| Thu 23 Aug 2007, 14:35 | | SYA - Siyathenga - Audited Results For The Year En |
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SYA
SYA
SYA - Siyathenga - Audited Results For The Year Ended 30 June 2007
Siyathenga Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2004/005198/06)
Share code: SYA
ISIN:ZAE000069530
("Siyathenga")
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2007
Member of the Property Loan Stock Association
Distribution growth 11.2%
Total return to unitholders for the year 56.5%
Portfolio growth of 20.4% to R1,77 billion
Occupancies of 96.8%
Investors distributable earnings
This investor information is aimed at disclosing to the users the basis on which
the distribution was calculated.
A reconciliation has been included to illustrate the accounting adjustments
which were not taken into account in calculating the distribution.
Year ended Year ended
R`000 30 Jun 07 30 Jun 06
Revenue
- Gross rentals received 181 232 113 359
- Profit on disposal of trading 2 089 759
property
Proceeds on disposal of trading 6 400 5 501
property
Cost of trading property disposed of (4 311) (4 742)
during the year
Net building costs (40 168) (24 479)
Administrative costs (9 985) (6 830)
Interest received 2 243 1 501
Finance costs (70 521) (45 872)
Linked unitholders distributable 64 890 38 438
earnings
Weighted average number of linked units 112 836 788 81 071 252
for the year/period
Distributable earnings per linked unit 57,51 47,41
for the year(cents)
Distribution per linked unit (cents) 57,50 47,00
Number of linked units in issue 116 746 704 110 725 104
Reconciliation between linked
unitholders
Distributable earnings to profit for
the year
Linked unitholders distributable 64 890 38 438
earnings
Revaluation of investment properties 132 185 112 783
Movement of fair value in interest rate 33 541 (1 806)
derivatives
Goodwill written off - (49 982)
Amortisation of debenture premium 3 403 1 563
Profit before tax and distribution to 234 019 100 996
unitholders
Debenture interest distributed to (64 931) (38 601)
unitholders
Profit before taxation 169 088 62 395
Taxation (47 789) (31 934)
Net profit for the year 121 299 30 461
Net asset value per linked unit (cents) 710 602
Net asset value per linked unit - 738 616
adjusted (cents)*
*Net asset value per linked unit - adjusted
Whilst the directors are of the opinion that the unrealised gains on the
revaluation of investment properties should be taxed at the capital gains rate
of 14.5%, as would better reflect the commercial position, IFRS requires that
deferred tax be raised at the Company income tax rate of 29%. The net asset
value per linked unit - adjusted, has included the deferred tax on the
revaluation of investment properties at 14.5%.
Return to unitholders
Year ended Year ended
30 Jun 07 30 Jun 06
Share price at 1 July 2006/5 August 2005 580,00 500,00
(cents):
Share price at 30 June (cents): 850,00 580,00
Capital return (cents) 270,00 80,00
Distributions for the year/period (cents) 57,50 47,00
Total return (cents) 327,50 127,00
Total return for the year/period (%) 56,47 25,40
High during year/period (cents): 960,00 800,00
Low during year/period (cents): 530,00 500,00
Strategy
Siyathenga`s investment strategy is to focus on urban retail centres, having a
value of in excess of R100 million, and offering sustainable net income growth
as a result of desirable location and visibility, size, quality tenant mix and
accessibility. Location in well-established areas or growth nodes serving
consumers with strong levels of disposable income remains a key criterion for
inclusion in the Company`s portfolio.
The retail component of the portfolio is complemented by commercial properties.
Again, a quality tenant mix is key and long-dated lease expiry profiles are
preferred.
Commentary
In May, Siyathenga concluded agreements, in terms of which an effective 15% of
Siyathenga`s linked units will be issued to two broad-based empowerment
consortia. The transaction meets our criteria for transferring real benefits to
broad-based consortia without compromising the economic interests of existing
investors.
Siyathenga has drawn significant benefit from a largely supportive macro-
economic environment. The most material national factors were sustained GDP
growth in the 5% range, the continued emergence of an upwardly progressive
middle class and strong growth in property values and rentals. We believe that
the committed infrastructure programmes of one trillion Rand in the next three
to five years will continue to drive the economic growth of South Africa and
will provide the required platform to sustain this growth.
The key challenges relate to the interest rate climate and concerns over credit
extension. Retail sales have continued to grow strongly despite a number of
interest rate increases. We anticipate that this trend will continue, albeit at
a more moderate pace.
