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Fountainhead Property Trust HY 2013 results
 

Fountainhead Property Trust HY 2013 results

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Fountainhead Property Trust HY 2013 results

Fountainhead Property Trust HY 2013 results

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    Fountainhead Property Trust HY 2013 results Fountainhead Property Trust HY 2013 results Document Transcript

    • UNAUDITED INTERIM RESULTS for the six months ended 31 March 2013 * Interim distribution of 26.11 cents per unit * Market capitalisation up 11% to R10.4 billion STATEMENT OF FINANCIAL POSITION Unaudited as at 31 March 2013 R’000 ASSETS Property assets Investment properties Straight-line lease accrual Current assets Trade and other receivables Cash and cash equivalents Total assets UNITHOLDERS’ FUNDS AND LIABILITIES Unitholders’ funds Capital of the fund Capital reserve Fair value reserve Retained earnings Non-current liabilities Interest-bearing liability Current liabilities Trade and other payables Interest-bearing liability Unitholders for distribution Total unitholders’ funds and liabilities Audited as at 30 September 2012 R’000 Unaudited as at 31 March 2012 R’000 10 972 389 10 587 590 384 799 433 552 91 250 342 302 10 794 992 10 477 200 317 792 454 612 93 653 360 959 10 336 554 10 037 817 298 737 441 343 59 858 381 485 11 405 941 11 249 604 10 777 897 8 090 211 2 874 030 629 579 4 208 280 378 322 8 062 932 2 874 030 609 810 4 261 240 317 852 7 776 713 2 874 030 575 778 4 028 108 298 797 2 117 777 1 197 953 144 370 750 000 303 583 1 983 205 1 203 467 129 885 750 000 323 582 1 142 887 1 858 297 112 739 1 420 000 325 558 11 405 941 11 249 604 10 777 897 STATEMENT OF COMPREHENSIVE INCOME Income Contractual rental income Straight-line lease adjustment Expenses Administrative expenses Property operating expenses Operating profit Net finance costs Interest received Interest paid Profit on disposal of investment properties Fair value adjustments to investment properties Profit for the period Total comprehensive income for the period Basic earnings per unit (cents) Headline earnings and distribution income reconciliation Profit for the period Adjust for: Profit on disposal of investment properties Fair value adjustments to investment properties Headline earnings Less: straight-line lease adjustment Distribution income Headline earnings per unit (cents) Distribution per unit (cents) Interim distribution per unit (cents) Final distribution per unit (cents) Units in issue Unaudited Audited six months to 12 months to 31 March 30 September 2013 2012 R’000 R’000 619 415 1 074 471 558 945 1 042 217 60 470 32 254 (161 017) (261 998) (44 157) (59 564) (116 860) (202 434) 458 398 (94 345) 10 898 (105 243) Unaudited six months to 31 March 2012 R’000 498 550 485 351 13 199 (120 007) (26 634) (93 373) 812 473 (131 079) 23 750 (154 829) 378 543 (39 786) 11 486 (51 272) 11 786 – (33 240) 330 862 242 179 935 359 (13 199) 325 558 330 862 28.46 935 359 80.45 325 558 28.00 330 862 935 359 325 558 (49) (11 786) – 33 240 364 053 (60 470) 303 583 31.31 26.11 26.11 – (242 179) 681 394 (32 254) 649 140 58.60 55.83 28.00 27.83 13 199 338 757 (13 199) 325 558 29.14 28.00 28.00 – 49 1 162 709 748 1 162 709 748 1 162 709 748 STATEMENT OF CASH FLOWS Unaudited six months to 31 March 2013 R’000 Cash effects from operating activities Profit for the period Adjustments for: Straight-line lease adjustment Interest received Interest paid Profit on disposal of investment properties Fair value adjustments to investment properties Operating profit before changes in working capital Trade and other receivables decreased/ (increased) Trade and other payables Increased/ (decreased) Cash generated from the operations Interest received Interest paid Income distributions Cash (outflows)/inflows from operating activities Cash effects from investing activities Additions to investment properties Proceeds from disposal of investment properties Cash outflows from investing activities Cash effects from financing activities Long-term loan raised Cash inflows from financing activities Audited 12 months to 30 September 2012 R’000 Unaudited six months to 31 March 2012 R’000 * Gearing at 26% * Average cost of debt down to 7.5% The Directors of Fountainhead Property Trust Management Limited, the Manager of Fountainhead Property Trust (“Fountainhead”) submit herewith their report on the unaudited results of Fountainhead for the six months ended