| Thu 11 Feb 2010, 12:00 | | PAP - Pangbourne - Condensed Unaudited Consolidated Financial Statements for the |
|
PAP
PAP
PAP - Pangbourne - Condensed Unaudited Consolidated Financial Statements for the
six months ended 31 December 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")
Condensed Unaudited Consolidated Financial Statements for the six months ended
31 December 2009
Directors` commentary
Results
Pangbourne`s interim distribution for the six months to 31 December 2009
amounted to 70,20 cents per linked unit. This represents an increase of 10,55%
over the 63,50 cents distribution for the previous comparable period. The
distribution for this interim period includes only recurring property income.
Review
Pangbourne has continued the intensive management of every asset in the
portfolio with many properties being upgraded, refurbished and, where
appropriate, re-tenanted. This proactive approach resulted in good growth in
rental income for the period despite a tougher economic environment and the
higher level of vacancies.
Considerable resources have been directed at Pangbourne`s retail portfolio. The
profile and mix of tenants in most of the centres have been improved and the
majority of the centres have been, or are in the process of being, refurbished.
The Thrupps Centre in Illovo will be substantially redeveloped during 2010. This
includes changing the retail layout and completely refurbishing the mall to
reposition the centre to cater for its target market. The N1 Value Centre in
Cape Town does not have a food or grocery anchor and a 1 850m2 Fruit & Veg City
is being introduced to remedy this. Ster Kinekor and Dischem have been secured
for The Boardwalk Inkwazi in Richards Bay, further consolidating the centre`s
dominant position in the region.
The phase one refurbishment of Pineslopes in Fourways is nearing completion.
Phase two, which involves redevelopment of the Casino View building, will
commence in March 2010.
The commercial and industrial properties have generally performed well over the
last six months. Hobart Square in Bryanston and The Braides in Gallo Manor are
now over 75% and 92% let respectively. The 13 000m2 warehouse on Radnor Road in
Cape Town, which has been vacant for over a year, has been let to a corporate
tenant for five years commencing on 1 April 2010. The market for large
industrial space in Pomona near OR Tambo Airport, which is dependent on an
expansion in logistics operations, is still muted. Oxford Manor in Illovo is
being upgraded. In order to provide ample parking, the tenant mix has changed
away from retail to focus on office tenants only.
The portfolio vacancy is currently 6,72% and has remained stable when compared
to the 6,68% at 30 June 2009, though the mix has changed. The board is cautious
regarding growth prospects in a number of commercial and industrial nodes where
vacancies are expected to increase in the short-term as these markets lag the
economic upturn. While Pangbourne has no developments in the pipeline, vacancies
in the commercial market may further be exacerbated by the many speculative
developments by other developers, scheduled for completion during 2010.
Pangbourne`s aggressive letting of its property portfolio is yielding positive
results and the group`s overall vacancies are expected to decrease from current
levels during the coming year.
Enigma
The remaining 28% of Enigma (the last tentacle of the past "octopus" strategy)
was acquired in August 2009 for R60,1 million. The Enigma portfolio consists of
14 properties with 51 tenants and was acquired at an average yield of 9%. The
flagship property in this portfolio is the A-grade Edward Nathan Sonnenberg
office block located in the Sandton CBD.
Investments and gearing
Pangbourne sold its remaining 51 932 653 units in Capital Property Fund and the
proceeds were utilised to reduce borrowings.
The group sold 56 properties in October 2009 to Fortress Income Fund Limited
("Fortress") for R998,2 million as follows:
Number of Proceeds
Sector properties (R`000)
Industrial 42 530 025
Commercial 5 110 890
Retail 9 357 300
Total 56 998 215
Pangbourne received 58 621 875 Fortress A units, 58 621 875 Fortress B units and
R412,0 million in cash as consideration. The Fortress A and Fortress B holdings
have been reduced to 48 100 000 and 58 000 000 linked units at 31 December 2009
respectively with the proceeds being applied against borrowings. This investment
has been equity accounted.