South Africa is laying the foundation of a strong and sustainable economy. Over
the medium to long term, this will benefit the retail environment. Siyathenga is
ideally placed to enjoy the benefits of these economic fundamentals.
Property portfolio
Our enhanced portfolio now consists of 17 properties with gross lettable area of
242 233m2. The percentage of retail properties remains at 84%, with office space
making up the balance.
Financial performance
Strong earnings growth was achieved, taking investors` distributable earnings to
R64,9 million (2006: R38,4 million). Robust revenue growth was also recorded -
up from R118,9 million to R187,6 million.
The distribution per linked unit was in line with management expectations,
rising by 11,2% to 57,5 cents (up from an annualised 51,70 cents in 2006). The
total return to linked unitholders over the last year is 56,5%.
Securitisation
In April, we cooperated with associate companies Pangbourne Properties Limited,
iFour Properties Limited and Monyetla Property Fund Limited to establish South
Africa`s first client-sponsored multi-borrower commercial mortgage-backed
securitisation programme.
Our securitisation transaction was hedged in full in March 2007 against interest
rate risk. This hedging was undertaken prior to the upward movement in interest
rates and allowed Siyathenga to lock in very attractive fixed rates.
Borrowings of R831,8 million (2006: R749,5 million) at year-end represent a
gearing level of 47.1%. This is well within the board mandate of 65% and
provides the opportunity for further expansion of the portfolio.
Prospects
Siyathenga looks forward to a continuation of supportive economic and industry
fundamentals in the new financial year and beyond.
As a consequence of the expected economic strength in the country, rental
streams of Siyathenga are expected to remain robust and vacancies low.
We will continue a strategy of growing our asset-base through selective
acquisition and the upgrading and expansion of The Boardwalk Centre. The
strategic objective is to grow the value of assets under management to R2,5
billion within two years.
Siyathenga management is cooperating with Pangbourne in the development of a
neighbouring site to create a significantly expanded centre to cater for strong
tenant demand. Construction work on the 38 000m2 extension has already begun,
with completion expected by April 2008. The extension is also currently more
than 90% let. This will turn Boardwalk into a leading destination centre and
significantly enhance the value of our original asset.
Siyathenga management has entered into negotiations with Pangbourne for the
purchase of this new phase of
the Boardwalk development. The opportunity to acquire the Boardwalk extension
from Pangbourne will be energetically pursued.
We have confidence in the future of our country and industry, and Siyathenga has
established a strong foundation for sustained growth.
Condensed Consolidated Income Statement for the year ended 30 June 2007
Year ended Year ended
30 Jun 07 30 Jun 06
R`000 R`000 R`000
Revenue 187 632 118 860
Straight line operating lease adjustment 15 290 5 150
Net building costs (40 168) (24 479)
Costs of trading property disposed of (4 311) (4 742)
during the year
Administrative costs (9 985) (6 830)
Profit from operations 148 458 87 959
Net revaluation of investment properties 116 895 107 633
Attributable to straight line operating (15 290) (5 150)
lease adjustment
Gross revaluation of investment 132 185 112 783
properties
Profit before financing costs and 265 353 195 592
taxation
Interest received 2 243 1 501
Finance costs (70 521) (45 872)
Amortisation of debenture premium 3 403 1 563
Movement in the fair value of interest 33 541 (1 806)
rate derivatives
Goodwill written off - (49 982)
Debenture interest distributed to linked (64 931) (38 601)
unitholders
Profit before taxation 169 088 62 395
Taxation (47 789) (31 934)
Profit for the year 121 299 30 461
Earnings per share (cents) 107,50 40,05
Diluted earnings per share (cents) 107,50 40,05
Earnings per linked unit (cents) 165,04 90,80
Diluted earnings per linked unit (cents) 165,04 90,80
Reconciliation between earnings and
headline earnings
Profit for the year 121 299 30 461
Adjustments:
Net revaluation of investment properties (82 995) (76 420)
net of taxation
Goodwill written off - 49 982
Headline profit per share 38 304 4 023
Debenture interest distributed to 64 931 38 601
unitholders
Headline profit per linked unit 103 235 42 624
Headline earnings per linked unit (cents) 91,49 56,04
Net asset value per linked unit (cents) 710 602
Headline earnings per share (cents) 33,95 5,29
Diluted headline earnings per share based 33,95 5,29
on 112 836 788 units (2006: 81 071 252
units) (cents)
