new mines being established. Steelpoort Industrial, which is effectively 100% owned by
        Freedom through Kadoma, is ideally placed to offer facilities to companies providing mining and related
        services. This is reflected in significant demand for industrial facilities in the area.

        In line with Freedom's strategy to further develop Steelpoort Industrial, the Company is:
        -        developing a further 7 industrial units to meet market demand, providing in excess of a further                       
                 8 050m(2) gross lettable area ("GLA"). It is anticipated that the first of the new units will be
                 completed and delivered by end November 2014, with the final units expected to be
                 completed by end May 2015; and
        -        upgrading and expanding existing facilities which it is anticipated will be completed by end
                 November 2014.
                                                                                                     
        The new expansion at Steelpoort Industrial will provide a total GLA in excess of 27,000m(2), excluding
        undeveloped stands which are let to certain tenants as well as 6 hectares of land available to be
        developed for industrial purposes. Freedom has appointed Pieterse, Du Toit and Associates to rezone
        the remaining 6 hectares for light industrial warehousing purposes. This will allow for the construction                                  
        of a further 36 000m(2) of industrial warehousing. It is anticipated that this development will commence in
        July 2015 and be completed towards the end of 2018. The cost of construction for this phase is
        anticipated to total R240 million and the expected rental income generated by Steelpoort Industrial will
        increase by R34 million per annum.

   2.2. Tweefontein Residential
        Tweefontein Residential Estate, owned by Freedom through Kadoma, is situated in Steelpoort,
        Limpopo Province. Further planned expansion includes initiating the Tweefontein Residential
        component of the land owned by the Company in Steelpoort. Tweefontein Residential provides
        Freedom in excess of 4 000 residential development opportunities. Pieterse, Du Toit and associates
        have been appointed to attend to the higher density rezoning application. This development is planned
        in 8 phases and expected to be completed by 2020.

        Freedom, in conjunction with Sasol, received approval for a storage licence on 16 hectares of an
        unutilized portion of the Tweefontein Residential development land. The construction of the structure is
        expected to start in January 2015, subject to the signing of a long term lease agreement with Sasol.

   2.3. Montana (La Bonne Vie)
        La Bonne Vie comprises of 90 sectional title residential opportunities of one, two and three bedroom
        units in Montana, Pretoria. The property is highly accessible and adjacent to the well-known Kolenade
        Shopping Centre and the Zambesi Country Estate. Installation of external, as well as internal services
        commenced on 1 June 2014. Construction has commenced in November 2014 in 3 phases. Phase 1
        comprising 22 units is expected to be completed by May 2015 and is estimated to generate annual
        rental income of R 1329 600. Phase 2 comprising 31 units is expected to be completed by August 2015
        and is estimated to generate annual rental income of R 1 586 400. Phase 3 comprising of 37 units is
        expected to be completed by February 2016 and is estimated to generate annual rental income of R1
        932 000. The project development cost is R35 million and will yield in excess of 12% per annum.
    
   2.4. Tubatse Residential Estate
        Tubatse Residential Estate is being developed in 6 phases totalling 3 761 residential opportunities,
        comprising 1, 2 and 3 bedroom units. Construction on the first 2 phases has commenced in November 
        2014. Phase 1 comprising 6 units of 185m(2) and 11 units of 175m(2) (3 bedrooms) will be constructed in                                         
        2015 and a further 16 units of 175m(2) in 2016. The estimated cost on the first phase of the project is
        R41 million and the expected rental income from the 33 houses R 4.2 million per annum. Phase 2 of
        the project will commence in 2015 and consist of 124 units of 80m(2) (2 bedrooms). The estimated cost
        on the second phase of the project is R75 million, and the expected rental income R10.5 million per
        annum.
    
   2.5. Wespark Palms
        Wespark Palms is located in Kroonstad, a town situated approximately midway between Johannesburg
        and Bloemfontein. The property is zoned general residential and comprises of 67 residential
        opportunities of 1, 2 and 3 bedroom units, as well as 11 Garages. Sixteen of the units and four garages
        have been built and are fully tenanted.
        Freedom plans to develop second and third phase at Wespark Palms commencing February 2015                                                  
        comprising 24 two bedroom units of 60m(2) (including carports) in each phase i.e. a total of 48 new two
        bedroom units with carports. The projected construction cost is R 21 million and the expected rental
        income R2.75 million per annum. Freedom's immediate strategy is to retain all residential units at
        Wespark Palms for rental purposes.
   
