| Thu 21 Aug 2003, 15:26 | | Audited Financial Results For The Year Ended 30 J |
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Pangbourne - Audited Financial Results For The Year Ended 30 June 2003
Pangbourne Properties Limited
(Incorporated in the Republic of South Africa)
Registration No. 1987/002352/06
Share Code: PAP
ISIN Code: ZAE000005252
("Pangbourne")
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2003
Increase in core earnings from 86,09 cents to 89,23 cents
Increased distribution from 88 cents to 89 cents
Increase in cash generated to 11,6 million for the period
Increase in occupancies from 82,7% to 90,7%
Issued share capital
176 033 514 (2002: 176 114 271) ordinary shares of 1 cent each
Issued debentures
1 584 301 626 (2002: 1 585 028 439) unsecured variable rate debentures of 50
cents each
Issued combined units
176 033 514 (2002: 176 114 271)
Weighted average combined units
175 981 149 (2002: 105 029 358)
Abridged consolidated income statement
Year ended
R"000 30.06.03 30.06.02
Revenue 238 514 166 135
Profit from operations 155 382 103 425
Revaluation of investment properties 41 182 22 131
Revaluation of listed investments 13 974 (6 909)
Investment income 37 332 10 625
Net goodwill amortised and realised 24 894 8 965
Net profit / (loss) on disposal of
investment properties and investments 21 611 (7 621)
Terminated operations - (6 201)
Profit before interest and taxation 294 375 124 415
Interest received 8 081 8 875
Finance costs (52 495) (40 132)
Embedded derivative marked to market (16 784) -
Profit before taxation and distributions
to unitholders 233 177 93 158
Debenture interest - debt portion (81 860) (59 286)
Amortised debenture interest (1 990) (1 453)
Profit before taxation 149 327 32 419
Taxation* (28 461) (8 468)
Share of losses from associate (340) -
Profit for the period 120 526 23 951
Opening accumulated losses (32 114) (5 507)
As previously stated - 22 321
Deferred tax - debt portion - (23 029)
Amortised interest - (4 799)
Deferred tax - arising on debt portion
of issue - (25 700)
Reversal of notional taxation on debenture
interest equity portion 21 509 9 863
Distribution to unitholders - debenture
interest equity portion (71 698) (32 878)
Distribution to unitholders -
Dividend portion (3 071) (1 843)
AC133 Embedded derivative transition
adjustment net of deferred taxation 4 313 -
Adjustment in fair value of long-term
investments net of deferred taxation (5 334) -
Closing accumulated profits (losses) 34 131 (32 114)
*Provision for taxation, including the
provision for notional tax of R21,5 million
which is reversed in the statement of
changes in equity, is made in accordance
with AC102.
Diluted and non-diluted
Headline earnings per unit (cents) 28,58 28,26
Core earnings per linked unit (cents)** 89,23 86,09
Distribution per unit (cents) 89,00 88,00
**Core earnings per linked unit is an
accurate reflection of the company"s
cash profits for the year available
for distribution.
Diluted and non-diluted
Earnings per share (cents) 39,97 0,53
Distribution per share (cents) 1,75 1,05
Distributions to unitholders (R"000)
Debenture interest debt portion 81 860 59 286
Debenture interest equity portion 71 698 32 878
Dividend 3 071 1 843
Total distributions 156 629 94 007
Accounting policies
The accounting policies stated in the 2003 annual report have been consistently
applied and comply with the South African Statements
of GAAP.
One third on a rotational basis of investment properties are valued by an
independent valuer who is a member of the Institute of Valuers, on an open
market basis, with the remaining two thirds being valued by the directors.
In the current year the group has adopted Financial Instruments: Recognition and
Measurement (AC133). The principal effect of the adoption of AC133 is the
classification of investments into investments held-for-trade and investments
available-for-sale (Long-term investments), as well as the fair valuing of
financial assets and liabilities including derivatives.
