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Octodec Investments Limited - Unaudited Interim Results Of The Group For The Six
Release Date: 21/04/2004 07:20:01 Code(s): OCT
Octodec Investments Limited - Unaudited interim results of the group for the six
months ended 29 February 2004
OCTODEC INVESTMENTS Limited
and its subsidiaries
(Incorporated in the Republic of South Africa)
Registration number 1956/002868/06
Share code: OCT
ISIN number: ZAE000005104
Octodec Investments Limited
And its subsidiaries
Unaudited interim results of the group for the six months ended 29 February 2004
Notice to linked unitholders
The directors report the unaudited interim results of the group for the six
months ended 29 February 2004 set out below, together with comparisons with the
results for the corresponding period in 2003 and the year ended 31 August 2003.
("Octodec" or "the group" or "the company")
- Interim distribution up by 25% to 29 cents per linked unit
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
Six months Six months Year to
29 Feb 28 Feb 31 Aug
% 2004 2003 2003
change R"000 R"000 R"000
Turnover (rental
income) 7,3 55 792 51 984 105 957
Net rental from
properties 7,7 38 174 35 449 72 011
Interest received 1 609 700 1 188
Income received
- associate 1 990 1 245 3 537
Capital profit:
disposals of property - 678 1 124
Fair value adjustments:
- Investment properties - - 48 362
- Associate, net of
capital gains tax 6 162 - 1 711
Acquisition of loan
account at a discount - - 730
47 935 38 072 128 663
Interest paid (1,4) 21 008 21 306 43 168
Depreciation 252 129 274
Profit before
Debenture interest 60,3 26 675 16 637 85 221
Debenture interest 25,0 19 595 15 677 32 095
Profit before taxation 7 080 960 53 126
Taxation 414 208 4 122
Profit attributable to
ordinary shareholders 6 666 752 49 004
Earnings per share
(cents) (basic
and diluted) 9,8 1,1 72,2
Headline earnings per
Share (cents) (basic
and diluted 0,7 0,1 1,2
Headline earnings per
linked unit (cents)
(basic and diluted) 27,6 29,6 23,2 48,4
Distribution per
linked unit (cents)
Dividends 0,14 0,11 0,23
Interest 28,86 23,09 47,27
Total 25,0 29,00 23,20 47,50
ABRIDGED CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
29 Feb 28 Feb 31 Aug
2004 2003 2003
R"000 R"000 R"000
ASSETS
Non-current assets
Investment properties 663 778 601 315 658 342
Plant and equipment 2 225 930 2 297
Investments
- listed 17 907 9 684 13 934
- associate company 20 485 8 995 11 926
Current assets 8 677 13 595 7 940
Total assets 713 072 634 519 694 439
Equity and liabilities
Share capital 11 096 11 096 11 096
Non-distributable reserve 109 589 48 883 100 050
Retained profit 1 458 396 1 035
Ordinary shareholders"
interest 122 143 60 375 112 181
Debentures 198 513 198 513 198 513
Linked unitholders"
interest 320 656 258 888 310 694
Outside shareholders"
interest - 10 682 -
Interest-bearing
borrowings 342 337 327 886 336 714
Deferred taxation 8 282 3 338 7 686
Current liabilities
- interest-bearing 4 051 804 3 914
- non-interest-bearing 37 746 32 921 35 431
Total equity and
liabilities 713 072 634 519 694 439
Linked units
in issue 67 896 223 67 896 223 67 896 223
Net asset value
per linked
unit (cents) 472 381 458
RECONCILIATION OF HEADLINE EARNINGS PER LINKED UNIT TO EARNINGS PER SHARE
Unaudited Unaudited Audited
Six months Six months Year to
29 Feb 28 Feb 31 Aug
Cents 2004 2003 2003
Headline earnings
per linked unit 29,6 23,2 48,4
Debenture interest (28,9) (23,1) (47,3)
Headline earnings
per share 0,7 0,1 1,1
Capital profit:
disposals of property - 1,0 1,7
Fair value adjustments:
Associate, net of capital
gains tax 9,1 - 2,5
Investment properties,
net of capital gains tax - - 65,8
Acquisition of loan account
at a discount - - 1,1
Earnings per share 9,8 1,1 72,2
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
Six months Six months Year to
29 Feb 28 Feb 31 Aug
2004 2003 2003
R"000 R"000 R"000
Cash flow from operating
activities
Net rental income from
properties 37 923 35 321 71 737
Adjustment for:
- Depreciation 252 129 274
Working capital
changes (1 234) 1 183 2 745
Cash generated from
operations 36 941 36 633 74 756
Investment income 3 272 1 945 4 205
Finance costs (21 008) (21 306) (43 168)
Taxation paid (23) (205) (298)
Distribution to linked
unitholders paid (16 499) (14 258) (30 011)
Net cash inflow from
operating activities 2 683 2 809 5 484
Cash flow from investing
activities
Investing activities (5 616) (5 333) (18 125)
Proceeds from disposal of
investment properties - 1 600 8 568
Net cash outflow used in
investing activities (5 616) (3 733) (9 557)
Cash flow from financing
activities 3 792 657 4 495
Net increase/(decrease)
in cash and cash
equivalents 858 (267) 422
Cash and cash equivalents
at beginning of period/year (10) (432) (432)
Cash and cash equivalents
at end of period/year 848 (699) (10)
STATEMENT OF CHANGES IN EQUITY
Non-distri- Distri-
Share butable butable
capital reserve reserves Total
R"000 R"000 R"000 R"000
Balance at
1 September 2002 11 096 48 022 390 59 508
Profit attributable
to ordinary
shareholders 49 004 49 004
Dividends paid (143) (143)
Transfer to
non-distributable
reserve 52 028 (48 216) 3 812
Balance at
1 September 2003 11 096 100 050 1 035 112 181
Profit attributable
to ordinary
shareholders 6 666 6 666
Dividends (81) (81)
Transfer to
non-distributable
reserve:
Fair value adjustments:
- Investment properties
of associate, net of
capital gains tax 6 162 (6 162) -
Listed investment,
net of capital gains
tax 3 377 - 3 377
Balance at
29 February 2004 11 096 109 589 1 458 122 143
NOTES TO THE FINANCIAL STATEMENTS
1. The same accounting policies and methods of computation have been followed
as in the financial statements of 31 August 2003 and are in accordance with
South African Statements of Generally Accepted Accounting Practice.
