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ABT
ABT
ABT - Ambit Properties Limited - Unaudited financial results and distribution
for the six month period ended 31 March 2008
Ambit Properties Limited
Registration number: 2001/007003/06
Share code: ABT
ISIN code: ZAE000051645
Distribution growth 13,1%
BEE shareholding up to 33%
Total investments up to R2,3 billion
Unaudited financial results and distribution for the six month period ended 31
March 2008
INCOME STATEMENT
Six months Six months Year ended
ended ended 30 September
31 March 31 March
2008 2007 2007
Unaudited Unaudited Audited
Notes R`000 R`000 R`000
Revenue 115 582 56 854 123 338
Rental - cash flows 104 727 54 321 118 447
inherent in leases
Rental - straight-line 10 855 2 533 4 891
adjustment
Property expenses (20 395) (13 531) (29 076)
Net rental income from 95 187 43 323 94 262
properties
Interest income from 6 565 6 004 15 391
associate
Interest income 241 252 391
Amortisation of 9 771 1 272 3 597
debenture premium
Finance costs (12 966) (13 592) (27 324)
Administrative expenses (5 255) (2 911) (6 541)
Corporate expenses (3 600) (1 356) (2 665)
Profit before fair 89 943 32 992 77 111
value adjustments
Change in fair value of 31 390 60 286 212 644
investment properties
- As per valuations 42 245 62 819 217 535
- Straight-line (10 855) (2 533) (4 891)
adjustment
Profit on disposal of 1 200 - -
investment property
Profit before debenture 122 533 93 278 289 755
interest and taxation
Share of associate 7 506 7 204 17 792
company`s after tax
profits
Debenture interest to (69 318) (29 156) (68 623)
linked unitholders
Debenture interest paid (82 011) (33 389) (74 868)
Less: Prepaid 12 693 4 233 6 245
distribution received
Profit before taxation 60 721 71 326 238 924
Taxation (9 832) (18 718) (59 261)
Net profit 50 889 52 608 179 663
Earnings per linked 2.2 30,97 42,91 119,20
unit (cents) (weighted)
Earnings per share 2.2 13,11 27,61 86,25
(cents) (weighted)
Distribution per linked 2.2 17,30 15,30 32,60
unit (cents)
CONDENSED BALANCE SHEET
31 March 31 March 30 September
2008 2007 2007
Unaudited Unaudited Audited
Notes R`000 R`000 R`000
ASSETS
Non-current assets
Investment properties 4.2 2 098 884 972 596 1 090 638
- At valuation 2 129 850 990 350 1 110 750
- Straight-line (30 966) (17 754) (20 112)
adjustment
Investment in associate 4.4 136 225 118 131 128 719
Rental receivable - 26 770 15 366 16 745
straight-line adjustment
Total non-current assets 2 261 879 1 106 093 1 236 102
Current assets
Trade and other 4.5 37 002 9 728 27 097
receivables
Cash and cash 90 814 53 851 50 077
equivalents
Total current assets 127 816 63 579 77 174
Non-current assets held 4.2 55 050 - 73 200
for sale
TOTAL ASSETS 2 444 745 1 169 672 1 386 476
EQUITY AND LIABILITIES
Share capital and 426 542 246 040 373 210
reserves
Non-current liabilities 1 919 031 882 813 963 745
Debentures 853 247 392 812 413 383
Debenture premium 587 764 90 854 103 843
Interest bearing 4.6 344 370 315 930 322 700
borrowings
Deferred taxation 133 650 83 217 123 819
liability
Total current liabilities 99 172 40 819 49 521
TOTAL EQUITY AND 2 444 745 1 169 672 1 386 476
LIABILITIES
CONDENSED STATEMENT OF CHANGES IN EQUITY
Non-
Share Distributable distributable
capital reserves reserves Total
Unaudited R`000 R`000 R`000 R`000
Balance at 30 1 865 364 190 886 193 115
September 2006
Shares issued 317 - - 317
during the period
Net profit - 52 608 - 52 608
attributable to
linked unitholders
Transfer to non- - (52 577) 52 577 -
distributable
reserves
Balance at 31 2 182 395 243 463 246 040
March 2007
Shares issued 115 - - 115
during the period
Net profit - 127 055 - 127 055
attributable to
linked unitholders
Transfer to non- - (127 086) 127 086 -
distributable
reserves
Balance at 30 2 297 364 370 549 373 210
September 2007
Shares issued 2 443 - - 2 443
during the period
