| Thu 22 Apr 2010, 14:39 | | PMM - Premium Properties Limited And Its Subsidiaries - Reviewed Preliminary |
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PMM
PMM
PMM - Premium Properties Limited And Its Subsidiaries - Reviewed Preliminary
Results Of The Group For The Year Ended 28 February 2010
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")
REVIEWED PRELIMINARY RESULTS OF THE GROUP FOR THE YEAR ENDED 28 FEBRUARY 2010
- Distribution up by 16,8% to 111,10 cents per linked unit
- Assets exceed R3,3 billion
- Increase in net asset value by 11,7% to 1 313 cents per linked unit
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
% Year to Year to
Change 28 February 28 February
R`000 2010 2009
Revenue 407 720 344 743
- earned on contractual basis 17,4 409 128 348 603
- straight line lease adjustment (1 408) (3 860)
Operating costs (168 042) (133 879)
Net rental income from properties 239 678 210 864
- earned on contractual basis 12,3 241 086 214 724
- straight line lease adjustment (1 408) (3 860)
Administrative costs (17 147) (15 530)
Depreciation (2 050) (1 631)
Operating profit 13,8 220 481 193 703
Fair value adjustments of 200 299 194 951
investment properties
Investment income 53 434 36 607
- Interest received 1 885 2 815
- associate
- share of after tax 7 756 (490)
profit/(loss)
- fair value adjustment/capital 34 555 20 632
reserves
- interest 9 238 13 650
Finance costs 10,6 (102 654) (92 856)
Amortisation of deemed debenture 9 611 10 286
premium
Profit before debenture interest 381 171 342 691
Debenture interest 16,8 (143 833) (123 120)
Profit before taxation 237 338 219 571
Taxation charge
Deferred taxation (48 674) (50 607)
Total comprehensive income for the 188 664 168 964
year attributable to equity
holders
Weighted linked units in issue 130 106 130 106
(`000)
Linked units in issue (`000) 130 106 130 106
Basic and diluted earnings per 9,4 145,0 129,9
share (cents)
Basic and diluted earnings per 12,5 255,6 224,5
linked unit (cents)
Distribution per linked unit
(cents)
Dividends 0,55 0,47
Interest 110,55 94,63
Total 16,8 111,10 95,10
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
28 February 28 February
R`000 2010 2009
ASSETS
Non-current assets 3 305 497 2 827 160
Investment properties 3 005 380 2 573 846
Property, plant and equipment 36 812 29 621
Investment properties - straight lining of 24 383 25 791
leases
Investments - equity accounted 238 922 197 902
Current assets 26 667 23 425
Total assets 3 332 164 2 850 586
EQUITY AND LIABILITIES
Share capital and reserves 1 310 084 1 122 136
Share capital and premium 2 507 2 507
Non-distributable reserves 1 276 473 1 091 858
Retained earnings 31 104 27 771
Non-current liabilities 1 499 612 1 429 019
Debentures and premium 398 069 407 680
Interest bearing borrowings 728 733 697 203
Deferred taxation 372 810 324 136
Current liabilities 522 468 299 430
Interest bearing 371 474 174 020
Non-interest bearing 73 971 61 268
Linked unit holders 77 023 64 142
Total equity and liabilities 3 332 164 2 850 586
Linked units in issue (`000) 130 106 130 106
Net asset value per linked unit (cents) 1 313 1 176
Net asset value per linked unit (cents) - 1 599 1 425
before providing for deferred tax
Loan to investment value ratio (%) 33,3 30,8
CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Audited
Year to Year to
28 February 28 February
R`000 2010 2009
CASH FLOW FROM OPERATING ACTIVITIES
Net rental income from properties 228 355 200 713
Adjustment for:
- Depreciation 2 050 1 631
- Working capital changes 2 222 (5 664)
Cash generated from operations 232 627 196 680
Investment income 11 123 16 465
Finance costs (102 654) (92 856)
Distribution to linked unit holders paid (131 668) (116 836)
Net cash inflow from operating activities 9 428 3 453
CASH FLOW FROM INVESTING ACTIVITIES
Investing activities (245 651) (89 969)
Net cash outflow from investing activities (245 651) (89 969)
CASH FLOW FROM FINANCING ACTIVITIES
Increase in interest bearing borrowings 236 872 88 474
Net cash generated from financing 236 872 88 474
activities