Net asset value per share (cents) 4 1
Condensed Consolidated Cash Flow Statement for the year ended 30 June 2007
Year ended Year ended
30 Jun 07 30 Jun 06
R`000 R`000 R`000
Cash flow from operating activities
Cash generated from operations 127 862 40 346
Interest received 2 243 1 501
Finance costs (70 521) (45 872)
Distributions paid to unitholders (59 809) (8 700)
Net cash outflow from operating (225) (12 725)
activities
Cash flow from investing activities
Additions to Investment properties (167 440) (716 561)
Additions to equipment, furniture and (156) (254)
fittings
Net proceeds from the sale of investment 6 368 5 501
properties
Loans advanced to The Siyathenga Unit (33) (11 224)
Purchase Trust participants
Net cash outflow from investing (161 261) (722 538)
activities
Cash flow from financing activities
Issue of linked units, net of transaction 44 105 488 729
costs
Long-term borrowings repaid 99 271 347 611
Movement in related party loan (17 341) (98 696)
Net cash inflow from financing activities 126 035 737 644
Net (decrease)/increase in cash and cash (35 451) 2 381
equivalents
Cash and cash equivalents at the 8 278 5 897
beginning of the year
Cash and cash equivalents at the end of (27 173) 8 278
the year
Segmental Information
Primary segment Corporate
R`000 Retail Office Other unallocated Total
Year ended
30/06/2007
Revenue - 152 178 29 054 - - 181 231
Rentals
Proceeds on 6 400 - - - 6 400
disposal of
trading
property
Straight line 13 475 1 815 - - 15 290
operating lease
adjustment
Segment results
Profit before 204 211 71 128 - (35 730) 239 609
finance costs
and taxation
Segment assets 1 518 797 247 370 - 62 553 1 828 720
Segment - - - 1 678 057 1 678 057
liabilities
Period ended
30/06/2006
Revenue - 95 447 17 912 - - 113 359
Rentals
Proceeds on - - 5 501 - 5 501
disposal of
trading
property
Straight line 4 350 800 - - 5 150
operating lease
adjustment
Segment results
Profit before 157 558 44 105 759 (94 155) 108 267
finance costs
and taxation
Segment assets 1 272 121 194 372 4 279 31 364 1 502 136
Segment - - - 1 472 773 1 472 773
liabilities
Segment revenue and expenses
Revenue and expenses that are directly attributable to a segment are allocated
to those segments. Items not directly attributable to a segment are allocated to
the corporate segment.
Condensed Consolidated Balance Sheet
as at 30 June 2007
As at As at
30 Jun 07 30 Jun 06
R`000 R`000 R`000
ASSETS
Non-current assets
Investment properties 1 766 045 1 466 419
Equipment, furniture and fittings 369 258
Loans to participants of The Unit Purchase 11 257 11 224
Trust
Derivative financial instruments - long 21 178 0
term
Deferred tax asset 1 995 -
Prepaid expenses - Long term 2 188 1 833
1 803 032 1 479 734
Current assets
Trading property - 4 279
Trade and other receivables 10 507 7 873
Prepaid expenses - Short term 3 429 1 972
Derivative financial instruments - short 8 477 -
term
Loan to related party 398 -
Cash and cash equivalents 2 877 8 278
25 688 22 402
Total assets 1 828 720 1 502 136
EQUITY
Capital and reserves
Share capital and premium 5 010 1 606
Retained earnings 145 653 27 757
Total equity 150 663 29 363
LIABILITIES
Debenture debt and premium 677 739 637 038
Linked unitholders` interest 828 402 666 401
Other non-current liabilities
Interest-bearing borrowings 831 843 732 572
Derivative financial instruments - 3 886
Deferred taxation liability 80 399 31 071
912 242 767 529
Current liabilities
Trade and other payables 22 149 20 964
Bank balances 30 050 -
Loan from related party - 16 943
Current income tax liabilities 853 397
Linked unitholders for distribution 35 024 29 902
88 076 68 206
Total equity and liabilities 1 828 720 1 502 136
Condensed Consolidated Statement of changes in equity for the year ended 30 June
2007
Share Share Retained
R`000 Capital Premium earnings Total
Balance at 1 July 2005 3 32 (1 141) (1 106)
Arising on issue of units 8 - - 8
during the year
Profit for the year - - 30 461 30 461
Transfer of amortised - 1 563 (1 563) -
debenture premium
Balance at 30 June 2006 11 1 595 27 757 29 363
Arising on issue of units 1 - - 1
during the year
Profit for the year - - 121 299 121 299
Transfer of amortised - 3 403 (3 403) -
debenture premium
Balance at 30 June 2007 12 4 998 145 653 150 663
Notes to the financial statements
1. Basis of preparation
1.1 The audited financial report has been prepared on the historical cost basis
as modified by the revaluation of available-for-sale financial assets,
financial liabilities through profit or loss and investment properties
which are carried at fair value. These are in accordance with International
Financial Reporting Standards ("IFRS"), IAS34 - interim Financial
Reporting, the requirements of the South African Companies Act 1973 as
amended.