Pangbourne`s gearing at 31 December 2009 was 36,2% after repayment of the R470
million securitised debt tranche in October 2009. The group currently has
substantial unutilised funding facilities and gearing levels are at the board`s
targeted levels. Accordingly, the Fortress A and B holdings will be sold only
when suitable acquisitions or development opportunities arise.
Property acquisition
The remaining 50% of Raceway Industrial Park, a 5 965m2 warehouse, was acquired
from Pangbourne`s partner, Atterbury, for R29,4 million at a capitalisation rate
of 8,23%. The property is fully let with a five year lease.
Prospects
Although there are strong indications that the economic environment is
improving, the property market is expected to remain difficult for the remainder
of the financial year. The board is nonetheless optimistic that the previous
forecast of 10% growth in distributions will be achieved.
By order of the board
Barry Stuhler Jacques van Wyk
Managing director Financial director
Johannesburg
10 February 2010
Consolidated statements of financial position
Unaudited Audited Unaudited
Dec 2009 Jun 2009 Dec 2008
R`000 R`000 R`000
ASSETS
Non-current assets 11 703 486 10 937 277 11 725 804
Investment property 10 301 044 9 525 282 9 373 617
Straight-lining of rental
revenue adjustment 202 591 142 775 110 958
Investment property under
development 252 443 237 249 818 986
Investments - 303 806 390 921
Investment in and loans to
associates 561 277 279 433 349 957
Loans 386 131 448 732 681 365
Current assets 294 819 1 283 618 640 719
Investment property held for sale - 998 215 405 819
Loans - 8 579 -
Trade and other receivables 229 281 197 279 170 867
Cash and cash equivalents 65 538 79 545 64 033
Total assets 11 998 305 12 220 895 12 366 523
EQUITY AND LIABILITIES
Total equity attributable to
equity holders 4 429 464 4 351 518 4 007 521
Share capital 4 034 4 034 3 929
Share premium 2 181 285 2 181 285 2 083 919
Non-distributable reserves 2 244 145 2 166 199 1 919 673
Retained earnings - - -
Total liabilities 7 568 841 7 869 377 8 359 002
Non-current liabilities 5 849 641 6 382 665 6 527 847
Linked debentures 1 815 011 1 815 011 1 767 784
Interest-bearing borrowings 3 387 841 3 855 544 4 018 510
Deferred tax 646 789 712 110 741 553
Current liabilities 1 719 200 1 486 712 1 831 155
Trade and other payables 423 629 395 655 485 533
Linked debenture interest payable 283 141 282 939 249 455
Income tax payable 62 465 2 192 1 184
Interest-bearing borrowings 949 965 805 926 1 094 983
Total equity and liabilities 11 998 305 12 220 895 12 366 523
Consolidated statements of comprehensive income
Unaudited Restated Restated
for the for the for the
six months year six months
ended ended ended
Dec 2009 Jun 2009 Dec 2008
R`000 R`000 R`000
Net rental and related revenue 507 091 886 808 413 908
Recoveries and contractual rental
revenue 709 721 1 310 046 661 010
Straight-lining of rental revenue
adjustment 28 487 (16 947) (44 626)
Rental revenue 738 208 1 293 099 616 384
Property operating expenses (231 117) (406 291) (202 476)
Distributable income from
investments 8 478 31 666 16 757
Fair value gain on investment
property and investments 49 035 51 653 59 392
Fair value gain on investment
property 22 238 59 446 39 746
Adjustment resulting from straight-
lining of rental revenue (28 487) 16 947 44 626
