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Putprop Limited HY 2014 results

Putprop Limited HY 2014 results

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  • 1. properties and the reduction of rental income in terms of the new leases effective from January 2013. BORROWINGS AND CAPITAL COMMITMENTS The company has no significant borrowings as at 31 December 2013 nor has it any capital commitments at that date. DIRECTORATE Mr Johann van Zyl was appointed to the board of directors as an independent, non-executive director, effective from 22 October 2013. There were no other changes in the composition of the board of directors during this reporting period. COMPANY SECRETARY Acorim Proprietary Limited was appointed as Company Secretary effective 15 August 2013, replacing Mr James Smith. SUBSEQUENT EVENTS There have been no significant reportable subsequent events between the period 31 December 2013 and the release of this report, 17 March 2014. PROSPECTS Trading conditions during the next reporting period are expected to continue to be challenging. The property market both locally and internationally is expected to remain subdued in the second half of the year. We will continue to focus on growing the portfolio, with the possibility of joint ventures with partners with similar strategies considered. ORDINARY INTERIM DIVIDEND NUMBER 49 Notice is hereby given that the board of directors have declared an interim gross cash dividend (“the dividend”) for the six months ended 31 December 2013 of 18 cents per ordinary share (December 2012: 18 cents per ordinary share) reflecting a dividend cover of 2,4 times. The dividend is payable to shareholders recorded in the books of the company at close of business on Friday, 11 April 2014. The current local Dividend Withholding Tax (DWT) rate is 15%. No Secondary Tax on Companies credits have been utilised against the dividend declared. The gross local dividend amount is 18 cents per share for shareholders exempt from paying the DWT whilst the net local dividend payable is 15,3 cents per share for shareholders liable to pay the DWT. The issued share capital of Putprop is 28 792 961 (2012: 28 792 961) shares. The income tax reference number is 9100097717. This dividend is payable from income reserves. The salient dates relating to the dividend are as follows: Last date to trade shares cum dividend Friday, 4 April 2014 Shares trade ex dividend Monday, 7 April 2014 Record date Friday, 11 April 2014 Payment date Monday, 14 April 2014 Share certificates may not be dematerialised or rematerialised during the period Monday, 7 April 2014 to Friday, 11 April 2014 both days inclusive. On behalf of the board 17 March 2014 A B Adrian B C Carleo Chairman Chief Executive Officer rifedesigns14001 VALUATION OF PROPERTY PORTFOLIO It is the group’s policy to value the entire investment property portfolio on an annual basis by an independent external valuer. The next valuation will be as at 30 June 2014. In addition, the property portfolio is valued by the directors on a six monthly basis. The directors have valued the group’s investment portfolio at 31 December 2013 at R286.2 million, an increase of R4,8 million or 1,7% on the external valuation at 30 June 2013. This valuation was based on a review of current market sales and purchase transactions in the property’s location as well as reasonable judgements and estimates of the directors. The effects of any acquisitions made during the year of acquisition are not included in any revaluation. The board has taken a conservative approach in respect of its valuation of the property portfolio as at this reporting date. In particular the Larimar tenanted properties, within the industrial segment, have been conservatively evaluated, due to the specialised nature of the Directorate A B Adrian*^ (Chairman), B C Carleo (Chief Executive Officer), J E Smith (Financial) (British), A L Carleo-Novello, P Senatore*^, P Nucci*^, J van Zyl*^ *Independent ^Non-executive Transfer Secretaries Computershare Investor Services Proprietary Limited 70 Marshall Street, Johannesburg P O Box 61051, Marshalltown, 2107 Auditors Mazars Sponsor Merchantec Capital Company secretary