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Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
Pearl Properties (2006) Limited FY 2013 financial results presentation
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Pearl Properties (2006) Limited FY 2013 financial results presentation

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Pearl Properties (2006) Limited FY 2013 financial results presentation

Pearl Properties (2006) Limited FY 2013 financial results presentation

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  • 1. PEARL PROPERTIES (2006) LIMITED FINANCIAL RESULTS PRESENTATION FOR THE YEAR ENDED 31 DECEMBER 2013 Thursday, 27 March 2014
  • 2. 1. Introduction 2. Property Market Overview 3. Financial Performance Highlights 4. Review of Financial Performance 5. Review of Operations 6. Outlook 7. Questions Agenda
  • 3. Property portfolio value exceeding $128 million. Market capitalisation $32 million. Diversified property portfolio comprising 57 properties. Fully integrated, internal management model INTRODUCTION
  • 4. • Rental negotiations difficult. • Rentals stagnant and or declining.Rentals • Increasing/worsening. • Protracted legal process. Arrears PROPERTY MARKET OVERVIEW
  • 5. • Decreasing in the CBD Offices. • High occupancy levels in CBD retail. • An estimated average occupancy of between 70% to 80%. • Vacancies increased by 10% in the last 6 months Occupancy levels • Growth in property values slowing. • Compressing rental yields. Property Values PROPERTY MARKET OVERVIEW
  • 6. • Depressed construction sector. • Residential developments dominant. • Speculative commercial developments. • Construction cost to value ratio relatively high - cheaper to buy than build. Developments • Cost of financing high relative to returns being achieved. • Depressed property market. • Aggregate demand for rental space weak. Property Economics PROPERTY MARKET OVERVIEW
  • 7. Revenue - up 2.18% Net Property Income (“NPI”) - up 1.91% NPI after admin. expenses - down 1.00% FINANCIAL PERFORMANCE HIGHLIGHTS
  • 8. Profit after tax - up 8.80% Investment properties - up 6.55% Shareholders’ equity - up 8.41% FINANCIAL PERFORMANCE HIGHLIGHTS
  • 9. USD mil. PROPERTY PORTFOLIO PERFORMANCE STATISTICS 75.08 88.95 106.52 114.34 123.95 30.95 26.00 39.62 34.67 32.19 0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00 2009 2010 2011 2012 2013 NAV Market Capitalisation Year
  • 10. PROPERTY PORTFOLIO PERFORMANCE STATISTICS (Cont.) 2009 2010 2011 2012 2013 Rental yield 4.85% 10.13% 9.80% 8.60% 7.80% Arrears 21.90% 14.80% 11.30% 9.06% 14.56% Inflation -7.67% 3.20% 1.70% 2.91% 0.33% Voids 10.20% 12.60% 22.50% 21.10% 23.70% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% Rental yield Arrears Inflation Voids
  • 11. FINANCIAL PERFORMANCE REVIEW
  • 12. (All figures in USD millions) FY 2013 FY 2012 % Change Revenue 9.022 8.830 2.18% Property expenses (1.683) (1.628) 3.38% Net property income (“NPI”) 7.339 7.202 1.91% Administration expenses (3.364) (3.187) 5.56% NPI after administration expenses 3.975 4.015 (1.00%) Investment income realized - 0.231 (100.00%) Dividend & other income 0.056 0.556 1.37% Finance income 0.653 0.450 45.03% Profit before tax & FV adjustments 4.684 4.751 (1.42%) Fair value adjustments 8.019 8.917 (10.08%) Profit before tax 12.703 13.668 (7.07%) Tax (2.879) (4.640) 37.94% Profit after Tax 9.824 9.028 8.80% CONSOLIDATED INCOME STATEMENT NPI: Rent reviews and new lettings. Increasing voids and void related costs due to evictions and company closures. Increasing arrears resulted in increased provision of credit losses and specific write-offs. Maintenance works continued. Administration Expenses: Increased due to staff related costs and group shared services. Profit Before Tax (“PBT”): Decline in PBT due to no investment income being realized in 2013 as the disposal of equities were suspended due to the depressed equities market. Fair Value Adjustments: Limited growth in property values, growth realized from reclassification of land use from residential to commercial use. MATERIAL FACTORS FOR INCREASE/DECREASE
