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PMM
PMM
PMM - Premium Properties Limited - Reviewed results of the group for the year
ended 29 February 2008
PREMIUM PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1994/003601/06)
Share code: PMM ISIN: ZAE000009254
("Premium" or "the company")
PREMIUM PROPERTIES LIMITED
NOTICE TO LINKED UNITHOLDERS
REVIEWED RESULTS OF THE GROUP FOR THE YEAR ENDED 29 FEBRUARY 2008
Successful completion of the first phase of the flagship Hatfield development
Distribution up by 16.6% to 84,5 cents per linked unit Assets exceed R2,5
billion Increase in net asset value by 23% to 1265 cents
NOTES TO THE FINANCIAL STATEMENTS
1. The reviewed 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 2007.
The results have been prepared and presented in accordance with IAS 34, Interim
Financial Reporting.
2. In order to comply with IFRS, deferred taxation on the fair value
adjustment of investments properties is provided for at the company income Tax
rate, which is currently 28% and not at the Capital Gains Tax rate of 14%, which
would be payable if the properties were sold.
3. Contingent liability: as at 29 February 2008 there are no material
contingent liabilities.
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 29 February 2008 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 and has benefited from
the strong trading conditions and the emerging black middle class.
Rental income and net rental income increased by 31.8% and 29.0% respectively,
compared with the previous 12 month period. Bad debts increased during the
period and management continues to focus on the policies and procedures relating
to the placement of tenants and the collection of rent.
Premium paid an interim distribution of 40,5 cents per linked unit. The total
distribution for the year of 84,5 cents per linked unit (2007: 72,5 cents)
equates to an increase of 16.6% on that paid in the previous corresponding
period.
The continuing healthy trading conditions resulted in rental increases before
acquisitions of 15%. The office component of the portfolio has benefited from
the slowing of delivery of new office space and increasing demand for properties
at affordable rentals. Due to the strong performance of the associate IPS as
well as the advance of additional funds to fund IPS`s growth, interest income
and dividends received increased to R10,1 million. IPS`s property portfolio is
valued at an excess of R650 million.
Property portfolio
Premium acquired eight properties in the Pretoria and Johannesburg CBD`s for a
total purchase price of R104 million at an average yield of 10%. These
properties include ABSA Pretorius Street, a property in Loveday Street,
Northvaal, Provisus, Pavillion, Gilboa, Armadale, MBA building. To date
significant value has been derived from these properties as a result of strong
letting.
The residential project Brisk Place, situated in the Johannesburg CBD, which was
completed during the financial year is fully let and the yields achieved are in
excess of expectations. The total cost of the project amounted to R20 million.
An amount of R5,6 million was spent on the upgrade of Amanda, Govpret and Silway
properties ahead of successful letting activities. The letting activity is
progressing well.
Phase l of the mixed-use Hatfield development, which is situated in Burnett
Street, has recently been successfully completed and the letting activity is
satisfactory. This initial phase will create 677 residential units as well as
4000 m2 of retail space at a cost of R311 million. Once it is fully let the
anticipated yield will be approximately 10%. It is anticipated that phase l of
the development will be fully let by 28 February 2009.
Phase II of this development has commenced which includes a four level parking
bay and discussions are taking place with a hotel group.
Gearing
Premium`s gearing at the end of the financial year was 33%. 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 58% of borrowings at 29 February 2008 have been fixed at an
average interest rate of 10.6% maturing at various dates ranging from May 2009
to September 2010.
Issues of new units
During the period 16 499 403 units were issued at an average price of 1388 cents
which includes a notional distribution pre-payment of R3,5 million. These units
were placed with selected institutions and investors. Some of the proceeds of
R229 million were utilised to fund The Fields development, refurbishments of
properties and acquisitions.
Revaluation of property portfolio
The directors` valuation of the portfolio, taking into account prevailing market
rentals, occupation levels and capitalisation rates, increased by R223 million.
This contributed to the increase in net asset value of 23%. At each financial
year end at least one-third of the property portfolio is valued on a rotational
basis by an external valuer. The valuations have been assessed by the Audit
Committee and the Board of Directors and are substantially the same as the
values reported by the external valuers.
