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ORE
ORE
ORE - Orion Real Estate Limited - Unaudited Interim Consolidated Results of the
Group for the Six Months Ended 31 December 2008
ORION REAL ESTATE LIMITED
Incorporated in the Republic of South Africa)
(Registration number: 1997/021085/06)
Share Code: ORE & ISIN: ZAE000075651
("Orion Real Estate" or "the company")
UNAUDITED INTERIM CONSOLIDATED RESULTS OF THE GROUP FOR THE SIX MONTHS ENDED 31
DECEMBER 2008
(All amounts given in Rands unless stated otherwise)
ABRIDGED CONSOLIDATED Unaudited Unaudited Audited
INCOME STATEMENT six months six months year ended
ended ended 30 June
31 December 31 December 2008
2008 2007
Revenue 21,998,958 11,755,368 23,810,399
Recoveries 4,107,611 2,205,400 3,976,666
Operating costs (13,829,324) (10,607,495) (16,651,056)
Operating profit 12,277,246 3,353,273 11,136,009
Interest Income 545,899 284,447 328,749
Straight line operating 312,903 559,392 (213,663)
lease adjustment
Provision for bad debts - - (1,174,746)
Loan written back - - 278,190
Impairment of Loan - - (57,128)
Impairment of non- - - (738,527)
current asset available
for sale
Loss on sale of assets - - 1,073,035
held for sale
Fair value adjustments 59,961,709 - 40,769,338
on investment
properties
Profit on sale of 3,250,193 1,800,000 3,389,617
investment properties
Finance charges (10,834,207) (5,642,369) (17,319,519)
Profit before taxation 65,513,743 354,743 37,471,355
Taxation (18,513,965) 731,654 (6,028,341)
Profit for year from 46,999,778 1,086,397 31,443,014
continued operations
Discontinued operations
Loss for the period - - (8,473,005)
from discontinued
operations
Profit for the year 46,999,778 1,086,397 22,970,009
before minority
interest
Minority shareholders` 56,386 36,147 56,386
interest
Profit for the period 47,056,164 1,122,544 23,026,395
Earnings per linked 20.71 0.56 10.89
units (cents)
Diluted earnings per 20.71 0.56 10.89
linked unit (cents)
Headline profit (loss) 0.45 (0.24) (4.63)
per linked unit (cents)
Diluted headline profit 0.45 (0.24) (4.63)
(loss) per linked unit
(cents)
Net asset value per 69.92 43.52 49.16
linked unit at end of
period (cents)
Number of linked units 226,938,557 192,820,910 226,938,557
at end of period
Weighted number of 226,938,557 192,820,910 210,923,488
linked units
Diluted number of 226,938,557 192,820,910 210,923,488
linked units
Reconciliation between
net earnings and
headline earnings
Net profit per Income 46,999,778 1,086,398 22,970,009
Statement
- Loans written off - - (278,190)
- Impairment of loan - - 57,128
- Fair value (59,961,709) - (40,769,338)
adjustment to investment
property
- Impairment of non- - - 738,527
current asset held for
sale
Loss on sale of assets - - (1,073,035)
held for sale
Profit on sale of (3,250,193) (1,800,000) (3,389,617)
investment properties
- Tax effect as a 17,244,306 252,000 11,975,738
result of the above
Headline earnings/(loss) 1,032,182 (461,602) (9,768,778)
ABRIDGED CONSOLIDATED Unaudited Unaudited Audited year
BALANCE SHEET six months six months ended
ended ended 30 June 2008
31 December 31 December
2008 2007
ASSETS
Non-current assets 379,796,839 164,522,293 276,120,939
Investment properties 374,699,990 159,043,470 271,128,511
Furniture, plant and 236,061 126,388 131,640
equipment
Other financial assets 4,860,788 5,352,435 4,860,788
Current assets 13,730,928 23,099,027 7,664,911
Trade and other 13,140,041 4,993,606 7,656,696
receivables
Rental Smoothing Short 590,887 - -
Term
Cash and cash 0 18,105,421 8,215
equivalents
Assets of disposal group 14,294,422 52,291,280 39,303,857
