| Thu 4 Nov 2004, 17:42 | | INTERIM RESULTS 30 SEPTEMBER 2004 |
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SA RETAIL PROPERTIES - UNAUDITED INTERIM RESULTS AND DISTRIBUTION ANNOUNCEMENT
FOR THE PERIOD ENDED 30 SEPTEMBER 2004
SA RETAIL PROPERTIES
REGISTRATION NUMBER: 1999/025764/06
SHARE CODE: SRL
ISIN: ZAE000034328
WEBSITE: www.saretail.co.za
UNAUDITED AND DISTRIBUTION ANNOUNCEMENT FOR THE PERIOD ENDED
30 SEPTEMBER 2004
* DISTRIBUTIONS UP 4% VACANCY FACT OR REDUCED TO 3,9%
* PROPERTY ACQUISITIONS EXCEED R280 MILLION
* LONG TERM FUNDING FAVOURABLY RENEGOTIATED
BALANCE SHEET (R`000) Unaudited Unaudited Audited
30.09.2004 30.09.2003 31.03.2004
ASSETS
Non-current assets
Investment properties 1 342 434 907 700 1 077 730
Current assets
Trade and other receivables 19 507 13 978 12 279
Cash resources and short-term
investments 21 110 62 865 13 426
40 617 76 843 25 705
TOTAL ASSETS 1 383 051 984 543 1 103 435
EQUITY AND LIABILITIES
Capital and reserves 147 191 25 787 36 124
Non-current liabilities
Debentures 1 029 482 864 075 864 140
Derivative - fair value of Put
option 12 902 26 900 32 450
Interest bearing borrowings 81 794 - -
Deferred taxation 22 734 3 584 6 433
1 146 912 894 559 903 023
Current liabilities
Trade and other payables 11 392 10 163 8 301
Property acquisition obligation - - 95 413
Taxation 3 3 4
Unitholders for distribution 67 553 54 031 60 570
78 948 64 197 164 288
TOTAL EQUITY AND LIABILITIES 1 383 051 984 543 1 103 435
INCOME STATEMENT (R`000) Unaudited Unaudited Audited
01.04.2004 01.04.2003 01.04.2003
to to to
Notes 30.09.2004 30.09.2003 31.03.2004
Revenue 96 507 77 373 162 695
Net rental from
properties 62 676 51 540 109 039
Interest earned 2 103 2 582 5 947
Finance costs (334) - (211)
Net profit before fair
value adjustments 64 445 54 122 114 775
Net surplus on
revaluation of
investment
properties 91 333 19 405 35 290
(Net of capital gains
taxation)
Revaluation of Put option 19 548 (400) (5 950)
Net profit before
debenture interest
and taxation 165 326 73 127 144 115
Debenture interest (63 949) (53 994) (114 560)
Net profit before
taxation 101 377 19 133 29 555
Taxation (205) (62) (112)
Net profit 101 172 19 071 29 443
Distribution per linked
unit (cents)
Interest 32,49 31,23 65,86
Dividend 0,01 0,02 0,04
Total 32,50 31,25 65,90
Headline earnings per
linked unit (cents)
(weighted) 2.2 37,70 31,03 62,52
Earnings per linked unit
(cents) (weighted) 2.2 84,36 42,26 82,81
CASH FLOW STATEMENT (R`000) Unaudited Unaudited Audited
01.04.2004 01.04.2003 01.04.2003
to to to
30.09.2004 30.09.2003 31.03.2004
OPERATING ACTIVITIES
Cash received from tenants 89 279 74 123 161 144
Cash paid to suppliers and
employees (30 740) (22 699) (52 315)
Cash generated by operating
activities 58 539 51 424 108 829
Interest earned 2 103 2 582 5 947
Distributions to linked unitholders (60 617) (27 987) (82 048)
Finance costs (334) (5) (211)
Taxation paid (4) - (8)
(313) 26 014 32 509
INVESTING ACTIVITIES
Acquisition of investment
properties (285 406) (14 500) (65 152)
Improvements to investment
properties (11 661) (4 516) (9 794)
Disposal of investment properties 44 400 - -
(252 667) (19 016) (74 946)
FINANCING ACTIVITIES
Share premium on issue of new
linked units 9 916 - -
Debentures issued 165 342 31 483 31 483
Debenture issue expenses - (1 909) (1 913)
Increase in interest bearing
borrowings 81 794 - -
Distribution pre-paid received 3 612 - -
260 664 29 574 29 570
Net increase/(decrease) in cash
and cash
equivalents 7 684 36 572 (12 867)
Cash and cash equivalents at
beginning
of the period 13 426 26 293 29 293
CASH AND CASH EQUIVALENTS
AT END OF THE PERIOD 21 110 62 865 13 426
STATEMENT OF CHANGES IN EQUITY Share
(R`000) Share premium &
capital reserves Total
Balance at 31 March 2003 2 33 249 33 251
Adjustment to opening balance
- Transitional provision in terms of
AC133 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 distribution - (70) (70)
Balance at 31 March 2004 2 36 122 36 124
Share premium on issue of new linked
units - 9 916 9 916
Prepaid distribution received - 3 612 3 612
Net profit - 101 172 101 172
Prepaid distribution distributed - (3 612) (3 612)
Dividend distributed - (21) (21)
Balance at 30 September 2004 2 147 189 147 191
1. OTHER INFORMATION
Unaudited Unaudited Audited
01.04.2004 01.04.2003 01.04.2003
to to to
30.09.2004 30.09.2003 31.03.2004
Linked units in issue 207 947 420 174 893 039 174 893 039
Weighted average linked
units in issue 195 733 074 172 893 039 173 890 299
Net asset value (cents per
linked unit) (including
distribution yet to be
paid) 598 540 549
Listed market price (cents
per linked unit) 605 540 565
Premium to net asset value 1,2% 0,0% 2,9%
Vacancy factor (based on
lettable area) 3,9% 5,6% 4,6%
2. NOTES TO THE FINANCIAL RESULTS
2.1 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, but has had no impact on distributable income recorded below.
