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PPR
PPR
PPR - Putprop Limited - Unaudited interim results for the six months ended 31
December 2010
Putprop Limited
(Incorporated in the Republic of South Africa)
(Registration number 1988/001085/06)
Share code: PPR ISIN: ZAE000072310
("Putprop" or "the company" or "the group")
Unaudited interim results for the six months ended 31 December 2010
Property revenue up 10.0% to R17.8 million
Net profit before tax increases to R19.1 million
Headline Earnings per share up 22.8 % to 38.7 cents
Net asset value up 15.4% to 848.5 cents
Interim dividend of 15 cents per share declared
Unaudited consolidated statement of comprehensive income for the six months
ended 31 December 2010
Unaudited Unaudited % Audited
31 December 31 December Change 30 June
2010 2009 2010
R`000 R`000 R`000
Property revenue 17 792 16 180 10.0 34 426
Straight line rental (171) 1 105 (115) 1 036
income accrual
Gross property revenue 17 621 17 285 1.9 35 462
Property expenses (752) (2 244) (66.5) (2 605)
Net profit from property 16 869 15 041 12.2 32 857
operations
Administration expenses (1 610) (1 601) 0.6 (2 992)
Investment and other 594 347 71.2 415
income
Operating profit before 15 853 13 787 15.0 30 280
capital items
Capital Items
Gross change in fair 3 273 5 000 (34.5) 19 504
value of investment
properties
Net profit before 19 126 18 787 1.8 49 784
taxation
Taxation (5 182) (5 421) (4.4) (11
814)
Net profit attributable
to equity holders 13 944 13 366 4.3 37 970
Other comprehensive - - - -
income
Total comprehensive 13 944 13 366 4.3 37 970
income attributable to
equity holders
Shares in issue 28 793 28 793 28 793
(weighted average
number) (millions)
Earnings and diluted 48.4 46.4 4.3 131.9
earnings per share
(cents)
Dividends paid per share 20 22 (9.1) 22
(cents)
Headline earnings per 38.7 31.5 22.8 73.7
share (cents)
Reconciliation of headline earnings
Net profit for the 13 944 13 366 4.3 37 970
period
Adjusted for:
Fair value and (3 273) (5 000) (34.5) (19
impairment adjustments 504)
Taxation effect of these 458 700 (34.5) 2 730
adjustments
Headline earnings 11 129 9 066 22.8 21 196
Unaudited consolidated statement of financial position as at 31 December 2010
Unaudited Unaudited Audited
31 December 31 December 30 June
2010 2009 2010
R`000 R`000 R`000
ASSETS
Non-current assets 240 972 225 127 239 224
Investment properties at fair 221 239 204 560 220 182
value
Other non-current assets
Furniture, fittings and 98 52 43
computer equipment
Straight line rental income 8 768 10 706 8 902
asset
Other investments 10 867 9 809 10 097
Current assets 21 155 3 638 11 969
Straight line rental income 2 698 987 2 720
asset
Amount owing by fellow 15 149 - -
subsidiary
Trade and other receivables 543 720 518
Taxation receivable 669 812 598
Cash and cash equivalents 2 096 1 119 8 133
Total assets 262 127 228 765 251 193
EQUITY AND LIABILITIES
Equity and reserves 244 322 211 532 236 136
Non-current liabilities 13 112 10 810 12 819
Current liabilities 4 693 6 423 2 238
Trade and other payables 4 693 6 423 2 238
Total equity and liabilities 262 127 228 765 251 193
RATIOS
Net asset value per share 848.5 734.7 820.1
(cents)
Unaudited consolidated statement of cash flows for the six months ended 31
December 2010
Unaudited Unaudited Audited
31 December 31 December 30 June
2010 2009 2010
R`000 R`000 R`000
CASH FLOW GENERATED FROM 7 731 6 711 15 134
OPERATING ACTIVITIES
Net cash generated from 17 855 16 600 29 127
operations
Investment and other income 594 347 415
Taxation paid (4 960) (3 902) (8 074)
Dividends paid (5 758) (6 334) (6 334)
CASH FLOWS FLOW UTILISED IN 1 381 (14 060) (15
INVESTING ACTIVITIES 469)
Improvements to investment (234) (1 254) (1 494)
properties
Disposal of investment 2 450 - -
property
Acquisitions of investment - (12 700) (13
properties 577)
Acquisition of furniture, (65) - (6)
fittings and computer
equipment
Additions to other (770) (106) (392)
investments
CASH FLOW UTILISED IN (15 149) - -
FINANCING ACTIVITIES
Amount owing by fellow (15 149) - -
subsidiary
NET DECREASE IN CASH AND CASH (6 037) (7 349) (335)
EQUIVALENTS
Cash and cash equivalents at 8 133 8 468 8 468
beginning of period
Cash and cash equivalents at 2 096 1 119 8 133
end of period
Unaudited Consolidated Statement of Changes in Equity for the six months ended