   2.6. Langebaan (sales)
        The Langebaan Beach Resort, located in Langebaan in the Western Cape, is a mixed use                                                                                 
        development consisting of 312 022m(2) of zoned residential land, 426 982m(2) of un-zoned residential                                                                 
        land, 8,063m(2) of land zoned for commercial use and 21 688m(2) for institutional use. The development is
        divided into nine phases of which one and two have been surveyed and are ready for market whilst   
        three to nine have been approved in terms of Section 25 of the Land Use Planning Ordinance.
        Provision has been made for bulk services contributions and installations on all the phases. While
        Freedom has not fully implemented its marketing strategies for the Langebaan project, sales of 2
        stands have been concluded generating revenues of R9 530 295 (Cost of Sales – R6 571 054) for the
        Company during the interim period. As set-out in the pre-listing statement, Freedom's strategy for
        Langebaan was the sale of serviced stands. This strategy will be reviewed by management over time
        and selected portions of this land may ultimately be developed by the Company for its income
        generating portfolios (industrial, commercial and residential) should demand indicate this will maximise
        value for stakeholders.

   2.7. Miami Village (sales)
        The Miami Village project is situated adjacent to Shelley Point in the St Helena Bay area in the Western
        Cape Province. The project is made up of 261 opportunities, consisting of 164 full title serviced stands
        and 97 sectional, bulk serviced stands. As at 31 August 2014 in excess of 40 full title serviced stands
        had been sold generating revenues of R5 442 000 (Cost of Sales – R3 776 436) for the Company
        during the interim period. Subsequent sales indicate that on average 10 sales will continue to be
        concluded on a monthly basis which exceeds the Company's projections, providing the company
        additional cash flows to apply to its development projects.

3. PROSPECTS & STRATEGY
   South Africa currently faces a chronic shortage of housing in the low to mid-tier sectors, which has been
   compounded due to, inter alia, a lack of delivery and affordability. Furthermore, the delivery of sub-standard
   housing has also exacerbated the situation. Freedom is well placed to operate in this sector based on
   existing strategic land holdings and a defined strategy to develop quality affordable housing to the market,
   which will be held for rental stock in the Company's income generating portfolios (alongside its commercial
   and industrial assets). This will provide some relief to the growing demand for rental units in the low to mid-
   tier sector.

   Subsequent to listing on 12 June 2014, Freedom began implementing its strategy of developing its projects
   as set-out in the pre-listing statement. In unlocking sustainable value and growth prospects for shareholders
   Freedom's strategic objectives can be summarised as follows:

   -  To capitalise on the largely ungeared value in the Freedom property portfolio by securing
      reasonably priced debt funding which will be utilised to develop a substantial portfolio of
      income generating assets. The Company's gearing relative to the net value of its property
      portfolio is less than 10% (assuming the borrowings outlined in 4 are fully drawn down).
   -  To provide shareholders with an opportunity to participate in significant capital growth
      opportunities as opposed to investing in the REIT, property loan stock and property unit trust
      markets, which tend to focus on income distribution rather than capital growth.
   -  Harnessing the extensive experience of Freedom's management team, as well as having
      access to the skills, expertise and market knowledge of selected vendors who have obtained
      a shareholding in Freedom pursuant to the acquisition agreements and who accordingly have
      a vested interest in developing the Freedom projects.
   -  To provide shareholders the prospect of participating in a diverse portfolio of assets, with a
      strong weighting in residential properties, which are forecast to generate significant rental
      incomes as access for investors to the residential property industry in South Africa is limited.
   -  To participate in the prospects of the market recognising the discount that the listing share
      price (and subsequent trading price) represents to the Freedom NAV per share.