Acorim Proprietary Limited Registered Office 91 Protea Road, Chislehurston, Sandton, 2196 COMBINED SEGMENT LEASE EXPIRY PROFILE 50 000 40 000 30 000 20 000 10 000 0 6 068 2017 47 540 2015 – 2016 21 385 2014 SEGMENTAL ANALYSIS The table above summarises by segment the performance and position for the six months ended 31 December 2013. Segment assets include all operating assets used by a segment and consist of investment properties, receivables and cash. Assets not directly attributable to a particular segment are allocated to the corporate segment. Segment liabilities include all operating liabilities of a segment and consist principally of outstanding accounts. ACQUISITIONS, EXPANSIONS AND REFURBISHMENTS During the period under review no material acquisitions were made. Although the group actively investigated many possible opportunities, no properties met the group’s investment guidelines and criteria. No major capital projects are currently under way. Refurbishments of the older properties will, as mentioned above, continue under a planned maintenance programme during the second half of the year. SEGMENTAL ANALYSIS Industrial Retail Commercial Corporate Total R’000 R’000 R’000 R’000 R’000 GROUP INCOME FOR THE SIX MONTHS ENDED 31 DECEMBER 2013 Property revenue 16 317 2 159 228 – 18 704 Straight-line rental income accrual 1 085 122 1 – 1 208 Property expenses (1 077) (21) (27) – (1 125) Net profit from property operations 16 325 2 260 202 – 18 787 GROUP FINANCIAL POSITION AT 31 DECEMBER 2013 Non-current assets Investment properties 235 736 40 396 4 327 – 280 459 Other non-current assets 4 728 22 501 26 233 54 53 516 Current assets Straight-line rental income asset 311 75 61 – 447 Trade and other receivables 1 395 – – 356 1 751 Cash and cash equivalents – – – 41 570 41 570 Non-current liabilities – – – 28 894 28 894 Current liabilities Taxation payable – – – 1 499 1 499 Trade and other payables 1 157 – – 3 761 4 918 GROUP INCOME FOR THE SIX MONTHS ENDED 31 DECEMBER 2012 Property revenue 18 135 2 012 219 – 20 366 Straight-line rental income accrual (3 130) 294 20 – (2 816) Property expenses (612) (48) (31) – (691) Net profit from property operations 14 393 2 258 208 – 16 859 GROUP FINANCIAL POSITION AT 31 DECEMBER 2012 Non-current assets Investment properties 211 948 34 575 4 466 – 250 989 Other non-current assets 711 24 299 25 854 93 50 957 Current assets Straight-line rental income asset 1 859 283 126 – 2 268 Trade and other receivables 905 542 – 306 1 753 Cash and cash equivalents – – – 24 477 24 477 Non-current liabilities – – – 22 089 22 089 Current liabilities Taxation payable – – – 632 632 Trade and other payables 955 – – 3 478 4 433 PORTFOLIO VALUE BY SECTOR Commercial 1,6% Retail 14,3% Industrial 84,1% CONTRACTUAL RENTAL ESCALATION PROFILE 9,2 9,0 8,8 8,6 8,4 8,2 8,0 7,8 7,6 Retail Industrial Commercial Average 8,3 8,1 9,0 8,1 FOR THE SIX MONTHS ENDED 31 DECEMBER 2013 AND INTERIM CASH DIVIDEND PUTPROP LIMITED Incorporated in the Republic of South Africa (Registration number 1988/001085/06) Share code: PPR ISIN: ZAE000072310 (“Putprop” or “the company” or “the group”) UNAUDITED INTERIM RESULTS
  • 2. These six months Interim Financial Statements have been issued in accordance with the requirements of the Companies Act of South Africa, 2008 and are published on 17 March 2014. COMMENTS BASIS OF PREPARATION The unaudited interim financial statements for the six months ended 31 December 2013 and comparative information have been prepared in accordance with and containing the information required by IAS34 Interim Financial Reporting as well as the SAICA Financial Reporting Guides as issued by the Accounting Practices Board; the Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council; the Listings Requirements of JSE Limited and the relevant sections of the South African Companies Act, 2008 (Act 71 of 2008) as amended. The accounting policies applied in the preparation of these condensed financial statements, which are based on reasonable judgements and estimates are in accordance with International Financial Reporting Standards (IFRS) and are consistent with those applied in the annual financial statements for the year