NET INCREASE IN CASH AND CASH EQUIVALENTS 649 1 958
Cash and cash equivalents at beginning of 15 902 (17 860)
year
Cash and cash equivalents at end of year (15 253) (15 902)
RECONCILIATION - EARNINGS TO DISTRIBUTABLE EARNINGS
Reviewed Audited
Year to Year to
28 February 28 February
R`000 2010 2009
Earnings attributable to equity holders 188 664 168 964
Amortisation of deemed debenture premium (9 611) (10 286)
Fair value adjustments
- associate, net of deferred tax (34 555) (20 632)
- investment properties, net of deferred (144 215) (143 422)
tax
Headline earnings before debenture interest 283 (5 376)
Debenture interest 143 833 123 120
Headline earnings attributable to linked 144 116 117 744
unit holders
Deferred taxation adjustments 464 6 088
Distributable earnings attributable to 144 580 123 832
linked unit holders
Headline earnings per linked unit (cents) 110,8 90,5
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
Change 28 February 28 February
R`000 2010 2009
Revenue
- earned on contractual basis 17,4 409 128 348 603
Operating costs (168 042) (133 879)
Net rental income from properties 12,3 241 086 214 724
Administrative costs (17 147) (15 530)
Depreciation (2 050) (1 631)
Operating profit 12,3 221 889 197 563
Investment income
- Interest received 1 885 2 815
- Investment income - associate 16 994 13 160
Distributable profit before 12,8 240 768 213 538
finance costs
Finance costs 7,2 (96 188) (89 706)
Gross finance costs 102 654 96 006
Included in fair value adjustment (6 466) (3 150)
Unit holders distributable 16,8 144 580 123 832
earnings
Linked units in issue (`000) 130 106 130 106
Distributable earnings per linked 16,8 111,1 95,2
unit (cents)
Distribution per linked unit 16,8 111,1 95,1
(cents)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Fair
Share Capital value Retained
R`000 capital reserve reserve earnings Total
Balance at 1 March 2 507 26 149 896 816 28 312 953 784
2008
Total comprehensive 168 964 168 964
income for the year
Transfer to capital 10 286 (10 286) -
- deemed debenture
premium
Dividends paid (612) (612)
Fair value
adjustments
- Investment 137 975 (137 975) -
properties, net of
deferred taxation
- associate, net 20 632 (20 632) -
of deferred tax
Balance at 28 2 507 36 435 1 055 423 27 771 1 122 136
February 2009
Total comprehensive 188 664 188 664
income for the year
Transfer to capital 9 611 (9 611) -
- deemed debenture
premium
Dividends paid (716) (716)
Fair value
adjustments
- Investment 140 449 (140 449) -
properties, net of
deferred taxation
- associate, net 34 555 (34 555) -
of deferred tax
Balance at 28 2 507 46 046 1 230 427 31 104 1 310 084
February 2010
NOTES TO THE FINANCIAL STATEMENTS
The condensed consolidated financial statements have been prepared and
presented in accordance with International Financial Reporting Standards
IAS34, 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.
Related party: City Property Administration (Proprietary) Limited is
responsible for the property and asset management of the Group.
Independent review by external auditors: These condensed consolidated
financial statements have been reviewed by our auditors Grant Thornton, whose
unmodified review report is available for inspection at the company`s
registered office.
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 28 February 2010 amounted to R181,4 million, in
favour of its associate company, IPS Investments (Proprietary) Limited
("IPS").
COMMENTS
Review of results
Premium`s results for the year ended 28 February 2010 once again reflect the
continuation of the Group`s impressive growth record. Premium has delivered
growth in distributions for the year ended 28 February 2010 of 16,8% compared
to the comparable prior year. This was achieved in a difficult trading
environment, 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. The Group also benefited from the decreases in the prime lending
rate during the year.
Premium paid an interim distribution of 51,90 cents per linked unit. The total
distribution per linked unit for the year is 111,10 (2009: 95,1 cents).
