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OCTODEC - REVIEWED RESULTS OF THE GROUP FOR THE YEAR ENDED 31 AUGUST 2004
OCTODEC INVESTMENTS LIMITED
and its subsidiaries
(Incorporated in the Republic of South Africa)
(Registration number 1956/002868/06)
Share code: OCT ISIN: ZAE000005104
(`Octodec` or `the group` or `the company`)
Reviewed results of the group for the year ended 31 August 2004
Notice to linked unitholders
The directors report the reviewed results of the group for the year ended 31
August 2004 set out herein, together with comparisons with the results for the
corresponding year ended 31 August 2003.
* Distribution up by 26,3% to 60cents per linked unit
CONSOLIDATED INCOME STATEMENT
Reviewed Audited
year to year to
% 31 August 31 August
R`000 changes 2004 2003
Revenue 6,1 112 399 105 957
Net property income 4,8 75 480 72 011
Interest received 5 485 3 529
Investment income - associate 5 089 1 188
Investment income - other 11 8
Depreciation (510) (274)
Capital profit: disposals of property (1) 1 124
Acquisition of loan account at a
discount - 730
Fair value adjustments
- associate, net of capital gains tax 6 162 1 711
- investment property 73 451 48 362
165 167 128 389
Interest paid (7,1) (40 114) (43 168)
Profit before debenture interest 46,7 125 053 85 221
Debenture interest 36,4 (43 764) (32 095)
Profit before taxation 81 289 53 126
Taxation charge (14 402) (4 122)
- Normal and Secondary Tax on Companies (979) (412)
- Deferred tax - Capital Gains Tax (13 423) (3 710)
Net income attributable to linked
unitholders 66 887 49 004
Units in issue - (000) 78 345 67 896
Units in issue - weighted (000) 73 163 67 896
Earnings per share - weighted (cents) 26,7 91,4 72,2
Headline earnings per linked unit
- weighted (cents) 25,5 60,8 48,4
Distribution per linked unit (cents)
Dividends 0,29 0,23
Interest 59,71 47,27
Total 26,3 60,00 47,50
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Reviewed Audited
year to year to
31 August 31 August
R`000 2004 2003
Cash flow from operating activities
Net rental income from properties 74 981 71 737
Adjustment for:
- Depreciation 510 274
- Working capital changes (1 060) 2 745
Cash generated from operations 74 431 74 756
Investment income and interest
received 8 484 4 205
Finance costs (40 114) (43 168)
Taxation paid (22) (298)
Distribution to linked unit holders
paid (36 189) (30 011)
Net cash inflow from operating
activities 6 590 5 484
Cash flow from investing activities
Investing activities (18 417) (18 125)
Proceeds from disposal of investment
properties 800 8 568
Net cash outflow used in investing
activities (17 617) (9 557)
Cash flow from financing activities 9 740 4 495
Net (decrease)/increase in cash and
cash equivalents (1 287) 422
Cash and cash equivalents at
beginning of year (10) (432)
Cash and cash equivalents at end of
year (1 297) (10)
ABRIDGED CONSOLIDATED BALANCE SHEET
Reviewed Audited
31 August 31 August
R`000 2004 2003
ASSETS
Non-current assets
Investment properties 749 156 658 342
Plant and equipment 2 041 2 297
Investments - listed 21 304 13 934
- associated company 15 438 11 926
Current assets 9 645 7 940
Total assets 797 584 694 439
EQUITY AND LIABILITIES
Share capital 11 200 11 096
Non-distributable reserve 172 530 100 050
Accumulated profit 1 556 1 035
Ordinary shareholders` interest 185 286 112 181
Debentures 242 923 198 513
Linked unitholders` interest 428 209 310 694
Interest bearing borrowings 297 811 336 714
Deferred taxation 22 214 7 686
Current liabilities - interest bearing 5 642 3 914
- non interest bearing 43 708 35 431
Total equity and liabilities 797 584 694 439
Linked units in issue (`000) 78 345 67 896
Net asset value per linked unit (cents) 547 458
STATEMENT OF CHANGES IN EQUITY
Non- Distribu-
Share distributable table
R`000 capital reserve reserve Total
Balance at
1 September 2002 11 096 48 022 390 59 508
Net income
attributable
to ordinary
shareholders - - 49 004 49 004
Dividends paid - - (143) (143)
Transfer to
non-distribut
able reserve - 52 028 (48 216) 3 812
Balances at
1 September 2003 11 096 100 050 1 035 112 181
Net income
attributable
to ordinary
shareholders - - 66 887 66 887
Dividends - - (177) (177)
Transfer to
non-distribut
able reserve - - - -
- Capital
loss on
disposal
of investment
property - (1) 1 -
Fair value
adjustments
- associate,
net of capita l
gains tax - 6 162 (6 162) -
- investment
property - 73 451 (73 451) -
- deferred
Capital Gains
Taxation - (13 423) 13 423 -
10 448 346 linked
units issued 104 - - 104
Adjustment to
value of
listed
investment
net of
Capital Gains Tax - 6 291 - 6 291
Balances at
31 August 2004 11 200 172 530 1 556 185 286
RECONCILIATION - HEADLINE EARNINGS PER LINKED
UNIT TO EARNING`S PER SHARE
Reviewed Audited
year to year to 31
31 August 31 August
Cents 2004 2003
Headline earnings per linked unit 60,8 48,4
Debenture interest (59,8) (47,3)
Capital profit: disposals of property - 1,7
Fair value adjustments
- associate net of capital gains tax 100,3 2,5
- investment property 8,4 71,3
- deferred Capital Gains Taxation (18,3) (5,5)
Acquisition of loan account at a discount - 1,1
Earnings per share 91,4 72,2
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
applicable to AC127 `Interim Financial Reporting`.
