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PMM
PMM
PMM - Premium - Reviewed results of the Group: year ended 28 February 2007
PREMIUM PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1994/003601/06)
Share code: PMM & ISIN: ZAE000009254
("Premium" or "the Group" or "the Company")
NOTICE TO LINKED UNITHOLDERS
REVIEWED RESULTS OF THE GROUP FOR THE YEAR ENDED 28 FEBRUARY 2007
The directors report the reviewed results of the group for the year ended 28
February 2007 set out herein, together with comparisons with the results for the
corresponding year ended 28 February 2006.
Distribution up by 18,9% to 72,5 cents per linked unit
Total return to unitholders of 41,3%
Assets exceed R1,8 billion
Increase in net asset value by 40% to 1025 cents
ABRIDGED CONSOLIDATED INCOME STATEMENT
R`000 % ReviewedYear RestatedYear
Change to28 to28
February2007 February2006
Revenue 223,056 165,898
- earned on contractual basis 28.8% 215,516 167,261
- straight line lease adjustment 7,540 (1,363)
Operating costs (76,895) (61,268)
Net rental income from properties 146,161 104,630
- earned on contractual basis 30.8% 138,621 105,993
- straight line lease adjustment 7,540 (1,363)
Administrative expenses (9,347) (6,996)
Depreciation (850) (500)
Profit before investment income 40.0% 135,964 97,134
Investment income 24,600 31,356
- interest received 958 752
- investment income - associate
equity earnings 2,570 654
fair value adjustment / capital 16,926 25,564
reserves
interest and dividends 4,146 4,386
Profit before finance charges and capital 160,564 128,490
profit
Fair value adjustments of investment
properties
- net revaluation 306,526 290,325
- gross revaluation 314,066 288,962
- straight line lease adjustment (7,540) 1,363
Amortisation of deemed debenture premium 1,700 1,700
Capital loss on disposal of investment - (84)
properties
Profit before finance charges 468,790 420,431
Finance charges 53.3% 52,970 34,554
Profit before debenture interest 415,820 385,877
Debenture interest 18.8% 81,945 68,959
Profit before taxation 333,875 316,918
Taxation charge (89,469) (84,164)
- Deferred taxation (89,469) (83,892)
- Normal taxation - (272)
Profit attributable to ordinary 244,406 232,754
shareholders
Earnings per share (cents) 5.0% 215.1 204.9
Earnings per linked unit (cents) 8.2% 287.3 265.6
Headline earnings per linked unit 36.7% 84.0 61.4
(cents)
Linked units in issue (`000) 113,607 113,607
Distribution per linked unit (cents)
Dividends 0.37 0.30
Interest 72.13 60.70
Total 18.9% 72.50 61.00
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
R`000 ReviewedYear RestatedYear
to28 to28
February2007 February2006
Cash flow from operating activities
Net rental income from properties 128,391 98,497
Adjustment for:
- Depreciation 850 500
- Working capital changes (15,130) (1,958)
Cash generated from operations 114,111 97,039
Investment income 7,674 5,138
Finance costs (52,970) (34,553)
Taxation refunded - 435
Distribution to linked unit holders (75,776) (63,047)
paid
Net cash (outflow)/inflow from operating (6,962) 5,012
activities
Cash flow from investing activities
Investing activities (246,016) (110,562)
Proceeds from disposal of investment 1,500 1,929
properties
Net cash outflow used in investing activities (244,516) (108,633)
Cash inflow from financing activities 235,897 103,016
Net decrease in cash and cash equivalents (15,581) (605)
Cash and cash equivalents at beginning of (109) 496
year
Cash and cash equivalents at end of year (15,690) (109)
DISTRIBUTABLE EARNINGS
The following additional information is provided and is aimed at
disclosing to the users the basis on which the distributions are
calculated.