4. BORROWINGS
   The Company has secured facilities with Nedbank Limited ("Nedbank") to provide term funding to Kadoma
   totalling R88 million, subject to agreed drawdowns and completion of units. These new term facilities will be
   applied to the Steelpoort Industrial expansion and further development within the Group, including
   Tweefontein Residential (see Operations – para 2.2). The gearing within the Group, once the new term
   facilities are in place and fully drawdown, will total R120 million (granted by Nedbank). The Nedbank facilities
   are secured by first mortgage bonds over the developed Steelpoort Industrial properties and a surety
   provided by Freedom.

   As set-out in the pre-listing statement, the company listed with a largely ungeared capital structure. Each of
   the property assets owned by the Company is housed in a separate wholly owned subsidiary and funding will
   only be raised to develop each of these properties once Freedom is satisfied that all the necessary planning
   is complete and that all initiatives are in place to take the projects to market successfully.

5. BLACK ECONOMIC EMPOWERMENT ("BEE") PARTICIPATION SCHEME
   In terms of the announcement released on the Stock Exchange News Service on 22 July 2014, shareholders
   of Freedom were advised that the board had in principle approved the adoption of a BEE Share participation
   Scheme. Management is in the process of finalising the terms and structure and shareholders will be
   provided with details and notice of a meeting to approve the scheme in due course.

6. CORPORATE GOVERNANCE
   The board is fully committed to the principles of the Code of Corporate Practices and Conduct as set out in
   King III. The board recognises that it is ultimately responsible for conducting the affairs of the Company with
   integrity and in accordance with generally accepted corporate practices. The board is working closely with
   management in ensuring that the necessary systems and controls are constantly being assessed and refined
   to ensure the interests of all stakeholders are protected and opportunities maximised.

7. HEALTH & SAFETY
   While Freedom contracts the development of its properties to professional teams with the requisite expertise,
   it remains focussed on ensuring that these contractors adhere to strict policies and practises relating to
   health and safety. In the short period that Freedom has been operational, Freedom is pleased to report that
   no injuries have been reported.

8. SUBSEQUENT EVENTS
   Other than the appointment of Mr Jan (Franky) Pretorius as Chief Financial Officer to the board of Freedom
   and the term funding raised from Nedbank (as set out in paragraph 4), there have been no material events
   subsequent to 31 August 2014 to report.

9. BASIS OF PREPARATION
   These consolidated reviewed interim financial results for the 6 month period ended 31 August 2014 have
   been prepared in accordance with International Financial Reporting Standards ("IFRS") on Interim Financial
   Reporting IAS34, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
   and Financial Reporting Guides as issued by the Financial Reporting Standards Council, the JSE Listings
   Requirements and the Companies Act of South Africa (Act 71 of 2008), as amended. The JSE Listings
   Requirements require interim reports to be prepared in accordance with the framework concepts and the
   measurement and recognition requirements of IFRS. The accounting policies applied in the preparation of
   these interim results are in terms of IFRS and are consistent with the accounting policies applied in the
   preparation of the audited financial statements for the Company for the year ended 28 February 2014.

   These interim results have been prepared under the historical cost convention except for investment
   properties which are measured at fair value. The fair value of investment properties are determined with
   reference to the external valuations dated 1 February 2014, prepared by the independent property valuer
   appointed to value the acquired properties which were the subject of Freedom's listing.

   The financial information has been reviewed by the Company's auditors, RSM Betty & Dickson
   (Johannesburg), in terms of ISRE 2410: Review of Interim Financial Information Performed by the
   Independent Auditor of the Entity. ISRE 2410 requires the auditor to conclude whether anything has come to
   their attention that causes them to believe that the interim financial statements are not prepared in all
   material respects in accordance with the applicable financial reporting framework. The auditor's unmodified
   review conclusion is available for inspection at the Company's registered office. The auditor's report does not
   necessarily report on all of the information contained in this announcement/financial results. Shareholders
   are therefore advised that in order to obtain a full understanding of the nature of the auditor's engagement
   they should obtain a copy of that report together with the accompanying financial information from the
   issuer's registered office.

