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SYA
SYA
SYA - Siyathenga Property Fund Limited - Reviewed interim results for the six
months ended 31 December 2007
Siyathenga Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2004/005198/06)
Share code: SYA & ISIN: ZAE000069530 ("Siyathenga" / "the Company")
Reviewed Interim Results
for the six months ended 31 December 2007
Distribution declared per linked unit
Distribution timetable:
Event Date
a. Last date to trade cum distribution Thursday, 13 March 2008
b. Linked units trade ex distribution Friday, 14 March 2008
c. Record date for unitholders to Thursday, 20 March 2008
participate in the distribution
d. Payment of distribution to unitholders Tuesday, 25 March 2008
e. Linked unit certificates may not be Friday, 14 March 2008 to
rematerialised or dematerialised Thursday, 20 March 2008
(both days inclusive)
Distribution declaration
Notice is hereby given that a distribution of 29,93 cents per linked unit has
been declared and approved by the Board of Directors for the six months ended
31 December 2007.
Commentary
Introduction
The end of 2007 and beginning of 2008 saw the volatility in global markets
increase substantially, and the real estate sector in South Africa was no
exception. Despite this, there is still a strong demand for space in the
portfolio and certain strategic changes will ensure it remains resilient
against market corrections.
Financial performance
The Company declared an 8,84% increase over the prior year in its interim
distribution to 29,93 cents per linked unit. Distribution growth is lower than
expected due to increased provisions against doubtful tenant debt and other
receivables and the timing of the BEE transaction and securitisation.
Property management
Following the strategic decision by Pangbourne Properties Limited
("Pangbourne") to terminate its property management service to associated
listed entities, this function is, with effect from 1 February 2008, outsourced
to JHI.
Property portfolio
During the period under review good demand for space in the property portfolio
resulted in an occupancy rate of 96,59% (2006: 96,96%).
In December 2007, linked unitholders approved the purchase of the Boardwalk
shopping centre extension currently being developed by Pangbourne. This
acquisition will add approximately 40 000 m2 to Siyathenga`s property portfolio
and will increase the size of the entire centre to over 65 000 m2. The first
phase of the extension was completed in December 2007 with the remainder of
the extension expected to be completed in May 2008. At the agreed forward yield
of 8,56% this acquisition is expected to increase Siyathenga`s portfolio value
by approximately R465 million.
The refurbishment of the existing Boardwalk centre was completed in December
2007 at a cost of R52 million. The public`s reaction to the refurbishment and
extension of the Boardwalk centre has been positive and retailers experienced
good trading conditions in the centre over the holiday period. It is evident
that this centre meets the retail needs of the local community and should
provide good future growth to Siyathenga.
The upgrade to the Crescent centre was completed in November 2007 at an
approximate cost of R12,5 million and has improved the quality of the retail
offering to local residents.
Management is currently busy with a R33 million refurbishment of Gezina
Galleries. Work on the centre will be completed by June 2008. The tenant mix
has been strengthened by the introduction of new national tenants such as First
National Bank (1 100m2), Clicks (850 m2) and Jet (750 m2). The existing
Checkers store has also undergone a substantial upgrade to a Blue Line
Checkers.
Harley Davidson, Primi Piatti, Footgear and the Brooklyn Bakery have all opened
their new stores in Willowbridge and are trading well. The new Pro-Shop store
of approximately 1 100 m2 is expected to open in Willowbridge by April 2008.
Subsequent to reporting date, Siyathenga sold President Place for R102,5
million and transfer of this property is expected to go through during the
first quarter of 2008. In addition, an agreement has been reached to sell the
Dions centre in Alberton for an amount of R66,4 million.
Borrowings
The company`s current gearing level was 47.9% at 31 December 2007, with total
debt exposure fully hedged against interest rate fluctuations using a
combination of derivative instruments.
BEE
In September 2007, 15% of the company`s equity was issued to two broad based
black economic consortia namely Meago and Tokoloho. The proceeds of R184
million from this transaction were utilised to pay down existing debt.
