| Thu 7 Feb 2008, 16:57 | | DIV - Diversified - Reviewed Interim Results And Distribution Announcement |
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DIV
DIV
DIV - Diversified - Reviewed Interim Results And Distribution Announcement
For The Six Months Ended 31 December 2007
Diversified Property Fund Limited
Registration number 2005/029685/06
(Incorporated in the Republic of South Africa)
("Diversified" or "the group")
JSE code: DIV
ISIN: ZAE000072369
REVIEWED INTERIM RESULTS AND DISTRIBUTION ANNOUNCEMENT FOR THE SIX MONTHS
ENDED 31 DECEMBER 2007
Directors` commentary
The distribution of 35,49 cents per linked unit for the six months ended 31
December 2007 represents a 14,6% increase over the distribution for the
comparable prior period.
The period was characterised by substantial changes to the group`s property
portfolio, as well as extensions to and refurbishment of four of the core
investment properties.
1 ACQUISITIONS AND DEVELOPMENTS
Chemserve, Spartan
Construction of a subdivisible 9 690 m2 warehouse and office development has
commenced on an unutilised portion of land. Due to the land being a sunk
cost, a forward yield of 10,5% is projected. The premises of the existing
tenant, a subsidiary of Chemserve, were reconfigured and refurbished and the
lease was renewed for a further five year period.
Evaton Plaza and Nquthu Plaza
Diversified acquired a 50% interest in Evaton Plaza and Nquthu Plaza for
R81,9 million and R45,8 million respectively. Evaton Plaza was acquired at a
forward yield of 9,75% and Nquthu Plaza at a forward yield of 10% with effect
from 1 July 2007.
Isando Business Park
The 4 330 m2 warehouse developed in the park on previously unutilised land
was completed within budget at a forward yield of 12%. The warehouse has been
let to a subsidiary of Grindrod Logistics on a five year lease.
Market Square, Grahamstown
The 2 150 m2 GLA extension to accommodate Jet Stores, Sheet Street, Pep
Stores, Clearvision and Kentucky Fried Chicken was completed within budget in
September 2007. A forward yield of 9,75% was achieved on the extension. More
importantly, by adding bulk to the centre, the extension has strengthened the
trading densities of the original tenants. This bodes well for rental
renewals in the future. Although there is strong tenant demand for additional
space, further extensions are not being considered at this stage.
Montague Business Park
Diversified owns a 25% undivided share in this 61,5 ha property in
partnership with Improvon Properties and Acucap Properties. Approval has
been obtained from the Cape Town City Council to commence with the
development of the roads and services infrastructure. Due to a shortage of
well-located zoned industrial property, land prices in the area have
increased substantially.
Rivonia Village
A R36,9 million redevelopment and upgrade of Rivonia Village commenced in
October 2007. The redevelopment will improve the vertical reticulation and
parking of the centre and will improve access to the upper retail level. The
project is expected to achieve a 9% yield and at the same time significantly
improve the tenant profile of the centre.
Sterkspruit Plaza
Diversified acquired a 68% interest in this 8,7 ha site at a cost of R4,3
million. Although retail rights have been approved and tenant demand is
strong, the site will not be developed until a dispute amongst the outside
shareholders has been resolved.
Village Mall, Kathu
This 19 000 m2 GLA closed mall situated in Kathu in the Northern Cape was
acquired on a 9% forward yield. Kathu is based on the fourth largest iron ore
deposit in the world. To meet international demand, mining activities and
transport infrastructure are currently undergoing major expansion. Tenants in
the mall will include Spar, Edcon, Truworths, Mr Price, Foschini and the
Clicks groups. The mall is scheduled for opening in October 2008.
Wessels Road, Rivonia
Diversified is in the process of acquiring a property adjacent to Rivonia
Village and the existing Wessels Road property. This acquisition will ensure
that Diversified will have ownership of all the properties situated on the
Rivonia Village block. Diversified is negotiating with Renlia Developments to
dispose of 50% in both Wessels Road properties.
The Johannesburg City Council has indicated that it supports the granting of
substantial additional residential rights for these properties.
2 PROPERTIES SOLD
The following table provides detail of properties sold during the interim
period. These properties were included under investment property held for
sale in the annual report and were reflected at net sales prices.
Properties sold and transferred by Properties sold but not transferred
31 December 2007 by 31 December 2007
Shoprite, Wierda Park Pick `n Pay, Newton Park
Erven 106, 108 and 112 of Steel Shoprite, Mdantsane
Road, Spartan Carolina Shopping Centre
Kyalami Crest Truworths, Kimberley
Forge Road, Spartan Belfast Shopping Centre
OK Furnishers, Queenstown Edendale Road, Eastleigh
Bradlows, Queenstown
3 FORTRESS ASSET MANAGERS
Diversified, in partnership with Madison Property Fund Managers, listed a
property-based exchanged traded fund (ETF) called PropTrax. PropTrax
attracted investments totalling just over R300 million. At the interim
reporting date Diversified had an investment of R51,5 million in PropTrax and
the intention is to sell down this investment over time to facilitate market
demand.
