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Octodec - Reviewed Results of the Group for the year ended 31 August 2003
Octodec investments limited and its subsidiaries
(Incorporated in the Republic of South Africa)
(Registration number 1956/002868/06)
("Octodec")
(Share code: OCT
ISIN: ZAE0000051040)
Notice to linked unitholders
Distribution up by 8,2% to 47,5 cents per linked unit.
The directors report the reviewed results of the group for the year ended 31
August 2003 set out below, together with comparisons with the results for the
corresponding year ended 31 August 2002.
Consolidated income statement
Reviewed Audited
% 2003 2002
change R"000 R"000
Turnover (rental income) 17,4 105 957 90 288
Net rental from properties 13,6 72 019 63 409
Interest received 4 197 3 981
Capital profit: disposals of
property 1 125 275
Adjustment to current valuation of
investment properties 48 362 7 007
Acquisition of loan account at a
discount 730 2 164
126 433 76 836
Interest paid 16,6 43 168 37 021
Depreciation 274 177
Profit before debenture interest 109,4 82 991 39 638
Debenture interest 7,9 32 095 29 732
Profit before taxation 50 896 9 906
Taxation 4 311 3 532
Profit attributable to ordinary
shareholders 46 585 6 374
Earnings per linked unit (cents)
(basic and diluted) 117,9 115,9 53,2
Headline earnings per linked unit
(cents) (basic and diluted) 7,6 47,4 44,1
Distribution per linked unit (cents)
Dividends 0,23 0,11
Interest 47,27 43,79
Total 8,2 47,50 43,90
Abridged consolidated balance sheet
Reviewed Audited
2003 2002
R"000 R"000
ASSETS
Non-current assets
Investment properties 660 639 603 762
Investments
- listed 13 934 9 684
- associated company 9 695 7 801
Current assets 7 825 7 404
Total assets 692 093 628 651
Equity and liabilities
Share capital 11 096 11 096
Non-distributable reserve 98 324 48 205
Accumulated profit 327 390
Ordinary shareholders" interest 109 747 59 691
Debentures 198 513 198 513
Linked unitholders" interest 308 260 258 204
Outside shareholders" interest - 10 761
Interest-bearing borrowings 336 714 325 936
Deferred taxation 7 766 3 338
Current liabilities
- interest-bearing 3 799 1 541
- non-interest-bearing 35 554 28 871
Total equity and liabilities 692 093 628 651
Linked units in issue 67 896 223 67 896 223
Net asset value per linked unit (cents) 454 380
Abridged consolidated cash flow statement
Reviewed Audited
2003 2002
R"000 R"000
Cash flow from operating activities
Net rental income from properties 71 745 63 233
Adjustment for:
- Depreciation 274 177
- Working capital changes 2 745 6 483
Cash generated from operations 74 764 69 893
Investment income 4 197 3 981
Finance costs (43 168) (37 021)
Taxation paid (298) 113
Distribution to linked unitholders paid (30 010) (32 081)
Net cash inflow from operating activities 5 485 4 885
Cash flow from investing activities
Investing activities (16 231) (309 751)
Proceeds from sale of fixed assets 8 566 1 750
Net cash outflow used in investing
activities (7 665) (308 001)
Cash flow from financing activities 2 602 301 721
Net increase/(decrease) in cash and cash
equivalents 422 (1 395)
Cash and cash equivalents at beginning
of year (432) 963
Cash and cash equivalents at end of year (10) (432)
Statement of changes in equity
Non-distri- Accumu-
Share butable lated
capital reserve profit Total
R"000 R"000 R"000 R"000
Balance at 1 September
2001 11 096 42 013 283 53 392
Profit attributable to
ordinary shareholders 6 374 6 374
Dividends paid (75) (75)
Transfer to non-distributable
reserve 6 192 (6 192) -
Balance at 1 September
2002 11 096 48 205 390 59 691
Restated - valuation Listed
Investment - (183) - (183)
Restated as at 1 September
2002 11 096 48 022 390 59 508
Profit attributable to ordinary
shareholders 46 585 46 585
Dividends (143) (143)
Revaluation Listed Investment,
net of capital against
tax - 3 797 - 3 797
Transfer to non-distributable
reserve - 46 505 (46 505) -
- Capital profit: disposal of
property 1 125 (1 125) -
- Acquisition of loan account
at a discount 730 (730) -
- Adjustment to valuation of
investment properties 48 362 (48 362) -
- Deferred capital gains tax (3 712) 3 712 -
Balances at 31 August
2003 11 096 98 324 327 109 747
Reconciliation of headline earnings to earnings per linked unit
Reviewed Audited
Cents 2003 2002
Headline earnings per linked unit 47,4 44,1
Capital profit: disposals of property 1,7 0,4
Acquisition of loan account at a discount 1,1 3,2
Adjustment to valuation of Investment properties
71,2 10,3
Deferred capital gains tax - revaluation investmentproperties
(5,5) (4,8)
Earnings per linked unit 115,9 53,2
Notex to the financial statements
1. The same accounting policies and methods of computation were followed as in
the financial statements of 31 August 2002 and are in accordance with South
African Statements of Generally Accepted Accounting Practice. The accounting
standard on financial instruments AC 133 has been applied for the first time in
these results, but had no effect on the distribution per linked unit.
