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PMM
PMM
PMM - Premium Properties - Notice to linked unitholders: Reviewed Results Of
The Group for the year ended 28 February 2009
PREMIUM PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1994/003601/06)
Share code: PMM ISIN: ZAE000009254
("Premium")
NOTICE TO LINKED UNITHOLDERS: Reviewed results of the group for the year ended
28 February 2009
- Distribution up by 12.5% to 95,10 cents per linked unit
- Assets exceed R2,8 billion
- Increase in net asset value by 10.4% to 1156 cents per linked unit
- Low debt risk with 87% of borrowing fixed
Abridged consolidated income statement
Reviewed Audited
Year to Year to
% 28 February 29 February
R`000 Change 2009 2008
Revenue 344.743 274,249
- earned on contractual 23.4% 348,603 282,398
basis
- straight line lease (3,860) (8,149)
adjustment
Operating costs (135,510) (105,194)
Net rental income from 209,233 169,055
properties
- earned on contractual 20.3% 213,093 177,204
basis
- straight line lease (3,860) (8,149)
adjustment
Administrative expenses (13,899) (13,805)
Depreciation (1,631) (1,064)
Profit before investment 25.6% 193,703 154,186
income
Investment income 36,607 44,829
- Interest received 2,815 2,255
- Investment income - (490) (2,157)
associate equity
earnings
fair value 20,632 33,004
adjustment/capital
reserves
interest, dividends and 13,650 11,727
fees
Profit before finance 15.7% 230,310 199,015
charges and capital
profit
Fair value adjustments 191,801 230,927
of investment properties
net revaluation
gross revaluation 187,941 222,778
straight line lease 3,860 8,149
adjustment
Amortisation of deemed 10,286 5,392
debenture premium
Profit before finance 432,397 435,334
charges
Finance charges 34.0% (89,706) (66,960)
Profit before debenture 342,691 368,374
interest
Debenture interest 16.3% (123,120) (105,885)
Profit before taxation 219,571 262,489
Taxation charge (55,956) (52,679)
- Deferred taxation (55,956) (52,700)
- Normal taxation - 21
Profit attributable to 163,615 209,810
ordinary shareholders
Weighted linked units in 130,106 122,644
issue - (`000)
Linked units in issue 130,106 130,106
(`000)
Earnings per share (26.5%) 125,8 171,1
(cents)
Earnings per linked unit (14.4%) 220,4 257,4
(cents)*
Headline earnings per 15.8% 102,6 88,6
linked unit (cents)*
*Based on a weighted
number of units in issue
Distribution per linked
unit (cents)
Dividends 0,47 0,42
Interest 94,63 84,08
Total 12.5% 95,10 84,50
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Reviewed Audited
Year to Year to
28 February 29 February
R`000 2009 2008
CASH FLOW FROM OPERATING ACTIVITIES
Net rental income from properties 197,563 162,335
Adjustment for:
- Depreciation 1,631 1,064
- Working capital changes (5,664) 34,003
Cash generated from operations 193,530 197,402
Investment income 16,465 13,981
Finance costs (89,706) (66,960)
Taxation paid - 21
Distribution to linked unitholders paid (116,836) (93,264)
Net cash inflow from operating 3,453 51,180
activities
CASH FLOW FROM INVESTING ACTIVITIES
Investing activities (89,970) (393,484)
Net cash outflow used in investing (89,970) (393,484)
activities
CASH INFLOW FROM FINANCING ACTIVITIES
Issue of linked units - 224,512
Increase in interest bearing borrowings 88,474 115,586
Net cash generated from financing 88,474 340,098
activities
NET DECREASE/(INCREASE) IN CASH AND 1,957 (2,206)
CASH EQUIVALENTS
Cash and cash equivalents at beginning (17,860) (15,654)
of year
Cash and cash equivalents at end of (15,903) (17,860)
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
% 28 February 29 February
R`000 Change 2009 2008
Revenue
- earned on contractual 23.4% 348,603 282,398
basis
Operating costs (135,510) (105,194)
Net rental income from 20.3% 213,093 177,204
properties
Administrative expenses (13,899) (13,805)
Depreciation (1,631) (1,064)
Profit before investment 21.7% 197,563 162,335
income
Investment income
- Interest received 2,815 2,255
- Interest received, - 3,508
prepaid distribution
- Investment income - 13,160 9,570
associate
Distributable profit 20.2% 213,538 177,668
before finance charges
Finance charges 34.0% (89,706) (66,960)
Distributable income 11.9% 123,832 110,708
before taxation
Taxation charge - 21
Unitholders distributable 11.9% 123,832 110,729
earnings
Linked units in issue - 130,106 130,106
(`000)
Distributable earnings per 11.9% 95,2 85,1
linked unit - (cents)
Distribution per linked 12.5% 95,1 84,5
unit (cents)
Abridged consolidated balance sheet
Reviewed Audited
28 February 29 February
R`000 2009 2008
ASSETS
Non-current assets 2,827,160 2,530,739
Investment properties 2,573,846 2,320,571
Investment properties - straight 25,791 29,651
lining of rental leases
Property, plant and equipment 29,621 19,807
Investments - associated company 197,902 160,710
Current assets 23,425 21,073
Total assets 2,850,585 2,551,812
EQUITY AND LIABILITIES