Corporate Action
Linked unitholders` attention is drawn to the joint Pangbourne and Siyathenga
cautionary announcement dated 5 February 2008 regarding corporate action.
Directorate
Dr Zuko Kubukeli and Mr Craig Hallowes were appointed as independent non-
executive director and executive director respectively, with effect from 22
November 2007.
Mr Andre von Bulow resigned as Managing Director and director of the Company
and Mr Hallowes succeeded him as Managing Director of Siyathenga with effect
from 1 February 2008.
The Board is grateful to Mr Von Bulow for his contribution to the Company`s
growth since listing in August 2005.
Prospects for the year
The focus for management of Siyathenga for 2008 will be on extracting value for
unitholders through rigorous asset management at a property level and the
implementation of improved systems of control, rental collections and property
administration.
Strategy changes in Siyathenga`s significant unitholder, Pangbourne, are likely
to bring about a reassessment of Siyathenga`s gearing levels and a review of
the suitability of certain properties within the property portfolio.
On behalf of the board
A J W L Richards C B Hallowes
Chairman Managing Director
21 February 2008
Distributable Earnings
Unaudited Unaudited
Unaudited
Six months Six months
ended ended Year ended
R`000 31.12.07 31.12.06 30.06.07
Revenue
- Gross rentals received 101 265 90 275 181 232
Profit on disposal of
trading property
included in
distributable income
- 2 089 2 089
Proceeds on disposal of - 6 400 6 400
trading property
Cost of trading - (4 311) (4 311)
property disposed of
during the year
Net building expenses (22 092) (20 258) (40 168)
Administrative expenses (5 577) (5 245) (9 985)
Interest received 2 341 1 146 2 243
Finance costs (34 304) (35 419) (70 521)
Linked unitholders 41 633 32 588 64 890
distributable earnings
Weighted average number of
linked units
for the period/year 139 101 377 110 725 104 112 836 788
Distributable earnings per 29,93 29,43 57,51
linked unit for the
period/year
Distribution per linked 29,93 27,50 57,50
unit (cents)
Number of linked units in 148 701 876 110 725 104 116 746 704
issue
Share price at 1 July 850 580 580
2007/1 July 2006 (cents):
Share price at 31 December
2007/31 December 2006/
30 June 2007 (cents): 985 820 850
Capital return (cents) 135,00 240,00 270,00
Distributions for the 29,93 27,50 57,50
period/year (cents)
Total return (cents) 164,93 267,50 327,50
Total return for the 19,40 46,12 56,47
period/year (%)
Month high during 985 850 960
period/year (cents):
Month low during 700 530 530
period/year (cents):
Income statement (Condensed consolidated)
Reviewed Unaudited Audited
Six months Six Year
months
ended ended ended
R`000 31.12.07 31.12.06 30.06.07
Revenue 101 265 96 675 187 632
Straight line operating lease 7 768 8 190 15 290
adjustment
Net building expenses (22 092) (20 258) (40 168)
Costs of trading property - (4 311) (4 311)
disposed of during the
period/year
Administrative expenses (5 597) (5 245) (9 985)
Profit from operations 81 344 75 051 148 458
Net revaluation of investment - 48 611 116 895
properties
Attributable to straight line - (8 190) (15 290)
operating lease adjustment
Gross revaluation of investment - 56 801 132 185
properties
Profit before financing costs 81 344 123 662 265 353
and taxation
Interest received 2 341 1 146 2 243
Finance costs (39 824) (35 419) (70 521)
Long term borrowings (34 304) (35 419) (70 521)
BEE consortia (5 520) - -
Amortisation of debenture 1 162 1 599 3 403
premium
Movement in the fair value of (8 178) 12 520 33 541
interest rate hedges
Valuation of unit based payment (32 288) - -
- BEE transaction
Debenture interest distributed (37 752) (32 588) (64 931)
to linked unitholders
(Loss)/profit before taxation (33 195) 70 920 169 088
Taxation (887) (19 672) (47 789)
(Loss)/profit for the (34 082) 51 248 121 299
period/year
Earnings and diluted earnings 2,64 75,72 165,04
per unit
Notes to the Financial Statements
1.Basis of preparation
The reviewed interim condensed consolidated financial report has been prepared
on the historical cost basis as modified by the revaluation of available-for-
sale financial assets and financial liabilities through profit or loss
Investment properties are carried at fair value. These are in accordance with
IAS34 - interim Financial Reporting, the requirements of the South African
Companies Act 1973 as amended and the JSE Listings Requirements. The Company
has adopted IFRS7 - Financial instruments, disclosure of which will be
presented in the annual report.