Total assets 407,822,188 239,912,600 323,089,707
EQUITY AND LIABILITIES
Capital and reserves
Share capital 5,695,799 5,354,622 5,695,799
Retained earnings 103,048,229 34,088,216 55,992,065
Share capital and 108,744,028 39,442,838 61,687,864
reserves
Linked debentures 49,939,573 44,480,749 49,939,573
Linked unit holders` 158,683,601 83,923,587 111,627,437
interest
Minority shareholders` (56,386) (40,283) (60,522)
interest
158,627,215 83,883,304 111,566,915
Liabilities 224,751,217 78,772,527 158,438,039
Long-term borrowings 134,230,093 62,713,695 104,337,425
Deferred tax 41,517,434 16,058,832 22,642,602
Loans from shareholders 49,003,690 31,458,012
Current liabilities 17,440,110 25,370,372 10,347,785
Current tax payable - - 895,724
Trade and other payables 10,540,675 23,479,831 6,716,013
Provisions 103,690 55,834 130,853
Short-term portion of 6,795,744 1,834,707 2,605,195
long-term liabilities
Liabilities of disposal 7,003,646 51,886,397 42,736,968
group
Total liabilities 242,191,326 156,029,296 211,522,792
Total equity and 407,822,188 239,912,600 323,089,707
liabilities
ABRIDGED CONSOLIDATED Unaudited Unaudited Audited
CASH FLOW STATEMENT six months six months year ended
ended ended 30 June 2008
31 December 31 December
2008 2007
Net cash flow from 3,323,020 1,532,998 (13,823,470)
operating activities
- Cash generated 13,611,328 6,890,920 3,167,300
from operations
- Interest received 545,899 284,447 328,749
- Interest paid (10,834,207) (5,642,369) (17,319,519)
Net cash (outflow) (40,467,084) 31,283,961 (11,805,178)
inflow from investing
activities
Net cash inflow 37,135,849 (14,711,838) 25,636,563
(outflow) from
financing activities
Net (decrease)/ (8,215) 18,105,121 7,915
increase in cash and
cash equivalents
Cash and cash 8,215 300 300
equivalents at the
beginning of the
period
Cash and cash 0 18,105,421 8,215
equivalents at the end
of the period
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Retained Total
capital premium Earnings
Balance at 1,882,862 3,516,635 12,337,515 17,737,012
30 June 2006
Issue of (90,212) (759,788) - (850,000)
shares
Buy back of - - - -
shares
Attributable - - 3,954,147 3,954,147
profit for
the year
Balance at 1,792,650 2,756,847 16,291,662 20,841,159
31 December
2006
Issue of 45,347 - - 45,347
shares
Shares held 90,212 759,788 - 850,000
in treasury
from
property
sales
Buy back of (90,222) - - (90,222)
shares
Adjustment - (236,506) (236,506)
prior year
error
Attributable - 16,910,515 16,910,515
profit for 6
months
Balance at 1,837,987 3,516,635 32,965,671 38,320,293
30 June 2007
Attributable - - 1,122,545 1,122,545
profit for 6
months
Balance at 1,837,987 3,516,635 34,088,216 39,442,838
31 December
2007
Issue of 341,177 - - 341,177
Linked Units
Attributable - - 21,903,849 21,903,849
profit for
the year
Balance at 2,179,164 3,516,635 55,992,065 61,687,864
30 June 2008
Attributable - - 47,056,164 47,056,164
Profit for
the Year
Balance at 2,179,164 3,516,635 103,048,229 108,744,028
31 December
2008
Commentary on the December 2008 Interim Financial Statements
1. Operating Performance
The group experienced satisfactory trading conditions. Rentals increased by
87% and recoveries increased by 86%. This is indicative of the transfer of
further properties from the Gmeiner portfolio. Only the ACA Kranz building
still needs to be transferred.
The increase in all major categories on the balance sheet arose from the
transfer of the additional properties. Cash flow generated by operations
improved substantially due to higher revenues, improved economies of scale
and tight management of overhead costs.
