Sens Announcement Spearhead Property Holdings Limited

Posted On Thursday, 12 February 2004 02:00 Published by
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SPEARHEAD PROPERTY HOLDINGS LIMITED

SPEARHEAD PROPERTY HOLDINGS LIMITED

   Registration Number: 1996/005827/06

   Share Code: SPE   ISIN: ZAE000019162

 

SPEARHEAD REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2003

 

* Basic earnings per linked unit up 52%

* Distribution per linked unit up 21%

 

"Spearhead continues its fine record of nine straight increases in bi-annual

distributions with another 21% increase per linked unit."

 

ABRIDGED CONSOLIDATED INCOME STATEMENT

                                6 months ended  6 months ended   Year ended

                                   31 Dec 2003     31 Dec 2002 30 June 2003

                                      Reviewed       Unaudited      Audited

                            % change    R000's          R000's       R000's

REVENUE                           38    43 059          31 285       58 651

Operating income                        28 774          20 564       44 120

Profit on sale of investment

 property                                3 213                          

                                        31 987          20 564       44 120

Less: Depreciation                         559             495        1 036

Goodwill amortised                                        485       16 488

Interest rate swaps –

 marked to market                          485                       5 500

Net finance costs                       10 582          10 004       20 304

Profit from operations                  20 361           9 580          792

Profit share from trusts                    11                          

Profit on disposal of shares

 in joint venture                                                     346

Profit (loss) from associate                18                         (19)

Profit before revaluation               20 390           9 580        1 119

Revaluation of investment

 properties                                                        20 958

Profit before debenture interest

 and taxation                    113    20 390           9 580       22 077

Debenture interest                      15 227           9 187       23 581

Profit/(Loss) before taxation            5 163             393       (1 504)

Income taxation expense                    734              65        1 886

Net profit/(loss) for the period         4 429             328       (3 390)

Linked units in issue

 (weighted average)                 19 002 063      13 977 258   14 693 941

Basic earnings per linked

 unit (cents)                     52    103,44           68,08       137,41

Headline earnings/(loss) per

 linked unit (cents)                      2,18            5,82       (33,69)

Core earnings per linked

 unit (cents)                         15 82,32           71,54       153,24

Distribution per linked unit (cents)  21 80,00           66,00       142,00

 

abridged consolidated cash flow statement

                                6 months ended  6 months ended   Year ended

                                   31 Dec 2003     31 Dec 2002 30 June 2003

                                      Reviewed       Unaudited      Audited

                                        R000's          R000's       R000's

Cash generated from operations

before working capital changes          21 455          20 367       44 450

Working capital changes                (61 427)        (12 871)     (15 673)

Net finance costs                      (16 544)        (19 707)     (39 258)

Cash flows from operating activities   (56 516)        (12 211)     (10 481)

Cash flows from investing activities   (32 081)           (619)       5 259

Cash flows from financing activities    47 918          (2 923)      29 862

Net (decrease)/increase in cash and

 cash equivalents                      (40 679)        (15 753)      24 640

Cash and cash equivalents at

 beginning of period                    41 854          17 214       17 214

Cash and cash equivalents at

 end of period                           1 175           1 461       41 854

 

abridged consolidated balance sheet

                                6 months ended  6 months ended   Year ended

                                   31 Dec 2003     31 Dec 2002 30 June 2003

                                      Reviewed       Unaudited      Audited

                                        R000's          R000's       R000's

Non current assets                     409 880         361 384      377 488

Property, plant and equipment            4 440           5 287        5 106

Investment properties                  381 782         328 870      340 479

Goodwill                                               16 003           

Other financial assets                  21 596          10 629       30 097

Deferred taxation                        2 062             595        1 806

Current assets                          78 258          11 629       57 647

Trade and other receivables             20 435          10 168       14 621

Investments held for trading            56 648                          

Cash and cash equivalents                1 175           1 461       43 026

Total assets                           488 138         373 013      435 135

Equity and liabilities

Equity and Non current liabilities     465 168         359 279      414 385

Capital and reserves                    33 554          37 265       29 704

Debentures                             186 531         136 400      184 783

Linked unitholders' interest           220 085         173 665      214 487

Interest bearing borrowings            233 379         183 898      189 735

Interest rate swap derivative            5 985                       5 500

Deferred taxation                        5 719           1 716        4 663

Current liabilities                     22 970           13734       20 750

Trade and other payables                 6 203           4 475        5 168

Bank overdraft                                                      1 172

Receiver of revenue                        822              72           80

Unitholders for distribution            15 945           9 187       14 330

Total equity and liabilities           488 138         373 013      435 135

 

movement in unitholders' funds

                                6 months ended  6 months ended   Year ended

                                   31 Dec 2003     31 Dec 2002 30 June 2003

                                      Reviewed       Unaudited      Audited

                                        R000's          R000's       R000's

Unitholders' interest at

 beginning of period                    29 704          36 858       36 858

Net profit for the period                4 429             328       (3 390)