The Directors have changed the group`s investment property revaluation policy
from director`s internal valuations being performed at 31 December and 30 June
each year (with a third of the portfolio being revalued externally over a three
year period) to an annual external revaluation at 30 June for the entire
portfolio and a fair value assessment at 31 December. With this exception to
the Companies investment property valuation policy, the accounting policies
applied and methods of computation are similar to those applied in the previous
reporting period.
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
Guarantees and sureties in respect of the consolidated entities amount to R833
million (Dec 2006: R731 million) in respect of the mortgage facility granted by
the financial institutions.
4.Capital commitments
The Directors approved the upgrade of the Gezina Galleries centre. The project
cost is estimated to be R33 million, and it is expected to be concluded before
the period ending June 2008. Existing cashflows are being used to finance the
upgrade which was approximately 20% complete at the end of December 2007.
Approval was obtained from shareholders for the acquisition of Boardwalk
extension from Pangbourne. The acquisition price will be about R465 million and
transfer is expected during May 2008. A combination of equity and loan finance
will be used to settle the purchase price.
5.Subsequent events
Agreements have been concluded for the sale of both President Place (R102,5
million) and Dions centre in Alberton (R66,4 million). Deferred tax raised on
the revaluation of the two buildings, has been reduced by R3,4 million, to
represent CGT rates of 14,5%. Transfer of both buildings is expected in March
2008.
A settlement package of R1,8 million was paid to the previous Managing
Director.
6.Consolidation of BEE consortia
The company has issued guarantees in favour of RMB in respect of the
obligations of both consortia. The effects of the BEE transaction have been
consolidated into the results of the Company, for the period ending 31 December
2007. Included in finance costs is an amount of R5,5 million which pertains to
the interest incurred by the consortia on their RMB loan funding.
Reconciliation Between Linked Unitholders Distributable Earnings To
(Loss)/Profit For The Period/Year
Unaudited Unaudited Unaudited
Six Six Year
months months
ended ended ended
R`000 31.12.07 31.12.06 30.06.07
Linked unitholders distrubtable 41 633 32 588 64 890
earnings
Gross revaluation of investment - 56 801 132 185
properties
Straight line operating lease 7 768 - -
adjustment
Movement in fair value in (8 178) 12 520 33 541
interest rate hedges
Consolidation of BEE consortia (5 540) - -
Amortisation of debenture 1 162 1 599 3 403
premium
Valuation of unit based payment (32 288) - -
- BEE transaction
Profit before tax and 4 557 103 508 234 019
distribution to unitholders
Debenture interest distributed (37 752) (32 588) (64 931)
to unitholders
(Loss)/profit before taxation (33 195) 70 920 169 088
Taxation (887) (19 672) (47 789)
Net (loss)/profit for the (34 082) 51 248 121 299
period/year
Balance Sheet (Condensed Consolidated)
Reviewed Unaudited Audited
Six months Six Year
months
ended ended ended
R`000 31.12.07 31.12.06 30.06.07
ASSETS
Non-current assets
Investment properties** 1 826 331 1 537 440 1 766 045
Equipment, furniture and 687 226 369
fittings
Loans to participants of The 14 167 11 244 11 257
Unit Purchase Trust
