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SAT
SAT
SAT - SA REIT Limited - Unaudited interim financial report for the 6 months
ended 29 February 2008
SA REIT Limited
(formerly Shops for Africa Limited)
(Incorporated in the Republic of South Africa)
Registration number: 2000/018084/06)
Share code: SAT
ISIN: ZAE000104196
Unaudited interim financial report
for the 6 months ended 29 February 2008
Balance sheet
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
29 Feb 2008 28 Feb 2007 31 Aug 2007
R`000 R`000 R`000
ASSETS
Non-current assets 408 257 22 820 20 604
Investment properties 332 282
Properties for re-development 75 884
Equipment 91 91
Investments 22 820 20 513
Current assets 59 569 9 503 14 173
Accounts receivable 5 443 290 1 492
Properties for re-development 50 597
Cash and cash equivalents 3 528 9 213 12 681
Total assets 467 826 32 322 34 777
EQUITY AND LIABILITIES
Capital and reserves 316 080 28 864 29 801
Share capital 6 416 721 721
Share premium 273 494 559 559
Fair value reserve 12 077 10 104
Retained earnings 36 171 15 507 18 416
Non-current liabilities 144 358 2 048 1 714
Borrowings 144 142
Deferred taxation 215 2 048 1 714
Current Liabilities 7 388 1 410 3 263
Accounts payable 2 437 142 30
Loan payable 1 509
Taxation 4 951 1 269 1 724
Total liabilities 467 826 32 322 34 777
Income statement
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
29 Feb 2008 28 Feb 2007 31 Aug 2007
R`000 R`000 R`000
Revenue 11 650 1 593 5 868
Operating income 9 265 (252) (1 155)
Straight line rental adjustment 769
Investment income 1 176 1 206 2 533
Realised profit on available-
for-sale investments 12 102 386 3 335
Finance costs (2 992) (9)
Profit before taxation 20 320 1 340 4 704
Taxation (2 565) (277) (731)
Profit for the period/year 17 755 1 064 3 973
Number of shares in issue 641 550 000 72 114 720 72 114 720
Weighted average number of
shares 536 085 717 72 114 720 72 114 720
Basic earnings per share cents 3,31 1,47 5,51
Headline earnings per share cents 1,37 0,98 1,35
Workings
Headline earnings per share:
Profit for the period 17 755 1 064 3 973
Realised profit on sale of
investments (12 102) (386) (3 335)
Tax effect 1 694 30 334
Adjusted earnings 7 347 707 972
Cash flow statement
for the six months ended 29 February 2008
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
29 Feb 2008 28 Feb 2007 31 Aug 2007
R`000 R`000 R`000
Cash flows from operating activities
Cash generated by/(utilised in)
operations 8 505 (579) (2 785)
Investment income 1 176 1 206 2 533
Finance costs (2 992) (20)
Taxation paid (835)
Net cash inflow/(outflow) from
operating activities 5 854 627 (272)
Cash flows from investing activities
Additions to equipment to
expand operations (17) (91)
Proceeds from disposal of
investments 22 510 386 3 335
Acquisition of investment
properties (332 282)
Acquisition of re-development
properties (126 481)
Net cash (outflow)/inflow from
investing activities (436 270) 386 3 244
Cash flows from financing
activities
Increase in borrowings 144 142 1 509
Decrease in loan payable (1 509)
Proceeds from issue of ordinary
shares 279 317
Share buyback (687)
Net cash inflow from financing
activities 421 263 - 1 509
Net (decrease)/increase in cash and
cash equivalents (9 153) 1 013 4 481
Cash and cash equivalents at
beginning of the period/year 12 681 8 200 8 200
Cash and cash equivalents at
end of the period/year 3 528 9 213 12 681
Notes to the cash flow statement
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
29 Feb 2008 28 Feb 2007 31 Aug 2007
R`000 R`000 R`000
1 Cash utilised by operations
Trading income 21 383 2 181
Adjusted for:
Profit on disposal of
investments (12 102) (3 335)
9 281 (1 154)
Increase in accounts receivable (3 183) (1 492)
Increase/(decrease) in accounts
