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SA Retail Properties Limited - Unaudited Interim Results And Distribution
Announcement
SA RETAIL PROPERTIES LIMITED
(Registration number 1999/025764/06)
Share code: SRL ISIN: ZAE000034328
Website: www.saretail.co.za
UNAUDITED INTERIM RESULTS AND DISTRIBUTION ANNOUNCEMENT FOR THE SIX MONTHS ENDED
30 SEPTEMBER 2003
BALANCE SHEET (R"000)
Unaudited Unaudited Audited
30.09.2003 30.09.2002 31.03.2003
ASSETS
Non-current assets
Investment properties 907 700 786 583 865 854
Current assets
Trade and other receivables 13 978 11 810 10 728
Cash resources and short-term
investments 62 865 50 838 26 293
76 843 62 648 37 021
TOTAL ASSETS 984 543 849 231 902 875
EQUITY AND LIABILITIES
Capital and reserves 25 787 33 248 33 251
Non-current liabilities
Debentures 864 075 762 528 834 441
Derivative - fair value of Put option 26 900 - -
Deferred taxation 3 584 16 102
894 559 762 544 834 543
Current liabilities
Trade and other payables 10 163 5 342 7 089
Taxation 3 45 3
Unitholders for distribution 54 031 48 052 27 989
64 197 53 439 35 081
TOTAL EQUITY AND LIABILITIES 984 543 849 231 902 875
INCOME STATEMENT (R"000) Unaudited Unaudited Audited
01.04.2003 01.04.2002 01.04.2002
to to to
Notes 30.09.2003 30.09.2002 31.03.2003
Revenue 77 373 62 432 130 834
Net rental from properties 51 600 45 143 92 660
Interest earned 2 582 2 943 5 216
Amortisation of debenture issue
expenses (60) - (31)
Net profit before fair value adjustments 54 122 48 086 97 845
Net surplus revaluation of investment
properties 19 405 - -
Revaluation of investment properties 22 830 - -
Deferred capital gains tax (3 425) - -
Deficit on revaluation of Put option (400) - -
Net profit before debenture interest
and taxation 73 127 48 086 97 845
Debenture interest (53 994) (48 009) (97 679)
Net profit before taxation 19 133 77 166
Taxation (62) (29) (74)
Net profit 19 071 48 92
Distribution per linked unit (cents) 2.2
Interest 31,23 31,48 62,30
Dividend 0,02 0,02 0,05
Total 31,25 31,50 62,35
Headline earnings per linked unit 2.2
(cents) (weighted) (0,19) 0,03 0,11
Earnings per linked unit (cents) 2.2
(weighted) 11,03 0,03 0,11
CASH FLOW STATEMENT (R"000)
Unaudited Unaudited Audited
01.04.2003 01.04.2002 01.04.2002
to to to
30.09.2003 30.09.2002 31.03.2003
OPERATING ACTIVITIES
Cash received from tenants 74 123 59 287 128 771
Cash paid to suppliers and employees (22 699) (18 077) (37 215)
Cash generated by operating activities 51 424 41 210 91 556
Interest earned 2 582 2 943 5 216
Distributions to linked unitholders (27 987) (36 603) (106 372)
Taxation paid (5) (9) (15)
26 014 7 541 (9 615)
INVESTING ACTIVITIES
Acquisition of investment properties (14 500) - (71 886)
Improvements to investment properties (4 516) (1 711) (9 096)
(19 016) (1 711) (80 982)
FINANCING ACTIVITIES
Debentures issued 31 484 - 80 453
Debenture issue expenses (1 910) - (8 571)
29 574 - 71 882
Net increase/(decrease) in cash and cash
equivalents 36 572 5 830 (18 715)
Cash and cash equivalents at beginning
of the period 26 293 45 008 45 008
CASH AND CASH EQUIVALENTS
AT END OF THE PERIOD 62 865 50 838 26 293
STATEMENT OF CHANGES IN EQUITY Share
(R"000) Share premium &
capital reserves Total
Balance at 31 March 2002 2 33 236 33 238
Net profit - 92 92
Dividend distributed - (79) (79)
Balance at 31 March 2003 2 33 249 33 251
Adjustment to opening balance
- Transitional provision in terms of
AC 133 in respect of fair value of
Put option at 31 March 2003 - (26 500) (26 500)
Restated opening balance at
31 March 2003 2 6 749 6 751