4 INVESTMENTS
Diversified acquired 1 888 461 units in Capital Property Fund, 6 586 098
units in Resilient Property Income Fund Limited, 7 850 000 units in
Pangbourne Properties Limited, and a net 2 272 959 units in PropTrax at
average prices of R5,7; R24,32; R15,91 and R34,50 respectively.
Diversified invested an amount of R147,2 million in New Europe Property
Investments PLC (NEPI), a property fund listed on AIM, the alternative market
of the London Stock Exchange. The investment is anticipated to yield 7% in
Euros for the 2008 financial year. Diversified also owns 50% of the
management company of NEPI.
5 PROSPECTS
The extensive asset management undertaken by Diversified since listing,
together with the strong tenant profile of the remaining property portfolio
and the pipeline of developments, place the company in a strong position to
show good growth in distributions for the remainder of the 2008 financial
year.
Consolidated balance sheet
Reviewed Audited Unaudited
31 Dec 30 Jun 31 Dec
2007 2007 2006
R`000 R`000 R`000
ASSETS
Non-current assets 2 224 010 1 434 543 1 244 388
Investment property 1 088 357 979 816 1 045 291
Straight-lining of rental income
adjustment 11 705 13 810 9 446
Investment property under
development 169 475 73 617 69 763
Investment in associate company 148 390 - -
Investments 666 351 249 182 39 986
Intangible assets 26 422 26 422 -
Loans 113 310 91 696 79 902
Current assets 109 958 182 653 41 459
Investment property held for sale 86 336 142 817 24 316
Straight-lining of rental income
adjustment 1 409 2 470 -
Trade and other receivables 21 230 37 201 17 129
Cash and cash equivalents 983 165 14
Total assets 2 333 968 1 617 196 1 285 847
EQUITY AND LIABILITIES
Total equity attributable to equity
holders 655 941 477 194 252 879
Share capital 1 738 1 469 1 396
Share premium 264 709 113 672 86 501
Non-distributable reserves 389 494 362 053 164 982
Total liabilities 1 678 027 1 140 002 1 032 968
Non-current liabilities 1 591 740 1 029 151 964 967
Linked debentures 834 260 705 221 670 135
Interest-bearing borrowings 648 393 224 045 218 828
Deferred tax 109 087 99 885 76 004
Current liabilities 86 287 110 851 68 001
Trade and other payables 22 169 54 003 24 323
Linked debenture interest payable 61 683 45 766 43 240
Income tax payable 2 435 10 173 438
Interest-bearing borrowings - 903 -
Bank overdraft - 6 -
Total equity and liabilities 2 333 968 1 617 196 1 285 847
Consolidated income statement
Reviewed Audited Unaudited
for the for the for the
6 months 12 months 6 months
ended Ended ended
31 Dec 2007 30 Jun 2007 31 Dec 2006
R`000 R`000 R`000
Net rental and related income 53 512 103 631 47 561
Recoveries and contractual
rental income 81 334 138 084 67 411
Straight-lining of rental income
adjustment (3 376) 10 536 3 063
Rental income 77 958 148 620 70 474
Property operating expenses (24 446) (44 989) (22 913)
Distributable income from
investments 17 040 3 067 735
Profit on disposal of
investments and investment
property 3 297 43 347 1 608
Profit on disposal of investment
property 323 34 867 48
Profit on disposal of
investments 2 974 8 480 1 560
Fair value gains on investments
and investment property 41 613 223 362 47 937
Fair value gain on investment
property - 209 499 44 177
Adjustment resulting from
straight-lining of rental
income 3 376 (10 536) (3 063)
Fair value gain on investments 38 237 24 399 6 823
Other income 10 314 3 806 -
Administrative expenses (4 680) (5 317) (979)
Asset management fee (5 325) (6 289) (2 822)
Impairment of goodwill (511) (3 587) (3 587)
Other expenses - (4 679) (4 516)
Income from associate company 1 114 - -
Profit before net finance costs 116 374 357 341 85 937
Net finance costs (77 259) (83 950) (42 958)
Finance income 12 871 16 301 6 797
Interest from the purchase trust 4 821 7 376 3 323
Fair value adjustment on
interest rate swaps 553 4 285 -
Interest on linked units issued
cum-distribution 7 497 4 640 3 474
Finance costs (90 130) (100 251) (49 755)
Interest on borrowings (25 989) (11 261) (5 045)
Fair value adjustment on
interest rate swaps - - (1 486)
Fair value adjustment on bond
shorts (2 458) - -
Interest to linked debenture
holders
- interim (61 683) (43 224) (43 224)
- final - (45 766) -
Profit before income tax 39 115 273 391 42 979