Prospects
Distribution growth to 28 February 2009 will be adversely affected by the
Hatfield development due to the phased take-up of the units which is expected
for a project of this nature as well as the cost of borrowings which is higher
than the yield on the project. The yield is expected to increase in subsequent
years and will impact positively on distribution growth in 2010 and beyond. The
remaining portfolio is expected to perform well as a consequence of the benefits
of the ongoing refurbishment of properties, strong tenant demand for CBD space
and the take up of vacant offices.
DECLARATION OF DIVIDEND 28 AND INTEREST PAYMENT
("the distribution")
Notice is hereby given that dividend number 28 of 0.22 cents (2007: 0.20 cents)
per ordinary share together with interest of 43.78 cents per debenture (2007:
38.60 cents) has been declared for the period 1 September 2007 to 29 February
2008, payable to linked unitholders recorded in the register on Friday, 16 May
2008. The last date to trade "CUM" distribution is Friday, 9 May 2008. The units
will commence trading "EX" distribution on Monday, 12 May 2008. Payment date
will be Monday, 19 May 2008.
No dematerialisation or rematerialisation of linked unit certificates may take
place between Monday, 12 May 2008 and Friday, 16 May 2008, both days inclusive.
By order of the Board.
A Wapnick J P Wapnick
(Chairman) (Managing director)
21 April 2008
ABRIDGED CONSOLIDATED INCOME STATEMENT
Reviewed Audited
Year to Year to
% 29 February 28 February
R`000 Change 2008 2007
Revenue 275,847 223,058
- earned on contractual basis 31.8% 283,996 215,518
- straight line lease (8,149) 7,540
adjustment
Operating costs (105,194) (76,893)
Net rental income from 170,653 146,164
properties
- earned on contractual basis 29.0% 178,802 138,624
- straight line lease (8,149) 7,540
adjustment
Administrative expenses (13,805) (9,347)
Depreciation (1,064) (850)
Profit before investment 14.6% 155,784 135,967
income
Investment income 43,230 24,600
- Interest received 2,255 958
- Investment income -
associate
equity earnings (2,157) 2,570
fair value adjustment 33,004 16,926
of investment properties
interest and dividends 10,128 4,146
Profit before finance charges 23.9% 199,015 160,567
and capital profit
Fair value adjustments of
investment properties
net revaluation 230,927 306,526
gross revaluation 222,778 314,066
straight line lease 8,149 (7,540)
adjustment
Amortisation of deemed 5,392 1,700
debenture premium
Profit before finance charges 435,334 468,793
Finance charges 26.4% 66,960 52,970
Profit before debenture 368,374 415,823
interest
Debenture interest 29.2% 105,885 81,945
Profit before taxation 262,489 333,878
Taxation charge (52,679) (89,469)
- Deferred taxation (52,700) (89,469)
- Normal taxation 21 -
Profit attributable to 209,810 244,409
ordinary shareholders
Weighted linked units in issue 122,618 113,607
- (`000)
Linked units in issue (`000) 130,106 113,607
Earnings per share (cents)* (20.5%) 171.1 215.1
Earnings per linked unit (10.4%) 257.5 287.3
(cents)*
Headline earnings per linked 6% 88.6 84.0
unit (cents)*
Distribution per linked unit
(cents)
Dividends 0.42 0.37
Interest 84.08 72.13
Total 16.6% 84.50 72.50
*based on the weighted number of units in issue
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Reviewed Audited
Year to Year to
29 February 28 February
2008 2007
R`000
Cash flow from operating activities
Net rental income from properties 163,933 128,427
Adjustment for :
- Depreciation 1,064 850
- Working capital changes 34,004 (15,127)
Cash generated from operations 199,001 114,150
Investment income 12,384 958
Finance costs (66,960) (52,970)
Taxation paid 21 -
Distribution to linked unit holders (93,264) (75,775)
paid
Net cash inflow/(outflow) from 51,181 (13,637)
operating activities
Cash flow from investing activities
Investing activities (393,484) (239,583)
Proceeds from disposal of investment - 1,780
properties
Net cash outflow used in investing (393,484) (237,803)
activities
Cash inflow from financing activities
Issue of linked units 224,512 -
Increase in interest bearing borrowings 115,586 235,896
Net cash generated from financing 340,098 235,896
activities
Net decrease in cash and cash (2,204) (15,544)
equivalents
Cash and cash equivalents at beginning (15,654) (110)
of year
Cash and cash equivalents at end of (17,858) (15,654)
year
DISTRIBUTABLE EARNINGS
The following additional information is provided and is aimed at disclosing to
the users the basis on which the distributions are calculated.
