| Thu 27 Aug 2009, 16:47 | | PAP - Pangbourne Properties Limited - Summarised Audited Consolidated Financial |
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PAP
PAP
PAP - Pangbourne Properties Limited - Summarised Audited Consolidated Financial
Statements for the Year Ended 30 June 2009
PANGBOURNE PROPERTIES LIMITED
Incorporated in the Republic of South Africa
Registration no. 1987/002352/06
Share code: PAP
ISIN: ZAE000005252
("Pangbourne" or "the company" or "the group")
SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE
2009
DIRECTORS` COMMENTARY
Results
Pangbourne`s final distribution for the six months to 30 June 2009 amounted to
70,15 cents per linked unit. This represents an increase of 10,59% over the
63,43 cents distribution for the six months to 30 June 2008. Accordingly, the
total distribution for the year ended 30 June 2009 is 133,65 cents per linked
unit which is an increase of 10,52% over the 120,93 cents distribution for the
same period ended 30 June 2008.
The distribution for this six month period included R11,3 million development
profits and fees, being 3,66% of the distribution. In total, therefore,
development profits and fees amounted to R22,3 million for the year ended 30
June 2009, which represents 3,84% of the total distribution. From the financial
year ending June 2010, only recurring property income will be distributed.
Review
Pangbourne has achieved strong growth at a property level through negotiating
upward rental reversions, meticulously recovering utilities and actively
managing operating costs. Pangbourne`s tenant arrears are being aggressively
controlled.
The impact of this improved operational performance is not fully reflected in
the distribution growth. This is due to the discontinuation of past reliance on
non-recurring income and an increase in vacancies brought about by the
completion of historical speculative developments in the period under review.
Most of these developments are valued at significantly less than cost.
The net valuation of the portfolio has increased despite an increase in
capitalisation rates and the inclusion of the impaired values for the
speculative developments. The entire property portfolio was independently valued
by Quadrant Properties.
The comprehensive programme of refurbishment and maintenance to address the
historical backlog has largely been completed and this has resulted in improved
tenant retention.
The total vacancies in the portfolio are 6,68%. The completed speculative
developments are currently over 50% vacant. Excluding these developments, the
portfolio was 4,2% vacant at year-end. As market conditions improve, the board
anticipates that these vacancies will be let and that this will have a positive
impact on distributions in the future.
The board has seen a decline in trading conditions of many tenants across all
sectors of the economy. Secondary properties have been most affected by this,
especially in the retail portfolio. Trading conditions remain strong in the core
industrial and commercial portfolio, as well as dominant or well located retail
centres, such as Boardwalk in Richards Bay.
Subsequent to the financial year-end, the remaining 28% shareholding in Enigma
was acquired for R60,1 million. This is the last remaining "tentacle" of the old
octopus strategy. The Enigma portfolio consists of 14 properties with 51
tenants. The properties are valued at R780,8 million and the portfolio was
acquired at an average forward yield of 9,0%. The flagship property in the
portfolio is the A-grade Edward Nathan Sonnenberg Inc. office block located in
the heart of Sandton, with a triple net lease for a further eight years.
Pangbourne`s investment in Capital Property Fund decreased from 66 257 711 units
at 31 December 2008 to 51 932 653 units at 30 June 2009. The proceeds were
utilised to reduce borrowings.
The securitisation structure remains a limiting factor in disposing of non-core
properties. The board remains committed to selling non-core industrial mini-
factories and smaller industrial properties. In line with Pangbourne`s strategic
focus on the industrial and commercial sectors, retail properties will be sold
over time.
Disposals
The following properties were transferred during the year under review:
Property Sales price (R`000)
260 Simon Vermooten Road Silverton 14 500
Culemborg 250 000
25 Wellington Road Parktown 34 000
16 Pressburg Road Founders Hill 11 500
659 Electron Avenue Isando 7 738
Pangbourne has in principle agreed to the sale of 56 properties valued at R998,2
million to Fortress Income Fund Limited ("Fortress"), a new property fund which
is scheduled to list on the JSE Limited in October 2009.
The average yield for the portfolio is 10,5%, and will be paid for in cash and
units issued by Fortress. The proposed transaction further rationalises the
number of properties to more manageable levels, improves the portfolio`s focus
and will reduce the level of debt.
Capital structure
Pangbourne has substantial unutilised bank facilities at its disposal. As the
board is concerned about the fragile markets for securitised debt, it has
resolved to repay R470 million of the securitised debt due in October 2009.
