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PMM
PMM
PMM - Premium - Unaudited Results Of The Group: The Six Months Ended
31 August 2007
PREMIUM PROPERTIES LIMITED and its subsidiaries
(Incorporated in the Republic of South Africa)
(Registration number 1994/003601/06)
Share code: PMM
ISIN: ZAE000009254
("Premium" or "the Group" or "the Company")
UNAUDITED RESULTS OF THE GROUP FOR THE SIX MONTHS ENDED 31 AUGUST 2007
Distribution up by 20,2% to 40,5 cents per linked unit
Assets exceed R2,2 billion
Increase in net asset value by 17% to 948 cents
CONDENSED CONSOLIDATED INCOME STATEMENT
R`000 % Unaudited Unaudited Audited
Change six months six months Year to
31 Aug 31 Aug 28 Feb
2007 2006 2007
Revenue 133,598 100,198 223,058
- earned on contractual 34.1% 133,250 99,343 215,518
basis
- straight line lease 348 855 7,540
adjustment
Operating costs (48,514) (36,658) (76,893)
Net rental income from 85,084 63,540 146,164
properties
- earned on contractual 35.2% 84,736 62,685 138,624
basis
- straight line lease 348 855 7,540
adjustment
Adminitrative expenses (6,343) (4,486) (9,347)
Depreciation (426) (449) (850)
Profit before 33.6% 78,315 58,605 135,967
investment income
Investment income 16,124 14,036 24,600
- Interest received 822 378 958
- Investment income -
associate
equity earnings (1,676) 182 2,570
fair value adjustment 11,500 10,586 16,926
/capital reserves
interest and dividends 5,478 2,890 4,146
Profit before finance 30.0% 94,439 72,641 160,567
charges and capital
profit
Fair value adjustments
of investment
properties
net revaluation 120,657 135,486 306,526
gross revaluation 121,005 136,341 314,066
straight line lease (348) (855) (7,540)
adjustment
Amortisation of deemed 1,264 850 1,700
debenture premium
Capital loss on - (45) -
disposal of investment
properties
Profit before finance 216,360 208,932 468,793
charges
Finance charges 47.5% 33,626 22,794 52,970
Profit before debenture 182,734 186,138 415,823
interest
Debenture interest 27.8% 48,687 38,092 81,945
Profit before taxation 134,047 148,046 333,878
Taxation charge (35,092) (39,539) (89,469)
- Deferred taxation (35,092) (39,539) (89,469)
- Normal taxation - - -
Income attributable to 98,955 108,507 244,409
ordinary shareholders
Weighted linked units 115,320 113,607 113,607
in issue - (`000)
Linked units in issue 127,239 113,607 113,607
(`000)
Earnings per share (10.2%) 85,8 95,5 215,1
(cents)
Earnings per linked (0.8%) 128,0 129,0 287,3
unit (cents)
Headline earnings per 24.5% 43,7 35,1 84,0
linked unit (cents)
*Based on a weighted
number of units in
issue.
Distribution per linked
unit (cents)
Dividends 0,20 0,17 0,37
Interest 40,30 33,53 72,13
Total 20.2% 40,50 33,70 72,50
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
R`000 % Unaudited Unaudited Audited
Change six months six months Year to
31 Aug 31 Aug 28 Feb
2007 2006 2007
Cash flow from
operating activities
Net rental income from 77,942 57,751 128,427
properties
Adjustment for:
- Depreciation 426 449 850
- Working capital (10,423) (19,797) (15,127)
changes
Cash generated from 67,945 38,403 114,150
operations
Investment income 4,623 3,268 958
Finance costs (33,626) (22,794) (52,970)
Distribution to linked (41,489) (37,490) (75,775)
unit holders paid
Net cash outflow from (2,547) (18,613) (13,637)
operating activities
Cash flow from
investing activities
Investing activities (235,188) (115,156) (239,583)
Proceeds from disposal - 1,455 1,780
of investment
properties
Net cash outflow used (235,188) (113,701) (237,803)
in investing activities
Cash inflow from
financing activities
Issue of linked units 186,223 - -
Increase in interest 29,273 124,844 235,896
bearing borrowings
Net cash generated from 215,496 124,844 235,896
financing activities
Net decrease in cash (22,239) (7,470) (15,544)
and cash equivalents
Cash and cash (15,654) (109) (110)
equivalents at
beginning of period
Cash and cash (37,893) (7,579)
equivalents at end of (15,654)
period
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 % Unaudited Unaudited Audited
Change six months six months Year to
30 Aug 30 Aug 28 Feb
2007 2006 2007
Revenue
- earned on contractual 34.1% 133,250 99,343 215,518
basis