Fair value gain/(loss) on
investments 55 284 (24 740) (24 980)
Other income - 11 010 7 702
Administrative expenses (19 575) (46 225) (31 277)
Net recognition of goodwill 9 907 - -
Loss on sale of subsidiaries - (65 262) (35 030)
Deconsolidation of Monyetla
Property Fund Limited - - (30 232)
Income from associates 12 529 11 323 11 682
Profit before net finance costs 567 465 880 973 412 902
Net finance costs (493 776) (1 217 685) (967 314)
Finance income 28 321 91 855 53 483
Interest from loans 28 321 85 182 51 257
Interest on linked units issued
cum distribution - 6 673 2 226
Finance costs (522 097) (1 309 540) (1 020 797)
Interest on borrowings (237 684) (534 519) (301 638)
Capitalised interest 12 873 48 473 30 761
Fair value adjustment on
interest rate swaps (14 145) (291 100) (500 465)
Interest to linked debenture
holders (283 141) (532 394) (249 455)
Profit/(loss) before income tax
expense 73 689 (336 712) (554 412)
Income tax expense 4 257 140 981 97 332
Profit/(loss) for the period
attributable to equity holders 77 946 (195 731) (457 080)
Total comprehensive income/(loss)
for the period 77 946 (195 731) (457 080)
Basic earnings per share (cents) 19,33 (49,17) (116,35)
Basic earnings per linked unit
(cents) 89,53 84,57 (52,85)
Diluted earnings per share (cents) 17,73 (49,17) (116,35)
Diluted earnings per linked unit
(cents) 82,15 77,52 (52,85)
Reconciliation of profit/(loss) for the period to headline earnings and
distributable income
Unaudited Restated Restated
for the for the for the
six months year six months
ended ended ended
Dec 2009 Jun 2009 Dec 2008
R`000 R`000 R`000
Basic earnings (shares) -
profit/(loss) for the period
attributable to equity holders 77 946 (195 731) (457 080)
- interest to linked debenture
holders 283 141 532 394 249 455
Basic earnings (linked units) 361 087 336 663 (207 625)
Adjusted for: 10 162 (82 037) (78 255)
- fair value loss/(gain) on
investment property 6 249 (76 393) (84 372)
- net recognition of goodwill (9 907) - -
- loss on sale of subsidiaries - 65 262 30
- deconsolidation of Monyetla
Property Fund Limited - - 30 232
- income tax effect 13 820 (70 906) (59 145)
Headline earnings (linked units) 371 249 254 626 (285 880)
Adjustment resulting from straight-
lining of rental revenue (28 487) 16 947 44 626
Fair value (gain)/loss on
investments (55 284) 24 740 24 980
Fair value adjustment on interest
rate swaps 14 145 291 100 500 465
Consolidation adjustment for BEE (1 619) 14 655 15 142
Post-acquisition reserves from
associate companies 1 207 - (11 682)
Other 7 401 (9)
Income tax effect (18 077) (70 075) (38 187)
Distributable income 283 141 532 394 249 455
Less: distribution declared (283 141) (532 394) (249 455)
Income not distributed - - -
Headline earnings per share (cents) 21,84 (69,78) (136,27)
Headline earnings per linked unit
(cents) 92,04 63,96 (72,77)
Diluted headline earnings per
share (cents) 20,04 (69,78) (136,27)
Diluted headline earnings per
linked unit (cents) 84,46 58,63 (72,77)
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 403 336 028 (Jun 2009: 398 088 528; Dec 2008: 392 841
028) shares/linked units in issue during the period.
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 439 565 837 (Jun 2009: 434 318 337;
Dec 2008: 429 070 837) shares/linked units in issue during the period.