Derivative financial instruments 19 366 7 239 21 178
- long term
Deferred tax asset 3 024 - 1 995
Prepaid expenses - long term 3 903 1 529 2 188
1 867 478 1 557 678 1 803 032
Current assets
Trade and other receivables 17 509 18 155 10 507
Prepaid expenses - short term 3 597 6 034 3 429
Derivative financial instruments 2 111 1 395 8 477
- short term
Loan to related party 400 - 398
Cash and cash equivalents 3 466 - 2 877
27 083 25 585 25 688
Total assets 1 894 561 1 583 262 1 828 720
EQUITY
Capital and reserves
Share capital and premium 6 173 3 205 5 010
Retained earnings 142 697 77 406 145 653
Total equity 148 870 80 611 150 663
LIABILITIES
Debenture debt and premium 738 130 635 439 677 739
Linked unitholders` interest 887 000 716 050 828 402
Other non-current liabilities
Interest-bearing borrowings 832 622 729 932 831 843
Deferred tax liability 81 345 50 440 80 399
913 967 780 372 912 242
Current liabilities
Trade and other payables 50 331 43 854 22 149
Bank overdraft - 9 698 30 050
Current income tax liabilities 1 823 700 853
Linked unitholders for 41 440 32 588 35 024
distribution
93 594 86 840 88 076
Total equity and liabilities 1 894 561 1 583 262 1 828 720
** The cumulative effect of the
straight line operating lease
adjustment included in
investment properties is R37,69
million (31 Dec 2006: R 22,82
million and 30 Jun 2007: R29,92
million).
Statement Of Changes In Equity
(Condensed consolidated)
Share Share Retained
R`000 capital Total
premium earnings
Balance at 30 June 2006 - 11 1 595 27 757 29 363
audited
Profit for the period 51 248 51 248
Transfer of amortised 1 599 (1 599) -
debenture premium
Balance at 31 December 11 3 194 77 406 80 611
2006 - unaudited
Arising on issue of units 1 1
during the period
Profit for the period 70 051 70 051
Transfer of amortised 1 804 (1 804) -
debenture premium
Balance at 30 June 2007 - 12 4 998 145 653 150 663
audited
Arising on issue of units 1 1
during the period
Loss for the period (34 082) (34 082)
Valuation of unit based 32 288 32 288
payment - BEE transaction
Transfer of amortised 1 162 (1 162) -
debenture premium
Balance at 31 December 13 6 160 142 697 148 870
2007 - reviewed
Cash Flow Statement (Condensed Consolidated)
Reviewed Unaudited
Six Six Audited
months months
ended ended Year ended
R`000 31.12.07 31.12.06 30.06.07
Cash flow from operating
activities
Cash generated from operations 92 213 56 697 127 862
Interest received 2 341 1 146 2 243
Finance costs (39 124) (35 419) (70 521)
Distributions made to (31 336) (29 902) (59 809)
unitholders
Net cash inflow/(outflow) from 24 094 (7 478) (225)
operating activities
Cash flow from investing
activities
Additions to Investment (52 518) (14 144) (167 440)
properties
Additions to equipment (358) (62) (156)
furniture and fittings
Net proceeds from the sale of 6 368 6 368
investment properties
Loans advanced to The
Siyathenga Unit Purchase
Trust participants (2 910) (20) (33)
Net cash outflow from investing (55 786) (7 858) (161 261)
activities
Cash flow from financing
activities
Issue of linked units, net of 61 554 - 44 105
transaction costs
Long-term borrowings 779 (2 640) 99 271
raised/(repaid)
Increase related party loan (2) - (17 341)
Net cash inflow/(outflow) from 62 331 (2 640) 126 035
financing activities
Net increase/(decrease) in cash 30 639 (17 976) (35 451)
and cash equivalents
Cash and cash equivalents at (27 173) 8 278 8 278
the beginning of the
period/year
Cash and cash equivalents at 3 466 (9 698) (27 173)