Abridged consolidated balance sheet
As at
R"000 30.06.03 30.06.02
Assets
non-current assets
Property, plant and equipment 1 207 172 1 261 483
Net goodwill (37 776) (67 876)
Investments in and loans to associates 117 306 163
Long-term loans 21 724 30 831
Deferred taxation asset 12 724 8 685
current assets
Bank and cash/(overdraft) 11 674 (925)
Receivables 62 457 60 743
Other receivables-sale of assets 18 000 -
Investments held-for-trade 162 592 63 607
Current portion of long-term loans 1 640 2 410
Total assets 1 577 513 1 359 121
Equity and liabilities
Capital and reserves 298 594 232 601
*Debentures debt portion 659 610 657 620
Other interest-bearing borrowings 391 772 272 354
Embedded derivative financial instruments 10 623 -
current liabilities
Payables 25 406 27 370
Deferred taxation liability 61 883 50 558
Current portion of interest-bearing
borrowings 43 462 76 005
Unitholders for distribution 86 163 42 613
1 577 513 1 359 121
*The split of debentures between debt and
equity portions, does not represent the legal
substance of the debentures, but has been
done in order to comply with GAAP
Net debt excluding debenture debt portion:
income earning assets (%) 28,2% 25,3%
Net asset value per unit (cents) excluding
negative goodwill and including debenture
debt portion 577 557
Abridged consolidated cash flow statement
Year ended
R"000 30.06.03 30.06.02
Cash generated from operations 134 732 56 209
Net finance costs (43 366) (31 257)
Investment income 37 332 10 625
Taxation paid (361) (1 592)
Cash flows from operating activities
before distribution to unitholders 128 337 33 985
Distributions to unitholders (113 079) (90 173)
Cash flows from operating activities 15 258 (56 188)
Cash flows from investing activities (89 282) 11 102
Cash flows from financing activities 86 623 44 275
Net increase (decrease) in cash and
cash equivalents 12 599 (811)
Cash and cash equivalents at beginning
of period (925) (114)
Cash and cash equivalents at end of period 11 674 (925)
Movement in unitholders" funds
Year ended
R"000 30.06.03 30.06.02
Unitholders" interest at beginning
of period 232 601 152 647
As previously stated - 466 034
Debt equity split - (285 559)
Deferred tax - debt portion - (23 029)
Amortised interest - (4 799)
Net profit for the period 120 526 23 951
Units issued - 2 April 2002 - 208 066
Off-set of treasury units - (28 979)
Acquistion of CBD and Pioneer funds - (72 237)
Share issue costs - (289)
AC 133 transition adjustment 6 161 -
Deferred tax on transition adjustment (1 848) -
Arising on purchase of treasury shares
during the year (922) -
Arising on sale of treasury shares during
the year 509 -
Reversal of notional taxation on debenture
interest equity portion 21 509 9 863
Distribution to unitholders - debenture
interest equity portion (71 698) (32 878)
Distribution to unitholders - dividend
portion (3 071) (1 843)
Profit on sale of treasury shares 161 -
Deferred taxation on debentures and
amortised debenture interest - (25 700)
Adjustment in fair value of long-term
investments (6 275) -
Deferred tax on adjustment in fair value
of long-term investments 941 -
Unitholders" interest at end of period 298 594 232 601
Reconciliation of earnings to headline earnings
Profit
before Net
taxation Taxation profit
R"000 R"000 R"000
Profit before tax after share of
losses from associate 148 987 (28 461) 120 526
Adjustments:
Revaluation of investment
properties (41 182) 6 177 (35 005)
Net goodwill amortised and
realised (24 894) - (24 894)
Net profit on disposal of
investment properties (12 822) 1 923 (10 899)
Adjustments for associate 223 353 576
Headline earnings as per South
African Statements of GAAP 70 312 (20 008) 50 304
Headline earnings as per South
African Statements of GAAP per
linked unit (cents) 28,58
Reconciliation of headline earnings
to core earnings per linked unit
Headline earnings as per South
African Statements of GAAP 70 312 (20 008) 50 304
Unrealised revaluation of listed
investments (13 974) 4 192 (9 782)
Unrealised embedded derivative
marked to market 16 784 (5 035) 11 749
Debenture interest - Debt portion 81 860 - 81 860
Notional taxation on debenture
interest - equity portion - 21 509 21 509
Debenture amortised interest 1 990 (597) 1 393
Core earnings 156 972 61 157 033
**Core earnings per linked
unit (cents) 89,23
**Core earnings per linked unit is an accurate reflection of the companies cash
profits for the year available for distribution.
Segmental information
Property Property Transfer
R"000 Property stock stock duty
Primary segment management trading investments finance*
Rentals received 227 928 - - -
Fees received - - - 3 470
Total revenue 227 928 - - 3 470
Segmental results
Profit before taxation
and distribution to
unitholders 236 599 48 648 11 447 832
236 599 48 648 11 447 832
Segmental information (continued)
R"000 Bridging Agents
Primary segment finance* commission* Corporate Total
Revenue
Rentals received - - 227 928
Fees received 2 201 4 915 - 10 586
Total revenue 2 201 4 915 - 238 514
Segmental results
Profit before taxation
and distribution to
unitholders 528 1 179 (66 056) 233 177
528 1 179 (66 056) 233 177
Segmental revenue and expenses
Revenue and expenses that are directly attributable to a segment are allocated
to those segments.
Expenses not directly attributable to a segment are allocated to the corporate
segment.
*Segment results of Paforma Property Finance (Pty) Ltd.
OPERATIONAL REVIEW
Financial disclosure
South African Statements of Generally Accepted Accounting Practice do not take
into account the special circumstances of the relationships between units and
debentures of property loan stock companies. The application of certain
statements and the treatment of certain aspects of the loan stock structure can
be misleading and confusing to unitholders. The implementation of AC133 has
nullified the objectives of management to remove the uncertainty of interest
rate fluctuations and to provide a guaranteed cost of borrowings against the
yield of portfolios. We have inserted notes and reconciliations into the
financial statements and have introduced "core earnings" as described in the
reconciliation of earnings to headline earnings to reflect and clarify financial
information for unitholders.