Issue of linked units                                                  47

Issue costs                                 (4)                       (711)

Treasury linked units disposed

 of by subsidiary                                          (1)           2

Discount on debentures                     678             166           87

Recoupment of discount on debentures    (1 253)            (86)      (3 189)

Unitholders' interest at end of period  33 554          37 265       29 704

 

reconciliation of earnings to headline earnings

                                        Profit                       Profit

                                        before                        after

                                      taxation        Taxation     taxation

                                        R000's          R000's       R000's

Earnings for the period                  5 163             734        4 429

Adjusted for:

Fair value adjustment of investments    (2 317)           (695)      (1 622)

Interest rate swap – Marked to market      485             146          339

Profit on disposal of investment

 properties                             (3 213)           (482)      (2 731)

Headline earnings                          118            (297)         415

Weighted average linked units

 in issue                           19 002 063                  19 002 063

Headline earnings per linked

 units (cents)                            0,62                        2,18

 

reconciliation of headline earnings to core earnings

                                        Profit                       Profit

                                        before                        after

                                      taxation        Taxation     taxation

                                        R000's          R000's       R000's

Headline earnings                          118            (297)         415

Distribution to linked unitholders      15 227                      15 227

Core earnings                           15 345            (297)     15  642

Weighted average linked units

 in issue                           19 002 063                  19 002 063

Core earnings per linked units           80,75                       82,32

 

abridged segmental information

                                 Property  Management  Unallocated     Total

                                   R000's      R000's       R000's    R000's

Revenue                            42 796         263                43 059

Net profit                         34 254       1 501      (31 326)    4 429

Segment revenue and expenses:

Revenue and expenses that are directly attributable to a segment are

allocated to those segments. Expenses not directly attrributable to a

segment are allocated to the unallocated result segment.

 

notes

Accounting Policies

1. The financial statements have been prepared in accordance with South

African Statements of Generally Accepted Accounting Practice. The principal

accounting policies adopted in the preparation of these financial statements

are consistent with those of the prior year.

2. The application of AC 133 (Financial Instruments – Recognition and

measurement) requires that interest rate swaps be marked to market at

balance sheet date. This statement requires that unrealised profits or

losses be accounted for in the income statement but will have no effect on

distribution per unit.

3. Core earnings has been introduced which is an accurate reflection of the

group's cash profits for the year available for distribution.

4. Revenue represents rentals, management fees and commission from tenants

and owners, development income and share trading income.

Revenue

Rentals                                 31 842          31 285       54 151

Share trading                            6 717                          

Property development income              4 500                       4 500

                                        43 059          31 285       58 651

These results have been reviewed by the company's auditors, Fisher Hoffman

PKF (Newlands) Inc, and the report is available for inspection at the

company's registered office.

 

 

comment

The board is pleased to announce the following results for the 6 months

ended 31 December 2003.

Financial Performance

Profit before debenture interest distributions rose by 113% over the

corresponding period of last year, due to a combination of stronger trading

activities and lower financing costs.

This resulted in far stronger basic earnings per linked unit growing by 52%.

This positive profit result has allowed a 21% increase in the interim

distribution per linked unit to 80 cents per linked unit and continues

Spearhead's fine record of 9 straight increases in bi-annual distributions

since listing in 1999. The ongoing performance of the company has been

noticed by the Investment community ranking Spearhead top amongst the listed

real estate funds in a number of categories.

Property portfolio activity

The pursuit of the goal of being singularly focused on the Western Cape

property market saw further disposals of Gauteng properties including Sammy

Marks Shopping Centre (Portion 3) for R37 million and Hyde Park Auto for

R11,7 million (transfer of Hyde Park was effected 30 January 2004). This

leaves only two properties owned outside of the Western Cape and it is

expected that they will be disposed of before financial year-end resulting

in Spearhead becoming the only listed Cape property specialist.

