| Wed 2 Jun 2004, 17:55 | | AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2004 |
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Metboard - Audited Results For The Year Ended 31 March 2004 And Distribution
Declaration
Metboard Properties Limited
(Registration number 1998/005425/06)
JSE Share code: MPL ISIN: ZAE000014874
(`Metboard` or `the company`)
AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2004 AND DISTRIBUTION DECLARATION
Audited Audited
31 March 31 March
2004 2003
Income statement R`000 R`000
Revenue 190,087 168,262
Property expenses (33,648) (28,376)
Net property income 156,439 139,886
Fund expenses (6,835) (4,054)
Trading income before interest 149,604 135,832
Interest received 7,249 1,139
Interest paid (69,210) (63,544)
Net operating income 87,643 73,427
Loss on disposal of investment properties (2,574) (5,019)
Fair value adjustments - investment 73,836 8,283
property
- interest bearing debt (18,282) -
- debenture capital (6,305) -
Net income before debenture interest and 134,318 76,691
taxation
Debenture interest paid (87,496) (73,265)
Net income before taxation 46,822 3,426
Taxation (11,928) 281
Current (55) (57)
Deferred (11,873) 338
Net income after taxation 34,894 3,707
Earnings per share/headline earnings per share
The disclosure of earnings and headline earnings per share set out below, while
obligatory in terms of accounting standards, is not meaningful to investors as
the capital structure of Metboard comprises ordinary shares linked to variable
rate debentures. This means that each share may only be traded on the JSE as a
linked unit, together with the debenture with which it is linked.
Virtually all of the revenue earnings of Metboard are distributed in the form of
debenture interest on the debenture component of the linked unit plus a dividend
on the share component of the linked unit in the ratio of 1 000 to 1. In
addition the headline earnings per share include fair value adjustments for
debentures as well as other interest bearing debt, which do not affect
distributable earnings. It is submitted that the distribution per linked unit
shown below is more meaningful.
Shares/linked units in issue 229,089,150 198,850,362
Weighted average number of 215,568,511 193,398,847
shares/linked units in issue
Earnings per share (cents) 16.19 1.92
Headline earnings per share (cents) (11.36) 0.05
Distributable earnings per linked 40.63 37.94
unit (cents)
Reconciliation of earnings to R`000 R`000
headline earnings
Net income before taxation 46,822 3,426
Taxation (11,928) 281
Earnings 34,894 3,707
Fair value adjustments - investment (73,836) (8,283)
properties
Deferred taxation 11,873 (338)
Loss on sale of properties 2,574 5,019
Headline earnings (24,495) 105
Fair value adjustments - debenture 6,305 -
capital
- interest bearing debt 18 282 -
Debenture interest paid 87,496 73,265
Distributable earnings 87,588 73,370
Distribution per linked unit 39.00 38.00
(cents)
Interim distribution to May - 6.80
Interim distribution to September 18.00 10.06
Final distribution to March 21.00 21.14
Distribution per linked unit 87,583 73,338
(R`000)
Interim distribution to May - 11,298
Interim distribution to September 39,474 20,004
Final distribution to March 48,109 42,036
Audited Audited
31 March 31 March
2004 2003
Balance sheet R`000 R`000
ASSETS
Investment properties 1,412,364 1,118,596
Current assets 66,571 29,331
Accounts receivable 28,740 22,294
Cash and cash equivalents 37,831 7,037
1,478,935 1,147,927
EQUITY AND LIABILITIES
Shareholders` equity 57,266 98,217
Non-current liabilities -debentures 687,267 519,920
Linked unitholders` interest 744,533 618,137
Other non-current liabilities 648,759 420,256
Interest bearing debt 547,680 418,992
Amount owing to vendors 87,942 -
Deferred tax 13,137 1,264
Current liabilities 85,643 109,534
Accounts payable 25,384 20,340
Distribution payable to linked 48,109 42,036
unitholders
Short term interest bearing debt 12,130 47,099
Taxation 20 59
1,478,935 1,147,927
Number of linked units in issue 229,089,150 198,850,362
Net asset value per linked unit 325.00 310.86
(cents)
Total
share
Share Share Non- Accumulated capital
distributable and
capital premium reserve profits reserves
Statement of R`000 R`000 R`000 R`000 R`000
changes in
equity
Audited 1,661 - 92,595 - 94,256
Balance at 31
March 2002
Shares issued 327 327
Net income 3,707 3,707
for the year
Transfer to 3,602 (3,602) -
non
distributable
reserve
Dividends (73) (73)
Audited 1,988 - 96,197 32 98,217
Balance at 31
March 2003
AC 133 - (76,631)
Transitional (76,631)
adjustment
Shares issued 303 570 873
Net income 34,894 34,894
for the year
Fair value 37,376 (37,376) -
adjustments
Transfer of (2,574) 2,574
