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OCT
OCT
OCT - Octodec Investments Limited - Unaudited results of the group for the six
months ended 29 February 2008
OCTODEC INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1956/002868/06)
Share code: OCT & ISIN: ZAE000005104
("Octodec")
NOTICE TO LINKED UNITHOLDERS
UNAUDITED RESULTS OF THE GROUP FOR THE SIX MONTHS ENDED 29 FEBRUARY 2008
Distribution up by 14.1% to 61.6 cents per linked unit
Increase in net asset value by 6.9% to 1573 cents
Total investments exceed R2,3 billion
NOTES TO THE FINANCIAL STATEMENTS
The unaudited interim financial statements have been prepared in accordance with
International Financial Reporting Standards and the requirements of the
Companies Act (Act 61 of 1973). The results have been prepared and presented in
accordance with IAS34, Interim Financial Reporting. The accounting policies
adopted and methods of computation are consistent with those applied in the
financial statements for the year ended 31 August 2007.
Deferred taxation on the fair value adjustment of investment property has been
provided at the company income taxation rate which is currently 28% and not at
the Capital Gains Tax rate of 14%, 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 29 February 2008 there are no material contingent
liabilities.
COMMENTS
REVIEW OF RESULTS
The directors of Octodec are pleased to report that the company has once again
produced excellent growth in distributions to linked unitholders. Rental income
and net rental income increased by 20.2% and 16.4% respectively.
The total distribution per linked unit for the six months of 61,6 cents (2007:
54 cents) represents an increase of 14.1% on that paid in the previous
comparable period.
The redevelopment of properties, favourable renewals of leases, strict expense
control as well as favourable trading conditions have all contributed to the
growth in distributable earnings. The retail portfolio which comprises five
quality shopping centres, continued to enjoy strong growth in earnings due to
favourable renewals and contractual rental escalations. The growth in rental
income amounted to 9%.
Bad debts increased during the period and management continues to focus on the
policies and procedures relating to the collections of rent.
Octodec continued to unlock the value of its Johannesburg and Pretoria CBD
portfolios by the redevelopment and refurbishment thereof. Construction has
commenced at Fine Art which is situated in Johannesburg CBD, to refurbish this
property at a cost of R10 million. The Tiny Town residential development, which
is situated adjacent to the Union Building, is due to commence in mid 2008.
During the period under review two properties were purchased and transferred for
an aggregate of R53 million. These purchases include Rentmeester, an office
block situated in Val-de-Grace, Pretoria.
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 R5,3 million. IPS`s property portfolio is valued at an excess of
R650 million.
BORROWINGS
During the period the borrowings increased by R79 million, as a result of
acquisitions of investment properties and development costs. Octodec`s gearing
at the end of the period under review was 22% as against 24% at 31 August 2007.
The group has facilities in excess of R300 million available to fund future cash
flow requirements.
Interest rates in respect of 57% of borrowings at 29 February 2008 have been
fixed at an average interest rate of 10.2% maturing at various dates ranging
from October 2008 to November 2010.
REVALUATION OF PROPERTY PORTFOLIO
At each financial year end at least one-third of the property portfolio is
valued on a rotational basis by an external valuer. The directors` valuation of
the portfolio, taking into account prevailing market rentals, occupation levels
and capitalisation rates increased by R104,6 million, increasing net asset value
by 6.3% after accounting for deferred tax.
PROSPECTS
The current economic environment, specifically the tightening of consumer
spending as well as the increases in the interest rates is likely to have an
impact on the distribution growth , however management is optimistic that the
company will continue to deliver above average distribution growth.