Net profit - 50 889 - 50 889
attributable to
linked unitholders
Transfer to non- - (50 889) 50 889 -
distributable
reserves
Balance at 31 4 740 364 421 438 426 542
March 2008
CONDENSED CASH FLOW STATEMENT
31 March 31 March 30 September
2008 2007 2007
Unaudited Unaudited Audited
R`000 R`000 R`000
OPERATING ACTIVITIES
Cash generated by operating 74 134 28 702 62 238
activities
Interest income 6 806 10 489 15 782
Finance costs (12 966) (13 592) (27 324)
Distributions paid to linked (27 401) (24 865) (57 622)
untiholders
Cash inflow/(outflow) from 40 573 734 (6 926)
operating activities
INVESTING ACTIVITIES
Improvements to investment (27 106) (2 981) (5 865)
properties
Proceeds on disposal of 5 600 - -
investment properties
Cash outflow from investing (21 506) (2 981) (5 865)
activities
FINANCING ACTIVITIES
Interest bearing borrowings 21 670 (30) 6 740
raised/(repaid)
Cash inflow/(outflow) from 21 670 (30) 6 740
financing activities
Increase/(decrease) in cash and 40 737 (2 277) (6 051)
cash equivalent
Cash and cash equivalents at 50 077 56 128 56 128
beginning of year
CASH AND CASH EQUIVALENTS AT 90 814 53 851 50 077
END OF YEAR
COMMENTARY
1. OTHER INFORMATION
Unaudited Unaudited Audited
31 March 31 March 30 September
2008 2007 2007
Linked units in issue 474 026 280 218 228 868 229 657 439
Weighted average 388 156 836 190 568 656 208 295 318
linked units
Net asset value 411 350 405
(cents per linked
unit) (prior to
distribution)
Listed market price 350 420 450
(cents per linked
unit)
(Discount)/premium to (14,8) 20,0 11,1
net asset value (%)
To fund the acquisition of the African Alliance portfolio, 186 486 487 units
were issued at 370 cents per unit. A further 57 882 354 units were issued during
the year at a price of 425 cents per unit to fund the acquisition of 11 Diagonal
Street. In addition, 17,3 cents per unit was received in respect of the interim
distribution paid.
2. NOTES TO THE FINANCIAL STATEMENTS
2.1 Basis of preparation and accounting policies
This interim report has been prepared in accordance with IAS 34: Interim
Financial Reporting. The accounting policies used in the preparation of these
results are in compliance with International Financial Reporting Standards and
the Companies Act and are consistent with those used in the annual financial
statements for the year ended 30 September 2007.
2.2 Earnings and headline earnings
Earnings and headline earnings for the year are based on the weighted average
number of linked units in issue for the year and calculated as follows:
Unaudited
31 March 2008 31 March 30 September
2007 2007
Cents
R`000 per unit
Profit(earnings) per share 50 889 13,11
Debenture interest 69 318 17,86
Profit(earnings) per linked unit 120 207 30,97
Amortisation of debenture premium (9 771) (2,52)
Capital surpluses (net of deferred (33 303) (8,58)
taxation)
Headline earnings per linked unit 77 133 19,87
Debenture interest (69 318) (17,86)
Headline earnings per share 7 815 2,01
Reconciliation to undistributed
earnings:
Debenture interest 69 318 17,86
Rental straight-lining (net of deferred (7 815) (2,01)
tax)
Distributable earnings 69 318 17,86
Debenture interest (69 318) (17,86)
Undistributed income - -
Distribution per linked unit in issue - 17,30
Unaudited
31 March 2008
Cents
R`000 per unit
Profit(earnings) per share 52 608 27,61
Debenture interest 29 156 15,30
Profit(earnings) per linked unit 81 764 42,91
Amortisation of debenture premium (1 272) (0,67)
Capital surpluses (net of deferred (49 507) (25,98)
taxation)
Headline earnings per linked unit 30 985 16,26
Debenture interest (29 156) (15,30)
Headline earnings per share 1 829 0,96
Reconciliation to undistributed
earnings:
Debenture interest 29 156 15,30
Rental straight-lining (net of deferred (1 798) (0,94)
tax)
Distributable earnings 29 120 15,32
Debenture interest (29 156) (15,30)
Undistributed income 31 0,02