Net profit - 19 071 19 071
Dividend distributed - (35) (35)
Balance at 30 September 2003 2 25 785 25 787
1. OTHER INFORMATION Unaudited Unaudited Audited
01.04.2003 01.04.2002 01.04.2002
to to to
30.09.2003 30.09.2002 31.03.2003
- Linked units in issue 174 893 039 152 505 805 168 596 335
- Weighted average linked units
in issue 172 893 039 152 505 805 157 002 337
- Net asset value (cents per linked
unit) (including distribution yet
to be paid) 540 553 531
- Listed market price (cents per
linked unit) 540 480 525
- Discount to net asset value 0,0% 13,2% 1,1%
- Vacancy factor (based on lettable
area) 5,6% 6,2% 6,2%
2. NOTES TO THE FINANCIAL RESULTS
2.1 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. The
accounting statement on financial instruments - AC 133 has been applied for the
first time in these results, but has had no impact on the distributable income
recorded below.
2.2 Earnings, headline earnings and distribution attributable to linked
unitholders
The earnings, headline earnings and distribution per linked unit for the period
1 April 2003 to 30 September 2003 are calculated as follows:
Cents
R"000 per unit
Net profit (earnings) 19 071 11,03
Adjustments for:
Net surplus on revaluation of investment properties (19 405) (11,22)
Headline earnings (334) (0,19)
Debenture interest 53 994 31,23
Deficit on revaluation of Put option 400 0,23
Undistributed income for the period (31) (0,02)
Distribution to linked unitholders 54 029 31,25
Earnings and headline earnings per linked unit in terms of comparative results
have been restated to now include the deduction of debenture interest.
2.3 Contingent liabilities and commitments
Guarantees
Guarantees in lieu of municipal service deposits amount to R1,7m.
Capital expenditure
Capital expenditure amounting to R70,3m has been authorised for the acquisition
of one new property and for improvements. This expenditure will be funded
through a combination of debt and from proceeds on disposals of certain
properties.
3. COMMENTARY ON RESULTS
3.1 Results
S A Retail"s distributable income for the six months ending 30 September 2003
amounted to 31,25 (30.09.2002: 31,50) cents per linked unit. This distribution
is in line with management"s expectations and reflects the difficult trading
conditions experienced by line shop tenants within the portfolio. The impact of
this has been evident in the provision for bad debts. Furthermore the interest
earnings are lower as a result of lower interest rates and the investment of
capital cash resources to improve existing properties, the benefits of which
will be felt going forward.
3.2 Property portfolio
In April 2003 S A Retail acquired Westwood Village Shopping Centre in Boksburg
for R14,5m at an initial yield of 14,0%. This four-year-old convenience shopping
centre serves the suburban residents of Benoni, Lakefield and Westdene and is
anchored by a Superspar on a 10-year lease.
Significant upgrades that have commenced in the six months to 30 September 2003
include a R4,5m refurbishment of Eikestad Mall; the construction of a R1,8m
Woolworths Food Store at Highland Mews, Witbank; the conversion of the Pick "n
Pay at Coachman"s Crossing from a Pick "n Pay Fresh to a Pick "n Pay Family
Store at a capital cost of R2,9m. A R40m redevelopment of Tokai Shopping Centre,
Cape Town in which S A Retail has a 50% undivided share has commenced. This
redevelopment will incorporate a new Pick "n Pay store on a 15-year lease. This
programme of upgrading existing centres is designed to generate the maximum
possible income from each property.