   The preparation of these condensed consolidated interim financial statements was supervised by Mr Jan
   (Franky) Pretorius CA (SA), Financial Manager of Freedom and reviewed by Mr Richard Eaton CA (SA), the
   Chief Financial Officer. Mr Pretorius has subsequently been appointed as Chief Financial Officer of Freedom
   and Mr Eaton remains on the board as a non-executive director with effect from 17 October 2014.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                             Reviewed            Audited         Reviewed   
                                                          6 Months to       12 Months to      6 Months to   
                                                       31 August 2014   28 February 2014   31 August 2013   
                                               Notes                R                  R                R   
Revenue - investment property income                       12 616 919                  -                -   
Revenue - development property                             26 972 295                  -                -   
- Cost of sales                                          (20 197 490)                  -                -   
Total Gross Profit                                         19 391 724                  -                -   
Other income                                                  339 713                  -                -   
Operating expenses                                       (11 496 642)        (4 657 688)            (905)   
Profit (Loss) from Operations                               8 234 795                                       
Investment revenue                                              3 529                  -                -   
Gain on bargain purchase                           1      283 112 121                  -                -   
Fair value adjustment                              2      123 822 855                  -                -   
Finance costs                                             (1 249 299)                  -                -   
Profit (Loss) before taxation                             413 924 001        (4 657 688)            (905)   
Taxation                                                 (25 395 540)                  -                -   
Total comprehensive income (Loss for the                                                                    
year)                                                     388 528 461        (4 657 688)            (905)   
Headline earning reconciliation:                                                       -                -   
Total comprehensive income                                388 528 461        (4 657 688)            (905)   
Adjusted for:                                                                                               
Fair value adjustment                              2    (123 822 855)                  -                -   
Gain on bargain purchase                           1    (283 112 121)                  -                -   
Profit on sale of investment property                       (339 713)                  -                -   
Total tax effects of adjustments                           23 766 743                  -                -   
Headline earnings                                           5 020 515        (4 657 688)            (905)   
Distributable Earnings                                      5 020 515                  -                -   
Shares in issue                                         1 027 029 031                  -                -   
Weighted number of shares in issue                        868 538 173                  -                -   
Earnings per share (cents)                                      44.73                  -                -   
Headline earnings per share (cents)                              0.58                  -                -   
Diluted earnings per share (cents)                              44.73                  -                -   
Diluted  headline earnings per share (cents)                     0.58                  -                -   
Distribution per share (cents)                                      -                  -                -   

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                   Reviewed            Audited         Reviewed   
                                                6 Months to       12 Months to      6 Months to   
                                             31 August 2014   28 February 2014   31 August 2013   
                                     Notes                R                  R                R   
ASSETS                                                                                            
Non - current assets                          1 417 400 615                  -                -   
Plant and equipment                               4 460 902                  -                -   
Investment property                      3    1 412 939 713                  -                -   
Current assets                                  127 213 168            566 632           15 188   
Inventories                              4       87 176 947                  -                -   
Trade and other receivables                      38 669 297            551 180              188   
Cash and cash equivalents                         1 366 924             15 452           15 000   
Total assets                                  1 544 613 783            566 632           15 188   
EQUITY AND LIABILITIES                                                                            
Equity                                        1 253 947 160        (4 643 133)           13 650   
Stated capital                                  870 076 832             15 000           15 000   
Retained income (Accumulated Loss)              370 975 328       (17 553 133)     (12 896 350)   
Share - based payment reserve                    12 895 000         12 895 000       12 895 000   
Liabilities                                                                                       
Non - current liabilities                       251 891 036              1 780            1 100   
Loans from Shareholders                                                  1 780            1 100   
Commercial term loan                     5       24 568 151                  -                -   
Deferred tax                             6      227 322 885                  -                -   
Current liabilities                              38 775 587          5 207 985              438   
Trade and other payables                         16 297 226          5 207 985                    
Loan payable                                     10 700 000                  -                -   
Commercial term loan                     5       11 000 667                  -                -   
Bank overdraft                                      777 694                  -              438   
Total equities and liabilities                1 544 613 783            566 632           15 188   
Total shares in issue                         1 027 029 031                  -                -   
NAV per share (cents)                                   123                  -                -   