Distribution per linked unit in issue - 15,30
Audited
31 March 2008
Cents
R`000 per unit
Profit(earnings) per share 179 663 86,25
Debenture interest 68 623 32,95
Profit(earnings) per linked unit 248 286 119,20
Amortisation of debenture premium (3 597) (1,73)
Capital surpluses (net of deferred (172 593) (82,86)
taxation)
Headline earnings per linked unit 72 096 34,61
Debenture interest (68 623) (32,95)
Headline earnings per share 3 473 1,66
Reconciliation to undistributed
earnings:
Debenture interest 68 623 32,95
Rental straight-lining (net of deferred (3 473) (1,66)
tax)
Distributable earnings 68 623 32,95
Debenture interest (68 623) (32,95)
Undistributed income - -
Distribution per linked unit in issue - 32,60
3. Primary business segments - all amounts exclude straight-line adjustments
Retail Office Industrial Group
R`000 R`000 R`000 R`000
31 March 2008
Rental - cash flows 37 620 56 301 10 806 104 727
inherent in leases
Net rental income 28 715 46 894 8 723 84 332
from properties
Fair value adjustment 22 595 13 100 6 550 42 245
Profit on disposal of - - 1 200 1 200
investment properties
Investment properties 709 700 1 286 550 188 650 2 184 900
- at valuation*
31 March 2007
Rental - cash flows 30 778 13 653 9 890 54 321
inherent in leases
Net rental income 23 000 9 689 8 101 40 790
from properties
Fair value adjustment 33 258 18 349 11 212 62 819
of investment
properties
Investment properties 609 850 208 700 171 800 990 350
- at valuation
* including non-current assets held for sale
4. COMMENTS
4.1 Results
Ambit has performed well for the period under review providing investors with
strong income growth. Ambit`s distribution for the half year to 31 March 2008
increased by 13,1% to 17,30 cents per unit (cpu) (2007: 15,30 cpu).
The market price of the units traded on the JSE at 31 March 2008 was 350 cpu
which represents a discount to net asset value of 15%.
4.2 Property portfolio
The property portfolio of 40 properties was valued by the directors at 31 March
2008 at R2,185 million. The portfolio has an office sector bias with (by value)
59% office, 27% retail and 14% industrial and is predominantly located in
Gauteng (69%). The increase in value since year end of R1,001 million comprises
both new acquisitions and revaluation increases. One property was disposed of
during the period.
During the period under review Ambit acquired the five African Alliance
properties (R690 million on a forward yield of 9%) and the 11 Diagonal Street
building (R246 million on a forward yield of 9,25%). Thus R936 million of
properties were acquired and R27,1 million was spent on capital improvements to
the Link in Pinetown, Park Meadow Mall and other properties in the portfolio.
The revaluation surplus of R42,2 million is largely due to an increase in market
rentals. The Metcash property in Brits was sold for R5,6 million realising a
capital profit of R1,2 million over the carrying value of R4,4 million. The West
Street Parkade (R57,5 million on a forward yield of 11,5%) was transferred in
April 2008.
Several smaller properties have been earmarked for sale and have been classified
as such on the balance sheet at a value of R55,1 million. These properties will
be disposed of when the required sale price can be achieved.
Phase 1 of the Link development at Old Main Road, Pinetown is scheduled for
completion during June 2008. Ambit owns a 50% stake in this retail investment.
The cost to Ambit of phase 1 will be R39 million inclusive of the land cost of
R14,2 million.
The proposed Abseq transaction that was circulated to unitholders in November
2007 and on which Ambit issued a further announcement dated 18 December 2007 has
not been concluded due to the current market volatility and the increased
interest rates.
4.3 Letting activity
A high level of tenant retention on lease expiry of 80% has been achieved.