March 2013. * 92.4% occupancy rate (97% on a financial basis) * Bryanston Shopping Centre Phase 2 approved STATEMENT OF CHANGES IN UNITHOLDERS’ FUNDS (R’000) Balance at 1 October 2011 Total comprehensive income for the period Profit and total comprehensive income for the period Transactions with unitholders, recorded directly in equity Profit and fair value reserve realised on sale of property transferred to capital reserve Fair value adjustment on investment properties transferred to fair value reserve Income distributions Total transactions with unitholders Balance at 31 March 2012 Balance at 1 October 2012 Total comprehensive income for the period Profit and total comprehensive income for the period Transactions with unitholders, recorded directly in equity Profit and fair value reserve realised on sale of property transferred to capital reserve Fair value adjustment on investment properties transferred to fair value reserve Income distributions Total transactions with unitholders Balance at 31 March 2013 Capital of the fund 2 874 030 Capital reserve 574 903 Fair value reserve 4 042 182 Retained earnings 285 598 Total unitholders’ funds 7 776 713 – – – 325 558 325 558 – – – – 2 874 030 2 874 030 875 – – 875 575 778 609 810 (875) (13 199) – (14 074) 4 028 108 4 261 240 – 13 199 (325 558) (312 359) 298 797 317 852 – – (325 558) (325 558) 7 776 713 8 062 932 – – – 330 862 330 862 – – – – 2 874 030 19 769 – – 19 769 629 579 (49) 33 240 (303 583) (270 392) 378 322 – – (303 583) (303 583) 8 090 211 COMMENTARY The industrial component has a vacancy of 13.7% which is primarily in Supreme Industrial Park and the Jet Park mini-units. 1. INCOME DISTRIBUTION PER UNIT Fountainhead has declared a distribution of 26.11 cents per unit for the six months ended 31 March 2013. The distribution is 6.8% below the comparable period last year. The reduction in distribution is mainly due to the expensing of advisory costs in relation to the proposals to acquire the assets of the trust, the dilutive effect of expensing the interest on the development of Blue Route Mall, the short-term dilution on the acquisition of 25% of Centurion Mall, the non-recurring income relating to municipal refunds received in the prior year, and the increase in the service fee paid to the manager as a result of the significant appreciation of the unit price. The portfolio excluding properties acquired, properties disposed of, and properties under development showed income growth of 3.74%. 2. FUNDING At 31 March 2013, Fountainhead’s borrowings of R2.9 billion represented 26% of the value of the property portfolio. The average cost of funding is 7.5%. Interest rates are fixed on 30% of borrowings for an average period of two years. Fountainhead’s strategy is to diversify providers and sources of funding and, when appropriate, seek a credit rating with the view to broadening its funding sources to the debt capital market. Negotiations are currently underway to increase the level of interest rate fixing to a minimum of 65% by 30 September 2014. 3. PORTFOLIO VALUATIONS The composition of Fountainhead Property Trust’s portfolio, as valued by the independent valuer, Rode and Associates CC, at 31 March 2013, is as follows: Sector Retail Office Industrial Specialised Total property Net current assets Net current liabilities Interest-bearing liability Net asset value Mar 2013 Value (Rm) 8 452 1 640 527 353 10 972 433 (447) (2 868) 8 090 Sept 2012 Value (Rm) 8 226 1 680 541 348 10 795 2013 FEY (%) 7.6 9.6 12.7 10.1 8.2 % of portfolio 2013 2012 77 76 15 16 5 5 3 3 100 100 4. MAJOR CAPITAL PROJECTS Blue Route Mall The mall was opened on 29 March 2012 and is currently fully let. The mall is generally trading well and has been well received by tenants and shoppers. There has been a notable increase in footcount since the recent completion of the external access slipways. The on-grade facilities for an additional 2 000 parking bays has been completed, and final completion of the total project is expected to be achieved by July 2013. Bryanston Shopping Centre The Bryanston Shopping Centre is undergoing a R94 million refurbishment, which is due for completion in May 2014. The project entails an extension of retail space for Checkers from its existing 2 200 m2 to 4 000 m2, as well as the construction of a new parking deck and a new entrance on the upper ground level. The Checkers extension will be earnings accretive but the overall project will be marginally dilutive to earnings due to the