| Fri 23 Oct 2009, 15:00 | | PMM - Premium - Unaudited Interim Results Of The Group For The Six Months |
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PMM
PMM
PMM - Premium - Unaudited Interim Results Of The Group For The Six Months
Ended 31 August 2009
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")
UNAUDITED INTERIM RESULTS OF THE GROUP FOR THE SIX MONTHS ENDED 31 AUGUST 2009
Distribution up by 13,3% to 51,90 cents per linked unit
Assets exceed R3,0 billion
Increase in net asset value by 4,8% to 1 232 cents
ABRIDGED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
% six months six months Year to
Change 31 August 31 August 28
February
R`000 2009 2008 2009
Revenue 198 204 164 450 344 743
- earned on contractual basis 19,7 197 944 165 435 348 603
- straight line lease 260 (985) (3 860)
adjustment
Operating costs (82 472) (63 613) (133 879)
Net rental income from 115 732 100 837 210 864
properties
- earned on contractual basis 13,4 115 472 101 822 214 724
- straight line lease 260 (985) (3 860)
adjustment
Administrative expenses (8 285) (6 746) (15 530)
Depreciation (883) (789) (1 631)
Profit before investment 14,2 106 564 93 302 193 703
income
Investment income 31 778 14 808 36 607
- Interest received 974 1 457 2 815
- Investment income -
associate
equity earnings/(loss) 3 653 (1 088) (490)
fair value 22 418 5 838 20 632
adjustment/capital reserves
interest, dividends and 4 733 8 601 13 650
fees
Profit before finance charges 28,0 138 342 108 110 230 310
and capital profit
Fair value adjustments of
investment properties
net fair value adjustment 70 913 97 961 191 801
gross fair value 71 173 96 976 187 941
adjustment
straight line lease (260) 985 3 860
adjustment
Amortisation of deemed 4 806 5 713 10 286
debenture premium
Profit before finance charges 214 061 211 784 432 397
Finance charges 11,0 (48 137) (43 379) (89 706)
Profit before debenture 165 924 168 405 342 691
interest
Debenture interest 13,3 (67 187) (59 290) (123 120)
Profit before taxation 98 737 109 115 219 571
Taxation charge - deferred (19 856) (27 153) (50 607)
Profit attributable to 78 881 81 962 168 964
ordinary shareholders
Weighted linked units in 130 106 130 106 130 106
issue (`000)
Linked units in issue (`000) 130 106 130 106 130 106
Earnings per share (cents) (3,8) 60,6 63,0 129,9
Headline earnings/(loss) per 500 0,4 (0,1) 0,1
share
Headline earnings per linked 14,3 52,0 45,5 94,7
unit (cents)
Distribution per linked unit
(cents)
Dividends 0,26 0,23 0,47
Interest 51,64 45,57 94,63
Total 13,3 51,90 45,80 95,10
ABRIDGED CONSOLIDATED BALANCE SHEET
Unaudited Audited
31 August 28 February
R`000 2009 2009
ASSETS
Non-current assets 3 031 043 2 827 161
Investment properties 2 748 171 2 573 846
Investment properties - straight lining of 26 051 25 791
rental leases
Property, plant and equipment 37 867 29 621
Investments - associated company 218 954 197 902
Current assets 27 207 23 425
Total assets 3 058 250 2 850 586
EQUITY AND LIABILITIES
Share capital and reserves 1 200 678 1 122 136
Share capital and premium 2 507 2 507
Non-distributable reserves 1 170 212 1 091 858
Retained earnings 27 959 27 771
Non-current liabilities 1 564 079 1 429 019
Debentures and premium 402 874 407 680
Interest bearing borrowings 817 212 697 203
Deferred taxation 343 993 324 136
Current liabilities 293 493 299 430
Interest bearing 169 609 174 020
Non-interest bearing 56 359 61 268
Linked unit holders 67 525 64 142
Total equity and liabilities 3 058 250 2 850 586
Linked units in issue (`000) 130 106 130 106
Loan to investment value ratio (%) 32,6 30,8
Net asset value per linked unit (cents) 1 232 1 176
Net asset value per linked unit (cents) - 1 497 1 425
before providing for deferred tax
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
Year to six months Year to
31 August 31 August 28 February
R`000 2009 2008 2009
CASH FLOW FROM OPERATING ACTIVITIES
Net rental income from properties 106 304 94 286 197 563
Adjustment for:
- Depreciation 883 789 1 631
- Working capital changes (9 308) (1 311) (5 664)
Cash generated from operations 97 879 93 764 193 530
Investment income 5 707 10 058 16 465
Finance costs (48 137) (43 379) (89 706)
Distribution to linked unit holders (64 142) (57 247) (116 836)
paid
Net cash (outflow)/inflow from (8 693) 3 196 3 453
operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Investing activities (107 522) (19 853) (89 969)
Net cash outflow used in investing (107 522) (19 853) (89 969)
activities
CASH FLOW FROM FINANCING ACTIVITIES
Increase in interest bearing 119 479 18 054 88 474
borrowings
Net cash generated from financing 119 479 18 054 88 474
activities
NET INCREASE IN CASH AND CASH 3 264 1 397 1 958
EQUIVALENTS
Cash and cash equivalents at beginning (15 902) (17 860) (17 860)
of year
Cash and cash equivalents at end of (12 638) (16 463) (15 902)
year
RECONCILIATION - EARNINGS TO DISTRIBUTABLE EARNINGS
Unaudited Unaudited Audited
six months six months Year to
31 August 31 August 28 February
R`000 2009 2008 2009
Earnings attributable to ordinary 78 881 81 962 168 964
shareholders
Amortisation of deemed debenture (4 806) (5 713) (10 286)
premium
Fair value adjustments
- associate, net of deferred tax (22 418) (5 838) (20 632)
- investment properties, net of (51 130) (70 532) (137 972)
deferred tax
Headline earnings before debenture 527 (121) 74
interest
Debenture interest per linked unit 67 187 59 290 123 120
Headline earnings 67 714 59 169 123 194
Straight line lease adjustment (187) 709 3 860
Deferred taxation adjustments - - (3 222)
Distributable earnings 67 527 59 878 123 832
DISTRIBUTABLE EARNINGS
The following additional information is provided and is aimed at disclosing to
the users the basis on which the distributions are calculated.