This document complies with South African Statements of GAAP applicable to
Interim Financial Reporting.
Results
Core earnings per linked unit have increased by 3,6%. Total distribution for the
year has been increased to 89 cents per unit (2002: 88 cents per unit).
The past year has been a challenging one for property owners as high interest
rates and a strong Rand take their toll on tenant activities. The decision in
2000 to diversify the portfolio away from the Gauteng domination to the greater
Durban area has proved both timely and successful as rentals and occupancies in
this area have firmed and increased. Vacancies have decreased in areas where
attention has been given to establishing a secure environment.
The increase in revenue also results from the accounting for the full year of
the acquisition of CBD and Pioneer properties. Investment income stems from the
ApexHi units exchanged for properties in two separate transactions reported
previously.
Occupancies
Occupancies increased from 82,7% at 30 June 2002 to 90,7% at 30 June 2003.
Improved demand for industrial space was evident in the second half of the year
and some notable lettings were achieved in this period. These will benefit the
company in the coming year.
iFOUR
In 2003 Pangbourne acquired a strategic holding of 34,0% in iFour Properties.
iFour was floated on the JSE in June 2002 with a portfolio of Agrade buildings
largely focused on the Sandton office area. The company was seen to offer value
as its distribution yield reflected its lack of critical mass. Since the year
end it was announced that Pangbourne will be selling a portfolio of properties
totalling R250 million to iFour in return for an increased holding in that
company. Simultaneously, iFour is acquiring further properties totalling R500
million which will result in iFour holding R1,5 billion of A grade properties
spread across the office and commercial sectors. As a result of these
transactions, Pangbourne will hold 48,8% of iFour and manage the property
portfolio. Further details of this transaction will be circulated to unitholders
shortly.
Asset management
The past year has seen important realignments of the portfolio resulting from
the prior year acquisition of the CBD and Pioneer properties. Eighteen downtown
Johannesburg properties acquired for R96 million in the CBD transaction, were
sold for R137 million to ApexHi in exchange for ApexHi units on a yield exchange
basis. A further eight smaller properties were disposed of for a total of R15
million.
Pangbourne acquired 14 properties in the Durban area at a forward yield of 14%
for R96,5 million. Two additional properties, one in Durban at R16,4 million
yielding 14,5% and one in Pretoria at a cost of R16,5 million yielding 15%, were
added to the portfolio. The Crescent at Umhlanga Ridge opened for trading in
September and trading volumes have been on budget with occupancies at 97%.
Additions to this centre are to begin shortly to the upper level to accommodate
a golf shop.
Valuation of properties
A comprehensive external valuation of the properties has been concluded by
Norman Griffiths & Associates. The properties have been valued on an open market
basis at R1 200 million, giving rise to a net surplus of R41,2 million.
Debt management
Borrowings, excluding debenture debt portion at 30 June 2003 amounted to R435
million at an average interest cost of 12,7%. At 30 June 2003, 100% of
borrowings were on fixed rate contracts. Net borrowings currently represent
28,2% of income earning assets, well below the 40% limit set by the board.
Paforma
Paforma has contributed a profit of R2,8 million for the year from an average
book of R22 million. Improved debtor control and a revised marketing strategy
have both contributed to the turnaround at Paforma.
Prospects
The company is well poised to take advantage of the upturn in the economy with a
well-balanced portfolio and an annuity income from management fees. Interest
rate cuts are anticipated over the next twelve months which will be positive for
Pangbourne. However, as the major part of the debt has been fixed for the next
three years, the benefit that will accrue to the company will result from
increased demand for lettable space flowing from buoyant macro economic
activity.
Distributions
Unitholders are referred to the announcement dated 25 June 2003 which gave
details of the final distribution of 48,0 cents per combined unit, comprising
dividend number 34 of 0,9412 cents per share and interest on debentures
calculated at 47,0588 cents per combined unit. The last day to trade in order to
receive the distribution is Friday, 3 October 2003 and the combined units will
commence trading ex distribution on Monday, 6 October 2003 with the record date
being Friday, 10 October 2003. Payment of the dividend and debenture interest of
48,0 cents per combined unit will be effected on Monday, 13 October 2003.
Combined unit certificates may not be dematerialised or rematerialised between
Monday, 6 October 2003 and Friday, 10 October 2003.
P L Campbell Chairman
A M A Campbell CEO
Pangbourne Properties Limited, 2nd Floor, Pangbourne House, 382 Jan Smuts
Avenue, Craighall, Johannesburg
21 August 2003.
These results have been audited by Deloitte & Touche and their unqualified audit
report is available for inspection at the company"s registered office
Date: 21/08/2003 02:34:23 PM Produced by the JSE SENS Department