R`000 % ReviewedYear RestatedYear
Change to28 to28
February2007 February2006
Revenue
- earned on contractual basis 28. 8% 215,516 167,261
Operating costs (76,895) (61,268)
Net rental income from properties 30.8% 138,621 105,993
Administrative expenses (9,347) (6,996)
Depreciation (850) (500)
Profit before investment income 30.4% 128,424 98,497
Investment income
- Interest received 958 752
- Investment income - associate 6,716 5,040
Distributable profit before finance 30.5% 136,098 104,289
charges
Finance charges 53.3% (52,970) (34,554)
Distributable income before 19.2% 83,128 69,735
taxation
Taxation charge - (272)
Unitholders distributable earnings 19.7% 83,128 69,463
Linked units in issue (`000) 113,607 113,607
Distributable earnings per linked 19.7% 73.2 61.1
unit (cents)
Distribution per linked unit 18.9% 72.5 61.0
(cents)
ABRIDGED CONSOLIDATED BALANCE SHEET
R`000 ReviewedYear RestatedYear
to 28 to 28
February2007 February2006
Assets
Non-current assets 1,884,691 1,310,033
Investment properties 1,737,764 1,197,743
Investment properties - straight 37,800 30,260
lining of rental leases
Property, plant and 18,290 18,999
equipment
Investment - associate 90,837 63,031
Current assets 19,934 9,820
Total assets 1,904,625 1,319,853
Equity and liabilities
Share capital and 722,337 478,351
reserves
Share capital and premium 1,349 1,349
Non-distributable reserve 689,532 451,663
Retained earnings 31,456 25,339
Non-current liabilities 1,086,599 758,717
Debentures and premium 200,004 201,704
Interest bearing 644,745 404,630
borrowings
Deferred taxation 241,850 152,383
Current liabilities 95,689 82,785
Interest bearing 5,613 11,744
Non-interest bearing 45,996 33,551
Linked unit holders 44,080 37,490
Total equity and 1,904,625 1,319,853
liabilities
Linked units in issue 113,607 113,607
(`000)
Net asset value per 812 599
linked unit (cents)
Net asset value per linked unit (cents) - 1,025 733
before providing for defered tax
STATEMENT OF CHANGES IN EQUITY
R`000 Share Capital Revaluation Distributable Total
capital reserve reserve reserve
Balance at 1 March 2005 1,136 8,985 201,465 25,767 237,353
before restatement
Restatement - deemed debenture
premium
Reallocation to share 213 213
premium
Amortisation of deemed debenture 8,372 8,372
premium
Reallocation of deemed debenture 8,372 - (8,372) -
premium
Balance at 1 March 2005 1,349 17,357 201,465 25,767 245,938
- restated
Profit attributable to ordinary 232,754 232,754
shareholders
Reallocation of deemed 1,700 (1,700) -
debenture premium
Dividends paid (341) (341)
Transfer to non- - 231,141 (231,141) -
distributable reserve
Balances at 1 March 1,349 19,057 432,606 25,339 478,351
2006 - restated
Profit attributable to ordinary 244,406 244,406
shareholders
Reallocation of deemed debenture 1,700 (1,700) -
premium
Dividends paid (420) (420)
Fair value adjustments
- Investment properties, net 219,243 (219,243) -
of deferred taxation
- associate, net of 16,926 (16,926) -
deferred tax
Balances at 28 February 1,349 20,757 668,715 31,456 722,337
2007
RECONCILIATION -EARNINGS PER SHARE TO HEADLINE EARNINGS PER LINKED
UNIT
Cents Year to 28 Year to 28
February2007 February2006
Earnings per share 215.1 204.9
Add: debenture interest per linked unit 72.2 60.7
Earnings per linked unit 287.3 265.6
Fair value adjustments
- investment properties, net of deferred (188.4) (181.7)
capital gains tax
- associate, net of deferred tax (14.9) (22.5)
Capital loss on disposal of investment - 0.1
properties
Headline earnings per linked unit 84.0 61.4
NOTES TO THE FINANCIAL STATEMENTS
1. The reviewed abridged financial report has been prepared in accordance with
International Financial Reporting Standards (IFRS) and the requirements of
the Companies Act (Act 61 of 1973) and are consistent in all material
respects with those applied in the financial statements for the year ended
28 February 2006. The results have been prepared and presented in
accordance with IAS 34, Interim Financial Reporting.
2. The prior year`s retained income, share premium and debenture premium have
been restated in accordance with the requirements of accounting standards
to allocate the deemed debenture premium on issue of linked units. The
debenture premium is amortised through the income statement over the life
of the debenture and subsequently transferred through the statement of
changes in equity to a non-distributable reserve.
The effect of the above on the prior year balance sheet 28
and income statement is as follows: February
2006
R`000
Income statement
- Increase in profit before finance charges 1,700
- Increase in profit before taxation 1,700
- Increase in profit attributable to linked unitholders 1,700
Balance sheet
- Increase in non-distributable reserves 10,072
- Increase in share premium 213
- Decrease in debenture capital and premium (10,285)
Increase in earnings per share (cents) 1.5
Increase in earnings per linked unit (cents) 1.5
Increase in headline earnings per linked unit (cents) 1.5
3. In order to comply with Accounting Standards, deferred taxation on the fair
value adjustment of investment properties is provided for at the company income
Tax rate, which is currently 29% and not at the Capital Gains Tax rate of 14.5%,
which would be payable if the properties were sold.
4. The financial statements have been reviewed by Grant Thornton, whose
unqualified review report is available for inspection at the company`s
registered office.