  • 13. FY 2013 FY 2012 Change Rental yield 7.80% 8.60% (9.35%) Rental / m² 8.28 8.18 1.22% Property expenses/revenue 18.66% 18.40% 1.39% Administration costs /revenue 37.29% 36.10% 3.29% Return on shareholders’ equity 8.12% 8.48% (4.25%) Arrears 14.56% 9.06% 60.71% Occupancy level 76.30% 78.90% (3.30%) KEY PERFORANCE RATIOS Yield: Subdued rental growth in FY2013 compared to growth in property values in FY2012. Rental / m2: Minimal rent reviews in 2013. New lettings at marginally higher rates. Arrears: Tight liquidity and economic environment impacting tenant viability. Occupancies: Increasing number of evictions and weak demand for new space. MATERIAL FACTORS FOR INCREASE/DECREASE
  • 14. (All figures in USD millions) FY 2013 FY 2012 Change Directors' fees 0.050 0.030 66.88% Auditors’ fees 0.077 0.045 72.71% ICT costs 0.049 0.018 163.91% Salaries other staff costs 1.723 1.679 2.64% Depreciation 0.231 0.213 8.29% Communication 0.021 0.029 (26.93%) Fees & other charges 0.125 0.263 (52.61%) Office costs 0.374 0.377 (0.85%) Travel & entertainment 0.009 0.008 13.24% Group shared services 0.642 0.482 33.33% Advertising 0.063 0.043 46.38% Total 3.364 3.187 5.56% ANALYSIS OF ADMINISTRATION EXPENSES
  • 15. (All figures in USD millions) FY 2013 FY 2012 % Change Investment properties 128.142 120.266 6.55% Vehicles and equipment 0.462 0.649 (28.88%) Equity investments 0.715 0.965 (25.92%) Loans and other receivables 1.356 1.938 (30.03%) Inventory 1.328 0.163 715.54% Trade and other receivables 7.443 1.523 388.86% Cash and cash equivalents 0.318 2.250 (85.89%) Total Assets 139.764 127.754 9.40% Shareholders’ equity 123.958 114.340 8.41% Non-current liabilities 14.969 12.965 15.46% Current liabilities 0.836 0.449 86.06% Equity and Liabilities 139.764 127.754 9.40% FINANCIAL POSITION REVIEW Investment Properties: 2% of the growth attributable to portfolio performance. The balance attributable to re-zoning of land at Arundel Office Park to commercial from residential use. Trade and other receivables: Increase in arrears of 60% and a prepayment of $4.10 million for a property acquisition. Cash: Significant cash outlay for the acquisition of properties. MATERIAL FACTORS FOR INCREASE/DECREASE
  • 16. All figures in USD millions FY 2013 FY 2012 At 1 January 120.266 109.738 Reclassification to inventory (0.480) - Additions to properties under development - 1.262 Improvements to existing properties 0.294 0.243 Fair value adjustments 8.062 9.022 At 31 December 128.142 120.266 ANALYSIS OF INVESTMENT PROPERTY
  • 17. (All figures in USD millions) FY 2013 FY 2012 % Change Cash flow from operations 4.468 4.426 0.94% Working capital changes (5.232) 0.261 (2,102.83%) Cash generated from operations (0.764) 4.688 (116.29%) Tax paid (1.295) (0.857) 51.04% Net cash generated from operations (2.059) 3.830 (153.76%) Net cash out flow from investing activities 0.126 (0.617) (120.43%) Net cash out flow from financing activities - (1.750) (100.00%) Net increase in cash and cash equivalents (1.933) 1.463 (232.12%) Opening cash and cash equivalents 2.250 0.788 185.77% Closing cash and cash equivalents 0.318 2.250 (85.89%) STATEMENT OF CASH FLOWS EXTRACT
  • 18.  No dividend proposed for the financial year ended 31 December 2013. Application of Funds Cash outflows (All figures in USD) Acquisition of 93 Central Avenue, Harare property 236,468 Acquisition of the remainder of Lot 57, Mount Pleasant land 4,100,000 Re-investment in property portfolio 526,981 Total 4,863,449 ANALYSIS OF CASH FLOWS
  • 19. The Group secured a medium term facility from a local financial institution under the following terms: Facility Amount $5,500,000 Tenure 5 Years Interest Rate Base Rate minus 3% per annum (Base rate at drawdown 13% per annum) Security Secured against immovable property, being First Mutual Park with a stamp cover of $6,500,000 EVENTS AFTER REPORTING DATE - BORROWINGS
  • 20. REVIEW OF OPERATIONS
  • 21. RENTALS PER SECTOR Rental rate per square metre: $8.28 (FY2012: $8.18)  Increased by 1.22% as a result of:  Rental reviews.  Leasing of vacant space/new lettings PROPERTY MANAGEMENT
  • 22. Occupancy Level: 76.30% (FY2012: 78.90%)  Declined by 3.30% as a result of net vacations.  Decline in space demand in the face of economic challenges.  Increase in vacations – evictions, company closures etc. PROPERTY MANAGEMENT (Cont.)
