| Mon 8 Dec 2003, 9:06 | | RESULTS TO 31 OCTOBER 2003 |
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PARAMOUNT PROPERTY FUND LIMITED - AUDITED RESULTS TO 31 OCTOBER 2003 AND
DISTRIBUTION ANNOUNCEMENT
PARAMOUNT PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Reg No.1945/019928/06)
Share code PRA ISIN ZAE000028577
AUDITED RESULTS TO 31 OCTOBER 2003 AND DISTRIBUTION ANNOUNCEMENT
The consolidated audited results of the group for the year ended
31 October 2003 are as follows:
CONSOLIDATED INCOME STATEMENT
Audited Audited
Notes October 2003 October 2002
R"000 R"000
Revenue 111,245 87,340
Trading Income 86,944 67,998
Accounting surplus on disposal of
investment property 2,190 515
Revaluation of investment properties 2,600 1,321
Depreciation (426) (390)
Interest received 1,840 335
Amortisation of debenture discount (70) -
Interest paid on borrowings (73,448) (50,884)
Income before taxation 19,630 18,895
Taxation 695 171
Income before distribution 20,325 19,066
Distribution to unitholders (18,963) (18,001)
Retained income 1,362 1,065
Linked Units in issue ("000) 51,585 22,512
Weighted average linked units in issue ("000) 36,970 20,418
Earnings per linked unit (cents) 55.0 93.3
Headline earnings per linked unit (cents) 44.0 85.7
Core earnings per linked unit (cents) 49.2 87.9
Distribution per linked unit (cents) 49.0 86.4
Earnings, headline earnings and core earnings per linked unit
The earnings, headline earnings and core earnings calculations are based on the
weighted average number of linked units ranking for distribution of 36 969 539
(2002: 20 418 491). The earnings per linked unit figure is given in preference
to earnings per share, as the linked units are traded as a single entity on the
JSE Securities Exchange and all distributions made by the company are in the
form of interest paid on the debenture portion of the linked unit. Earnings per
share is therefore not relevant in assessing the company"s performance. Earnings
per linked unit of R20 325 000 (2002: R19 066 000) is calculated on the net
income before debenture interest,
but after taxation. Headline earnings per linked unit is calculated on the net
income before debenture interest but after taxation and headline reconciling
items. Headline earnings for 2002 have been restated to give effect to SAICA
circular 7/2002, in terms of which surpluses on disposal of investment
properties are excluded from headline earnings. Core earnings per linked unit is
calculated by adding realised surpluses on disposal of investment properties
(net of capital gains tax) to headline earnings and deducting therefrom the
amortisation of debenture discount. This calculation is provided for the benefit
of stakeholders as the directors are of the opinion that it provides a more
accurate reflection of the group"s cash profits available for distribution, for
the year.
EARNINGS RECONCILIATION
Earnings attributable to linked unit holders 20,325 19,066
Revaluation surplus (2,600) (1,321)
Taxation of revaluation surplus 390 198
Accounting surplus on disposal of investment
properties (2,190) (515)
Taxation on disposal of investment properties 328 77
Headline earnings 16,253 17,505
Headline earnings per linked unit (cents) 44.0 85.7
Headline earnings 16,253 17,505
Accounting surplus on disposal of
investment properties 2,190 515
Taxation on disposal of investment properties (328) (77)
Amortisation of debenture discount 70 -
Core earnings 18,185 17,943
Core earnings per linked unit (cents) 49.2 87.9
One ordinary share and one A debenture are defined as one linked unit
ABRIDGED CONSOLIDATED BALANCE SHEET
Audited Audited
October 2003 October 2002
R"000 R"000
Total ordinary shareholders funds 14,265 7,037
A debenture holders 211,016 101,303
B debenture holders 1 133,508 129,937
Other long term liabilities 508,622 408,543
Unitholders for distribution 6,706 5,493
Current liabilities 2 61,023 5,519
Capital employed 935,140 657,832
Fixed assets 2 870,538 649,390
Deferred taxation 395 219
Listed investments 24,236 -
Other current assets 39,971 8,223
Total employment of capital 935,140 657,832
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Income before taxation 19,630 18,895
Adjustments for:
Interest received (1,840) (335)
Interest paid 73,448 50,884
Depreciation 426 390
Provisions raised 400 275
Accounting surplus on disposal of investment
property (2,190) (515)
Revaluation of investment properties (2,600) (1,321)
Operating profit before working capital changes 87,274 68,273
Working capital changes (27,781) (5,590)
Cash generated from operations 59,493 62,683
Interest received 1,840 335
Interest paid (73,448) (50,884)
Taxation paid - (271)
Net cash (outflow) / inflow from operating
activities (12,115) 11,863
Net cash inflows from financing activities 100,079 190,284
Net cash inflow from capital raising activities 100,366 64,167
Cash outflows from investing activities (165,835) (266,796)
22,495 (482)
Cash and cash equivalents at the beginning
of the year 118 600
Cash and cash equivalents at the end of the year 22,613 118
Capital expenditure
At the financial year end there was a capital commitment for the purchase of a
property totaling R52.5 million. The acquisition of this
property has been financed by way of a bank loan and the utilisation of existing
cash resources.
