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S A Retail - Reviewed Results And Distribution Announcement For The Year Ended
31 March 2004
S A Retail
(Reg. No. 1999/025764/06)
Share Code: SRL ISIN Number: ZAE000034328
Website: www.saretail.co.za
REVIEWED RESULTS AND DISTRIBUTION ANNOUNCEMENT FOR THE YEAR ENDED 31 MARCH 2004
* Property acquisitions exceed R160 million
* Distribution up by 5,7%
* Property value exceeds R1 billion
* Vacancy factor reduced to 4,6%
BALANCE SHEET (R"000)
Reviewed Audited
Notes 2004 2003
ASSETS
Non-current assets
Investment properties 1 077 730 865 854
Current assets
Trade and other receivables 12 279 10 728
Cash resources and short term investments 13 426 26 293
25 705 37 021
TOTAL ASSETS 1 103 435 902 875
EQUITY AND LIABILITIES
Capital and reserves
Share capital and reserves 36 124 33 251
Non-current liabilities
Debentures 864 140 834 441
Derivative - fair value of Put option 32 450 -
Deferred taxation 6 433 102
903 023 834 543
Current liabilities
Trade and other payables 8 301 7 089
Property acquisition obligation 3.2 95 413 -
Taxation 4 3
Linked unitholders for distribution 60 570 27 989
164 288 35 081
TOTAL EQUITY AND LIABILITIES 1 103 435 902 875
INCOME STATEMENT (R"000)
Notes Reviewed Audited
2004 2003
Revenue 162 695 130 834
Net rental income from properties 109 168 92 660
Interest earned 5 947 5 216
Finance costs (211) -
Amortisation of debenture issue expenses (129) (31)
Net profit before fair value adjustments 114 775 97 845
Net surplus on revaluation of investment
properties 35 290 -
Revaluation of investment properties 41 517 -
Deferred capital gains tax (6 227) -
Deficit on revaluation of Put option (5 950) -
Net profit before debenture interest and
taxation 144 115 97 845
Debenture interest (114 560) (97 679)
29 555 166
Net profit before taxation
Taxation (112) (74)
Net profit attributable to linked
unitholders 29 443 92
Headline earnings per linked unit (cents)
(weighted) 3.3 62,63 62,27
Earnings per linked unit (cents)
(weighted)
3.3 82,96 62,27
Distribution per linked unit (cents) 3.3
Interest 65,86 62,30
Dividend 0,04 0,05
Total 65,90 62,35
STATEMENT OF CHANGES IN EQUITY (R"000)
Share
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 - 29 443 29 443
Dividend distributed - (70) (70)
Balance at 31 March 2004 2 36 122 36 124
CASH FLOW STATEMENT (R"000)
Reviewed Audited
Notes 2004 2003
OPERATING ACTIVITIES
Cash received from tenants 161 144 128 771
Cash paid to suppliers and employees (52 315) (37 215)
Cash generated by operating activities 108 829 91 556
Interest earned 5 947 5 216
Distributions to linked unitholders (82 048) (106 372)
Finance costs (211) -
Taxation paid (8) (15)
32 509 (9 615)
INVESTING ACTIVITIES
Acquisition of investment properties (160 565) (71 886)
Property acquisition obligation 3.2 95 413 -
Improvements to investment properties (9 794) (9 096)
(74 946) (80 982)
FINANCING ACTIVITIES
Debentures issued 31 483 80 453
Debenture issue expenses (1 913) (8 571)
29 570 71 882
(12 867) (18 715)
Net decrease in cash and cash equivalents
26 293 45 008
Cash and cash equivalents at beginning of
the year 13 426 26 293
CASH AND CASH EQUIVALENTS AT END OF THE YEAR
1. OTHER INFORMATION Reviewed Audited
31.03.2004 31.03. 2003
* Linked units in issue 174 893 039 168 596 335
* Weighted average linked units in issue 173 573 039 157 002 337
* Net asset value (cents per linked unit) 549 531
(including distribution yet to be paid)
* Listed market price (cents per linked unit) 565 525
* Premium / (discount) to net asset value 2,9% (1,1%)
* Vacancy factor (based on lettable area) 4,6% 6,2%
(excluding re-development property)
2. REVIEW BY INDEPENDENT AUDITORS
S A Retail"s auditors, KPMG Inc., have reviewed these preliminary financial
results. The unqualified review report is available at S A Retail"s registered
office.
3. NOTES TO THE FINANCIAL RESULTS
3.1 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 for the
previous year. The accounting statement on financial instruments AC133 has been
applied for the first time in these results, but has had no impact on
distributable income recorded below.
3.2 Property acquisition obligation
The R95 413 000 was settled on the 1 April 2004 by way of an issue of 18 002
359 linked units.
3.3 Earnings, headline earnings and distribution per linked unit
The earnings, headline earnings and distribution per linked unit for the
period 1 April 2003 to 31 March 2004 are calculated as follows:
2004 2003
Cents Cents
per linked per linked
unit unit
R"000 (Weighted) R"000 (Weighted)
Net profit 29 443 16,96 92 0,06
Debenture interest 114 560 66,00 97 679 62,21
Earnings 144 003 82,96 97 771 62,27
Net surplus on
revaluation of investment
properties (35 290) (20,33) - -
Headline Earnings 108 713 62,63 97 771 62,27
Distributable earnings are not impacted by the deficit on revaluation of the Put
option (AC133 fair value adjustment), which is included in earnings and
headline earnings per linked unit.