ended 30 June 2013. These interim results have not been audited or reviewed by the company’s auditors. These statements have been prepared under the supervision of James E Smith B.Sc., BAcc, CIEA, the financial director of the company. The directors take full responsibility for the preparation of these interim financial statements. These interim financial statements are available for inspection at Putprop’s registered office. FINANCIAL RESULTS The directors report that property revenue for the six months ended 31 December 2013 prior to any straight-line income adjustments decreased by 8,2% to R18,7 million compared to R20,3 million for the six months ended 31 December 2012 (“the comparable period”). This decline in contractual rentals arose from a reduction of 11,1% of the head lease re-negotiated with our major tenant, Larimar Proprietary Limited (“Larimar”), effective from 1 January 2013. The group’s gross property rental, inclusive of straight-line rental accruals however, has increased by 13,5% over the comparable period, due to the smoothing effect of the straight-line rental asset, of the group’s major tenant, Larimar, as a result of the new lease agreement signed. Property expenses increased by 62,8%, from R691 000 to R1,125 million. This increase was a result of the implementation of our preventative maintenance policy for projects on several of our older properties. Maintenance and refurbishment costs are expected to be relatively consistent in the second half of the year, bearing any unplanned maintenance issues. Administration expenses increased by 6,1% over the comparable period. Investment and other income increased by 62,5% due to high cash reserves. The group’s contribution from its investments in associated companies increased from R1,6 million in December 2012 to R1,7 million as at 31 December 2013, an increase of 7,9%. Summit Place, did not make a contribution to reported profits for this period. The development however, continues to be on schedule. Contributions are expected within the next 12 months. During this reporting period, the retail shopping centre held by Breaking Waves Proprietary Limited, in which the group held a 22,8% holding was disposed of. A small profit was realised. Trade and other receivables decreased marginally from December 2012. All collection periods are within the group’s stated parameters. Cash reserves increased during the period from 31 December 2012 as no material acquisitions were made in this reporting period. The board of directors has declared an interim dividend for the six months ended 31 December 2013 of 18 cents per ordinary share (December 2012: 18,0 cents per ordinary share). This reflects a dividend cover of 2,4 times which continues to be more favourable than the group’s stated dividend policy. In terms of the South African Revenue Services (SARS), the company is required to withhold a 15% Dividend Withholding Tax (DWT) on the dividend declared. This DWT must then be paid to the SARS on behalf of the shareholder, unless the shareholder has exemption from this tax. Un- Un- audited audited Audited 31 Dec 31 Dec 30 Jun 2013 2012 % 2013 R’000 R’000 Change R’000 Reconciliation of headline earnings Net profit for the period 16 240 16 833 (3,5) 50 101 Adjusted for: Fair value adjustment of investment properties (4 800) (3 785) (26,8) (30 850) Taxation effect of fair value adjustments 893 704 26,8 5 738 Headline earnings 12 333 13 752 (10,3) 24 989 Shares in issue (weighted average number) (millions) 28 793 28 793 – 28 793 Dividends paid per share (cents) 18,0 18,0 – 36,0 Headline earnings per share (cents) 42,8 47,8 (10,5) 86,8 RATIOS Net asset value per share (cents) 1 189,3 1 053,3 12,9 1 151,0 PROPERTY PORTFOLIO At 31 December 2013 the portfolio comprised 15 properties (2012: 15) with a gross lettable area of 74 993m2 . The sectoral spread by gross rentals comprised 88% industrial, 10,6% retail and 1,4% commercial. Vacancies decreased during the period to less than 1% (2012: 0,4%) of gross lettable area. The company continues to transact primarily with ‘A’ grade tenants. The company continues to evaluate individual properties within the portfolio to ensure the stated