loss on
disposal
Dividends (87) (87)
Audited 2,291 570 54,368 37 57,266
Balance at 31
March 2004
Audited Audited
31 March 31 March
2004 2003
Cash flow statement R`000 R`000
Cash generated by operations 148,202 151,170
Net finance costs (61,961) (62,405)
Taxation paid (94) (10)
Distribution to linked unitholders (81,510) (67,189)
Cash flow from operating activities 4,637 21,566
Cash flow from investing activities (222,506) (200,726)
Cash flow from financing activities 248,663 171,971
Net increase/(decrease) in cash and cash 30,794 (7,189)
equivalents
Cash and cash equivalents at beginning of 7,037 14,226
the year
Cash and cash equivalents at end of the 37,831 7,037
year
Basis of accounting
The financial statements are prepared in accordance with South African
Statements of Generally Accepted Accounting Practice and the requirements of the
South African Companies Act. The accounting policies are consistent with those
applied in the annual financial statements for the year ended 31 March 2003,
except for the implementation of AC 133: Financial Instruments: recognition and
measurement. Furthermore the debentures have been restated as a liability in
accordance with the contractual arrangements. These results have been audited by
Fisher Hoffman PKF (Jhb) Inc. and their unqualified audit opinion is available
for inspection at the company`s registered office.
Financial results of the company
Revenue and net operating income for the year to 31 March 2004 have increased by
12.97% and 19.36% respectively. This is mainly as a result of the company
acquiring 21 additional properties during the year. Debenture interest payable
to linked unitholders increased by 19.42%, whilst distributions per linked unit
for the year to 31 March 2004 amounted to 39.0 cents compared to 38.0 cents in
the prior year, representing an increase of 2.63% over 2003. This increase in
distribution has been impacted by the increase in fund expenses in the current
year, which was mainly as a result of the implementation of a market related
asset management fee for the first time.
Acquisitions
In line with its stated policy of growing the investment properties (`property
portfolio`), Metboard acquired 21 additional properties during the year in 10
different acquisitions for a total cost of R216.6 million. As a result of these
acquisitions the company has increased its gross lettable area to more than 1.3
million square metres. The enlarged portfolio allows Metboard to offer a large
variety of space to let thereby reducing the dependency on any one building or
geographic area. The acquisitions were financed by the issue and placement of an
additional 30,238,788 linked units and additional borrowings of R45.6 million,
during the year, with a further issue of 14,084,375 linked units to vendors and
further borrowings of R48.5 million post the year end to settle the vendor
liability of R87.9 million.
Disposals
During the year to 31 March 2004 the company disposed of 13 properties that
either no longer met the investment criteria of the company or were vacant and
had no reasonable prospect of being let in the foreseeable future. Net proceeds
from these disposals totaled R34.7 million after commissions. The proceeds from
the sales were used to repay variable borrowings as well as fund capital
expenditure.
These disposals resulted in a net capital loss of R2.6 million.
Capital improvements
During the year the company began construction of a `state of the art` food
factory for Magpie foods. At 31 March 2004 an amount of R11.9 million had been
spent and the project is expected to be complete in June 2004 at a total cost of
approximately R22 million. In addition to this development an amount of R24.0
million was spent on capital improvements and refurbishments to the portfolio
during the financial year.
Property portfolio
At 31 March 2004 the property portfolio consisted of 166 properties with a gross
lettable area of 1,321,787 square metres. The current valuation of the property
portfolio is R1.4 billion. The number of buildings by building type is as
follows: Industrial parks 23, Warehouses 62, Light industrial 49, Heavy
industrial 25 and Motor trade 7.
Building profile by gross lettable area at 31 March 2004
Major national or international tenants occupy 60% of gross lettable area and
49% of the buildings are occupied by single tenants.
Geographic breakdown of the portfolio by gross lettable area at 31 March 2004
At 31 March 2004 the unlet space in the portfolio amounted to 65 915 square
metres representing 4.99% of total gross lettable area. The comparable figure
for March 2003 was 59 667 square metres representing 5.02% of total gross
lettable area.