Operating costs (48,514) (36,658) (76,893)
Net rental income from 35.2% 84,736 62,685 138,625
properties
Administrative expenses (6,343) (4,486) (9,347)
Depreciation (426) (449) (850)
Profit before investment 35.0% 77,967 57,750 128,428
income
Investment income
- Interest received 822 378 958
- Interest received, 2,590 - -
prepaid distribution
- Investment income - 3,802 3,072 6,716
associate
Distributable profit 39.2% 85,181 61,200 136,102
before finance charges
Finance charges 47.5% (33,626) (22,794) (52,970)
Distributable income 34.2% 51,555 38,406 83,132
before taxation
Taxation charge - - -
Unit holders 34.2% 51,555 38,406 83,132
distributable earnings
Distributable earnings 19.9% 40,5 33,8 73,2
per linked unit -
(cents)
Distribution per linked 20.2% 40,5 33,7 72,5
unit (cents)
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited Audited
31 Aug 28 Feb
R`000 2007 2007
Assets
Non-current assets 2,251,609 1,884,692
Investment properties 2,075,696 1,737,765
Investment properties - straight lining of 38,148 37,800
rental leases
Property, plant and equipment 19,328 18,291
Investments - associated company 118,437 90,836
Current assets 30,178 19,932
Total assets 2,281,787 1,904,624
Equity and liabilities
Share capital and reserves 821,756 722,340
Share capital and premium 2,311 1,349
Non-distributable reserve 787,717 689,533
Retained earnings 31,728 31,458
Non-current liabilities 1,340,121 1,086,597
Debentures and premium 384,001 200,004
Interest bearing borrowings 679,279 644,744
Deferred taxation 276,841 241,849
Current liabilities 119,910 95,687
Interest bearing 352 5,613
Non-interest bearing 68,026 45,994
Linked unit holders 51,532 44,080
Total equity and liabilities 2,281,787 1,904,624
Linked units in issue (`000) 127,239 113,607
Net asset value per linked unit (cents) 948 812
Net asset value per linked unit (cents) - 1,165 1,025
before providing for deferred tax
CONDENSED STATEMENT OF CHANGES IN EQUITY
R`000 Share Capital Revalua-ion Distribut-ble Total
capital reserve reserve reserve
Balance at 1,349 19,057 432,607 25,338 478,351
1 March 2006
Profit 244,409 244,409
attributable to
ordinary
shareholders
Reallocation of 1,700 (1,700) -
deemed debenture
premium
Dividends paid (420) (420)
Transfer to non- 236,169 (236,169) -
distributable
reserve
Balance at 28 1,349 20,757 668,776 31,458 722,340
February 2007
Profit 98,955 98,955
attributable to
ordinary
shareholders
Issue of linked 962 962
units
Reallocation of 1,264 (1,264) -
deemed debenture
premium
Dividends paid (254) (254)
Fair value
adjustments
- Investment 85,420 (85,667) (247)
properties, net
of deferred
taxation
- associate, net 11,500 (11,500) -
of deferred tax
Balance at 31 2,311 22,021 765,696 31,728 821,756
August 2007
RECONCILIATION - EARNINGS TO DISTRIBUTABLE EARNINGS
Unaudited Unaudited Audited
six months six months Year to
31 Aug 31 Aug 28 Feb
R`000 2007 2006 2007
Profit attributable to 98,955 108,507 244,409
shareholders
Add: debenture interest per 48,687 38,092 81,945
linked unit
Earnings - linked unitholders 147,642 146,599 326,354
Capital items - 45 -
Fair value adjustments
- associate, net of deferred (11,500) (10,586) (16,926)
tax
- investment properties, net (85,667) (96,195) (219,243)
of deferred tax
Headline earnings - linked 50,475 39,863 90,185
unitholders
Interest received, prepaid 2,590 - -
distribution
Straight line lease (246) (607) (5,353)
adjustment, after tax
Amortisation of deemed (1,264) (850) (1,700)
debenture premium
Distributable earnings - 51,555 38,406 83,132
linked unitholders
NOTES TO THE FINANCIAL STATEMENTS
The condensed 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 is consistent in all material respects with
those applied in the financial statements for the year ended 28 February 2007.
The results have been prepared and presented in accordance with IAS 34, Interim
Financial Reporting.
In order to comply with International Accounting Standard IAS 17, rental income
from leases is recognized on a straight-line basis over the period of the lease.
In order to avoid an overstatement of assets the fair value of investment
properties has been reduced by the cumulative straight-line rental accrual.