  • 23. Tenant arrears: 14.56% (FY2012: 9.06%)  Increased by 60.71% reflecting the negative impact of:  Operational challenges faced by tenants.  Tight liquidity and economic downturn. PROPERTY MANAGEMENT (Cont.)
  • 24.  Contributed 29.46% to rental income.  Arrears level declined by 21.68% reflecting improved performance by retailers.  Occupancy rate marginally declined by 3.31%. Year ended 31 Dec 2013 2012 % Change Rental / m2 (USD) 9.25 7.27 27.24% Arrears 14.49% 18.50% (21.68%) Occupancy rate 95.14% 98.40% (3.31%) SEGMENT ANALYSIS – CBD RETAIL
  • 25. Year ended 31 Dec 2013 2012 % Change Rental / m2 (USD) 9.35 12.19 (23.30%) Arrears 5.16% 0.70% 637.14% Occupancy rate 91.42% 78.80% 16.02%  Contributed 28.81% to rental income.  Arrears level increased as some anchor tenant(s) face viability challenges.  Occupancy rate improved by 16.02% due to new lettings. SEGMENT ANALYSIS – OFFICE PARKS
  • 26.  Contributed 20.96% to rental income.  Arrears increasing reflecting liquidity challenges faced by tenants.  High operating costs.  Occupancy rate declined by 23.66% as tenants rationalised their space holding. Year ended 31 Dec 2013 2012 % Change Rental / m2 (USD) 9.87 9.86 0.10% Arrears 14.42% 11.40% 26.49% Occupancy rate 54.81% 71.80% (23.66%) SEGMENT ANALYSIS – CBD OFFICES
  • 27.  Contributed 13.06% to rental income.  Arrears increased by 127.57% as tenants continue to face challenges.  Occupancy declined by 20.29% following vacation by an anchor tenant at 35 Birmingham. Year ended 31 Dec 2013 2012 % Change Rental / m2 (USD) 4.48 3.46 29.48% Arrears 33.68% 14.80% 127.57% Occupancy rate 65.12% 81.70% (20.29%) SEGMENT ANALYSIS – INDUSTRIAL
  • 28.  Contributed 7.71% to rental income.  Arrears level increased by 90.40% in the face of liquidity challenges borne by vacated tenants.  Occupancy improved by 35.81% following the letting of the Mabvuku Supermarket. Year ended 31 Dec 2013 2012 % Change Rental / m2 (USD) 9.03 7.17 25.94% Arrears 4.76% 2.50% 90.40% Occupancy rate 98.49% 72.52% 35.81% SEGMENT ANALYSIS – SUBURBAN RETAIL
  • 29. Acquisitions  Lot 57 Mount Pleasant: 240,000m2 - $9.60 million  Harare CBD: Old townhouse on 1,200 m2 - $220,000  Juliasdale Cottage: Holiday cottage on 24,900 m2 - $135,000  Brackenhill Cottage: Land on 61,000 m2 - $150,000 PROPERTY ACQUISITIONS
  • 30. PROPERTY ACQUISITION – LOT 57 MOUNT PLEASANT
  • 31. LOT 57 MOUNT PLEASANT DEVELOPMENT PLAN  The plan envisions the site being developed into a mixed use development.  The mixed use development will comprise:  Medical center space;  Retail space;  Office park space; and  Residential flats and cluster housing units.  It is estimated that the total cost of development will be in the region of $100 million.  The development will be funded using a combination of debt and equity.  Given its scale, the development will be phased over an indicative period of 5-10 years, or at an opportune time.  The site can be parceled into the various proposed uses and developed separately.
  • 32. Kamfinsa Cluster Housing Development  Construction in progress  15 cluster homes shells completed – Sales to commence upon completion of sectional title  25 cluster homes targeted for completion in H2 of 2014. PROPERTY DEVELOPMENTS
  • 33. KAMFINSA CLUSTER HOUSE MODEL (Cont.)
  • 34. KAMFINSA CLUSTER HOUSE MODEL (Cont.)
  • 35. KAMFINSA CLUSTER HOUSING DEVELOPMENT
  • 36. Operational efficiency and cost management Actively manage credit and liquidity risk Refurbish existing properties Selective investment in high yielding properties Increasing scope for access to medium and long term finance OUTLOOK
  • 37. THANK YOU

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