2. The company"s auditors, Deloitte & Touche have reviewed these preliminary
financial results. The unqualified review report is available at the company"s
registered office.
3. An amount of R5,6 million has been committed by the company in respect of
capital expenditure relating to the improvement of certain properties. These
developments will be financed by way of existing facilities as well as
additional funding from the company"s bankers.
4. Capital expenditure during the year amounted to R16,2 million, which includes
R0,3 million of capitalised interest. Adequate arrangements have been made to
finance these capital commitments.
5. Guarantees amounting to approximately R1,5 million have been issued to the
City of Tshwane Metropolitan Municipality in respect of electricity deposits for
various subsidiaries.
6. The company has bound itself as surety in favour of Nedbank Property Finance,
in respect of loans granted to an associated company, IPS Investments
(Proprietary) Limited, which at year-end amounted to R23,8 million.
7. In terms of AC 135 the company values its investment properties annually,
resulting in a fair value upward adjustment of R48,4 million.
Comments
1. Review of results
The final distribution of 24,3 cents per linked unit equates to a total
distribution of 47,5 cents (2002: 43,90 cents) per linked unit for the year
under review. This distribution represents an 8,2% increase on that paid in the
previous year and was achieved in an environment of weak property fundamentals.
Despite this, there was an increased demand for quality Pretoria CBD office and
retail space, and this together with the continued focus on tenant retention and
the refurbishment of a number of properties, resulted in an above average
performance for the year.
2. Property portfolio
Management continued to focus on increasing the quality of the property
portfolio, by disposing of underperforming assets and by the upgrading thereof.
Six properties were disposed of during the year for a total selling price of
R8,6 million. An amount of R10,1 million was spent on the upgrading of the
retail shopping centres, Killarney Mall and Elardus Park. The current vacancy
factor is approximately 8,0% (2002: 8,0%) of total potential rental income.
3. Interest risk management and borrowings
The total cost of funding is currently 12,3%, and 80% of the borrowings at year-
end are fixed. Opportunities to further manage the exposure of long-term
borrowing rates are currently being considered.
4. Prospects
The company is currently considering a number of acquisitions to acquire yield
enhancing quality investments as well as the refurbishment of certain of its
properties. This together with the growing demand for Pretoria CBD space bodes
well for the next financial year. Furthermore, the recent reductions in interest
rates will further enhance the company"s performance.
The directors expect that the distributable income for the period 1 September
2003 to 31 August 2004 will be not less than the current distribution of 47,5
cents. The company"s auditors, Deloitte & Touche, have examined and reviewed the
basis and assumptions underlying the forecast above. A copy of their report is
available for inspection.
Declaration of dividend No 27 and interest payment ("the distribution")
Notice is hereby given that dividend Number 27 of 0,12 cents (2002: 0,10 cents)
per ordinary share has been declared together with interest for the period 1
March 2003 to 31 August 2003 of 24,18 cents (2002: 20,9 cents) per debenture
payable to linked unitholders recorded in the register on Friday 24 October
2003. The last date to trade "CUM" distribution is Friday, 17 October 2003.
The units will commence trading "EX" distribution on Monday 20 October 2003.
Payment date will be Monday, 27 October 2003.
No dematerialisation or rematerialisation of linked unit certificates may take
place between Monday, 20 October 2003 and Friday, 24 October 2003, both days
inclusive.
By order of the Board
City Property Administration (Proprietary) Limited
30 September 2003
A Wapnick (Chairman)
JP Wapnick (Managing director)
Octodec Investments Limited
and its subsidiaries
(Incorporated in the Republic of South Africa)
Registration number 1956/002868/06
Share code: OCT ISIN: ZAE000005104
Directors
A Wapnick (Chairman), JP Wapnick (Managing director), MJ Holmes, RJ Inggs, J
Pollack, MZ Pollack, S Wapnick
Registered Office
Downies Building, 373 Proes Street, Pretoria 0002
PO Box 15, Pretoria 0001
Tel: (012) 326-8811
Fax: (012) 325-2209
Transfer Secretaries
Computershare Limited (Reg No: 1958/003546/06)
70 Marshall Street, Johannesburg 2001 PO Box 61051, Marshalltown 2107
Tel: (011) 370-7700
Fax: (011) 688-7712
City Property
Property Asset Managers
Date: 30/09/2003 04:47:04 PM Produced by the JSE SENS Department
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