| Mon 5 May 2003, 17:46 | | SA RETAIL PROPERTIES LIMITED - REVIEWED RESULTS AN |
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SA RETAIL PROPERTIES LIMITED
(Registration number 1999/025764/06)
(Share code: SRL ISIN number: ZAE000034328)
(Website: www.saretail.co.za)
REVIEWED RESULTS AND DISTRIBUTION ANNOUNCEMENT
FOR THE YEAR ENDED 31 MARCH 2003
BALANCE SHEET (R"000) Reviewed Audited
31.03.2003 31.03.2002
Assets
Non-current assets
Investment properties 865 854 784 872
Current assets
Trade and other receivables 10 728 8 665
Cash resources and short-term
investments 26 293 45 008
37 021 53 673
TOTAL ASSETS 902 875 838 545
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 33 238 33 238
Distributable reserves 13 -
33 251 33 238
Non-current liabilities
Debentures 834 441 762 528
Deferred taxation 102 38
834 543 762 566
Current liabilities
Trade and other payables 7 089 6 130
Taxation 3 8
Linked unitholders for distribution 27 989 36 603
35 081 42 741
TOTAL EQUITY AND LIABILITIES 902 875 838 545
INCOME STATEMENT (R"000) Reviewed Audited
01.04.2002 12.11.2001
to to
Notes 31.03.2003 31.03.2002
Revenue 130 834 48 523
Net rental income from properties 92 660 35 483
Interest earned 5 216 1 167
Amortisation of debenture issue expenses (31) -
Net profit before debenture interest 97 845 36 650
Debenture interest (97 679) (36 527)
Net profit before taxation 166 123
Taxation 74 47
Net profit attributable to linked
unitholders 92 76
Distribution per linked unit
(cents) 3.2
Interest 62,30 23,95
Dividend 0,05 0,05
Total 62,35 24,00
Headline earnings per linked unit 3.2
(cents) (weighted) 62,29 24,00
Earnings per linked unit (cents) 3.2
(weighted) 62,27 24,00
CASH FLOW STATEMENT (R"000) Reviewed Audited
01.04.2002 12.11.2001
to to
31.03.2003 31.03.2002
Operating activities
Cash received from tenants 128 771 39 857
Cash paid to suppliers and employees (37 215) (6 909)
Cash generated by operating activities 91 556 32 948
Interest earned 5 216 1 167
Distributions to linked unitholders (106 372) -
Taxation paid (15) (1)
(9 615) 34 114
INVESTING ACTIVITIES
Acquisition of investment properties (71 886) (784 048)
Improvements to investment properties (9 096) (824)
(80 982) (784 872)
FINANCING ACTIVITIES
Share capital issued - 2
Share premium arising on listing - 33 236
Debentures issued 80 453 762 528
Debenture issue expenses (8 571) -
71 882 795 766
Net (decrease)/increase in cash and
cash equivalents (18 715) 45 008
Cash and cash equivalents at
beginning of the year 45 008 -
CASH AND CASH EQUIVALENTS
AT END OF THE year 26 293 45 008
STATEMENT OF CHANGES
IN EQUITY Share Share Distributable
(R"000) capital premium reserves Total
On listing 15 November 2001 2 33 236 - 33 238
Profit attributable to
linked unitholders - - 76 76
Dividends distributed - - (76) (76)
Balance at 31 March 2002 2 33 236 - 33 238
Profit attributable to
linked unitholders - - 92 92
Dividends distributed - - (79) (79)
Balance at 31 March 2003 2 33 236 13 33 251
1. OTHER INFORMATION Reviewed Audited
31.03.2003 31.03.2002
- Linked units in issue 168 596 335 152 505 805
- Weighted average linked units
in issue 157 002 337 152 505 805
- Net asset value (cents per
linked unit) (based on book values) 514 521
- Listed market price
(cents per linked unit) 525 440
- Premium/(Discount) to net asset value 2,1% (15,5%)
- Vacancy factor (based on lettable area) 6,2% 5,7%
2. REVIEW BY INDEPENDENT AUDITORS
The company"s auditors, KPMG Inc., have reviewed these preliminary financial
results. The unqualified review report is available at the company"s registered
office.
3. NOTES TO THE FINANCIAL RESULTS
3.1 Accounting policies
These financial results are prepared in accordance with South African
Statements of Generally Accepted Accounting Practice and are consistent with
those applied in the preparation of the audited financial results for the
previous period.
3.2 Headline earnings and distribution attributable to linked unitholders
The headline earnings and distribution per linked unit for the period 1
April 2002 to 31 March 2003 is calculated as follows:
Cents
per unit
R"000 (weighted)
Debenture interest 97 679 62,21
Dividends 79 0,05
Distribution to linked unitholders 97 758 62,26
Undistributed income 13 0,01
Earnings attributable to
linked unitholders 97 771 62,27
Amortisation of debenture
issue expenses 31 0,02
Headline earnings attributable
to linked unitholders 97 802 62,29
Distributions per linked unit
Cents
R"000 per unit
For the period 1 April 2002
to 30 September 2002 48 047 31,50
For the period 1 October 2002
to 20 December 2002 21 722 14,25
For the period 21 December 2002
to 31 March 2003 27 989 16,60
97 758 62,35
3.3 Contingent liabilities and commitments
Guarantees
Guarantees in lieu of municipal service deposits amount to R1,4 million
(2002: R1,2 million).
Capital expenditure
Capital expenditure amounting to R19,8 million has been authorised for the
acquisition of one new property and for improvements. This expenditure will be
funded through existing resources and through the issue of units for property.