Segment reporting
By gross R % R %
revenue
Commercial 7,165,817 33 Gauteng 14,675,007 67
Industrial 4,579,759 21 Western 1,512,046 7
Cape
Retail 7,041,511 32 Mpumalanga 5,407,711 25
Residential 127,930 1 KwaZulu 404,194 2
Natal
Hospitality 3,083,941 14
21,998,958 100 21,998,958 100
Property R % R %
values
Commercial 97,346,724 26 Gauteng 251,499,990 67
Residential 0 0 Western 35,100,000 9
Cape
Land 24,396,000 7 Mpumalanga 80,000,000 21
Industrial 74,926,410 20 KwaZulu 8,100,000 2
Natal
Retail 135,282,090 36
Hospitality 42,748,766 11
374,699,990 100 374,699,990 100
Gross Sq.metres % Sq.metres %
lettable
area
Commercial 38,761 36 Gauteng 75,826 71
Industrial 21,844 20 Western 9,341 9
Cape
Retail 28,233 26 Mpumalanga 15,950 15
Hospitality 16,029 15 KwaZulu 6,000 6
Natal
Residential 2,250 2
107,117 100 107,117 100
Liabilities R % R %
Commercial 29,595,499 21 Gauteng 88,567,304 63
Industrial 28,618,248 20 Western 20,823,586 15
Cape
Retail 60,882,255 43 Mpumalanga 26,234,947 19
Hospitality 13,166,320 9 KwaZulu 5,400,000 4
Natal
Land 8,763,515 6
141,025,837 100 141,025,837 100
Acquisitions R % R %
Commercial 8,200,000 16 Gauteng 34,700,000 66
Industrial 26,500,000 50 Western 10,000,000 19
Cape
Retail 10,000,000 19 Mpumalanga 0 0
Hospitality 8,100,000 15 KwaZulu 8,100,000 15
Natal
Residential
52,800,000 100 52,800,000 100
2. Basis of preparation
This interim financial report was prepared in accordance with the
requirements of IAS 34: Interim Financial Reporting. The accounting
policies followed in the preparation thereof are in compliance with
International Financial Reporting Standards ("IFRS") and are consistent
with those used to prepare the most recent annual financial statements.
3. Contingent liabilities
The company has signed surety for the obligations of its subsidiaries in
respect of mortgage bond finance and has guaranteed the debts of a wholly
owned subsidiary company until that company`s assets, fairly valued,
exceeds its liabilities, and while it remains a wholly owned subsidiary.
4. Investment property acquired and disposed
4.1 Acquired
The Laser Park Properties were acquired at a price of R 26.5 million
from the Gmeiner Portfolio.
The Wartburg Property was transferred in July 2008 and was acquired at
a price of R8.1 million. The Gordon`s Bay Shopping Centre was acquired
in December 2008 at a purchase price of R10 million.
The Northcliff Corner Property was transferred from the Gmeiner
Portfolio at a purchase price of R8.2 million.
4.2 Disposed
The Property known as Marlboro 45-50 was disposed of for an amount of
R 12.075 million.
4.3 Financing of Wartburg and Gordon`s Bay Shopping Centre
Part of the financing of the two properties were done through the
utilisation of shares from the 9 022 199 shares held by a subsidiary
company. In the case of Wartburg 2 million shares for a value of R 1.2
million were utililised and in the case of Gordon`s Bay 3 333 333
shares were utilised for a value of R 2 million.
5. Subsequent events
The company has signed agreements for the purchase of a property Stand 962
Ferndale (Pty) Ltd, situated at 296 Kent Street, Ferndale, Randburg, for
the purchase price of R30 000 000 by Orion. The purchase consideration of
R30 million is payable R12 500 000 by way of issue of Orion shares at the
30 day volume weighted average price (VWAP) immediately prior to the date
of the general meeting to approve the purchase; and the payment of R17 500
000 by the Purchaser to the Seller by way of cash.
The seller is a related party to Orion and accordingly shareholder approval
is required. A circular, containing a notice of general meeting, is being
prepared and will be posted to shareholders in due course.
6. Dividends
No dividends were paid or declared during the financial period under
review.
7. Change to Board of Directors
There have been no changes to the board of directors during the period
under review.
8. Future Prospects
The transfer of the Gmeiner properties during the second half of the prior
year as well as the properties that were transferred in the interim period
under review, should boost income substantially in the coming financial
year. The company has also started to benefit from the better economies of
scale of the larger portfolio, which will further improve results.
Johannesburg
19 March 2009
Directors
R S Wilkinson, F M Viruly, A Boessenkool, A C Gmeiner, F
Gmeiner, C Nolte
Company Secretary and Registered Office
Corporate Governance Facilitators CC
Sponsor Transfer Office
Arcay Moela Sponsors (Pty) Ltd Computershare Investor
Services (Pty) Ltd
Date: 19/03/2009 16:49:01 Produced by the JSE SENS Department.
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