Across the portfolio renewal rentals generally continue to increase. As a result
of strong leasing activity the portfolio has a 98,1% (2007: 97,5%) occupancy.
4.4 Oryx investment - equity accounted associate
Ambit`s 26,4% interest in Oryx Properties Limited increased in value by R18,1
million to R136,2 million due to the increase in net asset value of Oryx to 931
cpu (2007: 778 cpu). The market price of the Oryx units is in excess of the net
asset value.
4.5 Net asset value
The revaluation of investment properties has given rise to a fair value
adjustment of R42,2 million. Current assets increased mainly due to prepaid
distributions due to Ambit.
The net asset value, before making provision for the debenture interest payable
but after providing for deferred taxation is 411 cpu, an increase of 17,4% on
2007 (350 cpu).
4.6 Borrowings
At 31 March 2008 Ambit`s long-term debt was R344 million (2007: R316 million),
which represents a long-term debt to non-current assets ratio of 14,9% (2007:
28,5%). Of this debt 61% (2007: 63%) is subject to fixed interest rate
agreements for periods from 2008 to 2014. The average interest rate at 31 March
2008 was 10,7% (2007: 10,0%). Subsequent to the period under review and before
the latest increase in interest rates, an interest rate swap agreement was
entered into increasing the fixed debt portion to 73% of total debt.
4.7 Related party transactions
Ambit is managed by Ambit Management Services (Pty) Limited. This company, which
is controlled by Absa Bank Limited, is also considered to be a related party.
All transactions with both these parties are concluded on an arm`s length basis
with market related terms and conditions.
Following the issue of linked units to the vendors of the African Alliance
portfolio Ambit has a 32,8% BEE shareholding which results in Ambit being placed
91st overall and 2nd in the listed property sector in a recent Financial Mail
survey of the BEE rating of JSE listed companies.
Ambit is committed to increasing its BEE procurement spend in all possible areas
including property asset management and property management.
4.8 Prospects
The continuing strength of the office and industrial markets has enabled
management to extract good growth out of Ambit`s core property portfolio and
this is expected to continue for the second half of the year.
Proactive management of the recently acquired investments is likely to show
returns in excess of those forecast prior to the acquisitions.
Accordingly Ambit should sustain a similar level of distribution growth for the
full financial year.
In these times of unit price volatility and uncertainties management will
endeavour to identify opportunities to further grow the portfolio and
distributions for the benefit of the unitholders.
4.9 Directorships
Nick Harris retires as CEO on 30 June 2008. The Board would like to express
their thanks and appreciation to him for his leadership and commitment from the
listing of Ambit in February 2004 and for the growth of the company`s asset base
over the past years. The Board has invited him to remain as a non-executive
director.
Heads of agreement have been signed and final documentation is being concluded
with the new CEO appointee and an announcement in this regard will be made
before the end of May 2008.
5. DECLARATION OF DISTRIBUTION
Notice is hereby given of distribution number seven amounting to 17,3 cpu
interest on debentures, for the six month period to 31 March 2008.
Last date to trade cum distribution Friday, 23 May 2008
Units will trade ex distribution Monday, 26 May 2008
Record date to participate in the distribution Friday, 30 May 2008
Payment of distribution Monday, 2 June 2008
Linked unit certificates may not be dematerialised or rematerialised between
Monday, 26 May 2008 and Friday, 30 May 2008, both days inclusive.
On behalf of the Board
JH Beare NBS Harris
Chairman Chief Executive Officer
8 May 2008
Directors:
JH Beare (Chairman)+, DJ Brits+, RR Emslie, NBS Harris (Chief Executive
Officer)*, IN Mkhari+, SL Rai, IB Skosana+, F Uys+
Alternate directors:
RD Jeffery, J de Beer* *executive +independent
Registered Office
Ambit Properties Limited, First Floor, 4 Fricker Road, Illovo Boulevard, Illovo
2196
Postal Address
PO Box 618, Melrose Arch 2076
Auditors
Deloitte
Sponsors
Exchange Sponsors
Transfer secretaries
Computershare
news@ambitprops.co.za
http://www.ambitprops.co.za
Date: 08/05/2008 17:00:08 Produced by the JSE SENS Department.
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