STATEMENT OF CHANGES IN EQUITY
Non-
Share Share distributable Distributable
capital Premium reserves reserves
Balance at 1/11/2002 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)
Increase in share capital 2,908
Net increase in share
premium 1,924
Issue of A debentures
Amortisation of debenture
discount
Revaluation of listed
investment
Surplus to 31/10/2003 1,362
Balance at 31/10/2003 5,159 7,802 45 225
Revaluation Subtotal A Linked unit
reserve Debentures Total
Balance at 1/11/2002 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
Surplus to 31/10/2002 1,065 1,065
Balance at 31/10/2002 0 7,037 101,303 108,340
Increase in share capital 2,908 2,908
Net increase in share premium 1,924 1,924
Issue of A debentures 109,643 109,643
Amortisation of debenture discount 70 70
Revaluation of listed
Investment 1,034 1,034 1,034
Surplus to 31/10/2003 1,362 1,362
Balance at 31/10/2003 1,034 14,265 211,016 225,281
Notes:
1) The B debentures are convertible into linked units in 5 equal tranches,
commencing in the January of the year following issue. The new linked units
participate in all distributions from the date of conversion.
2) Six properties acquired at a cost of R50 950 000 before 31 October 2003 had
not been transferred to the company by 31 October 2003. The assets have been
recognised in the balance sheet and the liability for the purchase is reflected
in current liabilities. The purchase price will be met by the issue of linked
units to the value of R15 420 000, bank borrowings of
R30 570 000 and existing cash resources of R4 960 000.
Accounting policies
The results for the year ended 31 October 2003 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.
Audit Report
These results have been audited by the company"s auditors, Deloitte & Touche,
and their unqualified audit report is available for inspection at the company"s
registered office.
COMMENTS
As anticipated in the 2002 Annual Report and confirmed by the Interim Report to
April 2003, the past year has been extremely difficult for the group.
Rental income from the properties declined due to lower reversionary rentals and
two significant vacancies, and this was compounded by the company"s financial
structure. This resulted in reduced distributions from 86,4 cents to 49 cents
per linked unit.
On the positive side, tight management resulted in the bulk of the vacancies
being relet and the fund"s vacancy ratio declining from around 7% at the
beginning of the year to 3%, notwithstanding the difficult letting conditions.
In line with our strategy of improving the financial structure of the company to
reduce the possible impact of further dilution in the future, a deal was
concluded with ABSA Bank which involved the issue of 17 537 000 new linked
units. This increased the fund"s market capitilisation and significantly reduced
the ratio of B debentures in the capital structure.
Payment for the units was made in a combination of cash and linked units in
Growthpoint Property Fund Limited. The Growthpoint units were sold subsequent to
the year end at a higher price, resulting in a profit.
Active management of the fund"s borrowings has enabled us to take advantage of
the current favourable interest rate environment. Certain interest fixes were
renegotiated during the year, and existing borrowings were fixed at more
favourable rates, resulting in significant savings in interest costs which will
benefit the fund in future.
Prospects for the year ahead are encouraging and, provided that there are no
significant changes in the present economic outlook, we are confident we will
see a modest increase in distributions for 2004.
DECLARATION OF DISTRIBUTION
Notice is hereby given that the board of directors has declared a final
distribution of 13 cents per linked unit in respect of the year ended 31 October
2003. The distribution will be paid on Monday 5 January 2004.
To comply with the procedures of STRATE, the distribution timetable
is as follows:
last day to trade linked units cum distribution: Tuesday 23 December 2003
linked units commence trading ex distribution: Wednesday 24 December 2003
record date: Friday 2 January 2004
pay date: Monday 5 January 2004
Linked unit certificates may not be dematerialised or rematerialised between
Wednesday 24 December 2003 and Friday 2 January 2004, both days inclusive.
By order of the board Cape Town
Spire Property Services (Pty) Ltd 8 December 2003
Secretaries
Transfer Secretaries:
Computershare Limited
Ground Floor,
70 Marshall Street
Johannesburg 2001
P O Box 1053,
Johannesburg 2000
Registered Office:
Tannery Park, 23
Belmont Road
Rondebosch 7700
P O Box 155,
Rondebosch 7701
Cape Town
DIRECTORS: A D Dalling (Chairman)+ , R C Squire - Howe (Managing),
J A Bester+ , S F Booysen*, (Alt. R D Jeffery), H N Coertze*,
R R Emslie*, (Alt. G C Cannings), F J Jenkings, B H Kerswill,
A A Maresky, J R Millar*, A D P Ovenstone*, G P Phillips*,
E G Raubenheimer*, R S Schur+ , R J Whiteford*.
* Non-executive +Independent non-executive
Date: 08/12/2003 07:00:24 AM Produced by the JSE SENS Department