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                                                             Reviewed            Audited         Reviewed   
                                                          6 Months to       12 Months to      6 Months to   
                                                       31 August 2014   28 February 2014   31 August 2013   
                                               Notes                R                  R                R   
CASH FLOWS FROM OPERATING ACTIVITES                                                                         
Cash (utilised in)/generated from operations             (16 433 033)             39 179           23 969   
Interest income                                                 3 529                  -                -   
Finance costs                                             (1 249 299)                  -                -   
Net cash from operating activities                       (17 678 803)             39 179           23 969   
CASH FLOWS FROM INVESTING ACTIVITIES                                                                        
Purchase of property plant and equipment                  (3 845 301)                  -                -   
Proceeds on sale of investment property                     1 000 000                  -                -   
Purchase of investment property                    7    (189 593 567)                  -                -   
Investment in subsidiaries                         7    (667 950 000)                  -                -   
Net cash from investing activities                      (860 388 868)                  -                -   
CASH FLOWS FROM FINANCING ACTIVITIES                                                                    
Movement in loans from shareholders                           (1 780)           (24 320)         (25 000)   
Movement in commercial term loan                            8 581 397                  -                -   
Issue of shares                                    7      870 061 832                  -                -   
Net cash from investing activities                        878 641 449           (24 320)         (25 000)   
Total cash movement                                           573 778             14 859          (1 031)   
Cash at the beginning of the period/year                       15 452                593              593   
Total cash at the end of the period/year                      589 230             15 452            (438)   


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                                                       Share - based      Retained income                   
                                                    Stated capital   payment reserve   (Accumulated Loss)    Total Equity   
                                            Notes                                                                           
                                                                 R                 R                    R               R   
Balance as at 28 February 2013                              15 000        12 895 000         (12 895 445)          14 555   
Net Loss for the period                                          -                 -                (905)           (905)   
Reviewed as at 31 August 2013                               15 000        12 895 000         (12 896 350)          13 650   
Stated capital                                                   -                 -                    -               -   
Share - based payment reserve                                    -                 -                    -               -   
Total comprehensive loss for the period                          -                 -          (4 656 783)     (4 656 783)   
Audited as at 28 February 2014                              15 000        12 895 000         (17 553 133)     (4 643 133)   
                                                7                                                                           
Issue of shares                                        870 061 832                 -                    -     870 061 832   
Share - based payment reserve                                    -                 -                    -               -   
Total comprehensive income for the period                        -                 -          388 528 461     388 528 461   
Reviewed as at 31 August 2014                          870 076 832        12 895 000          370 975 328   1 253 947 160   

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

1.   Gain on bargain purchase – relates to the acquisition of the 6 property owning subsidiaries acquired by
     Freedom, as set out in the pre-listing statement and supplementary circular dated 5 June 2014 ("listing
     documents"). The fair value of the properties owned in the acquired subsidiaries (as valued by the
     independent valuer dated 1 February 2014) were higher than the purchase consideration paid by Freedom.
2.   Fair value adjustment – relates to the fair value of properties acquired by Freedom, as set out in the listing
     documents. The fair value of the properties acquired (as valued by the independent valuer dated 1 February
     2014) were higher than the purchase consideration paid by Freedom.
3.   Investment property – is the fair value of the properties acquired by Freedom as set out in the listing
     documents, which will be developed and held by Freedom as income generating property assets.
4.   Inventories – are the properties acquired in Langebaan (see paragraph 2.6) and Miami Village (see
     paragraph 2.7) by Freedom which will be developed and sold, as set out in the listing documents.
5.   Commercial loan – R22 million of the long term portion of the commercial loan relates to the mortgage bond
     which was taken over in the acquisition of Stellenbosch Industrial (held through Passion Way Props
     Proprietary Limited). The current portion of the commercial loan relates to short term overdraft facilities
     utilised in funding the daily operations of the Company.
6.   Deferred taxation – relates to the fair value adjustments of the acquisition of the properties and property
     owning subsidiaries acquired by Freedom as set out in the listing documents.
7.   Net cash flows from financing and investment activities – a total of R857 543 567 Freedom ordinary
     shares were issued by Freedom to acquire the investment properties and property owning subsidiaries
     (purchase consideration and related costs) as set out in the listing documents.
8.   Segment Report – The segment report below does not provide an analysis of the comparative interim
     period as at 31 August 2013 nor for the 12 months ended 28 February 2014, as Freedom was not listed and
     had not acquired the properties (Investment properties and Development properties).