objectives, investment policy and returns are achieved. LEASE EXPIRY PROFILE The lease expiry profile reflects that in terms of gross lettable area, 28% of the portfolio expires during the next 12 months, 63% in 2015 and 9% from 2017 onwards. UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the six months ended 31 December 2013 Accu- Stated mulated capital profits Total R’000 R’000 R’000 At 30 June 2012 4 146 287 493 291 639 Total comprehensive income profit – 16 833 16 833 Dividend paid – (5 182) (5 182) At 31 December 2012 4 146 299 144 303 290 At 30 June 2013 4 146 327 228 331 374 Total comprehensive income profit – 16 240 16 240 Dividend paid – (5 182) (5 182) Balance at 31 December 2013 4 146 338 286 342 432 GROSS PROPERTY revenue up 13,5% to R19,9 million NET PROFIT BEFORE TAX of R22,2 million NET ASSET VALUE PER SHARE up 12,9% to 1189,3 cents INTERIM DIVIDEND maintained at 18 cents per share UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the six months ended 31 December 2013 Un- Un- audited audited Audited 31 Dec 31 Dec 30 Jun 2013 2012 % 2013 R’000 R’000 Change R’000 Property revenue 18 704 20 366 (8,2) 38 875 Straight-line rental income accrual 1 208 (2 816) (142,9) (1 419) Gross property revenue 19 912 17 550 13,5 37 456 Property expenses (1 125) (691) 62,8 (2 016) Net profit from property operations 18 787 16 859 11,4 35 440 Administration expenses (2 767) (2 607) 6,1 (4 830) Investment and other income 884 544 62,5 1 040 Share of associated profits 1 745 1 617 7,9 2 034 Operating profit before capital items 18 649 16 413 13,6 33 684 Impairment provision associate company write back – – – 763 Capital items Fair value adjustments 3 592 6 601 (45,6) 32 269 Gross change in fair value investment properties 4 800 3 785 26,8 30 850 Straight-line rental income adjustment (1 208) 2 816 (142,9) 1 419 Net profit before taxation 22 241 23 014 (3,4) 66 716 Taxation (6 001) (6 181) (2,9) (16 615) Net profit 16 240 16 833 (3,5) 50 101 Other comprehensive income Total comprehensive income and net profit attributable to: – Owners of the parent 16 240 16 833 (3,5) 50 101 – Non-controlling interest – – – – 16 240 16 833 (3,5) 50 101 Earnings and diluted earnings per share (cents) 56,4 58,5 (3,6) 174,0 UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2013 Unaudited Unaudited Audited 31 Dec 31 Dec 30 Jun 2013 2012 2013 R’000 R’000 R’000 ASSETS Non-current assets 333 975 301 946 331 965 Net investment properties 280 459 250 989 276 855 Gross investment properties 286 208 254 135 281 396 Straight-line rental income adjustment (5 749) (3 146) (4 541) Other non-current assets Furniture, fittings and computer equipment 54 93 75 Investments in associates 48 160 49 986 50 728 Straight-line rental income asset 5 302 878 4 307 Current assets 43 768 28 498 33 712 Straight-line rental income asset 447 2 268 234 Trade and other receivables 1 751 1 753 1 693 Cash and cash equivalents 41 570 24 477 31 785 Total assets 377 743 330 444 365 677 EQUITY AND LIABILITIES Capital and reserves 342 432 303 290 331 374 Non-current liabilities 28 894 22 089 27 661 – Deferred tax 28 894 22 089 27 661 Current liabilities 6 417 5 065 6 642 Trade and other payables 4 918 4 433 5 143 Taxation payable 1 499 632 1 499 Total equity and liabilities 377 743 330 444 365 677 UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS for the six months ended 31 December 2013 Unaudited Unaudited Audited 31 Dec 31 Dec 30 Jun 2013 2012 2013 R’000 R’000 R’000 CASH FLOW GENERATED FROM OPERATING ACTIVITIES 5 483 10 258 17 770 Net cash generated from operations 14 549 21 049 37 228 Investment and other income 884 544 1 054 Taxation paid (4 768) (6 153) (10 146) Dividends paid (5 182) (5 182) (10 366) CASH FLOW UTILISED IN INVESTING ACTIVITIES 4 302 (76) (280) Improvements to investment properties (12) (76) (273) Proceeds on sale of associate company 5 396 – – Acquisition of furniture fittings and computer equipment – – (7) Acquisitions of associates (1 082) – – NET INCREASE IN CASH AND CASH EQUIVALENTS 9 785 10 182 17 490 Cash and cash equivalents at the beginning of the period 31 785 14 295 14 295 Cash and cash equivalents at the end of the period 41 570 24 477 31 785