De Wet Centre in Stellenbosch was disposed of during the period for R14,75

million at a profit of R3,2 million on the carrying value and R5,75 million

on original cost.

A number of properties were acquired during the period:

Wynberg Mews was acquired at a cost of R15 million. It consists of an office

park of four buildings in the heart of the southern suburb of Wynberg.

Sun Valley Mall in Noordhoek was acquired in a joint venture for R21

million. It comprises a 5,000-m2 Pick 'n Pay with various other line shops.

A planned redevelopment will take place later this year.

An industrial park in Gardens was acquired in joint venture for R22 million.

Part of the property is being demolished and a 180 unit residential block

called Wembley Square will be constructed. The remainder of the property

will be redeveloped for up-market commercial and retail space.

Phase 2 construction of the Spearhead business park development in Montague

Gardens is complete and the Park is now 90% let with tenants including

Caltex Oil and Samsung Electronics. Final completion of the R50 million park

is expected before the end of 2004.

Occupancy levels rose to 94% at the end of the period, up from 93% at the

end of June 2003.

The properties were not revalued at the end of the period but a

comprehensive exercise will be undertaken in June 2004 at financial year-end

and a significant uplift is expected due to the hardening of capitalisation

rates.

Trading and Development activities

Spearhead, being internally managed and staffed is fully equipped to be

active in the property development industry across the commercial, retail,

industrial and residential categories.

Besides development for long-term holding purposes, the company is also

involved with two very successful joint-venture residential sectional-title

developments: South Seas in Moullie Point and Wembley Square in Gardens.

Both have been predominately pre-sold off-plan and are in various stages of

completion. Neither has been accounted for yet through the Income Statement

but could impact on the June 2004, 2005 and 2006 profits.

As part of the disposal proceeds of some Gauteng properties, Spearhead has

accepted part-payment in listed linked-units of companies such as Shops For

Africa and Prima Property Trust. Other scrip has been accumulated for

strategic reasons and the company held a significant percentage of Arnold

Properties at year-end.

The strategy is to  dispose of the listed property securities at the

appropriate time.

An unrealised profit of R2,3 million was accounted for on marking to market

the various scrip holdings at 31 December 2003.

Prospects

Spearhead is budgeting real growth for the second half-year period when the

fruits of some of the company's development activity should start

contributing handsomely to profits.

The underlying portfolio should also continue to strengthen and with planned

portfolio additions coming through, it should underpin profit growth for the

next few years.

The important absence of any conflict of interest amongst Spearhead's

experienced management team and their property trading skills will also

translate into ongoing and sustainable earnings and save any major increase

in interest rates should see the company continue to outperform its peer

group.

Distribution declaration no. 9

Notice is hereby given of the declaration of distribution no. 9 which

amounts to 80 cents per linked unit, in respect of the six months to 31

December 2003. The last date to trade cum distribution will be Friday, 5

March 2004 and the linked units will commence trading ex distribution from

Monday, 8 March 2004, with the record date being Friday, 12 March 2004.

Payment will be effected on Monday, 15 March 2004.

Linked unit certificates may not be dematerialised or rematerialised from

Monday, 8 March 2004 to Friday, 12 March 2004, both days inclusive.

On behalf of the Board

M Kaplan             M N Flax              Sponsor:

Chairman Chief       Executive Officer     Bridge Capital Services (Pty) Limited

   Cape Town

   11 February 2004

 

For these results and more information on the company, see:

   www.spearheadprop.com

 

SPEARHEAD PROPERTY HOLDINGS LIMITED

   Registration Number: 1996/005827/06

   Share Code: SPE ISIN: ZAE000019162

 

Registered Office:

   3rd Floor, The Spearhead

   42 Hans Strijdom Avenue

   Foreshore

   Cape Town, 8001. 

 

Transfer Secretaries:

   Computershare Limited

   70 Marshall Street

   Johannesburg 2001

   PO Box 61051

   Marshalltown, 2107. 

 

Directors: M Kaplan* (Chairman),  MN Flax (Chief Executive Officer),

           JE Allie, DB Fabian*, A Groll*, L Hoffman, H Schreuders*,

           F van Hoogstraten*, DM Wilder  *Non-executive


Publisher: Spearhead Property
Source: Spearhead Property

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