Share capital and reserves 1,095,765 932,762
Share capital and premium 2,507 2,507
Non-distributable reserve 1,065,488 901,944
Retained earnings 27,770 28,311
Non-current liabilities 1,455,389 1,477,981
Debentures and premium 407,680 417,966
Interest bearing borrowings 697,203 765,465
Deferred taxation 350,506 294,550
Current liabilities 299,430 141,069
Interest bearing 174,021 19,043
Non-interest bearing 61,267 64,779
Linked unitholders 64,142 57,247
Total equity and liabilities 2,850,585 2,551,812
Linked units in issue (`000) 130,106 130,106
Net asset value per linked unit 1,156 1,038
(cents)
Net asset value per linked unit 1,425 1,265
(cents) - before providing for
deferred tax
Statement of changes in equity
Revalua- Distribut-
Share Capital tion able
R`000 capital reserve reserve reserve Total
Balance at 1 1,349 20,757 668,776 31,458 722,340
March 2007
Issue of 1,158 1,158
linked units
Profit 209,810 209,810
attributable
to ordinary
shareholders
Reallocation 5,392 (5,392) -
of deemed
debenture
premium
Dividends (546) (546)
paid
Transfer to - 207,019 (207,019) -
non-
distributable
reserve
Balances at 2,507 26,149 875,795 28,311 932,762
29 February
2008
Profit 163,615 163,615
attributable
to ordinary
shareholders
Reallocation 10,286 (10,286) -
of deemed
debenture
premium
Dividends (612) (612)
paid
Fair value
adjustments
- Investment 132,626 (132,626) 3,860
properties,
net of
deferred
taxation
- associate, 20,632 (20,632)
net of
deferred tax
Balances at 2,507 36,435 1,029,053 27,770 1,095,765
28 February
2009
Reconciliation - earnings to distributable earnings
Reviewed Audited
Year to Year to
28 February 29 February
R`000 2009 2008
Earnings per share 163,615 209,810
Add: debenture interest per linked unit 123,120 105,885
Earnings per linked unit 286,735 315,695
Fair value adjustments
- associate, net of deferred tax (20,632) (33,004)
- investment properties, net of (132,626) (174,015)
deferred tax
Headline earnings per linked unit 133,477 108,676
Interest received, prepaid distribution - 3,508
Straight line lease adjustment 2,779 5,867
Deferred taxation adjustments (2,138) (1,930)
Amortisation of deemed debenture (10,286) (5,392)
premium
Distributable earnings 123,832 110,729
Notes to Financial Statements
The reviewed financial report has been prepared in accordance with International
Financial Reporting Standards (IFRS), the listings requirements of the JSE
Limited and the requirements of the Companies Act 61 of 1973, as amended and is
consistent in all material respects with those applied in the financial
statements for the year ended 29 February 2008.
These reviewed results have been reviewed by Grant Thornton, whose unqualified
review report is available for inspection at the Company`s registered office.
Related party: City Property Administration (Proprietary) Limited is responsible
for the property and asset management of the group.
Subsequent events: There have been no significant subsequent events that require
reporting.
Contingent liability: The Company has issued guarantees of R1,6 million in
favour of City of Tshwane Metropolitan Municipality for the provision of
services to its subsidiaries. The Company provided a suretyship to Nedbank
Property Finance, which at year end amounted to R77,8 million, in favour of its
associate company, IPS Investments Limited.
COMMENTS
Review of results
The directors of Premium are pleased to report that the Company has delivered
growth in distributions for the year ended 28 February 2009 of 12.5% compared to
the comparable prior year period. Premium paid an interim distribution of 45,8
cents per linked unit. The total distribution per linked unit for the year is
95,10 cents (2008: 84,5 cents). This was achieved against a background of
tougher trading conditions, however the company continued to benefit from the
substantial investments made over several years in the growth of the CBD
portfolio and the upgrades and redevelopment of properties.
Rental income and net rental income increased by 23.4% and 20.3% respectively,
compared with the comparable period. Property expenses increased to 38.9% of
rental income largely due to an increase in municipal costs.
Major contributors to the growth were the residential and office properties.
The residential portfolio which comprises 3011 units, delivered strong growth in
rental income in excess of 12.0%. This is underpinned by low vacancies and good
demand for affordable and secure accommodation.
As reported previously, the distribution growth was negatively impacted by the
Hatfield development due to the phased take-up of units as well as the cost of
borrowings which is higher than the yield of the project. This was anticipated
for a project of this nature. Phase I of the mixed-use Hatfield development
which consists of 677 residential units as well as 4400m2 of rental space, is
almost fully let.
