| Tue 10 Dec 2002, 10:18 | | Paramount Property Fund Limited - Results To 31 Oc |
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Paramount Property Fund Limited - Results To 31 October 2002 And Distribution
Announcement
Paramount Property Fund Limited
(Incorporated in the Republic of South Africa)
(Reg No.1945/019928/06)
Share code: PRA ISIN: ZAE000028577
RESULTS TO 31 OCTOBER 2002 AND
DISTRIBUTION ANNOUNCEMENT
The consolidated results of the group for the year ended 31 October 2002 are as
follows:
Reviewed Audited
October 2002 October
2001
CONSOLIDATED INCOME STATEMENT Notes R`000 R`000
Revenue 87,340 42,694
Trading Income 69,834 32,380
Less - depreciation (390) (265)
Interest received 335 127
Less - interest paid on borrowings (50,884) (24,261)
Income before taxation 18,895 7,981
Taxation 171 (300)
Income before distribution 19,066 7,681
Distribution to unitholders (18,001) (7,263)
Retained income 1,065 418
Linked units in issue (`000) 22,512 12,104
Weighted average linked units in
issue (R`000) 20,418 12,104
Earnings per unit (cents) 1 93.3 63.5
Headline earnings per unit (cents) 2 87.9 63.5
Distribution per unit (cents) 86.4 60.0
ABRIDGED CONSOLIDATED BALANCE SHEET
Total ordinary shareholders` funds 7,037 1,195
"A" debenture holders 101,303 54,469
"B" debenture holders 3 129,937 97,610
Other long-term liabilities 408,543 218,289
Unitholders for distribution 5,493 7,263
Current liabilities 5,519 6,612
Capital employed 657,832 385,438
Fixed assets 649,390 381,148
Deferred taxation 219 -
Current assets 8,223 4,290
Total employment of capital 657,832 385,438
One ordinary share and one "A" debenture
are defined as one linked unit.
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Income before taxation 18,895 7,981
Adjustments for:
Interest received (335) (127)
Interest paid 50,884 24,261
Depreciation 390 265
Provisions raised 275 75
Revaluation of properties (1,321) 150
Operating profit before working capital
changes 68,788 32,605
Working capital changes (5,590) 4,809
Cash generated from operations 63,198 37,414
Interest received 335 127
Interest paid (50,884) (24,261)
Taxation paid (271) -
Net cash inflow from operating activities 12,378 13,280
Net cash inflow from financing activities 190,284 216,759
Net cash inflow from capital raising
activities 64,167 141,536
Cash outflow from investing activities (267,311) (370,752)
(482) 823
Cash and cash equivalents at the beginning
of the year 600 (223)
Cash and cash equivalents at the end of
the year 118 600
Non-
Share Share distributable Distributable
Capital Premium Reserves Reserves
STATEMENT OF CHANGES
IN EQUITY
Balance at 1/11/2000 296 13,599 45 (2,620)
Share premium converted
to debentures (13,309)
Increase in share capital 914
Net increase in share premium 1,852
Issue of "A" debentures
Surplus to 31/10/2001 418
Balance at 31/10/2001 1,210 2,142 45 (2,202)
Increase in share capital 1,041
Net increase in share premium 3,736
Issue of "A" debentures
Surplus to 31/10/2002 1,065
Balance at 31/10/2002 2,251 5,878 45 (1,137)
Linked
"A" Unit
Subtotal Debentures Total
Balance at 1/11/2000 11,320 11,320
Share premium converted
to debentures (13,309) 13,309 -
Increase in share capital 914 914
Net increase in share premium 1,852 1,852
Issue of "A" debentures - 41,160 41,160
Surplus to 31/10/2001 418 418
Balance at 31/10/2001 1,195 54,469 55,664
Increase in share capital 1,041 1,041
Net increase in share premium 3,736 3,736
Issue of "A" debentures - 46,834 46,834
Surplus to 31/10/2002 1,065 1,065
Balance at 31/10/2002 7,037 101,303 108,340
CAPITAL EXPENDITURE
There are capital commitments for the purchase of properties totalling R165
million. The acquisition of these properties will be financed by way of bank
loans which have already been approved, and the issue to the vendors of new
linked units and "B" debentures.
Notes:
1) The earnings per linked unit are calculated on the weighted average number of
linked units ranking for distribution of 20 418 491 (2001: 12 104 345) and the
net income before debenture interest but after tax of R19 066 000 (2001: R7 681
000).