The current portfolio vacancy factor of 5,6% compares favourably with the
industry average of 6,6% reported by SAPIX for convenience shopping centres. The
portfolio expense ratio is reported at 30,6% compared with the industry average
of 40,6% reported by SAPIX for convenience shopping centres. 59,0% of S A
Retail"s income is derived from South Africa"s national retailers. This reflects
the robust nature of the underlying income. The majority of the expiring leases
in 2003 thus far have been renewed on favourable terms.
Subsequent to 30 September 2003, S A Retail concluded an agreement to acquire
Town Square Shopping Centre in Constantia Kloof in the Northern Suburbs of
Gauteng for R49m at an initial yield of 11,5%. This property is anchored by
Woolworths on a 10-year lease. This acquisition is in line with the company"s
investment criteria of ensuring sustainable long-term earnings and capital
growth by maintaining a premier quality portfolio.
S A Retail has recently disposed of two properties which do not meet with
investment criteria. These include The Circle in Somerset West and Witbank
Centre. These properties will realise R44,4m. Plans are currently underway to
market a further two non-core properties in Gauteng.
3.3 Valuations
In conformity with accounting standards the portfolio is valued at each
reporting date. The portfolio was revalued by directors at R907,7m. This
represents a 2% or R19,4m increase in carrying value after providing for
deferred capital gains tax.
3.4 Deficit on revaluation of fair value of Put commitment and Call option
In terms of AC 133: The accounting statement on financial instruments, the Put
commitment and Call option that exists between S A Retail and Whirlprops 33
(Pty) Ltd has been fair valued at 30 September 2003.
Put option commitment
The fair value of the Put option that Whirlprops 33 (Pty) Ltd has on S A Retail
at 30 September 2003 on the assumption that the Put option will be exercised by
Whirlprops 33 (Pty) Ltd in November 2006 is a shortfall of R26,9m (15,4 cents
per linked unit or 2,9%). The accounting standard requires the potential
unrealised liability to be recognised on balance sheet.
In terms of the transitional provisions of the accounting statement, R0,4m of
the fair value adjustment has been charged to the income statement in the
current period and R26,5m, being the fair value adjustment at 31 March 2003 has
been charged against opening reserves in the balance sheet.
This treatment has had no effect on distributable income.
Call option commitment
It is not the intention of management to exercise the Call option that it has on
Whirlprops 33 (Pty) Ltd in the immediate future.
3.5 Prospects
S A Retail has successfully disposed of two non-core investments and acquired
two superior convenience retail shopping centres. Negotiations are advanced
regarding additional investment in substantial retail centres which satisfy S A
Retail"s investment criteria.
S A Retail is well placed to benefit from the more favourable economic
environment and the impact which lower interest rates will have on consumer
spending. The outlook for the retail property industry remains favourable.
4. DECLARATION OF DIVIDEND AND INTEREST PAYMENT NUMBER 5
Notice is hereby given that dividend number 5 of 0,02 cents per ordinary share
and interest of 31,23 cents per debenture totalling 31,25 cents per linked unit
have been declared in respect of the income distribution period 1 April 2003 to
30 September 2003.
Last date to trade cum distribution Friday, 14 November 2003
Units will trade ex distribution Monday, 17 November 2003
Record date to participate in the distribution Friday, 21 November 2003
Payment of the dividend and debenture interest Monday, 24 November 2003
Linked unit certificates may not be dematerialised or rematerialised between
Monday, 17 November 2003 and Friday, 21 November 2003, both days inclusive.
By order of the board
S A RETAIL PROPERTIES LIMITED
31 October 2003
Registered office
Marriott at Kingsmead
Kingsmead Office Park
Durban, 4001
PO Box 207
Durban, 4000
Tel: (031) 366-1111
Property Asset Managers
Marriott Property Services
(Registration number 1982/006032/07)
Sponsor
Exchange Sponsors (Pty) Limited
(Registration number 1999/024433/07)
Transfer secretaries
Computershare Limited
70 Marshall Street
Johannesburg, 2001
PO Box 61051
Marshalltown, 2107
Tel: (011) 370-7700
Date: 30/10/2003 05:23:10 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