The board has set a target gearing level of 40% or below. Pangbourne`s gearing
at year-end was 38,3%. The gearing calculation excludes the properties being
sold to Fortress, which are categorised as properties held for sale. The R780,8
million of assets and R540 million of debt in Enigma will be brought on balance
sheet once this transaction is finalised. After completion of the Fortress and
Enigma transactions, it is anticipated that gearing will be 40,2%.
Acquisitions
Until such time as the board is satisfied with the capital structure, no new
acquisitions or developments will be considered.
Prospects
The streamlined business operations have resulted in a more efficient and
effective business and one which is no longer dependent on non-recurring income
for its distribution growth.
The restructured debt facilities have ensured that the business is able to meet
its cash flow requirements in the future.
While the board expects macroeconomic circumstances to continue to deteriorate,
it is confident that Pangbourne will achieve similar growth in distributions in
the next financial year. This statement has not been reviewed or reported on by
Pangbourne`s auditors.
By order of the board
Barry Stuhler Jacques van Wyk
Managing director Financial director
Johannesburg
26 August 2009
CONSOLIDATED BALANCE SHEET
Audited Audited
Jun 2009 Jun 2008
R`000 R`000
ASSETS
Non-current assets 10 937 277 12 159 323
Investment property 9 525 282 10 713 398
Straight-lining of rental income adjustment 142 775 179 569
Investment property under development 237 249 475 577
Investment in and loans to associates 279 433 356 958
Investments 303 806 -
Loans 448 732 426 606
Property, plant and equipment - 7 215
Current assets 1 283 618 1 634 015
Investment property held for sale 998 215 520 188
Loans 8 579 62 118
Trade and other receivables 197 279 824 713
Cash and cash equivalents 79 545 226 996
Total assets 12 220 895 13 793 338
EQUITY AND LIABILITIES
Total equity attributable to equity holders 4 351 518 4 400 985
Share capital 4 034 3 852
Share premium 2 181 285 2 020 264
Non-distributable reserves 2 166 199 2 376 869
Retained earnings - -
Minority interest - 255 039
Total liabilities 7 869 377 9 137 314
Non-current liabilities 6 382 665 7 041 327
Linked debentures 1 815 011 1 733 246
Interest-bearing borrowings 3 855 544 4 450 674
Deferred tax 712 110 857 407
Current liabilities 1 486 712 2 095 987
Trade and other payables 395 655 356 907
Linked debenture interest payable 282 939 244 786
Income tax payable 2 192 14 600
Interest-bearing borrowings 805 926 1 479 694
Total equity and liabilities 12 220 895 13 793 338
CONSOLIDATED INCOME STATEMENT
Audited Audited
for the for the
year ended year ended
Jun 2009 Jun 2008
R`000 R`000
Net rental and related income 886 808 455 374
Recoveries and contractual rental income 1 310 046 624 477
Straight-lining of rental income adjustment (16 947) 14 688
Rental income 1 293 099 639 165
Property operating expenses (406 291) (183 791)
Minority share of distributable earnings - (19 695)
Distributable income from investments 31 666 -
Profit on disposal of investments and
investment property 34 253 11 467
Profit on disposal of investment property 36 282 7 527
(Loss)/profit on disposal of investments (2 029) 3 940
Fair value gain on investments and
investment property 17 400 1 094 321
Fair value gain on investment property 23 164 1 109 009
Adjustment resulting from straight-lining
of rental income 16 947 (14 688)
Fair value loss on investments (22 711) -
Other income 11 010 68 460
Administrative expenses (46 225) (90 332)
Net recognition of goodwill - 137 652
Impairment of intangible asset - (23 924)
Loss on sale of subsidiaries (65 262) -
Income from associate company 11 323 223 984
Profit before net finance costs 880 973 1 857 307
Net finance costs (1 217 685) (327 342)
Finance income 91 855 324 782
Interest from loans 85 182 22 692
Fair value adjustment on interest rate swaps - 152 226
Interest on linked units issued cum 6 673 149 864
distribution
Finance costs (1 309 540) (652 124)
Interest on borrowings (486 046) (233 126)
Fair value adjustment on interest rate swaps (291 100) -
Fair value adjustment on bond option - (17 256)
Interest to linked debenture holders (532 394) (401 742)
(Loss)/profit before income tax (336 712) 1 529 965
Income tax expense 140 981 (267 092)
(Loss)/profit for the year (195 731) 1 262 873
Attributable to:
Equity holders of the company (195 731) 1 222 838