31 December 2010
Stated Accumulated
capital profits Total
R`000 R`000 R`000
At 30 June 2009 4 146 200 354 204 500
Profit attributable to equity
holders - 13 366 13 366
Dividend paid - (6 334) (6 334)
At 31 December 2009 4 146 207 386 211 532
Profit attributable to equity - 24 604 24 604
holders
Dividend paid - - -
At 30 June 2010 4 146 231 990 236 136
Profit attributable to equity - 13 944 13 944
holders
Dividend paid - (5 758) (5 758)
Balance at 31 December 2010 4 146 240 176 244 322
Comments
Basis of preparation
The unaudited interim financial statements for the six months ended 31 December
2010 and comparative information have been prepared in terms of IAS34 (Interim
Financial Reporting) and IAS1 (Presentation of Financial Statements); the
Listings Requirements of JSE Limited and the relevant sections of the South
African Companies Act, 1973 (Act 61 of 1973) as amended.
The accounting policies applied which are based on reasonable judgements and
estimates are in accordance with International Financial Reporting Standards
(IFRS) and are consistent with those applied in the most recent audited
financial statements. These interim results have not been audited or reviewed by
the group`s auditors.
Financial results
The directors are pleased to report that property revenue for the six months
ended 31 December 2010 prior to any straight line income adjustments increased
by 10.0% to R17.8 million compared to R16.2 million for the six months ended 31
December 2009 ("the comparable period"). The group`s rental, inclusive of
straight line rental accruals, has increased nominally by 1.9% over the
comparable period.
Property expenses decreased by 66.5% due to the deferment of certain large
maintenance projects to early 2011. Maintenance and refurbishment costs will
increase substantially in the second half of the year. Administration expenses
were contained in line with the comparable period. Investment and other income
rose by 71.2% due to increased cash reserves and a short-term loan advanced to a
fellow subsidiary at favourable interest rates.
The board of directors has declared an interim dividend for the six months ended
31 December 2010 of 15 cents per ordinary share (December 2009 0 cents per
ordinary share). This reflects a dividend cover of 3.2 times which is in line
with the groups stated dividend policy of 3 - 4 times as noted in the June 2010
annual financial statements.
Property portfolio
At 31 December 2010 the portfolio comprised 17 properties with a gross lettable
area of 91 370m2. During the period under review the group disposed of its two
commercial office holdings in Studio Park Lonehill, due to returns not meeting
the group`s contractual cash flow criteria over the past two years.
The sectoral spread by gross rentals comprised 85% industrial, 9% retail and 6%
commercial. Vacancies increased during the period to 6.9% (2009: 1.1%) of gross
lettable area. This arose largely as a result of the non-renewal of the lease at
one of our Lea Glen properties. The group has concluded a new lease with a
suitable tenant which will come into effect in the second quarter of 2011.
The company continues to transact primarily with `A` grade tenants. An early
settlement was reached with the East Gate House tenant. This will have no effect
on the income stream for 2011. The group is currently pursuing new leasing
possibilities in respect of this property. Our Carlin House property was sold in
December with transfer to be effected in March 2011. The decision to dispose
arose due to concerns in respect of the deterioration of the geographic area the
property was situated in.
The lease expiry profile reflects that in terms of gross lettable area, 4% of
the portfolio expires during the next 12 months, 87% in month 13 to 24, and 9%
from 2013 onwards. This provides a stable future income stream for the group.
Segmental analysis
The table below summarises by segment the position for the six months ended 31
December 2010.
Segment assets include all operating assets used by a segment and consist of
investment properties, receivables and cash. Assets not directly attributable to
a particular segment are allocated to the corporate segment. Segment liabilities
include all operating liabilities of a segment and consist principally of
outstanding accounts.