3.4 Contingent liabilities and commitments
Guarantees
Guarantees in lieu of municipal service deposits amount to R1,9 million (2003:
R1,4 million).
Capital expenditure
Capital expenditure amounting to R22,2 million has been authorised for
redevelopment and improvements of existing properties. This expenditure will be
funded through existing resources.
4. COMMENTARY ON RESULTS AND PORTFOLIO
4.1 Financial results
Distributable income for the year ended 31 March 2004 increased to 65,90 cents
per linked unit (31 March 2003 : 62,35 cents per linked unit). This 5,7%
increase on last year reflects the net rental growth derived from the
properties.
The improved turnover rental generated from national tenants within the
portfolio can be attributed to increased consumer confidence as a consequence of
a lower interest rate environment and a buoyant retail sector.
4.2 Property portfolio
During the year under review S A Retail acquired three shopping centres for
a total purchase consideration of R160,5m. In April 2003 S A Retail acquired
Westwood Village Shopping Centre in Boksburg for R14,6m at an initial yield of
14,0%. This convenience centre serves the suburban residents of Benoni,
Lakefield, Westdene and is anchored by a SuperSpar on a 9 year lease. In
January 2004 S A Retail acquired Town Square Shopping Centre in Constantia
Kloof in the Northern Suburbs of Johannesburg for R49,7m at an initial yield
of 11,5%. This property is anchored by a Woolworths store on a 10 year lease.
On 1 March 2004 S A Retail acquired an undivided half share of Sanlam Centre,
Pinetown for a purchase consideration of R96,2m at an initial yield of 12,0%.
This investment is anchored by majors and nationals occupying 84% of the gross
lettable area including Pick `n Pay, Woolworths and Game.
Significant upgrades have been completed during the financial year. These
include a R4,5m refurbishment of Eikestad Mall, Stellenbosch; the construction
of a R1,8m Woolworths Foodstore at Highland Mews, Witbank and the construction
of a Pick `n Pay Family Store at Coachman"s Crossing, Sandton at a capital cost
of R2,9m. Good progress is being made on the R40,0m redevelopment of Tokai
Shopping Centre in Cape Town, in which S A Retail has an undivided half share.
Planning is currently advanced on the refurbishment of the East Rand Galleria
in Boksburg. This project is likely to commence in the 3rd quarter of 2004 at a
capital cost of R9,0 m.
Negotiations are proceeding on additional retail property investment
opportunities which satisfy S A Retail"s investment criteria.
S A Retail has entered into agreements to dispose of two properties which do
not meet S A Retail"s investment criteria. The Circle in Somerset West and
Witbank Centre - Checkers in Witbank will realise a combined R44,4m.
The vacancy factor of the portfolio at 31 March 2004 was 4,6%. The expense to
income ratio at year end was 29,9%. Both these factors remain satisfactory.
4.3 Valuations
In conformity with accounting standards the portfolio is valued at each
reporting date. The portfolio was revalued by directors at R1 077,7m. This
represents a 4,0% or R35,3m increase in carrying value after providing for
deferred capital gains tax.
4.4 Deficit on revaluation of fair value of Put commitment and Call option
In terms of AC133, 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 31 March 2004.
Put option commitment
The fair value of the Put option that Whirlprops 33 (Pty) Ltd has on S A Retail
at 31 March 2004 on the assumption that the Put option will be exercised by
Whirlprops 33 (Pty) Ltd in November 2006 is a shortfall of R32,5m (18,5 cents
per linked unit or 3,3%). The accounting standard requires the potential
unrealised liability to be recognised on balance sheet.
In terms of the transitional provisions of the accounting statement, R6,0m of
the fair value adjustment has been charged to the income statement in the
current year and R26,5m, being the fair value adjustment at 31 March 2003 has
been charged against opening reserves in the statement of changes in equity.
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.
4.5 Prospects
The outlook for the retail property industry remains favourable. S A Retail is
well placed to benefit from the anticipated consumer confidence in the
forthcoming year.
5. DECLARATION OF DIVIDEND AND INTEREST PAYMENT NUMBER 6
Notice is hereby given that dividend number 6 of 0,02 cents per ordinary share
and interest of 34,63 cents per debenture totalling 34,65 cents per linked unit
have been declared in respect of the income distribution for the period 1
October 2003 to 31 March 2004.
Last date to trade cum distribution Friday, 21 May 2004
Units will trade ex distribution Monday, 24 May 2004
Record date to participate in the distribution Friday, 28 May 2004
Payment of the dividend and debenture interest Monday, 31 May 2004
Linked unit certificates may not be dematerialised or re-materialised between
Monday 24 May 2004 and Friday, 28 May 2004, both days inclusive.
BY ORDER OF THE BOARD
S A RETAIL PROPERTIES LIMITED
4 May 2004
Registered Office
Marriott at Kingsmead
Kingsmead Office Park
Durban, 4001
P O Box 207
Durban, 4000
Tel: (031) 366 1111
Auditors
KPMG Inc.
20 Kingsmead Boulevard,
Kingsmead Office Park,
Durban,4001
P O Box 1496
Durban, 4000
Tel (031) 327 6000
Transfer secretaries
Computershare Limited
70 Marshall Street,
Johannesburg, 2001
P O Box 61051
Marshalltown, 2107
Tel: (011) 370 7700
Property Asset Managers
Marriott Property Services
Registered Auditors and Accountants
KPMG Inc.
Sponsor
Exchange Sponsors
Date: 04/05/2004 10:41:08 AM Produced by the JSE SENS Department