SEGMENT REPORT

The group has two reportable segments, as described below. The segments offer different types of revenue
income and are managed separately to enable the Group to adequately monitor the various risk profiles. For
each of these segments, the Group's Chief Executive Officer reviews internal management reports on a monthly
basis. The following summary describes each of the Group's reportable segments:
-        Property Rental Income
-        Development Property Sales

Other operations include the Group's administrative and finance costs. None of these segments meets any of the
quantitative thresholds for determining reportable segments in the current year. Information regarding the results
of each reportable segment is included below.

OPERATING SEGMENTS

Statement of comprehensive Income - 31 August 2014

                                          Development Property                              
                          Rental Income                  Sales   Total Operating Segments   
Segment revenue              12 616 919             26 972 295                 39 589 214   
Expenditure                 (5 098 048)           (20 197 490)               (25 295 538)   
Segment Results               7 518 871              6 774 805                 14 293 676   


Statement of Financial Position - 31 August 2014

                                          Development Property                              
                          Rental Income                  Sales   Total Operating Segments   
Non Current Assets                                                                          
Investment properties     1 412 939 713                      -              1 412 939 713   
Current Assets                                                                              
Inventory                             -             87 176 947                 87 176 947   
Segment Assets            1 412 939 713             87 176 947              1 500 116 660   
Non Current Liabilities                                                                     
Deferred tax                227 322 885                      -                227 322 885   
Commercial term loan         24 568 151                      -                 24 568 151   
Current Liabilities                                                                         
Commercial term loan          1 218 659                      -                  1 218 659   
Segment Liabilities         253 109 695                      -                253 109 695   


Reconciliations of reportable segment revenues, profit or loss, assets and liabilities and other material items :

Revenues                                                    
Total Revenue for reportable segments               39 589 214   
Profit or loss for reportable segments              14 293 676   
Other profit or loss                                             
Unallocated Amounts                                              
Operating Expenses                                 (7 205 433)   
Finance Costs                                        (442 460)   
Other Income                                           339 713   
Investment Revenue                                       3 529   
Gain on bargain purchase                           283 112 121   
Fair value adjustment                              123 822 855   
Profit (Loss) before taxation                      413 924 001   
Assets                                                           
Total Assets for reportable segments             1 500 116 660   
Other Assets                                                     
Other unallocated amounts                           44 497 123   
Consolidated total assets                        1 544 613 783   
Liabilities                                                      
Total Liabilities for reportable segments          253 109 695   
Other liabilities                                                
Other unallocated amounts                           37 556 928   
Consolidated total Liabilities                     290 666 623   
     
By order of the Board

PE Burton                                                     NT Govender
Chairman                                                      Chief Executive Officer

Monday, 24 November 2014

COMPANY INFORMATION                                           Company Secretary: Statucor Proprietary Limited
Freedom Property Fund Limited                                 Registered Office: 24 Peter Place, Lyme Park, Sandton, 2196
(Incorporated in the Republic of South Africa)                Postal Address: PO Box 752, Cramerview, 2060
(Registration No. 2012/129186/06)                             Transfer   Secretaries:    Computershare     Investor    Services
Share code: FDP ISIN: ZAE000185260                            Proprietary Limited, Ground Floor, 70 Marshall Street,
("Freedom" or "the Company" or "the Group")                   Johannesburg 2001 (PO Box 61051, Marshalltown, 2107)      
Directors: PE Burton#* (Chairman); NT Govender (Chief         Sponsor: PSG Capital, 1st Floor, Ou Kollege Building,
Executive Officer); JF Pretorius (Chief Financial Officer);   35 Kerk Street, Stellenbosch 7600
RD Eaton#*; BM Molefi#*; SB Rule*; WH Rule*, WB Stocks#*
(#Independent *Non-executive)
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