Accounting policies applied are similar to those applied in the previous
reporting period.
There has been no changes in accounting policies during the year.
2. Related party transactions
Related party transactions were concluded during the reporting period at
arm`s length terms as would be negotiated between unrelated willing
parties.
3. Contingent liabilities
There are no contingent liabilities as at 30 June 2007.
4. Capital commitments
The directors have approved the following capital expenditure projects:
4.1 Boardwalk
Refurbishment costs amounting to approximately R50 million were approved by
the board. As at year end, the refurbishment project was approximately 37%
complete. Specific funding for the entire refurbishment has been arranged
through ABSA Bank Limited and FirstRand Bank Limited (through RMB) which
has an applicable rate of interest of JIBAR plus a margin of 1.4%.
4.2 Crescent
The refurbishment commenced on 4 June 2007. The total cost of the
refurbishment is expected to be R12,39 million. As at year end, the
refurbishment was 25% complete. Cash flows from existing operations will
fund the refurbishment.
5. Subsequent events
5.1 Restructured financing
5.1.1Securitisation
During July 2007 Siyathenga securitised R524 million of its debt. This
entailed the issue of bonds, through Prime Realty Obligors Packaged
Securities "PROPS", on the Bond Exchange of South African. Seventy seven
percent of the bonds issued were rated AAA, by Fitch rating agency, for
which there was an over subscription. The maturing dates of the bonds
issued were a combination of three and five years. The effective rate
achieved on the securitised debt was 8.95% NACS, for the first three years
and 10.10% for years four and five.
5.1.2 Reallocation of Nedbank long term funding obligations
The Nedbank long term funding obligations were repaid during July 2007. The
funds raised for such repayment were made available through FirstRand Bank
Ltd (through RMB) and ABSA Bank Limited.
5.1.3 Repayment of FirstRand Bank (through RMB) bridging facility.
Linked units were issued in July 2007 via a vendor placement. The proceeds
of which have been
used to repay RMB`s bridging facility, which was raised on payment for the
additional 25% undivided share in Willowbridge.
5.2 BEE transaction
Siyathenga linked unitholders are referred to an announcement on SENS dated
17 July 2007. The Company has entered into agreements in terms of which an
effective 15% holding of Siyathenga`s linked units ("linked units") will be
issued to special purpose vehicles ("SPVs") to be held by Black Economic
Empowerment partners. The linked unit issue price was set at R8,25.
The SPV`s will be funded by FirstRand Bank Limited (through RMB).
Siyathenga Property Fund Limited and Siyathenga Properties Two (Pty) Ltd
will offer surety to RMB for the funding. The SPV`s have hedged 85% of this
funding at a rate of 10.82% NACM.
This announcement has been prepared in compliance with the Listing
Requirements of the JSE Limited.
The consolidated financial statements for the year have been audited by
Deloitte & Touche and their accompanying unqualified report as well as
their unqualified audit report on this set of financial information is
available for inspection at the company`s registered office.
On behalf of the Board
AJWL Richards APF von Bulow
Chairman Managing Director
23 August 2007
Siyathenga Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2004/005198/06)
Share code: SYA
ISIN: 000069530 ("Siyathenga")
Member of the Property Loan Stock Association
Address 2nd Floor, Pangbourne House, 382 Jan Smuts Avenue, Craighall, 2196, T:
+27 11 889 8740, F: +27 11 787 9933
Directorate and Secretary AJWL Richards (Chairman), APF von Bulow (Managing
Director), B Frigenti (Italian - Non-executive), CM Hutchison (Non-executive),
JB Gibbon (Non-executive), EPM Moses (Non-executive), LX Mtumtum (Non-
executive), MD Bosman (Secretary). www.siyathenga.co.za
Date: 23/08/2007 14:35:06 Produced by the JSE SENS Department.
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