2) The headline earnings per linked unit are calculated on the weighted average
number of linked units ranking for distribution of 20 418 491 (2001: 12 104 345)
and the net income of R17 943 000 (2001: R7 681 000) calculated before debenture
interest but after taxation and after headline reconciling items determined as
follows:
2002 2001
Income attributable to linked unitholders 19,066 7,681
Revaluation surplus (1,321) -
Taxation on revaluation surplus 198 -
Headline earnings 17,943 7,681
3) The "B" debentures are convertible into linked units in 5 equal tranches,
commencing in January of the year following issue. The new linked units
participate in all distributions from the date of conversion.
4) As the company only acquired its property portfolio with effect from 1
February 2001, the comparative figures in reality only cover a 9-month trading
period.
COMMENTS
Paramount is pleased to announce that it has been able to meet its projected
distributions for the year. At the commencement of the past financial year we
were encouraged by low interest rate expectations and prospects for a low
inflation environment. Unfortunately, virtually the opposite prevailed, and the
year proved to be a very difficult and volatile one for the property industry,
during which we experienced significant pressure on rentals and four interest
rate increases in rapid succession.
With the final distribution of 24,4 cents per linked unit announced today, total
distributions for the year will be 86,4 cents, an 8% increase on the annualised
distribution of 60 cents made in respect of the period ended 31 October 2001.
These results have been achieved by proactive management of both the property
portfolio and the interest risk. As a result of the "hands on" management of the
properties, vacancies in the portfolio were kept down to approximately 5% over
the course of the year, which is well below the industry average. Despite this,
however, net rental income from the property portfolio was below our
expectations. This was due to poor conditions in many sectors of the property
market, where the hostile economic environment and an oversupply of space is
resulting in increasing vacancies and declining rental levels.
Looking ahead to next year, despite currently improving economic expectations,
it will take some time for the benefits to filter through to the commercial
property market. General consensus in the industry is that property income
growth will be all but flat during the next year, before economic circumstances
result in income levels increasing in 2004 and 2005.
Paramount`s financial structure works to shareholders` advantage in times of
rental growth, but is vulnerable to periods of low or declining growth and high
interest rates. With the above prognosis, it is anticipated that the conversion
of the "B" debentures will result in a material dilution of earnings in the year
ahead. Management is looking at ways of actively addressing this situation.
Paramount will be continuing to make further acquisitions to increase the
diversity and scale of its portfolio in the forthcoming year.
Review opinion
These results have been reviewed by the company`s auditors, Deloitte & Touche
and their unqualified review opinion is available for inspection at the
company`s registered office.
Accounting policies
The results for the year ended 31 October 2002 have been prepared on a basis
consistent with the accounting policies set out in the last annual financial
statements and in accordance with South African Statements of Generally Accepted
Accounting Practice.
DECLARATION OF DISTRIBUTION
Notice is hereby given that the board of directors has declared a final
distribution of 24,4 cents per linked unit in respect of the year ended 31
October 2002.
To comply with the procedures of STRATE the distribution timetable is as
follows:
Last day to trade linked units
cum distribution Tuesday, 24 December 2002
Linked units commence
trading ex distribution Friday, 27 December 2002
Record date Friday, 3 January 2003
Pay date Monday, 6 January 2003
Linked unit certificates may not be dematerialised or rematerialised between
Friday, 27 December 2002 and Friday, 3 January 2003, both days inclusive.
BY ORDER OF THE BOARD
SPIRE PROPERTY SERVICES (PTY) LTD
SECRETARIES CAPE TOWN
9 December 2002
Registered office
Tannery Park
23 Belmont Road
Rondebosch 7700
PO Box 155
Rondebosch 7701
Transfer secretaries
Computershare Investor Services Limited
70 Marshall Street
Johannesburg 2001
PO Box 61051
Marshalltown 2107
Sponsor Barnard Jacobs Mellet Corporate Finance (Pty) Ltd
DIRECTORS: A D Dalling (Chairman)*, R C Squire-Howe (Managing), H N Coertze*, F
J Jenkings, B H Kerswill, A Keller*, A A Maresky, J R Millar*, A D P Ovenstone*,
G P Phillips*, E G Raubenheimer*, R J Whiteford*.
* Non-executive
Date: 10/12/2002 08:07:00 AM Produced by the JSE SENS Department