DECLARATION OF DIVIDEND 36 AND INTEREST PAYMENT
("the distribution")
Notice is hereby given that dividend number 36 of 0.30 cents (2007: 0.27 cents)
per ordinary share together with interest of 61.30 cents per debenture (2007:
53.73 cents), for the period 1 September 2007 to 29 February 2008 has been
declared, payable to linked unitholders recorded in the register in 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
Unaudited Unaudited Audited
% six months six months year to
R`000 Changes 29 Feb 2008 28 Feb 2007 31 Aug 2007
Revenue 143,046 110,663 223,035
- earned on contractual 20.2% 133,017 109,785 226,333
basis
- straight line lease 10,029 878 (3,298)
adjustment
Operating costs (49,056) (37,629) (79,792)
Net rental income from 93,990 73,034 143,243
properties
- earned on contractual 16.4% 83,961 72,156 146,541
basis
- straight line lease 10,029 878 (3,298)
adjustment
Administrative expenses (6,753) (5,265) (10,219)
Depreciation (327) (297) (656)
Income before investment 28.8% 86,910 67,472 132,368
income
Investment income 31,770 14,099 32,928
- Interest received 827 518 1,204
- Investment income - 4,589 3,520 7,683
listed investments
- Investment income -
associate
share of after tax (480) 573 17
profit/(loss)
fair value adjustment / 21,504 7,111 18,610
capital reserves
interest and dividends 5,330 2,377 5,414
Income before finance 45.5% 118,680 81,571 165,296
costs
Finance costs 2.4% (31,270) (30,522) (64,499)
Income before debenture 71.2% 87,410 51,049 100,797
interest and capital
profits
Trading profit and other - - 2,771
capital items
Fair value adjustment of
investment properties
- net revaluation 94,589 186,340 241,858
- gross revaluation 104,618 187,218 238,560
- attributable to (10,029) (878) 3,298
straight line lease
adjustment
Amortisation of deemed 7,523 1,783 4,010
debenture premium
Income before debenture (20.8%) 189,522 239,172 349,436
interest
Debenture interest 30.0% (54,739) (42,095) (85,737)
Income before taxation (31.6%) 134,783 197,077 263,699
Taxation charge (21,473) (54,943) (63,535)
- Deferred taxation (20,617) (54,293) (61,988)
- Normal taxation (856) (650) (1,547)
Income attributable to 113,310 142,134 200,164
linked unitholders
Linked units in issue - 89,297 78,345 89,297
(`000)
Weighted linked units in 89,297 78,345 78,975
issue - (`000)
Earnings per share - (30.1%) 126.9 181.4 254.7
(cents)*
Earnings per linked unit - (20.0%) 188.2 235.1 363.2
(cents)*
Headline earnings per 36.3% 77.9 57.2 114.2
linked unit - (cents)*
* Based on the weighted
number of unit in issue
Distribution per linked
unit (cents)
- Dividends 0.30 0.27 0.53
- Interest 61.30 53.73 105.67
Total 14.1% 61.60 54.00 106.20
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
R`000 % Changes Unaudited Unaudited Audited
six months six months year to
29 Feb 2008 28 Feb 2007 31 Aug 2007
Cash flow from operating
activities
Net rental income from 76,881 67,769 137,788
properties
Adjustment for:
- Depreciation 327 297 656
- Working capital 3,045 (4,183) (6,283)
changes
Cash generated from 80,253 63,883 132,161
operations
Investment income and 10,747 6,415 14,301
interest received
Finance costs (31,270) (30,522) (64,499)
Taxation paid (1,368) (940) (679)
Distribution to linked (46,613) (36,195) (75,763)
unit holders paid
Net cash inflow from 11,749 2,641 5,521
operating activities
Cash flow from investing
activities
Investing activities (65,437) (58,336) (132,901)
Increase in investments (32,759) (6,001) (28,493)
and loans to associate
Proceeds from disposal of - - 3,572
investment properties
Net cash outflow used in (98,196) (64,337) (157,822)
investing activities
Cash flow from financing
activities
Issue of linked units - - 199,203
Increase/(decrease) in 79,153 61,099 (52,409)
interest bearing
borrowings
Net cash generated from 79,153 61,099 146,794
financing activities
Net (decrease)/increase (7,295) (597) (5,507)
in cash and cash
equivalents
Cash and cash equivalents (9,327) (3,820) (3,820)
at beginning of year
Cash and cash equivalents (16,622) (4,417) (9,327)
at end of year
RECONCILIATION - EARNINGS TO DISTRIBUTABLE EARNINGS
Unaudited six months Unaudited six Audited year to
29 February 2008 months 31 August 2007
28 February 2007
R`000 cents R`000 cents R`000 cents
Earnings per 113,310 126.9 142,134 181.4 200,164 253.5
share
Add: debenture 54,739 61.3 42,095 53.7 85,737 108.6
interest per
linked unit
Earnings per 168,049 188.2 184,229 235.2 285,901 362.0
linked unit
Trading - - - - (2,771) (3.5)
profits and
other capital
items
Fair value - - -
adjustments
- associate, (21,504) (24.1) (7,111) (9.1) (18,610) (23.6)
net of
deferred tax
- investment (76,942) (86.2)
properties, (132,301) (168.9) (174,328) (220.7)
net of
deferred tax
Headline 69,603 77.9 44,817 57.2 90,192 114.2
earnings per
linked unit
Straight line (7,221) (623) 2,342
lease
adjustment
Deferred 162 - (4,493)
taxation
adjustments
Interest - - 2,738
received -
prepaid
distribution
Amortisation (7,523) (1,783) (4,010)
of deemed
debenture
premium
Trading profit - - 2,198
Distributable 55,021 42,411 88,967
earnings
ABRIDGED CONSOLIDATED BALANCE SHEET
Unaudited Audited
29 February 31 August
R`000 2008 2007
Assets
Non-current assets 2,361,225 2,152,906