Minority interest - 40 035
(195 731) 1 262 873
Basic earnings per share (cents) (49,17) 371,14
Basic earnings per linked unit (cents) 84,57 493,07
Diluted earnings per share (cents) (49,17) 340,17
Diluted earnings per linked unit (cents) 77,52 451,93
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non-
distri-
Share Share butable Retained
capital premium reserves earnings Total
Audited R`000 R`000 R`000 R`000 R`000
Balance at
30 June 2007 2 392 812 750 - 1 154 031 1 969 173
Issue of linked
units 1 584 1 396 842 1 398 426
Linked units issued
to BEE initiatives
eliminated (124) (189 328) (189 452)
Change in ownership
in subsidiary -
Profit for the year 1 222 838 1 222 838
Transfer to non-
distributable
reserves 2 376 869 (2 376 869) -
Balance at
30 June 2008 3 852 2 020 264 2 376 869 - 4 400 985
Issue of linked
units 182 161 021 - - 161 203
- Issue of
7 675 000 linked
units on
23 September 2008 77 63 655 63 732
- Issue of
4 000 000 linked
units on
27 March 2009 40 39 548 39 588
- Issue of
6 495 000 linked
units on
20 April 2009 65 57 818 57 883
Loss on linked
units issued by the
Pangbourne Unit
Purchase Trust to
employees (116) (116)
Loss on linked
units disposed of
by the Pangbourne
Unit Purchase Trust (14 823) (14 823)
Disposal of
subsidiary
Loss for the year (195 731) (195 731)
Transfer to non-
distributable
reserves (195 731) 195 731 -
Balance at
30 June 2009 4 034 2 181 285 2 166 199 - 4 351 518
Non-distributable reserves comprise those profits and losses that are not
distributable to unitholders and are mainly made up of revaluation
adjustments on investment property and investments, profits or losses on
the disposal of investment property and investments and other non-
distributable balances.
Minority Total
interest equity
Audited R`000 R`000
Balance at
30 June 2007 222 471 2 191 644
Issue of linked units 1 398 426
Linked units issued to BEE initiatives eliminated (189 452)
Change in ownership in subsidiary (7 467) (7 467)
Profit for the year 40 035 1 262 873
Transfer to non-distributable reserves 0
Balance at
30 June 2008 255 039 4 656 024
Issue of linked units - 161 203
- Issue of 7 675 000 linked units on 23 September
2008 63 732
- Issue of 4 000 000 linked units on 27 March 2009 39 588
- Issue of 6 495 000 linked units on 20 April 2009 57 883
Loss on linked units issued by the Pangbourne Unit
Purchase Trust to employees (116)
Loss on linked units disposed of by the Pangbourne
Unit Purchase Trust (14 823)
Disposal of subsidiary (255 039) (255 039)
Loss for the year (195 731)
Transfer to non-distributable reserves -
Balance at
30 June 2009 - 4 351 518
RECONCILIATION OF (LOSS)/PROFIT FOR THE YEAR TO HEADLINE EARNINGS AND
DISTRIBUTABLE INCOME
Audited Audited
for the for the
year ended year ended
Jun 2009 Jun 2008
R`000 R`000
Basic earnings (shares) - (loss)/profit for the
year attributable to equity holders (195 731) 1 222 838
- interest to linked debenture holders 532 394 401 742
Basic earnings (linked units) 336 663 1 624 580
Adjusted for: (111 126) (995 047)
- fair value gain on investment property (40 111) (1 094 321)
- fair value loss on investments 22 711 -
- profit on disposal of investment property (36 282) (7 527)
- loss/(profit) on disposal of investments 2 029 (3 940)
- net recognition of goodwill - (137 652)
- impairment of intangible asset - 23 924
- income tax effect (59 473) 224 469
Headline earnings 225 537 629 533
Profit for the year attributable to minorities - 40 035
Adjustment resulting from straight-lining
of rental income 16 947 (14 688)
Fair value adjustment on interest rate swaps 291 100 (152 226)
Income tax effect (81 508) 42 623
Fair value adjustment on bond option - 17 256
Consolidation adjustment for BEE 14 655 2 009
Restructuring costs - 17 168
Post-acquisition reserves from associate company - (177 263)
Loss on sale of subsidiaries 65 262 -
Results of subsidiary - (2 646)
Other 401 (59)
Distributable income 532 394 401 742
Less: distribution declared (532 394) (401 742)
Income not distributed - -
Headline earnings per share (cents) (77,08) 69,14
Headline earnings per linked unit (cents) 56,65 191,07
Diluted headline earnings per share (cents) (77,08) 63,37
Diluted headline earnings per linked unit
(cents) 51,93 175,12
Basic earnings per share, basic earnings per linked unit, headline
earnings per share and headline earnings per linked unit are based on the
weighted average of 398 088 528 (2008: 329 479 609) shares/linked units in
issue during the year.