Consolidated statements of changes in equity
Attributable to equity holders of the
group
Non-
Share Distri-
Capi- Share butable Retained
tal premium reserves earnings Total
Unaudited R`000 R`000 R`000 R`000 R`000
Balance at -
30 June 2008 3 852 2 020 264 2 376 869 4 400 985
Issue of linked
units 77 63 655 63 732
Loss on linked
units issued by the
Pangbourne Unit
Purchase Trust
to employees (116) (116)
Deconsolidation/
disposal of
subsidiaries -
Total comprehensive
loss for the period (457 080) (457 080)
Transfer to non-
distributable
reserves (457 080) 457 080 -
Balance at
31 December 2008 3 929 2 083 919 1 919 673 - 4 007 521
Issue of linked
units 105 97 366 97 471
Loss on linked
units disposed of
by the Pangbourne
Unit Purchase Trust (14 823) (14 823)
Total comprehensive
income for the
period 261 349 261 349
Transfer to non-
distributable
reserves 261 349 (261 349) -
Balance at
30 June 2009 4 034 2 181 285 2 166 199 - 4 351 518
Total comprehensive
income for the
period 77 946 77 946
Transfer to non-
distributable
reserves 77 946 (77 946) -
Balance at
31 December 2009 4 034 2 181 285 2 244 145 - 4 429 464
Consolidated statements of changes in equity (continued)
Minority Total
interest equity
Unaudited R`000 R`000
Balance at
30 June 2008 255 039 4 656 024
Issue of linked
units 63 732
Loss on linked units
issued by the
Pangbourne Unit
Purchase Trust
to employees (116)
Deconsolidation/
disposal of
subsidiaries (255 039) (255 039)
Total comprehensive
loss for the period (457 080)
Transfer to non-
distributable
reserves -
Balance at
31 December 2008 - 4 007 521
Issue of linked
units 97 471
Loss on linked
units disposed of
by the Pangbourne
Unit Purchase Trust (14 823)
Total comprehensive
income for the period 261 349
Transfer to non-
distributable reserves -
Balance at 30 June 2009 - 4 351 518
Total comprehensive
income for the
period 77 946
Transfer to non-
distributable
reserves -
Balance at
31 December 2009 - 4 429 464
Abridged consolidated statements of cash flows
Unaudited Audited Unaudited
for the for the for the
six months year six months
ended ended ended
Dec 2009 Jun 2009 Dec 2008
R`000 R`000 R`000
Cash (outflow)/inflow from
operating activities (42 116) 297 156 221 323
Cash inflow/(outflow) from
investing activities 858 254 126 573 (135 254)
Cash outflow from financing
activities (830 145) (571 180) (249 032)
Decrease in cash and cash
equivalents (14 007) (147 451) (162 963)
Cash and cash equivalents at
the beginning of the period 79 545 226 996 226 996
Cash and cash equivalents at
the end of the period 65 538 79 545 64 033
Cash and cash equivalents
consist of:
Cash on call iro securitisation 60 990 59 086 51 495
Current accounts 4 548 20 459 12 538
65 538 79 545 64 033
Notes
1 Preparation
The condensed consolidated financial statements have been prepared in accordance
with IAS 34, the JSE Listings Requirements and the requirements of the South
African Companies Act. The accounting policies adopted are consistent with
those of the prior year and in accordance with IFRS.
Headline earnings for June 2009 and December 2008 has been restated to include
the fair value adjustments on investments and exclude loss on sale of
subsidiaries and the deconsolidation of Monyetla Property Fund Limited. The
group previously disclosed profit or loss on disposal of investment property and
investments separately from the fair value adjustments on these items. To
better reflect the nature of these transactions, these amounts are now combined
into the respective fair value adjustment lines in the statement of
comprehensive income.
This report was not audited or reviewed by the company`s auditors.
2 Summary of financial performance
Dec 2009 Jun 2009 Dec 2008 Jun 2008
Distribution per
linked unit (cents) 70,20 70,15 63,50 63,43
Units in issue 439 565 837 439 565 837 429 070 837 421 395 837
Property operations
Net asset value* R15,30 R15,02 R14,61 R15,64
Gearing ratio** 32,0% 34,0% 38,0% 39,7%
Units in issue 439 565 837 439 565 837 429 070 837 421 395 837
Consolidated
Net asset value* R15,48 R15,17 R14,70 R15,93
Gearing ratio** 36,2% 38,1% 41,3% 43,0%
Units in issue 403 336 028 403 336 028 392 841 028 385 166 028
*Net asset value includes total equity attributable to equity holders
and linked debentures.
**The gearing ratio is calculated by dividing interest-bearing
borrowings by total assets.