essential defensive spend on the parking deck construction. The Bryanston Woolworths already trades extremely well and the Checkers extension will ensure that the centre retains its entrenched attraction in a very competitive market. In addition, the project will allow for the tenant mix to be reviewed and fine-tuned for the Bryanston market. Centurion Mall The revamp of the spine area of the Centurion Mall has created a fresh new look and feel which has attracted potential new tenants and continues to draw positive attention from shoppers. The spine area revamp has allowed for the introduction of brands such as Guess, Aldo, Charles and Keith, Typo, Cotton On and Fabiani. The refurbishment has added significant value to the centre, to the tenants and to the overall shopping experience. 5. ACQUISITIONS AND DISPOSALS Fountainhead did not acquire any properties during the review period. Essex Park, sold during the prior financial year, was transferred during the review period. The selling price was R30.2 million (valuation R30.2 million). 6. SEGMENTAL INFORMATION 330 862 935 359 325 558 (60 470) (10 898) 105 243 (32 254) (23 750) 154 829 (13 199) (11 486) 51 272 (49) (11 786) – 33 240 (242 179) 13 199 397 928 780 219 365 344 2 403 (23 200) 10 595 14 486 414 817 10 898 (105 243) (323 582) 6 102 763 121 23 750 (154 829) (646 001) (11 044) 364 895 11 486 (51 272) (320 443) (3 110) (13 959) 4 666 (180 368) (1 741 205) (1 523 683) 47 749 2 446 (1 693 456) (1 521 237) 30 249 (150 119) 134 572 1 684 265 1 513 947 134 572 1 684 265 1 513 947 Retail Office Industrial Specialised Corporate Total Mar 2013 Sep 2012 Mar 2012 six months 12 months six months Net Net Net Revenue income % of Revenue income % of Revenue income % of Rm Rm Total Rm Rm Total Rm Rm Total 403 314 104 735 583 90 335 267 82 97 80 26 186 156 24 90 75 23 42 33 11 88 70 11 44 34 11 17 17 6 33 33 5 16 16 5 – (141) (47) – (192) (30) (67) (21) 559 303 100 1 042 650 100 485 325 100 7. LETTING ACTIVITY Retail Vacant at 30 September 2012 Sold Vacated New leases Vacant at 31 March 2013 (19 720) (33 240) – (52 960) 4 208 280 Offices % of Area year-end area (m2) 13 092 3.0 – – 2 189 0.5 (3 530) (0.8) 11 751 2.7 % of Area year-end (m2) area 27 721 16.5 (310) (0.2) 704 0.4 (1 760) (1.3) 26 355 15.4 Industrial % of Area year-end (m2) area 13 489 8.0 – – 18 575 11.1 (9 106) (5.4) 22 958 13.7 * he retail and office vacancy as at 30 September 2012 has been restated to more accurately account for vacant T office area at the retail centres. Vacancy levels Sector Retail Office Industrial Specialised Total Mar 2013 % 2.7 15.4 13.7 – 7.6 Sep 2012 % 3.0 16.5 8.0 – 6.7 Mar 2012 % 2.0 17.7 7.1 – 5.6 Vacancy levels in terms of rentable area were as follows: Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period (18 657) (23 150) (2 624) 360 959 384 109 384 109 Cash and cash equivalents at end of the period The retail component has a vacancy of 2.7% which is primarily in The Brightwater Commons and Dekema Mall. 342 302 360 959 381 485 The office component has a vacancy of 15.4% which is primarily in Centurion Mall offices, Grayston Ridge and AMR Office Park. By value, the vacancies equated to 3% of the rent roll for March 2013, compared with 3.5% at 31 September 2012. 8. PROSPECTS Based on the Board of Director’s (“the Board”) assessment of difficult trading conditions being experienced, expensing of the transaction advisory costs, the temporary dilution of Blue Route Mall and the effect of hedging the debt to an acceptable level, it is anticipated that distributions for the year ending 30 September 2013 will be marginally below the distribution for the year ended 30 September 2012. This forecast has not been reviewed or reported on by Fountainhead’s auditor. 9. CHANGES TO THE BOARD OF DIRECTORS Mr Aaron Suckerman has been appointed as Financial Director of Fountainhead with immediate effect, subject to approval by the Financial Services Board. 