Diluted earnings per share, diluted earnings per linked unit, diluted
headline earnings per share and diluted headline earnings per linked unit
are based on the weighted average of 434 318 337 (2008: 359 478 798)
shares/linked units in issue during the year.
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Audited Audited
for the for the
year ended year ended
Jun 2009 Jun 2008
R`000 R`000
Cash inflow/(outflow) from operating activities 297 156 (174 660)
Cash inflow/(outflow) from investing activities 126 573 (2 997 073)
Cash (outflow)/inflow from financing activities (571 180) 3 373 114
(Decrease)/increase in cash and cash equivalents (147 451) 201 381
Cash and cash equivalents at beginning of year 226 996 25 615
Cash and cash equivalents at end of year 79 545 226 996
Cash and cash equivalents consist of:
Current accounts 79 545 226 996
NOTES
1 PREPARATION AND AUDIT OPINION
The summarised audited consolidated financial statements have been prepared in
accordance with the recognition and measurement criteria of International
Financial Reporting Standards (IFRS), the presentation and disclosure
requirements of IAS34 and the requirements of the Companies Act (Act 61 of
1973). The accounting policies adopted are consistent with those of the prior
year. Deloitte & Touche has audited the financial statements from which the
financial information included in this report has been extracted. Their
unmodified audit report on the financial statements is available for inspection
at the group`s registered address.
2.SUMMARY OF FINANCIAL PERFORMANCE
Jun 2009 Dec 2008 Jun 2008 Dec 2007
Distribution per
linked unit (cents) 70,15 63,50 63,43 57,50
Linked units in issue 439 565 837 429 070 837 421 395 837 297 561 759
Property operations
Net asset value* R15,13 R14,61 R15,64 R12,91
Gearing ratio** 38,3% 40,3% 36,7% 37,9%
Linked units in issue 439 565 837 429 070 837 421 395 837 297 561 759
Consolidated
Net asset value* R15,29 R14,70 R15,93 R12,99
Linked units in issue 403 336 028 392 841 028 385 166 028 273 793 190
*Net asset value includes total equity attributable to equity holders and linked
debentures.
**The gearing ratio is calculated by dividing the total gearing by the
investment in non-current assets. For calculating the gearing ratio in June 2009
the investment property held for sale was classified as a non-current asset
(refer to note 3 for the gearing calculation).
2.1 To comply with financial reporting requirements, the group will consolidate
entities that do not form part of its operations, do not operate under its
operating policies and whose businesses, risk profiles and debt levels are not
comparable to that of its own.
Disclosure under "Property operations" excludes Panya Investments (Pty) Ltd,
Meago Siyam Investments (Pty) Ltd and Tokoloho Investments (Pty) Ltd ("BEE
partners").
2.2 Pangbourne signed sureties in favour of banks with regards to the funding
of BEE partners. The BEE partners collectively hold 36 229 809 linked units in
Pangbourne.
The following table indicates the effect of consolidating BEE partners into the
group financial statements (the column "Property operations" indicates
Pangbourne`s results had the BEE partners not been consolidated):
BEE Property
Consolidated partners operations
Jun 2009 (Unaudited) R`000 R`000 R`000
Income statement
Finance costs
- Interest on borrowings (486 046) 63 076 (422 970)
- Fair value adjustment
on interest rate swaps (291 100) 14 291 (276 809)
- Interest to linked debenture
holders (532 394) (48 421) (580 815)
Income tax expense 140 981 (2 586) 138 395
Balance sheet
Total equity attributable to
equity holders
Share capital 4 034 362 4 396
Share premium 2 181 285 309 379 2 490 664
Non-distributable reserves 2 166 199 11 364 2 177 563
Non-current liabilities
Linked debentures 1 815 011 163 035 1 978 046
Interest-bearing borrowings
(non-current and current) 4 661 470 (501 989) 4 159 481
Current liabilities
Trade and other payables 395 655 (7 567) 388 088
Linked debenture interest payable 282 939 25 416 308 355
3.GEARING
Amount Amount % of
Expiry R`million R`million Rate borrowings
Interest rate swaps
October 2009 10,0 9,05% 0,22%
October 2010 200,0 10,45% 4,37%
January 2011 100,0 10,33% 2,19%
August 2011 100,0 7,35% 2,19%
September 2011 100,0 10,33% 2,19%
October 2011 130,0 10,26% 2,84%
December 2011 200,0 8,55% 4,37%
August 2013 100,0 8,05% 2,19%
September 2013 400,0 9,85% 8,75%
October 2014 460,0 9,36% 10,06%
April 2015 300,0 8,26% 6,56%
September 2015 200,0 9,61% 4,37%
August 2016 200,0 8,51% 4,37%
Pangbourne pays the fixed rate and receives the 3-month Jibar floating
rate on the swaps.