Rental income and net rental income increased by 17,4% and 12,3% respectively,
compared with the comparable period. Property expenses increased to 41% of
rental income largely due to an increase in municipal costs as well as costs
of repairs and maintenance. Arrears and bad debts remained at acceptable level
and no significant deterioration is anticipated.
A major contributor to the growth has been the residential and office
properties. The residential portfolio which comprises 3 062 units, delivered
strong growth in rental income of 9%. This is underpinned by low vacancies and
good demand for affordable and secure accommodation.
The distribution growth was positively impacted by the mixed-use Hatfield
development due to the much improved occupancy levels achieved during the
year.
Property portfolio
Premium continues to focus on its strategic objective of acquiring properties
in the Pretoria and Johannesburg CBD`s as well as the ongoing programme of
upgrading properties. During the year six properties situated in the Pretoria
CBD were acquired for a total purchase price of R84 million. An amount of R55
million was spent on various upgrades of properties.
Phase II of the Hatfield development continued during the period. This
includes a four level parking bay, 9 000m? of "A" grade offices and retail
space as well as a hotel. The cost of the project is R285 million.
The conversion of Longsbank building situated in the JHB CBD is ongoing and is
expected to be completed by June 2010. The total cost of the project amounts
to R55 million with a yield of 11%.
Income from IPS increased to R16,9 million due to the strong performance of
this R1 billion property portfolio. IPS also has a 50% interest in various
joint ventures ("JV"). These include a JV with Bidvest Property which houses a
motor dealership and a JV with Old Mutual which includes four residential
properties. Premium has an effective 20% interest in these JVs. The IPS group
has a total of 2 732 residential units of accommodation, with a committed
development pipeline to build in excess of a further 700 units. The majority
of these units will be built at Kempton City in Kempton Park and at Lara`s
Place situated in the Johannesburg CBD. Due to the anticipated phased take up
of these new units, a decrease in income from IPS is forecast for the next
financial year.
Vacancies have increased due to a slowdown 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.
Details of the vacancies are as follows:
28 February 28 February
2010 2009
(% GLA) (% GLA)
Offices 13,5 9,9
Retail 3,6 3,0
Commercial 1,4 1,5
Industrial 2,9 2,5
Residential 0,3 0,8
TOTAL 21,7 17,8
Gearing
Premium`s gearing at 28 February 2010 was 33,3% of the total value of the
portfolio against 30,8% at 28 February 2009. Interest rates in respect of 41%
of borrowings as at 28 February 2010 have been fixed at an average interest
rate of 12% maturing at various dates ranging from May 2010 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 R192,4 million to R3,1 billion represents an increase of 6,7%.
This upward revaluation contributed to the increase in the net asset value per
unit of 11,7% to 1 313 cents.
Prospects
Premium`s plans to expand its CBD portfolio and upgrade its properties are
ongoing. The Company will continue to benefit from the upgrades and
redevelopment activities which will continue to impact positively on the
distribution growth for the 2011 financial year. Management is optimistic
that Premium will continue to deliver distribution growth which is in line
with the sector average.
DECLARATION OF DIVIDEND 32 AND INTEREST PAYMENT
("the distribution")
Notice is hereby given that dividend number 32 of 0,29 cents (2009: 0,24
cents) per ordinary share together with interest of 58,91 cents per debenture
(2009: 49,06 cents) has been declared for the period 1 September 2009 to 28
February 2010, payable to linked unit holders recorded in the register on
Friday, 21 May 2010. The last date to trade "cum" distribution is Friday, 14
May 2010. The units will commence trading "ex" distribution on Monday, 17 May
2010. Payment date will be Monday, 24 May 2010.
No dematerialisation or rematerialisation of linked unit certificates may take
place between Monday, 17 May 2010 and Friday, 21 May 2010, both days
inclusive.
By order of the Board
A Wapnick JP Wapnick
(Chairman) (Managing Director)
22 April 2010
Directors
A Wapnick* (Chairman)
JP Wapnick* (Managing)
AK Stein* (Financial)
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
Property Asset Manager
e-mail address: propworld@cityprop.co.za
website address: www.cityprop.co.za
Date: 22/04/2010 14:39:01 Produced by the JSE SENS Department.
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