Investment properties, plant and equipment
- Investment properties 2,035,431 1,877,070
- Plant and equipment 3,308 1,969
Investment properties - straight line lease 32,717 22,688
adjustment
Investment - listed securities 129,060 132,742
- associate company 160,709 118,437
Current assets 19,003 22,520
Total assets 2,380,228 2,175,426
Equity and liabilities
Share capital and Reserves 1,006,442 906,500
Share capital and premium 54,744 47,221
Non-distributable reserve 915,248 829,938
Retained profit 36,450 29,341
Non - current liabilities 1,268,142 1,166,166
Debentures capital and premium 398,582 406,105
Interest bearing borrowings 586,482 495,543
Deferred tax liability 283,078 264,518
Current liabilities 105,644 102,760
Interest bearing 24,213 28,683
Non - interest bearing 26,692 27,696
Linked unitholders 54,739 46,381
Total equity and liabilities 2,380,228 2,175,426
Linked units in issue (`000) 89,297 89,297
Net asset value per linked unit (cents) 1,573 1,471
Net asset value per linked unit (cents) - 1,890 1,766
before deferred tax
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
R`000 Share Non- Distributable Total
capital distributable reserve
and reserve
premium
Balance at 1 September 42,224 599,156 28,046 669,426
2006
Net income attributable 200,164 200,164
to ordinary
shareholders
Reallocation of deemed 4,010 (4,010) -
debenture premium
Dividends paid (392) (392)
Adjustment to valuation 36,315 36,315
of listed investment,
net
of deferred Capital
Gains Tax
Transfer to non-
distributable reserve
Capital profit on 481 (481) -
disposal of investment
property
Fair value adjustment
of investment
properties
- associate, net of 18,610 (18,610) -
deferred tax
- investment 175,376 (175,376) -
properties, net of
defered tax
Balances at 31 August 47,221 829,938 29,341 906,500
2007
Net income attributable 113,310 113,310
to ordinary
shareholders
Reallocation of deemed 7,523 (7,523) -
debenture premium
Dividends paid (232) (232)
Adjustment to valuation (13,136) (13,136)
of listed investment,
net
of deferred Capital
Gains Tax
Transfer of non-
distributable reserves
Fair value adjustment
of investment
properties
- investment 76,942 (76,942) -
properties, net of
deferred tax
- associate, net of 21,504 (21,504) -
deferred tax
Balances at 29 February 54,744 915,248 36,450
2009 1,006,442
SEGMENTAL INFORMATION
Indus- Com-
R`000 trial Office Retail mercial
Analysis by property
usage - 2008
Revenue
Rentals and 18,555 19,311 61,051 30,159
recoveries received
Straightline lease - - - -
adjustment
Total revenue 18,555 19,311 61,051 30,159
Income before 11,486 11,875 39,625 18,080
investment income
Assets
Investment Properties 283,773 285,981 991,086 455,329
Other Assets - - - -
(unallocated)
Total Assets 283,773 285,981 991,086 455,329
SEGMENTAL INFORMATION
Corporate
Resi- Unallo-
R`000 dential cated Total
Analysis by property usage - 2008
Revenue
Rentals and recoveries received 3,023 918 133,017
Straightline lease adjustment - 10,029 10,029
Total revenue 3,023 10,947 143,046
Income before investment income 1,671 4,173 86,910
Assets
Investment Properties 55,287 2,071,456
Other Assets (unallocated) - 308,772 308,772
Total Assets 55,287 308,772 2,380,228
DISTRIBUTABLE EARNINGS
The following additional information is provided and is aimed at disclosing to
the users the basis on which the distributions are caluculated.
Unaudited Unaudited Audited
% six months six months year to
R`000 Changes 29 Feb 2008 28 Feb 2007 31 Aug 2007
Revenue
- earned on contractual 20.2% 133,017 109,785 226,333
basis
Operating costs (49,056) (37,629) (79,792)
Net rental income from 16.4% 83,961 72,156 146,541
properties
Administrative expenses (6,753) (5,265) (10,219)
Depreciation (327) (297) (656)
Income before investment 15.4% 76,881 66,594 135,666
income
Investment income
- Interest received 827 519 1,204
- Interest received - - - 2,738
prepaid distribution
- Investment income - 64.4% 4,850 2,950 5,431
associate
- Investment income - 30.4% 4,589 3,520 7,683
listed investments
Distributable income 18.4% 87,147 73,583 152,722
before finance charges
Finance charges 2.4% (31,270) (30,522) (64,499)
Distributable income 55,877 43,061 88,223
before taxation
Taxation charge (856) (650) (1,454)
Unit holders 55,021 42,411 86,769
distributable earnings
Trading profit - - 2,198
Unit holders 55,021 42,411 88,967
distributable earnings
Weighted linked units in 89,297 78,345 89,297
issue - (`000)
Distribution per linked 14.1% 61.6 54.0 106.2
unit (cents)
Earnings distributed 55,007 42,306 88,867
(`000)
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 Transfer Secretaries
CPA House Computershare Investor Services
101 du Toit Street (Proprietary) Limited
Pretoria, 0002 (Registration number 2004/003647/07)
P O Box 15, 70 Marshall Street, Johannesburg, 2001
Pretoria, 0001 P O Box 61051, Marshalltown, 2107
Tel: (012) 319 8811 Tel: (011) 370 7700
Fax: (012) 319 8812 Fax: (011) 668 7712
Octodec Investments Limited and its subsidiaries. (Incorporated in the Republic
of South Africa)
(Registration number 1956/002868/06) Share code: OCT ISIN: ZAE000005104
("Octodec" or "the company")
Date: 21/04/2008 17:05:01 Produced by the JSE SENS Department.
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