COMMENTS
Review of results
Premium`s results for the 12 months ended 28 February 2007 once again reflect
the continuation of the Group`s impressive growth record.
Premium has continued to focus on its strategic objective of acquiring and
redeveloping properties in the Pretoria and Johannesburg CBD and surrounding
areas.
Rental income and net rental income increased by 28.8% and 30.8% respectively,
compared with the previous 12 month period.
Premium paid an interim distribution of 33.7 cents per linked unit. The total
distribution for the year of 72.5 cents per linked unit (2006: 61.0 cents)
equates to an increase of
18.9 % on that paid in the previous corresponding period.
The total return to linked unitholders for the financial year based on the price
as at
28 February 2006 was 41.3%, comprising of capital growth of 33.3% and a
distribution of 72.5 cents per linked unit.
The continuing strong trading conditions resulted in rental increases before
acquisitions increasing by 14%. This combined with strict expense control and
management`s ongoing programme of redevelopment, have all contributed to the
increase in distributable earnings per linked unit.
Property portfolio
Premium acquired seven properties located in the Pretoria CBD for a total
purchase price of R104 million. These properties include Die Meent, Poyntons,
AVN and Praetor. To date significant value has been derived from these
properties as a result of strong letting.
A property was acquired in the Johannesburg CBD for R4,6 million and North City
in Braamfontein for R21,9 million.
Two residential projects in the Pretoria CBD, which were completed in the
previous financial year are fully let and the yields achieved are well in excess
of expectations.
The conversion of Brisk Place in the Johannesburg CBD will be available for
occupation by July 2007. The total building costs of the project amount to R19,6
million and the expected yield is 11%. R3,4 million was spent on the
reconfiguration of the offices at the Trust Bank Building in the Pretoria CBD.
The letting of these smaller offices is progressing well.
The development of The Fields situated in Burnett Street, Hatfield is
progressing well. This project will create 661 residential units as well as
4000m2 of retail space. The investment is expected to cost in excess of R230
million with an initial yield of approximately 10%. It is anticipated that the
project will be completed early in 2008.
Gearing
Premium`s gearing at the end of the financial year was 34.5% as against 31.8% in
the comparable period. It is the policy of the company to hedge the majority of
its exposure to interest rate fluctuations thereby ensuring the sustainability
of future growth in distributions.
Interest rates in respect of 77% of borrowings at 28 February 2007 have been
fixed at an average interest rate of 10.8% maturing at various dates ranging
from August 2007 to September 2010.
Revaluation of property portfolio
It is the Group`s policy to perform directors` valuations of the property
portfolio on a six monthly basis. Each year one-third of the properties are
valued on a rotational basis by an external valuer. The increase in valuation of
the property portfolio by R314,1 million to R1,794 billion represents an
increase of 21.4%.
Prospects
With a stable local economic outlook and continuing strong trading conditions
the Group is optimistic of achieving further growth in distributions. However
increases in interest rates during the previous financial period will have the
consequence of slowing distribution growth.
DECLARATION OF DIVIDEND NO. 26 AND INTEREST PAYMENT ("the distribution")
Notice is hereby given that dividend number 26 of 0.20 cents (2006: 0.16 cents)
per ordinary share together with interest of 38.6 cents per debenture (2006:
32.84 cents), has been declared for the period 1 September 2006 to 28 February
2007, payable to linked unitholders recorded in the register on Friday, 18 May
2007. The last date to trade "CUM" distribution is Friday, 11 May 2007. The
units will commence trading "EX" distribution on Monday, 14 May 2007. Payment
date will be Monday, 21 May 2007.
No dematerialisation or rematerialisation of linked unit certificates may take
place between Monday, 14 May 2007 and Friday, 18 May 2007, both days inclusive.
By order of the Board.
City Property Administration (Proprietary) Limited
25 April 2007
A Wapnick J P Wapnick
(Chairman) (Managing director)
Directors
A Wapnick* (Chairman), JP Wapnick* (Managing director), MJ Holmes#, MZ Pollack#,
S Wapnick+
* Executive director # Independent non-executive director +Non-executive
director
Registered Office Transfer Secretaries
CPA House Computershare Investor Services 2004 (Proprietary)
Limited
101 du Toit Street (Registration number 2004/003647/07)
Pretoria, 0002 70 Marshall Street, Johannesburg, 2001
P O Box 15, Pretoria, 0001 P O Box 61051, Marshalltown, 2107
Tel: (012) 319 8811 Tel: (011) 370 7700
Fax: (012) 319 8812 Fax: (011) 668 7712
Date: 25/04/2007 17:28:04 Produced by the JSE SENS Department.