2. An amount of R80,6 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 secured from the
company`s bankers as well as funds raised from a recent capital raising
exercise.
3. Capital expenditure during the year amounted to R18,4 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 31 August 2004 amounted
to R38,06 million.
6. In terms of AC135 the company values its investment properties annually,
resulting in a fair value upward adjustment of R73,4 million.
7. The company`s auditors, Deloitte & Touche, have reviewed these financial
results. Their unqualified reviewed report is available for inspection at
the company`s registered office.
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 twelve month period ended 31 August
2004, amounted to 60,8 cents (2003:48,4 cents), an increase of 25,5% over the
previous comparative period. Turnover and net rental income increased by 6,1%
and 4,8% respectively, compared with the previous twelve month period ended 31
August 2003.
The total distribution for the year of 60,0 cents per linked unit (2003: 47,5
cents) represents an increase of 26,3% on that paid in the previous
corresponding period.
The favourable climate of reducing interest rates and management`s proactive
approach to letting, as well as a containment of operating costs, resulted in
the fund`s exceptional growth in earnings and distributions.
Income from an associate company, IPS, in which Octodec holds a 40% interest,
increased significantly as a result of greater demand for residential and
office space and a number of acquisitions made at attractive yields. A
successful residential sectional- title development was completed and largely
sold out as at 31 August 2004. The profits from this venture have had a further
positive impact on the results.
Property portfolio
Management continues to focus on increasing the quality of properties through
an ongoing program of upgrading. During the financial year, Octodec spent R18,4
million on renovations to properties such as Killarney Mall and Elardus Park
Shopping Centre.
The vacancy factor remained stable at approximately 7% (2003: 8,0%) of total
potential rental income.
Woodmead Value Mart, Killarney Mall, Elardus Park and Waverley Plaza continue
to enjoy strong growth in consumer spending and demand from existing and
prospective tenants.
The property portfolio was revalued at 31 August 2004 at R749,2 million. This
is an increase of 10,8% on the property values prior to revaluation.
Capital raising
In June 2004, Octodec approached the capital markets to raise new equity to
fund various projects including the refurbishment and reconfiguration of the
Killarney Mall Shopping Centre. The total equity raised, at a price of 450
cents per unit which included a notional distribution prepayment of 20 cents
per unit, amounted to R47 million.
All new units issued rank pari-passu with the existing units from date of issue
and the prepaid distribution, amounting to R2,1 million, did not dilute the
earnings and distributions of existing unitholders.
Interest risk management and borrowings
At 31 August 2004 Octodec`s borrowings amounted to R302 million, equating to a
40,2% debt to property value ratio. At 31 August 2004, interest rates have been
fixed in respect of 52% of net borrowings for periods ranging from October 2004
to October 2007.
Prospects
The company has embarked on a major refurbishment and reconfiguration programme
of Killarney Mall shopping centre. This includes the construction of
approximately 5 500m2 of additional retail space including a two level Edgars
store and an additional 430 parking bays. The cost of this project is
approximately R77,0 million and is expected to yield an initial 11% return.
The successful completion of the refurbishment and reconfiguration programme of
Killarney Mall in October 2005, a favourable interest rate environment and the
continuation of prevailing market conditions, should result in further growth
in distribution to unitholders.
DECLARATION OF DIVIDEND NO. 29 AND INTEREST PAYMENT (`the distribution`)
Notice is hereby given that dividend number 29 of 0,15 cents (2003: 0,12 cents)
per ordinary share together with interest of 30,85 cents per debenture (2003:
24,18 cents), for the period 1 March 2004 to 31 August 2004 has been declared,
payable to linked unitholders recorded in the register on Friday, 12 November
2004. The last date to trade `CUM` distribution is Friday, 5 November 2004. The
units will commence trading `EX` distribution on Monday, 8 November 2004.
Payment date will be Monday, 15 November 2004.
No dematerialisation or rematerialisation of linked unit certificates may take
place between Monday, 8 November 2004 and Friday, 12 November 2004, both days
inclusive.
By order of the Board
City Property Administration (Proprietary) Limited
18 October 2004
A Wapnick (Chairman)
J P Wapnick (Managing director)
Directors:
AWapnick* (Chairman)
J P Wapnick* (Managing director)
M J Holmes#, R J Inggs*, M Z 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 Investor Services 2004 (Pty) Limited
(Registration number 2004/003647/07)
70 Marshall Street, Johannesburg 2001
P O Box 61051, Marshalltown 2107
Tel: (011) 370-7700
Fax: (011) 688-7712
CITY PROPERTY
Property Asset Managers
Date: 18/10/2004 04:21:24 PM
Produced by the JSE SENS Department
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