Income tax expense (11 769) (47 257) (13 882)
Profit for the period
attributable to equity holders 27 346 226 134 29 097
Basic earnings per share
(cents)* 15,73 157,84 20,84
Basic earnings per linked unit
(cents)* 51,22 219,96 51,80
*There are no dilutionary instruments in issue
Reconciliation of profit for the period to headline earnings and
distributable income
Reviewed Audited Unaudited
for the for the for the
6 months 12 months 6 months
ended ended ended
31 Dec 2007 30 Jun 2007 31 Dec 2006
R`000 R`000 R`000
Basic earnings (shares) -
profit for the period
attributable to equity holders 27 346 226 134 29 097
Interest to linked debenture
holders 61 683 88 990 43 224
Basic earnings (linked units) 89 029 315 124 72 321
Adjusted for: (32 630) (226 401) (35 139)
- fair value gain on investment
property (3 376) (209 499) (44 177)
- fair value gain on
investments (38 237) (24 399) (6 823)
- profit on disposal of
investment property (323) (34 867) (48)
- profit on disposal of
investments (2 974) (8 480) (1 560)
- impairment of goodwill 511 3 587 3 587
- income tax effect 11 769 47 257 13 882
Headline earnings 56 399 88 723 37 182
Adjustment resulting from
straight-lining of rental
income 3 376 - -
Fair value adjustment on
interest rate swaps (553) (4 285) 1 486
Fair value adjustment on bond
shorts 2 458 - -
Other 3 4 552 4 556
Distributable income 61 683 88 990 43 224
Less: Distribution declared (61 683) (88 990) (43 224)
Income not distributed - - -
Headline earnings per linked
unit (cents) 32,45 61,93 26,63
Diluted headline earnings per
linked unit(cents) 32,45 61,93 26,63
Basic earnings per share, basic earnings per linked unit and
headline earnings per linked unit are based on the weighted average
of 173 804 113 (30 June 2007: 143 266 165; 31 December 2006: 139 611
389) linked units in issue during the period.
Diluted earnings per share, diluted earnings per linked unit and
diluted headline earnings per linked unit are the same as earnings
per share, earnings per linked unit and headline earnings per linked
unit as there are no dilutory instruments in issue.
Consolidated statement of changes in equity
Non-
Issued Share distri- Retained
capital premium butable earnings Total
R`000 R`000 reserves R`000 R`000
Unaudited R`000
Balance at 30 June 2006 1 215 54 276 135 863 - 191 354
Issue of units
- Issue of 14 705 882
units on
17 October 2006 147 26 564 26 711
- Issue of 3 445 000
units on
16 November 2006 34 5 658 5 692
Issue of units held
by the purchase trust 3 3
Profit on units
issued by the purchase
trust 22 22
Profit for the period 29 097 29 097
Transfer to reserves 29 097 (29 097) -
Balance at
31 December 2006 1 396 86 501 164 982 - 252 879
Reviewed
Balance at 30 June 2007 1 469 113 672 362 053 - 477 194
Issue of units
- Issue of 9 523 809
units on
25 October 2007 95 51 946 52 041
- Issue of 3 723 000
units on
23 November 2007 37 18 989 19 026
- Issue of 13 636 363
units on
6 December 2007 137 80 102 80 239
Profit on units
issued by the
purchase trust 95 95
Total recognised
income and expense
- profit for the
period 27 346 27 346
Transfer to reserves 27 346 (27 346) -
Balance at
31 December 2007 1 738 264 709 389 494 - 655 941
Abridged consolidated statement of cash flow
Reviewed Audited Unaudited
for the for the for the
6 months 12 Months 6 Months
Ended ended ended
31 Dec 2007 30 Jun 2007 31 Dec 2006
R`000 R`000 R`000
Cash (outflow)/inflow from
operating activities (17 442) 30 793 (178)
Cash outflow from investing
activities (685 619) (230 294) (131 041)
Cash inflow from financing
activities 703 885 199 582 131 155
Increase/(decrease) in cash and
cash equivalents 824 81 (64)
Cash and cash equivalents at
beginning of the period 159 78 78
Cash and cash equivalents at end
of period 983 159 14
Cash and cash equivalents consist
of:
Current accounts 983 165 14
Bank overdraft - (6) -
983 159 14
Notes
1 PREPARATION AND REVIEW OPINION
The consolidated reviewed interim results have been prepared in accordance
with the recognition and measurement criteria of International Financial
Reporting Standards (IFRS), the presentation and disclosure requirements of
IAS34 and the requirements of the Companies Act (Act 61 of 1973). The
accounting policies adopted are consistent with those of the prior period.