Interest rate cap
October 2012 140,0 10,75%
Interest rate floor 3,06%
October 2012 140,0 9,40%
Securitised loan
July 2012 1 190,0 10,36% 26,02%
The securitised loan is shown as nominal annual compounded quarterly and
is inclusive of lending margin, amortised upfront costs and ongoing
management fees payable to the securitisation administrators, trustees,
rating agency and other external costs.
Hedged borrowings 3 690,0 140,0 83,75%
Variable rate borrowings 742,7 16,25%
Total gearing* 4 572,7 100,00%
*Total gearing comprises the level of external interest-bearing borrowings,
excluding those of BEE partners, should current liabilities be liquidated and
current assets be realised.
Jun 2009 Jun 2008
Gearing is calculated as follows: R`million R`million
Interest-bearing borrowings 4 661,5 5 930,4
Interest-bearing borrowings of BEE partners (502,0) (463,4)
Current liabilities 680,8 616,3
Current liabilities of BEE partners 17,8 (14,5)
Current assets (285,4)* (1 634,0)
Current assets of BEE partners - 22,8
Total gearing 4 572,7 4 457,6
*The investment property held for sale is included in non-current assets and was
thus excluded from the gearing calculation in June 2009.
4.LEASE EXPIRY PROFILE
Based on
Based on contractual
rentable rental
Lease expiry area income
Vacant 6,68% -
June 2010 20,12% 20,45%
June 2011 17,99% 21,22%
June 2012 18,83% 19,17%
June 2013 15,72% 17,43%
June 2014 6,86% 8,33%
>June 2014 13,80% 13,40%
Total 100,00% 100,00%
5.SEGMENTAL ANALYSIS
Jun 2009 Jun 2008
Rental income R`000 R`000
Industrial 619 169 457 163
Commercial 196 425 116 244
Retail 437 897 62 197
Other 39 608 3 561
Total 1 293 099 639 165
Jun 2009 Jun 2008
Profit before net finance costs R`000 R`000
Industrial 437 279 1 262 173
Commercial 170 039 160 472
Retail 283 297 132 272
Other 72 586 2 305
Corporate (82 228) 300 085
Total 880 973 1 857 307
6.PAYMENT OF FINAL DISTRIBUTION
The board has approved and notice is hereby given of a final interest
distribution (distribution no 46) of 70,15 cents per linked unit for the six
months ended 30 June 2009.
The last date to trade linked units cum distribution will be Friday, 11
September 2009 and trading will commence ex distribution on Monday, 14 September
2009. The record date to participate in the distribution will be Friday, 18
September 2009.
Linked unit certificates may not be dematerialised or rematerialised between
Monday, 14 September 2009 and Friday, 18 September 2009, both days inclusive.
Payment of the distribution will be made to linked unitholders on Monday, 21
September 2009.
In respect of dematerialised linked unitholders, the distribution will be
transferred to the Central Securities Depository Participant accounts/broker
accounts on Monday, 21 September 2009. Certificated linked unitholders`
distribution payments will be posted on or about Monday, 21 September 2009.
Directors
Dr I Abedian (chairman) BL Stuhler (managing director)*
D de Beer (alternate: SV Majija) RJ Falkenberg CB Hallowes*
BD Hopkins AL Manickum MH Muller* JPG de Rauville DS Savage
TS Sishuba JJ van Wyk* TMZ Zuma (*Executive)
Company secretary
AA Bornman
Registered address
3rd Floor Rivonia Village Rivonia Boulevard Rivonia 2191
Transfer secretaries
Link Market Services South Africa (Proprietary) Limited 16th Floor
11 Diagonal Street Johannesburg 2001 (PO Box 4844 Johannesburg 2000)
Sponsor
Java Capital (Proprietary) Limited
www.pangbourne.co.za
Date: 27/08/2009 16:47:01 Produced by the JSE SENS Department.
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