R14,6 million was settled on 7 April 2003 through the issue of units for
property.
Potential Put commitment and Call Option
AC 133: The accounting statement on Financial Intruments in terms of
Generally Accepted Accounting Practices is effective for the year ends
commencing on or after 1 July 2002. The following disclosure is made in
anticipation of this accounting statement for unitholder information.
Potential Put Option commitment
The fair value of the Put option that Whirlprops 33 (Pty) Ltd has on S A
Retail at 31 March 2003 on the assumption that the Put will be exercised by
Whirlprops 33 (Pty) Ltd in November 2006 is a shortfall of R26,5 million or a
decline in the net asset value by 15,67 cents per unit or 3,05%.
Potential Call Option commitment
It is not the intention of management to exercise the call option that it
has with Whirlprops 33 (Pty) Ltd in the immediate future.
4. COMMENTARY ON RESULTS AND PORTFOLIO
4.1 Financial results
S A Retail"s financial results for the first full year of trading are set
out above. The results incorporate the investment of R73,2 million made in six
convenience centres acquired in December 2002.
A total distribution of R97,8 million or 62,35 cents per linked unit has
been achieved for the year ended 31 March 2003. This distribution gives rise to
a yield of 12,5% per annum on the initial listing price of 500 cents per linked
unit. Taking into account the lack of growth within the South African economy
and the generally more difficult conditions experienced by retail property
owners, these results are considered satisfactory. Rental levels have remained
flat during the period and should rise in a more buoyant economy.
4.2 Property portfolio
S A Retail was established in November 2001 to acquire, secure and manage
sustainable income from a focused retail portfolio largely of convenience
shopping centres in stable communities. Favourable trading results of S A"s
largest supermarket chains, Pick "n Pay and Shoprite, accounts for 30% of S A
Retail"s rental income, and these have yielded higher than budgeted turnover
rentals. However, the trading conditions experienced by smaller line shop
tenants have resulted in greater than expected incidences of tenant failure.
This has given rise to S A Retail incurring bad debts amounting to 1,8% of gross
revenue for the period under review. The current portfolio vacancy factors is
6,2% which is below the industry SAPIX benchmark of 7,1% for convenience retail.
The portfolio expense ratio of 26,7% is below the industry SAPIX benchmark.
In December 2002 S A Retail acquired an undivided half share of a portfolio
of six properties worth R146,4 million. The properties are all community based
shopping centres ranging from 4 500 m2 to 15 000 m2 in lettable areas and are
anchored by major national retailers on long leases. The exposure to national
tenants is some 60% of the total area and this underpins the quality of the
income stream and the steady growth that is anticipated from the portfolio.
Westwood Village Shopping Centre in Boksburg was acquired in April 2003 for
R14,6 million. The profile of the property is very similar to that described
above. These properties were acquired at an average yield of 14%.
An extension of the Hilton Quarry Spar has been completed at a cost of R4,2
million. Furthermore, a refurbishment is currently underway at Eikestad Mall at
a cost of R4,5 million. Proposals are currently being considered for major
extensions and improvements to the East Rand Galleria.
There are two properties, Cambridge Downs office park in Sandton and Kyalami
Downs business park in Midrand, which are being marketed for disposal from the
portfolio. These two properties were acquired as part of a portfolio and their
sale is consistent with the company"s investment philosophy.
4.3 Prospects
S A Retail seeks to expand its property portfolio to greater than R1,2
billion in the short term by taking advantage of appropriate acquisition
opportunities always being mindful of the impact on earnings in the short and
long-term.
Notwithstanding the current high interest rate environment, S A Retail is
currently well positioned to acquire prime retail properties. It has the
propensity to expand its asset base and acquire yield enhancing quality
investments. Accordingly, management are currently reviewing potential
acquisitions, including co-ownership in regional shopping centres where
opportunities and appropriate yield enable investment in these flagship centres.
The stimulatory budget released by the Department of Finance earlier this
year bodes well for the retail sector. Furthermore, the likelihood of falling
interest rates over the next 12 months will further strengthen the property
sector. S A Retail is well positioned to take advantage of rising rentals in a
growing economy.
5. DECLARATION OF DIVIDEND AND INTEREST PAYMENT NUMBER 4
Notice is hereby given that dividend number 4 of 0,02 cents per ordinary share
and interest of 16,58 cents per debenture totalling 16,60 cents per linked unit
have been declared in respect of the income distribution period 21 December 2002
to 31 March 2003.
Last date to trade "cum" distribution Friday, 23 May 2003
Units will trade "ex" distribution Monday, 26 May 2003
Record date to participate in the distribution Friday, 30 May 2003
Payment of the dividend and debenture interest Monday, 2 June 2003
Linked unit certificates may not be dematerialised or rematerialised between
Monday, 26 May 2003 and Friday, 30 May 2003, both days inclusive.
By order of the board
S A RETAIL PROPERTIES LIMITED
6 May 2003
Registered office:
Marriott at Kingsmead, Kingsmead Office Park, Durban, 4001
(PO Box 207, Durban, 4000) Tel: (031) 366 1111
Auditors:
KPMG Inc., 20 Kingsmead Boulevard, Kingsmead Office Park,
Durban, 4001 (PO Box 1496, Durban, 4000) Tel: (031) 327 6000
Transfer secretaries:
Computershare Investor Services Limited,
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107) Tel: (011) 370 7700
Property Asset Managers
Marriott Property Services
registered auditors and accountants
KPMG
Sponsor
EXCHANGE SPONSORS (PTY) LIMITED
