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Release Date: 19/02/2004 17:02:01 Code(s): PAP
Pangbourne - Unaudited financial results for the six months ended 31 December
2003
Pangbourne Properties Limited
("Pangbourne")
(Incorporated in the Republic of South Africa)
(Registration number 1987/002352/06)
Share code: PAP ISIN: ZAE000005252
Unaudited financial results for the six months ended 31 December 2003
* 3,66% increase in interim distribution to 42,5 cents
* Occupancies up to 92,4%
* Gearing at 27,9% allowing for further expansion
* Ongoing benefits of in-house management still evident
* 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
176 033 514 (2002: 175 979 779 )
Abridged consolidated income statement
Six months to Year to
R"000 31.12.03 31.12.02 30.6.03
Revenue 133 007 137 368 275 846
Profit from rental income,investment income and fees
received 94 407 91 148 192 714
Net profit on disposal of listed
investments held-for-trade 6 483 - 8 789
Net trading profit 100 890 91 148 201 503
Revaluation of investment
properties - - 41 182
Revaluation of listed
investments held-for-trade 11 545 2 419 13 974
Net goodwill amortised
and realised 8 338 9 922 24 894
Net profit/(loss) on disposal of
investment properties 8 531 (1 021) 12 822
Profit before interest
and taxation 129 304 102 468 294 375
Interest received 3 447 4 368 8 081
Finance costs (29 909) (22 350) (52 495)
Embedded derivative marked
to market (2 102) 1 219 (16 784)
Profit before taxation and
distributions to unitholders 100 740 85 705 233 177
Debenture interest - debt portion (40 930) (40 930) (81 860)
Amortised debenture interest (1 114) (957) (1 990)
Profit before taxation 58 696 43 818 149 327
Taxation* (13 686) (10 320) (28 461)
Share of profits/(losses) from
associates 1 138 - (340)
Profit for the period 46 148 33 498 120 526
*GAAP requires that the company segregate its debentures and debenture interest
into Debt and Equity components in the Balance Sheet, and Income Statement and
Statements of changes in equity respectively. This gives rise to a profit in the
income statement in respect of which a notional tax charge of R9,7 million has
been raised, which provision is reversed in the Statements of changes in equity
where the equity portion of interest is reflected.
Abridged consolidated balance sheet
As at As at
R"000 31.12.03 31.12.02 30.6.03
ASSETS
Non-current assets
Property, plant and equipment 1 061 411 1 265 410 1 207 172
Net goodwill (29 438) (57 955) (37 776)
Investments in and loans
to associates 318 768 - 117 306
Long-term loans 20 749 34 203 21 724
Deferred taxation asset 14 592 8 211 12 724
Current assets
Bank and cash 3 727 5 745 11 674
Receivables 63 675 50 086 62 457
Other receivables - sale of assets 31 013 - 18 000
Investments held-for-trade 129 287 159 544 162 592
Current portion of long-
term loans 916 1 911 1 640
Total assets 1 614 700 1 467 155 1 577 513
EQUITY AND LIABILITIES
Unitholders" interest
Capital and reserves 319 233 248 132 298 594
Debentures debt portion 660 724 658 577 659 610
Other interest-bearing borrowings 412 955 387 014 391 772
Embedded derivative financial
instruments 12 725 (7 380) 10 623
Deferred taxation liability 67 530 53 117 61 883
Current liabilities
Payables 31 915 25 827 25 406
Current portion of interest-
bearing borrowings 33 138 29 604 43 462
Unitholders for distribution 76 480 72 264 86 163
1 614 700 1 467 155 1 577 513
Net debt: income earning assets 27,9% 28,2% 28,2%
Net asset value per unit excluding
negative goodwill (cents) 583 585 577
Statement of changes in equity
Six months to Year to
R"000 31.12.03 31.12.02 30.6.03
Balance at beginning
of period 298 594 232 601 232 601
Net profit for the period 46 148 33 498 120 526
AC133 transition adjustment -
June 2003 opening reserve
adjustment - 6 161 6 161
Deferred tax on AC133
transition adjustment - (1 848) (1 848)
Arising on purchase of treasury
shares during the period - - (922)
Arising on sale of treasury
shares during the period - - 509
Reversal of notional taxation
on debenture interest -
equity portion 9 725 8 942 21 509
Distribution to unitholders:
debenture interest - equity
portion (32 417) (29 807) (71 698)
Distribution to unitholders:
dividend portion (1 467) (1 415) (3 071)
Profit on sale of treasury shares
during the period - - 161
Net loss on disposal of
investments available-for-sale (1 350) - -
Adjustment to fair value of
long-term investments - - (6 275)
Deferred tax on adjustment in
fair value of long-term
investments - - 941
Balance at end of period 319 233 248 132 298 594
Reconciliation between earnings
and headline earnings
Profit before
taxation Taxation
Cents Cents
per per
R"000 unit R"000 unit
Profit after share of
profit from associate 59 834 34,00 (13 686) (7,78)
Adjustments
Net goodwill amortised
and realised (8 338) (4,74) - -