the end of the period/year
Segmental information
Corporat
e
R`000 Retail Office Other unalloca Total
ted
REVIEWED
Six months
ended
31/12/2007
Primary
segment
Revenue - 80 392 17 606 3 267 - 101 265
Rentals
Straight line
operating
lease 3 158 4 050 560 - 7 768
adjustment
Segment
results
Profit from 66 831 16 3 217 (5 482) 81 344
operations 778
Segment assets 1 478 281 59 75 398 1 894
315 848 000 561
Segment - - - 1 745 1 745
liabilities 691 691
UNAUDITED
Six months
ended
31/12/2006
Primary
segment
Revenue - 59 723 13 717 16 - 90 275
Rentals 835
Proceeds on
disposal of
trading 6 400 - - - 6 400
property
Straight line
operating
lease 5 879 905 1 406 - 8 190
adjustment
Segment
results
Profit from 57 586 10 12 (5 245) 75 051
operations 573 137
Net 23 962 24 649 - - 48 611
revaluation
Segment assets 1 064 222 257 39 355 1 583
769 010 128 262
Segment - - - 1 502 1 502
liabilities 651 651
AUDITED
Year ended
30/06/2007
Primary
segment
Revenue - 152 178 29 054 - - 181 232
Rentals
Proceeds on
disposal of
trading 6 400 - - - 6 400
property
Straight line
operating
lease 13 475 1 815 - - 15 290
adjustment
Segment
results
Profit from 135 691 22 752 - (9 985) 148 458
operations
Net 68 519 48 376 - - 116 895
revaluation
Segment assets 1 518 247 - 62 553 1 828
797 370 720
Segment - - - (1 678 (1 678
liabilities 057) 057)
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.
Reviewed interim results
The interim results have been reviewed by the Company`s
auditors Deloitte & Touche. The auditor`s unmodified review
opinion is available for inspection at the Company`s
registered office.
Reconciliation Between Earnings And Headline Earnings
Reviewed
Six months ended 31.12.07
Loss before Taxation Loss after taxation
taxation
Cents Cents Cents
R`000 per R`000 per R`000 per
unit unit unit
(Loss)/profit (33 (887) (0,64) (34 082)
for the 195) (23,86 (24,50
period/year ) )
Adjustments:
Net revaluation - - - - - -
of investment
properties
Cumulative tax - - - - - -
effect on
adjustments
Headline (33 (887) (34 082)
(loss)/earnings 195) (23,86 (0,64) (24,50
per share ) )
Review Unaudited Audite
ed d
Six Six months Year
months to to
to
31.12. 31.12.06 30.06.
07 07
Distributable 29,93 29,43 57,51
earnings per
linked unit
(cents)
Headline profit 2,64 44,54 91,49
per linked
unit(cents)
Net asset value 596 647 710
per linked unit
(cents)
Net asset value 4 2 4
per share
(cents)
Unaudited Audited
Six months to Twelve months to
31.12.06 30.06.07
Cents Cents
R`000 per R`000 per unit
unit
(Loss)/profit 51 248 46,28 121 299 107,50
for the
period/year
Adjustments:
Net revaluation (48 (116
of investment 611) (43,90) 895) (103,60)
properties
Cumulative tax 14 097 12,73 33 900 30,04
effect on
adjustments
Headline 16 734 15,11 38 304 33,95
(loss)/earnings
per share
Distributable
earnings per
linked unit
Headline profit
per linked unit
Net asset value
per linked unit
(cents)
Net asset value
per share
(cents)
Address: 2nd Floor, Pangbourne House, 382 Jan Smuts Avenue, Craighall, 2196,
T: +27 11 889 8740,
F: +27 11 787 9933
Directors: A J W L Richards (Chairman), B Frigenti (Italian), J B Gibbon, C B
Hallowes (Managing)*, C M Hutchison, Dr Z N Kubukeli, E P M Moses, L X Mtumtum
* Executive
Secretary: M D Bosman
Transfer Secretaries: Computershare Investor Services 2004 (Proprietary)
Limited, PO Box 61051, Marshalltown, 2107
www.siyathenga.co.za
Date: 22/02/2008 07:19:01 Produced by the JSE SENS Department.
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