KPMG Inc. have reviewed the financial information set out in this abridged
report. Their unqualified review report is available for inspection at the
group`s registered address.
2 SUMMARY OF FINANCIAL PERFORMANCE
2.1 Investment properties are fair valued at 30 June each year by external
valuers. The interim results do therefore not contain a fair value adjustment
to investment property.
2.2 The investment in NEPI has been equity accounted.
31 Dec 2007 30 Jun 2007 31 Dec 2006 30 Jun 2006
Distribution per
linked unit (cents) 35,49 31,15 30,96 27,07
Units in issue 173 804 113 146 920 941 139 611 389 121 460 507
Net asset value* R8,57 R8,05 R6,61 R6,38
Gearing ratio** 29,6% 11,3% 21,1% 23,9%
* Net asset value includes total equity attributable to equity holders and
linked debentures
**The gearing ratio is calculated by dividing the total gearing by the
investment in non-current assets excluding loans to the purchase trust.
3 GEARING
Amount Swap/bond Interest % of
Expiry R`million short rate rate borrowings
Interest rate swaps
- October 2008 50,0 7.78% 8,00%
- August 2009 50,0 8.59% 8,00%
- October 2010 50,0 8.06% 8,00%
- September 2012 50,0 8.86% 8,00%
Bond shorts
- R157 96,4 8.40% 15,43%
- R186 98,6 8.34% 15,78%
- R201 98,0 8,73% 15,69%
Hedged borrowings 493,0 10,32% 78,90%
Variable rate 131,7 12,55% 21,10%
borrowings
Total gearing* 624,7 10,79% 100,00%
*Total gearing comprises the level of external interest-bearing borrowings
should current liabilities be liquidated and current assets be realised.
Gearing is calculated as follows
31 Dec 2007 30 Jun 2007 31 Dec 2006
R`million R`million R`million
- Interest-bearing borrowings 648,4 224,9 218,8
- Current liabilities 86,3 109,9 68,0
- Current assets (110,0) (182,7) (41,5)
Total gearing 624,7 152,1 245,3
4 LEASE EXPIRY PROFILE AND SEGMENTAL ANALYSIS
Based on Based on rental
rentable area income
Lease expiry
Vacant 2.3% 0,0%
June 2008 7.9% 10,1%
June 2009 25.4% 24,0%
June 2010 26.9% 22,9%
June 2011 12.2% 11,7%
June 2012 12.4% 15,9%
>June 2012 12.9% 15,4%
Total 100.0% 100,0%
Profit before
Rental net finance costs
Geographical area income
R`000 R`000
Gauteng 50 774 33 618
Eastern Cape 12 916 9 355
KwaZulu-Natal 6 623 5 168
Limpopo 5 058 3 699
Mpumalanga 2 162 1 624
Northern Cape 425 371
Corporate - 62 539
Total 77 958 116 374
5 PAYMENT OF INTERIM DISTRIBUTION
The board has approved and notice is hereby given of an interim distribution
(distribution no.5) of 35,49 cents per linked unit for the six months ended
31 December 2007.
The last date to trade linked units cum-distribution will be Friday,
22 February 2008 and trading will commence ex-distribution on Monday,
25 February 2008. The record date to participate in the distribution will be
Friday, 29 February 2008.
Linked unit certificates may not be dematerialised or rematerialised between
Monday, 25 February 2008 and Friday, 29 February 2008, both days inclusive.
Payment of the distribution will be made to linked unitholders on Monday, 3
March 2008. In respect of dematerialised linked unitholders, the distribution
will be transferred to the Central Securities Depository Participant
accounts/broker accounts on Monday, 3 March 2008. Certificated linked
unitholders` distribution payments will be posted on or about Monday, 3 March
2008.
By order of the board
David Lewis Andries de Lange
Managing director Financial director
Johannesburg
7 February 2008
Directors
Mike Tshishonga*; (chairman); Hayden Bamford; Des de Beer; Andries de Lange;
David Lewis; Holden Marshall*; Gugu Mazibuko*; David Savage*; Sagaran
Subramanien*; Djurk Venter*; Trurman Zuma*
*Independent non-executive
Company secretary
Abraham Bornman
Registered address
4th Floor, Rivonia Village, Rivonia Boulevard, Rivonia, 2191
Transfer office
Link Market Services South Africa (Pty) Ltd
11 Diagonal Street; Johannesburg 2001
Sponsor
Java Capital (Proprietary) Limited
Date: 07/02/2008 16:57:23 Produced by the JSE SENS Department.
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