payable 2 407 (139)
8 505 (2 785)
2 Finance costs
Amount outstanding at beginning
of the period/year - 11
Income statement charge 2 992 9
Amount outstanding at end of the
period/year - -
2 992 20
3 Taxation paid
Amount outstanding at beginning
of the period/year 1 724 992
Income statement charge 4 062 732
Amount outstanding at end of the
period/year (4 951) (1 724)
835 -
Statement of changes in equity
Share Share Fair value
capital premium reserve
R`000 R`000 R`000
Balance at 31 August 2006 721 559 8 287
Total recognised income 3 790
Profit for the period - - -
Total income recognised directly in
equity
Fair value gain on available-for-sale
investments - - 3 790
Balance at 28 February 2007 721 559 12 077
Balance at 1 March 2007 721 559 12 077
Total recognised income (1 973)
Profit for the period - - -
Total loss recognised directly in equity
Fair value gain realised on
available-for-sale investments sold - - (1 973)
Balance at 31 August 2007 721 559 10 104
Total recognised income 5 695 272 935 (10 104)
Profit for the period - - -
Issue of ordinary shares 5 709 273 608 -
Share buyback (14) (673) -
Total loss recognised directly in equity
Fair value gain realised on
available-for-sale investments sold - - (10 104)
Balance at 29 February 2008 6 416 273 494 -
Retained
earnings Total
R`000 R`000
Balance at 31 August 2006 14 443 24 010
Total recognised income 1 064 4 854
Profit for the period 1 064 1 064
Total income recognised directly in
equity
Fair value gain on available-for-sale
investments - 3 790
Balance at 28 February 2007 15 507 28 864
Balance at 1 March 2007 15 507 28 864
Total recognised income 2 909 936
Profit for the period 2 909 2 909
Total loss recognised directly in equity
Fair value gain realised on
available-for-sale investments sold - (1 973)
Balance at 31 August 2007 18 416 29 800
Total recognised income 17 755 286 281
Profit for the period 17 755 17 755
Issue of ordinary shares - 279 317
Share buyback - (687)
Total loss recognised directly in equity
Fair value gain realised on
available-for-sale investments sold - (10 104)
Balance at 29 February 2008 36 171 316 081
Note
Basis of accounting
The interim financial report has been prepared in accordance with IFRS, IAS 34
- Interim Financial Reporting, the Listing Requirements of the JSE Ltd and the
South African Companies Act.
The accounting policies used in the preparation of this interim financial
report are consistent with those used in prior periods.
Commentary
Subsequent to the company`s year end at 31 August 2007, it entered into various
agreements to acquire properties. The total consideration for these
acquisitions, amounting to R376 950 000, was settled partly through the issue of
shares and the balance in cash from own resources or secured borrowings from
banks. The company`s name was changed to SA REIT LIMITED in terms of a special
resolution passed at a general meeting of shareholders held on 27 September
2007. The suspension of the company`s shares on the JSE Ltd was lifted with
effect from the commencement of trading on Monday, 8 October 2007.
Furthermore, at the general meeting held on 27 September 2007, the appointment
of the following directors was approved:
- Messrs J Bielich, LH Cohen, DB Fabian, RS Schur and A Varachhia.
Property acquisitions
During January 2008 the company acquired the following properties:
Investment properties -
Erf 205 Roggebaai in Cape Town, known as the Virgin Active building, for a
consideration of R30 000 000;
Erf 156998 Cape Town, known as the Coin Security building, for a
consideration of R12 500 000.
Development properties -
Erf 38746 Bellville in Tyger Valley, for a consideration of R25 000 000.
The acquisitions were funded partly by cash and the balance by way of
borrowings from banks.