Reviewed Audited
Year to Year to
% 29 February 28 February
R`000 Change 2008 2007
Revenue
- earned on contractual basis 31.8% 283,996 215,518
Operating costs (105,194) (76,893)
Net rental income from 29.0% 178,802 138,625
properties
Administrative expenses (13,805) (9,347)
Depreciation (1,064) (850)
Profit before investment income 27.6% 163,933 128,428
Investment income
- Interest received 2,255 958
- Investment income - 7,971 6,716
associate
Distributable profit before 28.0% 174 159 136,102
finance charges
Finance charges 26.4% (66,960) (52,970)
Distributable income before 21.6% 107 199 83,132
taxation
Taxation charge 21 -
Unit holders distributable 29.0% 107 220 83,132
earnings
Interest received, prepaid 3,508 -
distribution
Interest holders distributable 33.2% 110 729 83 132
earnings
Linked units in issue - (`000) 130,106 113,607
Distributable earnings per 16.3% 85.1 73.2
linked unit - (cents)
Distribution per linked unit 16.6% 84.5 72.5
(cents)
ABRIDGED CONSOLIDATED BALANCE SHEET
Reviewed Audited
Year to Year to
29 February 28 February
R`000 2008 2007
Assets
Non - current assets 2,530,739 1,884,692
Investment properties 2,320,571 1,737,765
Investment properties - straight 29,651 37,800
lining of operating leases
Property, plant and equipment 19,807 18,291
Investments - associated company 160,710 90,836
Current assets 11,134 19,932
Total assets 2,541,873 1,904,624
Equity and liabilities
Share capital and reserves 932,767 722,340
Share capital and premium 2,512 1,349
Non-distributable reserve 901,944 689,533
Retained earnings 28,311 31,458
Non - current liabilities 1,478,454 1,086,597
Debentures and premium 417,961 200,004
Interest bearing borrowings 765,943 644,744
Deferred taxation 294,550 241,849
Current liabilities 130,652 95,687
Interest bearing 18,564 21,841
Non - interest bearing 54,841 29,766
Linked unit holders 57,247 44,080
Total equity and liabilities 2,541,872 1,904,624
Linked units in issue (`000) 130,106 113,607
Net asset value per linked unit 1,038 812
(cents)
Net asset value per linked unit 1,265 1,025
(cents) - before providing for
deferred tax
STATEMENT OF CHANGES IN EQUITY
Share Capital Revalua- Distri- Total
tion butable
R`000 capital reserve reserve reserve
Balance at 1,349 19,057 432,607 25,338
1 March 2006 478,351
Profit 244,409
attributable to 244,409
ordinary
shareholders
Reallocation of 1,700 (1,700) -
deemed debenture
premium
Dividends paid (420) (420)
Transfer to non- 236,169 -
distributable (236,169)
reserve
Balances at 1,349 20,757 668,776 31,458
28 February 2007 722,340
Profit 209,810
attributable to 209,810
ordinary
shareholders
Issue of linked 1,163 1,163
units
Reallocation of 5,392 (5,392) -
deemed debenture
premium
Dividends paid (546) (546)
Transfer to non-
distributable
reserve
Fair value
adjustments
- Investment 174,015 -
properties, net (174,015)
of deferred
taxation
- associate, net 33,004 (33,004) -
of deferred tax
Balances at 29 2,512 26,149 875,795 28,311
February 2008 932,767
RECONCILIATION -EARNINGS PER SHARE TO HEADLINE EARNINGS PER LINKED UNIT
Reviewed Audited
Year to Year to
29 February 28 February
Cents 2008 2007
Earnings per share 209,810 244,409
Add: debenture interest per linked 105,885 81,945
unit
Earnings per linked unit 315,695 326,354
Fair value adjustments
- associate, net of deferred tax (33,004) (16,926)
- investment properties, net of (174,015) (219,243)
deferred tax
Headline earnings per linked unit 108,676 90,185
Interest received, prepaid 3,508 -
distribution
Straight line lease adjustment 5,867 (5,353)
Deferred taxation adjustments (1,930) -
Amortisation of deemed debenture (5,392) (1,700)
premium
Distributable earnings 110,729 83,132
e-mail address: propworld@citigroup.co.za
website address: www.cityprop.co.za
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")
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 (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: 21/04/2008 16:27:01 Produced by the JSE SENS Department.
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