Net profit/(loss) on
disposal of investment
properties (8 531) (4,84) 1 280 0,73
Adjustments for associates (389) (0,23) (78) (0,05)
Headline earnings as
per South African
Statements of GAAP
per linked unit 42 576 24,19 (12 484) (7,10)
Reconciliation of headline earnings to core earnings per linked unit
Headline earnings as per South African
Statements of GAAP 42 576 24,19 (12 484) (7,10)
Unrealised revaluation
of listed investments
held-for-trade (11 545) (6,56) 3 464 1,97
Unrealised embedded
derivative marked
to market 2 102 1,19 (631) (0,36)
Debenture interest -
debt portion 40 930 23,25 - -
Notional taxation on
debenture interest -
equity portion - - 9 725 5,53
Debenture amortised
interest 1 114 0,63 (335) (0,19)
Core earnings per
linked unit** 75 177 42,70 (261) (0,15)
Reconciliation between earnings
and headline earnings (continued)
Net profit after Six months to
taxation 31.12.02
Cents Cents
per per
R"000 unit R"000 unit
Profit after share of
profit from associate 46 148 26,22 33 498 19,04
Adjustments
Net goodwill amortised
and realised (8 338) (4,74) (9 922) (5,64)
Net profit/(loss) on
disposal of investment
properties (7 251) (4,11) 867 0,58
Adjustments for associates (467) (0,28) - -
Headline earnings as
per South African Statements
of GAAP per linked unit 30 092 17,09 24 443 13,98
Reconciliation of headline
earnings to core earnings
per linked unit
Headline earnings as per
South African Statements
of GAAP 30 092 17,09 24 443 13,98
Unrealised revaluation of
listed investments
held-for-trade (8 081) (4,59) (1 693) (0,97)
Unrealised embedded
derivative marked
to market 1 471 0,83 (853) (0,49)
Debenture interest -
debt portion 40 930 23,25 40 930 23,26
Notional taxation on
debenture interest -
equity portion 9 725 5,53 8 942 5,08
Debenture amortised
interest 779 0,44 669 0,38
Core earnings per
linked unit** 74 916 42,55 72 438 41,24
**Core earnings per linked unit (cents)
Core earnings per linked unit is an accurate reflection of the companies cash
profits available for distribution.
Six months to Year
31.12.03 31.12.02 30.6.03
Diluted and non-diluted earnings
and distribution per linked unit
Headline earnings per linked
unit (cents) 17,09 13,90 28,58
Core earnings per linked
unit (cents)** 42,55 41,24 89,23
Distribution per linked
unit (cents) 42,50 41,00 89,00
Diluted and non-diluted earnings
and distribution per share
Earnings per share before equity
portion of debenture
interest (cents) 26,22 19,04 39,97
Distribution per share (cents) 0,83 0,80 1,75
Distributions to linked unitholders
Debenture interest debt portion 40 930 40 930 81 860
Debenture interest equity portion 32 417 29 807 71 698
Dividends 1 467 1 415 3 071
Total distributions 74 814 72 152 156 629
Accounting policies
The accounting policies stated in the 2003 annual report have been consistently
applied and comply with South African Statements of GAAP.
Where necessary comparative figures have been adjusted to conform to changes in
presentation in the current year.
Abridged consolidated cash flow statement
Six months to Year to
R"000 31.12.03 31.12.02 30.6.03
Cash generated from operations 91 808 104 743 172 064
Net finance costs (26 462) (17 982) (43 366)
Taxation paid (381) (218) (361)
Cash flows from operating
activities before distribution
to unitholders 64 965 86 543 128 337
Distributions to unitholders (84 497) (42 501) (113 079)
Cash flows from operating
activities (19 532) 44 042 15 258
Cash flows from investing
activities 726 (102 798) (89 282)
Cash flows from financing
activities 10 859 65 426 86 623
Net (decrease)/increase in cash
and cash equivalents (7 947) 6 670 12 599
Cash and cash equivalents
at beginning of period 11 674 (925) (925)
Cash and cash equivalents
at end of period 3 727 5 745 11 674
Segmental information
Property Property
R"000 Property stock stock
Primary segment management trading investments
Revenue
Rentals received 102 269 - -
Fees received - - 2 468
Investment income received - 7 347 15 667
Total revenue 102 269 7 347 15 667
R"000
Segment results
Profit before taxation and
distribution to unitholders 99 936 25 376 15 667
99 936 25 376 15 667
Segmental information (continued)
Transfer
R"000 duty Bridging Agents
Primary segment finance finance commission
Revenue
Rentals received - - -
Fees received 2 468 2 158 2 520
Investment income received - - -
Total revenue 2 468 2 158 2 520
R"000
Segment results
Profit before taxation and
distribution to unitholders 530 464 542
530 464 542
Segmental information (continued)
R"000 Corporate Total
Revenue
Rentals received - 102 269
Fees received 578 7 724
Investment income received - 23 014
Total revenue 578 133 007
R"000
Segment results
Profit before taxation and
distribution to unitholders (41 775) 100 740
(41 775) 100 740
Segment 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.