Vacant space reconciliation in square metres
Vacant space 1 April 2003 59,667
Leases expired during the year 269,158
Vacant buildings sold (24,154)
Renewals during the year (177,800)
New lettings during the year (60,956)
Vacant space 31 March 2004 65,915
In terms of AC135 the company needs to revalue its` property portfolio on an
annual basis. Metboard`s policy is that, one third of the property portfolio
will be valued by the external valuers on an annual basis, the results of which
are reflected below:
25 properties valued by Mr. A Rostovsky - an R276.8 million
independent valuer
24 properties valued by Mills Fitchet and R253.9 million
Associates - independent valuers
R530.7 million
The balance of the portfolio has been valued by the directors whose valuations
have been performed on the same basis and consistent with the assumptions made
by the external valuers. The valuations at 31 March 2004 resulted in a increase
in the value of the property portfolio of R73.8 million.
Linked unitholders` interest
Linked unitholders` interest in the company was increased by the issue of
30,238,788 linked units to partly fund the acquisitions referred to previously.
Borrowings and cash resources
At 31 March 2004 total borrowings amounted to R541.5 million before the fair
value adjustment. The fair value adjustment to interest bearing borrowings
amounted to R18.3 million, resulting in interest bearing borrowings of R559.8
million at 31 March 2004, of which 93.09% has been fixed for periods ranging
from 2 to 10 years. The weighted average rate of interest over these periods
amounts to 13.09%. The borrowings represent 39.64% of the value of the property
portfolio. After settlement of the vendor liability of which R48.5 million is to
be settled in cash the loan to value ratio will increase to 43.07%.
During the year Metboard repaid R22 million of it`s borrowings utilising the
cash proceeds from the sale of properties.
Cash resources at 31 March 2004 amounted to R37.8 million (2003: R7.0 million).
Post balance sheet events
Subsequent to year end Metboard concluded two separate transactions for the
acquisition of 29 properties. The first transaction is the acquisition of 22
properties from Lyons Corporate Lease Fund Limited for a total cost of
R176.4 million. Linked unitholders are referred to the press announcements dated
28 April 2004 and 24 May 2004.
The second transaction is the acquisition of 7 properties from African Tubes &
Pipes (Pty) Ltd for a total consideration of R87.0 million. Linked unitholders`
are referred to the press announcement dated 29 April 2004. Both transactions
are subject to Competition Commission approval, and are expected to be finalised
late June 2004. Transfer of all 29 properties is expected after I July 2004.
Prospects
While the industrial property sector is showing general signs of improvement
with a net reduction in vacancy rates across the sector, Metboard`s lease expiry
profile is such that leases over approximately 35% of total gross lettable area
need to be renewed between June 2004 and December 2005.
In a number of instances the leases that need to be renewed have been in
existence for periods of between 5 and 10 years and together with a low
prevailing inflation rate and downward pressure on escalation rates, Metboard is
experiencing reversionary pressures on rental levels when renewing leases.
Notwithstanding this, the board of directors of Metboard expect total
distributions for the year to March 2005 to be in line with total distributions
for the year to March 2004.
Declaration of dividend and interest payments
Notice is hereby given of a final dividend declaration number 15 of 0.0210 cents
per share and debenture interest payment number number 15 of 20.9790 cents per
debenture for the period 1 October 2003 to 31 March 2004. (`the final
distribution`).
The final distribution of 21.0000 cents per linked unit will be payable to
Metboard linked unitholders in accordance with the the abbreviated timetable set
out below:
2004
Last date to trade cum the final distribution Friday, 18 June
Linked units commence trading `ex` the
final distribution Monday , 21 June
Record date to participate in the final
distribution Friday, 25 June
Payment of the final distribution Monday , 28 June
No dematerialisation or rematerialisation of linked unit certificates may take
place between Monday, 21 June 2004 and Friday, 25 June 2004, both days
inclusive.
By order of the board
C M Liebenberg, Secretary
2 June 2004
METBOARD PROPERTIES LIMITED
REGISTERED OFFICE:
GROUND FLOOR, 100 GRAYSTON DRIVE, SANDOWN, SANDTON 2196. P O BOX
78949, SANDTON, 2146
TRANSFER SECRETARY:
COMPUTERSHARE LIMITED REG NO. 2000/006082/06
70 MARSHALL STREET, JOHANNESBURG 2001. PO BOX 61051, MARSHALLTOWN, 2107
SPONSOR:
INVESTEC BANK LIMITED REGISTRATION NO. 1969/004763/06
100 GRAYSTON DRIVE, SANDOWN, SANDTON, 2146. P O BOX 785700, SANDTON 2146
Date: 02/06/2004 05:47:11 PM
Produced by the JSE SENS Department