In order to comply with Accounting Standards, deferred taxation on the fair
value adjustment of investment property has been provided at the company income
taxation rate which is currently 29% and not at the Capital Gains Tax rate of
14.5%, which would be payable if properties were sold.
Related party: City Property Administration (Proprietary) Limited is responsible
for the property and asset management of the group.
Contingent liability: as at 31 August 2007 there are no material contingent
liabilities.
COMMENTS
Review of results
Premium`s results for the 6 months ended 31 August 2007 once again reflect the
continuation of the Group`s impressive growth record.
Rental income and net rental income increased by 34.1% and 35.2% respectively,
compared with the previous six month period.
The interim distribution for the period of 40,5 cents (2006: 33,7 cents)
represents an increase of 20.2% on that paid in the previous corresponding
period.
The continuing strong trading conditions and management`s pro-active approach to
letting 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 has continued to focus on its strategic objective of acquiring and
redeveloping properties in the Pretoria and Johannesburg CBD`s and surrounding
areas.
Premium acquired seven properties, located in Arcadia and the Pretoria and
Johannesburg CBD`s for a total purchase price of R117 million. These properties
include ABSA Pretorius Street, Armadale, Gilboa, Loveday Street, Northvaal,
Pavilion and Provisus. These properties are strategically situated and will
enhance the overall quality of the portfolio and further add to the growing
income streams.
The residential project Brisk Place which is situated in the Johannesburg CBD
was completed during the period. It is fully let and the yield achieved is well
in excess of expectations.
R3 million was spent on the Govpret and Silway properties ahead of successful
letting of these premises.
The development of The Fields situated in Burnett Street, Hatfield is
progressing well. This project will create 661 residential units as well as 4000
m2 of retail space. The investment is expected to cost in excess of R250 million
with an initial yield of approximately 10%. It is anticipated that the project
will be completed early in 2008.
Issue of new units
During the period 13 632 019 units were issued at a price of 1386 cents which
includes a notional distribution pre-payment of 19 cents. These units were
placed with selected institutions and investors. The proceeds of R186 million
are to be utilised to fund redevelopment and expansion opportunities. In the
short term the proceeds will be utilised to reduce borrowings and will result in
an interest saving at a rate of approximately 11.5%. An amount of R2,6 million
was received as a prepaid distribution. Subsequent to 31 August 2007 an
additional 2 867 384 units were placed at an issue price of 1395 cents. The
proceeds amounted to R40 million.
Gearing
Premium`s gearing at the end of the financial year was 30.2% as against 34.5% at
28 February 2007. Interest rates in respect of 65% of borrowings at 31 August
2007 have been fixed at a weighted average interest rate of 10.6% at 31 August
2007 maturing at various dates ranging from May 2009 to September 2010.
Revaluation of property portfolio
It is the Group`s policy to perform directors` valuations of all the properties
on a six monthly basis. At the year end one-third of the properties are valued
by external valuers. The increase in the valuation of the portfolio by R120,6
million to R2,1 billion represents an increase of 6.4%.
Prospects
The Premium board is confident that, subject to market conditions remaining
favourable, the company will continue to produce growing distributions on par
with, if not better than, the market average.
DECLARATION OF DIVIDEND NO. 27 AND INTEREST PAYMENT ("the distribution")
Notice is hereby given that dividend number 27 of 0,20 cents (2006: 0,17 cents)
per ordinary share together with interest of 40,30 cents per debenture (2006:
33,53 cents), has been declared for the period 1 March 2007 to 31 August 2007,
payable to linked unitholders recorded in the register on Friday, 16 November
2007. The last date to trade "CUM" distribution is Friday, 9 November 2007. The
units will commence trading "EX" distribution on Monday, 12 November 2007.
Payment date will be Monday, 19 November 2007.
No dematerialisation or rematerialisation of linked unit certificates may take
place between Monday, 12 November 2007 and Friday, 16 November 2007, both days
inclusive.
By order of the Board.
City Property Administration (Proprietary) Limited
18 October 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
CPA House
101 du Toit Street
Pretoria, 0002
P O Box 15, Pretoria, 0001
Tel: (012) 319 8811
Fax: (012) 319 8812
Transfer Secretaries
Computershare Investor Services 2004 (Proprietary) Limited
(Registration number 2004/003647/07)
70 Marshall Street, Johannesburg, 2001
P O Box 61051, Marshalltown, 2107
Tel: (011) 370 7700
Fax: (011) 668 7712
Date: 18/10/2007 15:58:39 Produced by the JSE SENS Department.
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