2.1 To comply with financial reporting requirements the group will account for
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
December 2009 R`000 R`000 R`000
Statement of comprehensive income
Finance costs
- interest on borrowings (237 684) 23 815 (213 869)
- interest to linked debenture
holders (283 141) (25 434) (308 575)
Statement of financial position
Current assets
Trade and other receivables 229 281 (6 914) 222 367
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 2 244 145 9 744 2 253 889
Non-current liabilities
Linked debentures 1 815 011 163 035 1 978 046
Interest-bearing borrowings
(non-current and current) 4 337 806 (504 885) 3 832 921
Current liabilities
Trade and other payables 423 629 (9 983) 413 646
Linked debenture interest payable 283 141 25 434 308 575
3 Gearing
Amount Amount % of
Expiry R`million R`million Rate borrowings
Interest rate swaps
October 2010 200,0 10,45% 5,2%
January 2011 100,0 10,33% 2,6%
August 2011 100,0 7,35% 2,6%
September 2011 100,0 10,33% 2,6%
October 2011 130,0 10,26% 3,4%
December 2011 200,0 8,55% 5,2%
May 2012 200,0 8,49% 5,2%
August 2013 100,0 8,05% 2,6%
September 2013 400,0 9,85% 10,4%
April 2015 300,0 8,26% 7,8%
September 2015 200,0 9,61% 5,2%
August 2016 200,0 8,51% 5,2%
September 2016 400,0 8,42% 10,4%
September 2017 50,0 8,45% 1,3%
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 3,7%
October 2012 140,0 9,40%
Securitised loan
July 2012 1 190,0 10,36% 31,0%
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 3 870,0 140,0 104,4%
Variable rate borrowings (177,1) (4,4%)
Total gearing* 3 832,9 10,71% 100,0%
*Total gearing comprises the level of external interest-bearing
borrowings, excluding those of BEE partners.
4 Lease expiry profile
Based on
Based on contractual
rentable rental
Lease expiry area income
Vacant 6,72% -
June 2010 13,87% 11,46%
June 2011 18,22% 22,32%
June 2012 17,71% 18,56%
June 2013 18,91% 20,23%
June 2014 7,66% 8,63%
June 2015 5,33% 6,31%
>June 2015 11,58% 12,49%
Total 100,00% 100,00%
5 Segmental analysis
Dec 2009 Jun 2009 Dec 2008
Rental revenue R`000 R`000 R`000
Industrial 324 771 619 169 271 364
Commercial 145 415 196 425 119 696
Retail 248 062 437 897 201 596
Other 19 960 39 608 23 728
Total 738 208 1 293 099 616 384
Dec 2009 Jun 2009 Dec 2008
Profit before net finance costs R`000 R`000 R`000
Industrial 226 359 437 279 223 435
Commercial 122 495 170 039 78 154
Retail 135 907 283 297 136 869
Other 16 082 72 586 59 822
Investments and other 66 622 (82 228) (85 378)
Total 567 465 880 973 412 902
6 Payment of interim distribution
The board has approved and notice is hereby given of an interim interest
distribution (distribution no 47) of 70,20 cents per linked unit for the six
months ended 31 December 2009.
The last date to trade linked units cum distribution will be Friday, 5 March
2010 and trading will commence ex distribution on Monday, 8 March 2010. The
record date to participate in the distribution will be Friday, 12 March 2010.
Linked unit certificates may not be dematerialised or rematerialised between
Monday, 8 March 2010 and Friday, 12 March 2010, both days inclusive. Payment of
the distribution will be made to linked unitholders on Monday, 15 March 2010.
In respect of dematerialised linked unitholders, the distribution will be
transferred to the Central Securities Depository Participant accounts/broker
accounts on Monday, 15 March 2010. Certificated linked unitholders` distribution
payments will be posted on or about Monday, 15 March 2010.
Directors
Dr I Abedian (chairman), BL Stuhler (MD)*, D de Beer (Alt: VS Majija), JPG de
Rauville, RJ Falkenberg, CB Hallowes*, BD Hopkins, AL Manickum, MH Muller*, DS
Savage, TS Sishuba, JJ van Wyk*, TMZ Zuma (*Executive)
Company secretary
IF Pick
Registered address
3rd Floor Rivonia Village Rivonia Boulevard Rivonia 2191
Transfer secretaries
Link Market Services South Africa (Proprietary) Limited
11 Diagonal Street Johannesburg 2001
Sponsor
Java Capital (Proprietary) Limited
11 February 2010
Date: 11/02/2010 12:00:28 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.