Property portfolio
Premium has continued to focus on its strategic objective of acquiring and
redeveloping properties in the Pretoria and Johannesburg CBDs and surrounding
areas. During the year two properties were acquired for a total purchase price
of R13,4 million at an average initial yield of 10%. These properties are
situated in the Johannesburg CBD and Gezina, Pretoria. An amount of R57,9
million was spent on various projects and upgrades including Phase II of the
Hatfield development, Gilboa and NHG building.
Phase II of the Hatfield development has commenced. This includes a four level
parking bay, 9000m2 of "A" grade offices, retail space and a hotel. The cost of
the project is R280 million.
Premium has committed to convert the Longsbank building, situated in the
Johannesburg CBD, into 142 residential units. The total cost of the project
amounts to R45 million with a yield of approximately 10.5%
Income from IPS increased to R13,2 million due to the strong performance of the
portfolio as well as the advance of additional funds to IPS to fund IPS`s
growth. IPS`s property portfolio is valued in an amount in excess of R790
million. IPS has a 50% interest in various joint ventures (JV). These include a
JV with Bidvest which houses a motor dealership developed at a total cost of R38
million and at an effective yield of 11% and a JV with Old Mutual, which
includes four residential properties. The average yield of these properties is
in excess of 14%. Premium has an effective 20% interest in these JV`s. IPS is
currently developing an aggregate of 1085 units of residential accommodation at
a total cost in excess of R400 million. These units will be built at Kempton
City in Kempton Park, Tayob Towers and Corporation House in the Johannesburg
CBD.
Vacancies at 28 February 2009 amounted to 21.7% of total lettable area (28
February 2008: 22.2%). A large percentage of the vacancies are in respect of
properties recently acquired or currently undergoing redevelopment or
refurbishment. A number of these properties were acquired with large vacancies
and little or no consideration was paid for the vacant space.
Further details of the vacancies are as follows:
28 February 2009 29 February 2008
Offices 11.5% 10.5%
Retail 3.8% 4.2%
Commercial 3.0% 1.1%
Industrial 1.6% 3.5%
Residential 1.8% 2.9%
TOTAL 21.7% 22.2%
Premium continues to actively pursue investment and redevelopment opportunities
that will enhance the overall quality and value of the portfolio.
Gearing
Premium`s gearing at 28 February 2009 was 30.8% as against 31.0% at 29 February
2008. Interest rates in respect of 87.1% of borrowings as at 28 February 2009
have been fixed at an average interest rate of 11.4% maturing at various dates
ranging from April 2009 to April 2018.
Revaluation of property portfolio
It is the Company`s policy to perform directors` valuations of all the
properties on a six monthly basis. At the year end one-third of the properties
are valued by external valuers. The directors valuations have been assessed at
audit committee level and are substantially the same as the values reported by
the external valuers. The increase in the director`s valuation of the portfolio
by R187,9 million to R2,6 billion represents an increase of 9.1%. This upward
revaluation contributed to the increase in the net asset value per unit of 11.4%
to 1156 cents.
Prospects
During the period there has been a deterioration in the trading environment as
a result of a slowing economy and reduced consumer spending. This is expected
to continue in the short to medium term, however the residential and office
letting market is expected to remain buoyant. The benefit of the Hatfield
development will impact positively on distribution growth in 2010 and beyond.
Premium expects to deliver growth in distribution for the year ending 28
February 2010, assuming no further material change in market conditions.
DECLARATION OF DIVIDEND 30 AND INTEREST PAYMENT
("the distribution")
Notice is hereby given that dividend number 30 of 0,24 cents (2008: 0,22 cents)
per ordinary share together with interest of 49,06 cents per debenture (2008:
43,78 cents) has been declared for the period 1 September 2008 to 28 February
2009, payable to linked unitholders recorded in the register on Friday, 22 May
2009. The last date to trade "CUM" distribution is Friday, 15 May 2009. The
units will commence trading "EX" distribution on Monday, 18 May 2009. Payment
date will be Monday, 25 May 2009.
No dematerialisation or rematerialisation of linked unit certificates may take
place between Monday, 18 May 2009 and Friday, 22 May 2009, both days inclusive.
By order of the Board.
A Wapnick JP Wapnick
(Chairman (Managing director)
23 April 2009
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
PO Box 15, Pretoria 0001
Tel: (012) 319 8811 Fax: (012) 319 8812
Transfer Secretaries
Computershare Limited
(Reg. No: 2000/006082/06)
70 Marshall Street, Johannesburg 2001
PO Box 61051, Marshalltown 2107
Tel: (011) 370 7700 Fax: (011) 688 5200
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")
CITY PROPERTY
Property Asset Manager
e-mail address: propworld@cityprop.co.za
website address: www.cityproperty.co.za
www.premiumproperties.co.za
Member of the Property Loan Stock Association
Date: 23/04/2009 13:00:01 Produced by the JSE SENS Department.
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