Distribution of 42,5 cents declared per linked unit
Distribution timetable
Event Date
Last date to trade cum distribution Thursday, 1 April 2004
Linked units trade ex distribution Friday, 2 April 2004
Record date for unitholders to participate
in the distribution Thursday, 8 April 2004
Payment of distribution to unitholders Tuesday, 13 April 2004
Linked unit certificate may not be
rematerialised or dematerialised between Friday, 2 April and
Thursday, 8 April 2004
(both days inclusive)
On behalf of the board
J J Groenewald
Secretary
2nd Floor
382 Jan Smuts Avenue
Craighall
Johannesburg
19 February 2004
COMMENTARY
RESULTS
The strategy for the Group going forward was set out in the 2003 Annual
Financial Statements. This envisaged Pangbourne, in addition to owning its own
properties, becoming a significant investor in certain property loan stock
companies. In line with this strategy, R250 million of property was sold to
iFour Properties Limited during the latter part of 2003 in exchange for iFour
units. Pangbourne will provide the property management to these portfolios
resulting in rationalisation benefits and increased annuity income to
Pangbourne.
The distribution for the first half of this year has increased by 3,66% to
42,5cents. This is as a result of improved occupancies and benefits from the
iFour transaction in the form of management fees and distributions. Demand for
space and rental growth in the Greater Durban area continues to support the
company"s decision to diversify into KwaZulu-Natal.
OCCUPANCIES
Good demand for industrial space has been evident during the past six months and
it is expected that the current occupancy level of 92,4% (June 2003: 90,7%) will
be maintained to year-end.
iFOUR
The take-on of the property and accounting management of iFour has gone smoothly
and these properties are now fully integrated into Pangbourne"s systems,
resulting in considerable benefits. As previously reported, Pangbourne now holds
48,8% of iFour. This holding was approved by unitholders of iFour at their
general meeting in September 2003, thereby removing the restrictions placed on
Pangbourne by the Securities Regulation Panel.
RECENT TRANSACTIONS
Demand for space at The Crescent in Umhlanga Ridge led to additional lettable
area being provided. In addition, a joint venture company, Panross (Pty)
Limited, has been formed between Pangbourne and J.T. Ross & Son (Pty) Ltd. The
Umvubu Business Park on the Riverhorse Estate in Durban is the first project in
this joint venture. This is an exciting prospect as it is the last undeveloped
land in this prime location on the new Effingham interchange and adjoining the
N2.
The stake in ApexHi continues to be reduced as market conditions allow.
Pangbourne has entered into an agreement in terms of which it will acquire two
properties under leasehold and freehold title respectively for a cash
consideration of R98 150 000 from Blue Cloud Investments 40 (Pty) Limited
subject to the approval of the Competition Commission. The financial effects of
this acquisition on earnings per unit, headline earnings per unit, net asset
value and tangible net asset value per unit are not material.
DEBT MANAGEMENT
Borrowings currently remain low at 27,9% of income earning assets with interest
rates being fixed for varying periods of up to five years.
PAFORMA
Paforma Property Finance has continued to grow with turnover nearly double that
of the comparable period for last year.
PROSPECTS
Good demand for industrial and warehousing properties has been experienced, and
it is expected that the growth trend in earnings and distributions, will
continue to at least the year-end.
Notice is hereby given that a distribution of 42,50 cents has been declared and
approved by the board of directors (2002: 41,00 cents) for the period ended 31
December 2003.
P L Campbell Chairman
A M A Campbell CEO
19 February 2004
Pangbourne Properties Limited
2nd Floor, Pangbourne House
382 Jan Smuts Avenue
Craighall, Johannesburg
Directors: P L Campbell (Chairman), A M A Campbell (CEO), L S Barnard, J B
Gibbon, C K Hickling, D J Kennedy, A J W L Richards, B M H Tsita.
Secretary: J J Groenewald
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