Industrial Retail Commercial Corporate Total
R`000 R`000 R`000 R`000 R`000
Group income for the six months ended 31
December 2010
Property 15 123 1 601 1 068 - 17 792
revenue
Straight line (405) 231 3 - (171)
rental
income accrual
Property (618) (68) (66) - (752)
expenses
Net profit 14 100 1 764 1 005 - 16 869
from property
operations
Group financial position at 31 December 2010
Non-current
assets
Investment 164 174 34 850 22 215 - 221 239
properties
Other non- 7 452 11 569 614 98 19 733
current assets
Current assets
Straight line 2 293 216 189 - 2 698
rental income
asset
Trade and - - 170 16 191 16 361
other
receivables
Cash and cash - - - 2 096 2 096
equivalents
Non-current - - - 13 112 13 112
liabilities
Current
liabilities
Trade and - - 2 329 2 364 4 693
other payables
Group income for the six months ended 31
December 2009
Property 13 830 1 542 808 - 16 180
revenue
Straight line 824 254 27 - 1 105
rental income
accrual
Property (1 940) (83) (221) - (2 244)
expenses
Net profit 12 714 1 713 614 - 15 041
from property
operations
Group financial position at 31 December 2009
Non-current
assets
Investment 155 076 31 849 17 635 - 204 560
properties
Other non- 7 555 4 206 8 754 52 20 567
current assets
Current assets
Straight line 746 133 108 - 987
rental income
asset
Trade and 302 - 169 249 720
other
receivables
Cash and cash - - - 1 119 1 119
equivalents
Non-current - - - 10 810 10 810
liabilities
Current
liabilities
Trade and 189 222 - 6 012 6 423
other payables
Acquisitions, expansions and refurbishments
During the period under review no acquisitions were made. Although the group
actively investigated many possible opportunities, no properties met the group`s
investment guidelines and criteria. No major capital projects are currently
under way.
Valuation of property portfolio
It is the groups` policy to value the entire investment property portfolio on an
annual basis by an independent external valuer. The next valuation will be at 30
June 2011. In addition, the property portfolio is valued by the directors on a
six monthly basis. The directors have valued the group`s investment portfolio at
31 December 2010 at R221 million, an increase of R3.3 million or 1.5% on the
external valuation at 30 June 2010. The effects of any acquisitions made during
the year of acquisition are not included in any revaluation.
Borrowings and capital commitments
The company has no significant borrowings as at 31 December 2010 nor has any
capital commitments at that date.
Directorate
There have been no changes in the composition of the board of directors during
the current period.
Subsequent events
There have been no significant subsequent events between the period 31 December
2010 and the release of this report, 10 March 2011.
Prospects
Trading conditions during the next reporting period are expected to continue to
be challenging in the form of rising vacancies, longer collection times, a
deterioration of rental escalations and existing rental agreements coming under
pressure from tenants to renegotiate terms. As already indicated, maintenance
and refurbishment costs will increase substantially for the six months to June
2011.
The board is of the opinion however, that a reasonable growth in earnings will
still be achieved in the second half of the year. The group will resume paying
both interim and final dividends for the foreseeable future.
Ordinary interim dividend number 43
Notice is hereby given that the board of directors have declared an interim cash
dividend ("the dividend") for the six months ended 31 December 2010 of 15 cents
per ordinary share (December 2009: 0 cents per ordinary share) reflecting a
dividend cover of 3.2 times. The dividend is payable to shareholders recorded in
the books of the company at close of business on Friday, 8 April 2011.
The salient dates relating to the dividend are as follows:
Last day to trade shares cum dividend Friday, 1 April 2011
Shares trade ex dividend Monday, 4 April 2011
Record date Friday, 8 April 2011
Payment date Monday 11 April 2011
Share certificates may not be dematerialised or rematerialised during the period
Monday, 4 April 2011 to Friday, 8 April 2011 both days inclusive.
On behalf of the board
10 March 2011
A B Adrian A Carleo A L Carleo-Novello
Chairman Chief Executive Officer Managing Director
Directorate
A B Adrian* (Chairman), A Carleo (Chief Executive Officer), A L Carleo-Novello
(Managing Director), B C Carleo, J E Smith (Financial) (British), P Senatore*, P
Nucci*
* Independent Non-executive
Registered Office
91 Protea Road
Chislehurston
Sandton
2196
Transfer Secretaries
Computershare Investor Services (Proprietary) Limited
70 Marshall Street
Johannesburg
P O Box 61051
Marshalltown
2107
Sponsor
Merchantec Capital
Date: 10/03/2011 13:30:13 Produced by the JSE SENS Department.
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