Operations
During this reporting period, the company has commenced trading as property
investors earning rental income from its investment properties; and has
commenced developing its development properties with two substantial projects
in progress. In addition, work has commenced with the upgrading and
refurbishment of certain of the investment properties which will enable the
company to increase the rental returns on these properties and enhance earnings
in the long term.
Net rental income was R11.65 million for the 6 months and was in line with
expectations. The company disposed of its entire investment in listed
investments and realised a profit of R12.1 million; the funds so generated were
used to partly fund the property acquisitions. The interest received on
available cash resources is not sustainable in the second half of the year as
any surplus funds are used to reduce borrowings. A major portion of the
interest paid in this period was in respect of occupational interest paid to
some of the vendors of the properties for the period between the effective
dates of acquisition and transfer dates. The basic earnings per share is 3.3
cents (forecast basic earnings per share was 0.9 cents) and the headline
earnings per share is 1.4 cents (forecast headline earnings per share was 0.9
cents).
Comparisons to prior periods are not feasible as the nature of the business is
totally different.
At the reporting date, the total value of investment properties acquired
amounted to R332.282 million and properties for re-development amounted to
R126.481 million, whilst borrowings amounted to R144.142 million.
The company purchased 1.45 million of its own shares at the end of January 2008
at prices which are earnings enhancing.
Prospects
The Board expects to maintain its earnings forecast for the full year. The
successful completion of the development projects currently in progress will
add significant value to the company`s portfolio and generate increased rental
inflows in the forthcoming years.
These projects are expected to be completed during the 2010 financial year.
Subsequent events
During March 2008, the company sold a 50% share in its development property
known as 1 Dock Road to the Redefine Income Fund Ltd for a total consideration
of R51 700 000. The parties also entered into a joint venture, development and
enterprise agreement for the further development of the property into a
commercial rental enterprise. The rationale was to diversify the company`s risk
profile and to share expertise, development skills and networks of the parties,
thereby further enhancing their close working relationship.
The funds received from this transaction will be utilised to repay borrowings.
Shareholders are also referred to the Joint Announcement dated 16 April 2008
wherein the company advised that it has entered into a heads of agreement with
the Super Group Ltd in terms of which it will acquire a portfolio of 11
commercial and industrial properties. The transaction will become effective
upon the fulfilment or waiver of certain conditions precedent.
The transaction is in line with the company`s strategy to diversify and grow
its property fund and earnings.
In the event of the transaction becoming effective, a circular providing
information on the transaction and incorporating Revised Listing Particulars
and a notice convening a general meeting of shareholders to approve the
transaction, will be posted to shareholders in due course.
On behalf of the Board
A A MARESKY
Chief Executive Officer
M KAPLAN
Chairman
M WAGENHEIM
Financial Director and Company Secretary
23 April 2008
Cape Town
SA REIT Limited
(formerly Shops for Africa Limited)
(Incorporated in the Republic of South Africa)
Registration number: 2000/018084/06)
Share code: SAT
ISIN: ZAE000104196
Directors: J Bielich, LH Cohen*, DB Fabian*, A Groll*, M Kaplan* (Chairman),
AA Maresky, AJ Shapiro*, RS Schur*, A Varachhia*, M Wagenheim
*non-executive
Registered office and postal address: Suite 102, Intaba, 25 Protea Road,
Claremont,
Cape Town, 7708.
Company secretary: M Wagenheim
Contact details: Tel: 021 674 5170; Fax: 021 674 5135;
Email: info@sareitltd.com
Transfer secretaries: Computershare Investor Services (Pty) Ltd,
70 Marshall Street, Johannesburg, 2001
Tel: 011 370 5000
Sponsor: Nedbank Capital
Auditors: KPMG Inc.
Bankers: Absa Bank Ltd and Nedbank Ltd
Attorneys: Edward Nathan Sonnenbergs
Date: 23/04/2008 14:20:01 Produced by the JSE SENS Department.
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