10. PROPOSALS TO ACQUIRE THE ASSETS OF THE TRUST Fountainhead received competing proposals for all or the majority of its underlying assets from Redefine Properties Limited (“Redefine”) (“Redefine Proposal”) and Growthpoint Properties Limited (“Growthpoint”) (“Growthpoint Proposal”) on 1 October 2012 and 23 October 2012, respectively. Collectively, “the proposals”. The Board of Fountainhead Property Trust Management Limited (“Fountainhead Manco”) then constituted an independent sub-committee (“Independent Committee“) which, together with its advisors, considered both the proposals and the updated changes to these proposals as received by the Board. The Independent Committee appointed Rand Merchant Bank (“RMB”), a division of FirstRand Bank Limited, Bowman Gilfillan Inc and Questco Proprietary Limited to assist it with the evaluation and fairness of the proposals. Based on all the facts at its disposal, the Independent Committee took a decision to progress both the competing proposals with a view of putting the proposals to a vote by unitholders of Fountainhead (“Unitholders”). Whilst progressing on this basis, Redefine withdrew its proposal and announced that it had acquired 18% of the Fountainhead units as at 11 March 2013 and that it intended, on an accelerated basis, to acquire an additional 15% on the terms set out in its announcement on that date. On 25 March 2013, the Chairman of the Board of Fountainhead Manco received a letter from Redefine, advising that Redefine held 45.6% of the Fountainhead units. In light of this fact and based on advice that the Independent Committee received at the time, it resolved to terminate its engagement with Growthpoint in relation to the Growthpoint Proposal. The primary reason for this was that without sufficient comfort regarding Growthpoint’s ability to implement the Growthpoint Proposal without amendments to the Trust Deed or the ability to preclude Redefine from voting its units in respect of the Growthpoint Proposal, the Independent Committee indicated that it did not believe that it was in the interests of Unitholders to progress the Growthpoint Proposal given that, in all likelihood, such proposal would not be approved. In response to the decision taken by the Independent Committee, Growthpoint released an announcement on 17 April 2013 in which it reiterated its commitment to acquire all of the assets of Fountainhead. To ensure its proposal would get in front of Unitholders, Growthpoint requested a formal ruling from the JSE that Redefine be precluded from voting on all resolutions, including the vote required to amend the Trust Deed. It came to the attention of the Independent Committee that the JSE had notified Growthpoint in writing on Friday, 19 April 2013 that it had declined Growthpoint’s ruling request and based on this ruling, the Independent Committee announced that it remains of the view that Growthpoint’s Proposal, if taken to the Unitholders, would, in all likelihood, not be approved and therefore shall continue to not engage with Growthpoint. 11. BASIS OF PREPARATION AND ACCOUNTING POLICIES The unaudited interim results have been prepared in accordance with International Financial Reporting Standards (IFRS), the AC500 series issued by the Accounting Practices Board, the requirements of the Collective Investment Schemes Control Act and the JSE Limited (“JSE”) Listings Requirements. The accounting policies are consistent in all material respects with those applied in prior years. The interim results have been prepared under the supervision of Aaron Suckerman, ACCA (UK). 12. INCOME DISTRIBUTION ANNOUNCEMENT Notice is hereby given of distribution No. 60 of 26.11 cents per unit for the six months ended 31 March 2013. The source of the distribution is net income from property rentals. The distribution is not regarded as a dividend and therefore no dividend withholding tax is payable on the distribution amount. The last date to trade cum distribution will be Friday, 24 May 2013. The units of Fountainhead Property Trust will commence trading ex-distribution on Monday, 27 May 2013 and the record date will be Friday, 31 May 2013. The distribution will be paid on Monday, 3 June 2013. Unit certificates may not be dematerialised or rematerialised between Monday, 27 May 2013 and Friday, 31 May 2013, both dates inclusive. BY ORDER OF THE BOARD Fountainhead Property Trust Management Limited (Registration number 1983/003324/06) 8 May 2013 Transfer secretaries: Computershare Investor Services (Pty) Limited 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) Secretary: Broll Property Group (Pty) Limited, Broll House 27 Fricker Road, Illovo, Johannesburg, 2196 (PO Box 1455, Saxonwold, 2132) Registered office: Redefine Place, 2 Arnold Road, Rosebank Johannesburg (PO Box 1731, Parklands, 2121) Shortname: FPT Share code: FPT ISIN: ZAE000097416 Directors: WM Kirchmann (Chairman), VA Christian, AJ Konig, HY Laher, B Nackan, JD Rainier, DS Savage Chief Executive Officer: MA Phakathi Sponsor: Standard Bank Website: www.fountainheadproperty.co.za