Unaudited Unaudited Audited
% six months six months Year to
Change 31 August 31 August 28 February
R`000 2009 2008 2009
Revenue
- earned on contractual basis 19,7 197 944 165 435 348 603
Operating costs (82 472) (63 613) (133 879)
Net rental income from 13,4 115 472 101 822 214 724
properties
Administrative expenses (8 285) (6 746) (15 530)
Depreciation (883) (789) (1 631)
Profit before investment 12,7 106 304 94 287 197 563
income
Investment income
- Interest received 974 1 457 2 815
- Investment income - 8 386 7 513 13 160
associate
Distributable profit before 12,0 115 664 103 257 213 538
finance charges
Finance charges 11,0 (48 137) (43 379) (89 706)
Distributable income before 12,8 67 527 59 878 123 832
taxation
Taxation charge - - -
Unit holders distributable 12,8 67 527 59 878 123 832
earnings
Linked units in issue (`000) 130 106 130 106 130 106
Distributable earnings per 12,8 51,9 46,0 95,2
linked unit (cents)
Distribution per linked unit 13,3 51,9 45,8 95,1
(cents)
STATEMENT OF CHANGES IN EQUITY
Fair
Share Capital value
R`000 capital reserve reserve
Balance at 1 March 2008 2 507 26 149 896 816
Profit for the year
Transfer to capital reserve - deemed 10 286
debenture premium
Dividends paid
Transfer to non-distributable reserve 158 607
Balance at 28 February 2009 2 507 36 435 1 055 423
Profit for the year
Transfer to capital reserve - deemed 4 806
debenture premium
Dividends paid
Transfer to fair value reserve
- Investment properties, net of deferred 51 130
taxation
- associate, net of deferred tax 22 418
Balance at 31 August 2009 2 507 41 241 1 128 971
Retained
R`000 earnings Total
Balance at 1 March 2008 28 311 953 783
Profit for the year 168 964 168 964
Transfer to capital reserve - deemed (10 286) -
debenture premium
Dividends paid (612) (612)
Transfer to non-distributable reserve (158 607) -
Balance at 28 February 2009 27 770 1 122 135
Profit for the year 78 881 78 881
Transfer to capital reserve - deemed (4 806) -
debenture premium
Dividends paid (338) (338)
Transfer to fair value reserve
- Investment properties, net of deferred (51 130) -
taxation
- associate, net of deferred tax (22 418) -
Balance at 31 August 2009 27 959 1 200 678
NOTES TO THE FINANCIAL STATEMENTS
The unaudited condensed 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 28 February 2009.
These interim results have not been audited or reviewed by the Group`s
external auditors.
In order to comply with International Financial Reporting Standards, deferred
taxation on the fair value adjustment of improvements to investment properties
has been provided at the company income taxation rate, which is currently 28%,
and the fair value adjustments on land at the Capital Gains Tax rate of 14%,
which would be payable if the properties were sold.
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 has provided a suretyship to Nedbank
Property Finance, which at 31 August 2009 amounted to R161 million in favour
of its associate company, IPS Investments (Proprietary)Limited ("IPS").
COMMENTS
Review of results
Premium`s results for the six months ended 31 August 2009 once again reflect
the continuation of the Group`s impressive growth record. Premium has
delivered growth in distributions for the six months ended 31 August 2009 of
13,3% compared to the comparable prior year period. This was achieved against
a background of tougher trading conditions, however the Group continued to
benefit from the pro-active approach to letting, the substantial investments
made over several years in the growth of the CBD portfolio and the upgrade and
redevelopment of properties.
Rental income and net rental income increased by 19,7% and 13,4% respectively,
compared with the comparable period. Property expenses increased to 41,7% of
rental income largely due to an increase in municipal costs as well as costs
of repairs and maintenance.