2. An amount of R15,7 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.
3. Capital expenditure during the year amounted to R5,4 million.
4. 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.
5. The company has bound itself as surety, in favour of Nedbank Property
Finance, in respect of loans granted to an associate company, IPS Investments
(Proprietary) Limited ("IPS"), which at 29 February 2004 amounted to 38,06
million.
6. In terms of AC135 the company values its investment properties annually. A
valuation of the total portfolio will be undertaken for the year ending 31
August 2004.
Comments
Review of results
The directors of Octodec are pleased to report that the company has continued to
produce sustained growth in earnings to its linked unitholders. Headline
earnings per linked unit for the six-month period ended 29 February 2004,
amounted to 29,1 cents (2003:
23,2 cents), an increase of 25,5% over the previous comparative period. Turnover
and net rental income increased by 7,3% and 7,7%, respectively, compared with
the previous six-month period ended
28 February 2003.
The interim distribution of 29,0 cents per linked unit (2003:
23,2 cents) represents an increase of 25,5% on that paid in the previous
corresponding period.
Management"s proactive approach to letting activities resulted in a much
improved tenant mix for its shopping centres and a steady improvement in the
letting of office space.
Property portfolio
Management continues to focus on increasing the quality of the properties by the
upgrading thereof. The upgrading of the retail shopping centres, Killarney Mall
and Elardus Park, in the previous financial year resulted in an increase in
rental income.
The current vacancy factor is approximately 7% (2003: 8,0%) of total potential
rental income.
Income from an associate company, IPS, in which Octodec holds a 40% interest,
increased significantly, on the back of increased demand for residential and
office space, and due to a number of acquisitions made at attractive yields. IPS
was involved in a very successful residential sectional-title development, which
was completed and sold as at 29 February 2004. The profits from this venture are
expected to have an impact on the results for the next six-month period. IPS is
currently considering other similar developments.
Interest risk management and borrowings
At 29 February 2004 Octodec"s borrowings amounted to R346,4 million, equating to
a 52% debt to property value ratio. Interest rates have been fixed to the extent
of 67% of net borrowings for periods ranging from October 2004 to November 2006.
Prospects
The company is currently considering a number of major refurbishments, including
that of the Killarney Mall shopping centre. Substantial renovations, the
construction of approximately 5 500 m2 of additional retail space and an
additional 430 parking bays, at a cost of approximately
R77,0 million, is expected to yield an initial 11% return.
This, together with the growing demand for Pretoria CBD space, bodes well for
the future. Subject to the prevailing market conditions and the interest rate
environment remaining constant, the directors expect that the distributable
income for the six months, 1 March 2004 to 31 August 2004, will be approximately
31,0 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 28 AND INTEREST PAYMENT ("the distribution")
Notice is hereby given that dividend number 28 of 0,14 cents (2003: 0,11 cents)
per ordinary share has been declared together with interest for the period 1
September 2003 to 29 February 2004 of 28,86 cents (2003: 23,09 cents) per
debenture payable to linked unitholders recorded in the register on Friday, 14
May 2004. The last date to trade "CUM" distribution is Friday, 7 May 2004. The
units will commence trading "EX" distribution on Monday, 10 May 2004. Payment
date will be Monday, 17 May 2004.
No dematerialisation or rematerialisation of linked unit certificates may take
place between Monday, 10 May 2004 and Friday, 14 May 2004, both days inclusive.
By order of the Board
City Property Administration (Proprietary) Limited
20 April 2004
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 number: ZAE000005104
Directors
A Wapnick* (Chairman), JP Wapnick* (Managing director), MJ Holmes#, RJ Inggs*,
MZ Pollack#, S Wapnick+
*Executive directors; +Non-executive directors; #Independent non-executive
directors
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: 2000/006082/06)
70 Marshall Street, Johannesburg 2001
PO Box 61051, Marshalltown 2107
Tel: (011) 370-7700 Fax: (011) 688-77121
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