A major contributor to the growth has been the residential and office
properties. The residential portfolio which comprises 3 090 units, delivered
strong growth in rental income in excess of 10,0%. This is underpinned by low
vacancies and good demand for affordable and secure accommodation.
The distribution growth was positively impacted by the Hatfield development
due to the much improved occupancy levels achieved during the period. Phase I
of the mixed-use Hatfield development which comprises of 694 residential units
as well as 5 224mSquared of rental space, is almost fully let.
Property portfolio
Premium continues to focus on its strategic objective of acquiring and
redeveloping properties in the Pretoria and Johannesburg CBD`s and surrounding
areas. During the period four properties were acquired for a total purchase
price of R52,0 million. These properties are situated in the Pretoria CBD. An
amount of R59,7 million was spent on various projects and upgrades including
Phase II of the Hatfield development, Jardown, Longsbank, Louis Pasteur, Bank
Towers and Rezmep.
Phase II of the Hatfield development has commenced. This includes a four level
parking bay, 9 000 mSquared of "A" grade offices and retail space as well as a
hotel. The cost of the project is R280 million.
Premium is currently converting the Longsbank building situated in the
Johannesburg CBD into 142 residential units. The total cost of the project
amounts to R55 million with a yield of approximately 11,0%. The letting of the
units is expected to commence during the 2011 financial year.
Interest income and dividends received from IPS increased to R8,4 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 R1 billion. IPS is currently developing an
aggregate of 1 085 units of residential accommodation at a total cost in
excess of R480 million. These units will be built at Kempton City in Kempton
Park, Tayob Towers and Corporation House in the Johannesburg CBD.
Vacancies at 31 August 2009 amounted to 21,8% of total lettable area (28
February 2009: 17,8%). Vacancies have increased due to a slow down in economic
activity during the period which is affecting the letting of vacant space. A
large percentage of the vacancies are in respect of properties that are
undergoing redevelopment or that were recently acquired.
Further details of the vacancies are as follows:
31 August 28 February
2009 2009
% %
Offices 12,6 9,9
Retail 4,0 3,1
Commercial 3,4 1,5
Industrial 1,2 2,5
Residential 0,6 0,8
TOTAL 21,8 17,8
Gearing
Premium`s gearing at 31 August 2009 was 32,6% of the total value of the
portfolio as against 30,8% at 28 February 2009. Interest rates in respect of
66,4% of borrowings as at 31 August 2009 have been fixed at an average
interest rate of 11,7% maturing at various dates ranging from September 2009
to April 2018.
Revaluation of property portfolio
It is the Group`s policy to perform directors` valuations of all the
properties on a six monthly basis. At the year end one third of the properties
is valued by external valuers. The increase in the directors` valuation of the
portfolio by R70,9 million to R2,8 billion represents an increase of 3,0%.
This upward revaluation contributed to the increase in the net asset value per
linked unit of 4,8% to 1 232 cents.
Partial offer
As announced on SENS on Friday, 28 August 2009, and as set out in a circular
to unitholders dated 11 September 2009, Octodec together with the Wapnick
Family have made a partial offer to all independent Premium linked unit
holders to acquire from them up to a maximum of 10% of their Premium linked
units. The offer price is R12,44 per linked unit. Details of the offer
acceptances will be released on SENS on Monday, 26 October 2009.
Prospects
Premium`s plans to expand its CBD portfolio and upgrade its properties are
ongoing. The Company will continue to benefit from upgrades and redevelopment
activities. Phase I of the Fields development will continue to impact
positively on the distribution growth for the remainder of the year.
Management is optimistic that Premium will deliver distribution growth above
the sector average.
DECLARATION OF DIVIDEND 31 AND INTEREST PAYMENT
("the distribution")
Notice is hereby given that dividend number 31 of 0,26 cents (2009: 0,23
cents) per ordinary share together with interest of 51,64 cents per debenture
(2009: 45,57 cents) has been declared for the period 1 March 2009 to 31 August
2009, payable to linked unit holders recorded in the register on Friday, 20
November 2009. The last date to trade "cum" distribution is Friday, 13
November 2009. The units will commence trading "ex" distribution on Monday, 16
November 2009. Payment date will be Monday, 23 November 2009.
No dematerialisation or rematerialisation of linked unit certificates may take
place between Monday, 16 November 2009 and Friday, 20 November 2009, both days
inclusive.
By order of the Board
A Wapnick JP Wapnick
(Chairman) (Managing Director)
23 October 2009
CITY PROPERTY
Property Asset Manager
e-mail address: propworld@cityprop.co.za
website address: www.cityproperty.co.za
www.premiumproperties.co.za
Directors
A Wapnick* (Chairman)
JP Wapnick* (Managing Director)
AK Stein* (Financial Director)
MJ Holmes#
MZ Pollack#
S Wapnick+,
DP Cohen#
* 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 Investor Services (Pty) Limited
(Reg. No: 2000/006082/06)
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107.
Tel: (011) 370 7700
Fax: (011) 688 7712
Date: 23/10/2009 15:00:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