2.2 Earnings, headline earnings per linked unit attributable to linked
unitholders
The earnings, headline earnings per linked unit for the period 1 April 2004 to
30 September 2004 are calculated as follows:
September 2004
Cents
per linked
unit
R`000 (weighted)
Net profit 101 172 51,69
Debenture interest 63 949 32,67
Earnings 165 121 84,36
Net surplus on revaluation of investment
properties (91 333) (46,66)
Headline earnings 73 788 37,70
September 2003
Cents
per linked
unit
R`000 (weighted)
Net profit 19 071 11,03
Debenture interest 53 994 31,23
Earnings 73 065 42,26
Net surplus on revaluation of investment
properties (19 405) (11,22)
Headline earnings 53 660 31,04
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.
2.3 Contingent liabilities and commitments
Guarantees
Guarantees in lieu of municipal service deposits amount to R2,1 million
(2004: R1,9 million).
Capital expenditure
Capital expenditure amounting to R39,5 million has been authorised for
potential acquisitions, redevelopment and improvements of existing properties.
This expenditure will be funded through existing resources.
3. COMMENTARY ON RESULTS
3.1 Results
S A Retail`s distributable income for the six months ending 30 September 2004
amounted to 32,50 (30.09.2003: 31,25) cents per linked unit which represents a
4% growth in distributions over the prior period.
3.2 Property portfolio
During the six months under review to 30 September 2004, the company acquired
investment properties to the value of R286,2 million. On 1 April 2004, a 50%
undivided share of Sanlam Centre, Pinetown was acquired for R96,2 million. 18
002 359 linked units were issued at 530 cents per linked unit for this
acquisition. On 15 September 2004, a 50% undivided share of Musgrave Centre,
Durban was acquired for R190,0 million. This acquisition was funded by an issue
of 15 052 055 linked units at 554 cents per linked unit and the balance by way
of debt. These acquisitions signal an accelerated diversification into regional
centres.
The 38 000m2 Sanlam Centre, Pinetown is 100% let and is anchored by majors and
nationals occupying 84% of the gross lettable area including Pick `n Pay,
Woolworths and Game. The 40 000 m2 Musgrave Centre, also 100% let, is one of
Durban`s premier shopping destinations with a 70% composition of national
tenants including Pick `n Pay, Woolworths, Stuttafords, Truworths and Ster
Kinekor.
Certain properties which no longer meet the investment criteria were sold
during the period under review. These were The Circle, Somerset West, Witbank
Checkers and Witbank Centre. Rondebosch Shopping Centre was transferred post 30
September 2004. The sale of these properties realised R68,4 million. In
addition, agreements to dispose of Florida Junction, Florida; Cambridge Downs,
Fourways; and Kyalami Downs, Midrand have been entered into. These disposals
are expected to realise R102,5 million.
The company has actively pursued redevelopment and refurbishment opportunities
at selected shopping centres. The first phase of the R48,9 million Tokai
redevelopment opened on 29 September 2004. Phase 1 is currently 100% let and
there is strong tenant interest for the remaining 3 000m2 in Phase 2.
Management have recently approved a development plan at Highland Mews to
enlarge the centre by an additional 6 230m2 at a capital cost of R17 million.
The project provides for a new Edgars store of 3 190m2 and a spread of national
tenants including Mr Price, CNA and Jet. Both Tokai and Highland Mews are held
under joint ownership by S A Retail and Martprop. Planning is currently well
advanced on the refurbishment of East Rand Galleria in Boksburg.
The vacancy factor of the portfolio as at 30 September 2004 is 3,9% (2003:
5,6%). The expense income ratio was 33%. These remain favourable.
3.3 Valuations
In conformity with Accounting Standards the portfolio is valued at each
reporting date. The portfolio was revalued by directors at R1 342,4 million.
This represents an 8,7% or R91,3 million increase in carrying value after
providing for deferred capital gains tax of R16,1 million.
3.4 Fair value of Put and Call option
The company is pleased to announce that it has reached an agreement with
Whirlprops 33 (Pty) Limited to extend the exercise date of the Put option from
November 2006 to November 2011, which has had a favourable impact on the value
of the derivative and hence S A Retail`s net asset value.
In terms of AC133: The accounting statement on financial instruments, the Put
and Call option that exists between S A Retail and Whirlprops 33 (Pty) Limited
has been fair valued at 30 September 2004.
Put option
The fair value of the Put option that Whirlprops 33 (Pty) Limited has on S A
Retail at 30 September 2004 on the assumption that the Put option will be
exercised by Whirlprops 33 (Pty) Limited in November 2011 is a shortfall of
R12,9m (6,2 cents per linked unit or 1%). The accounting standard requires the
potential unrealised liability to be recognised on balance sheet.
The fair value of the derivative liability has been reduced from R32,5 million
to R12,9 million and this movement has been reflected through the Income
Statement.
Call Option
It is not the intention of management to exercise the Call option that it has
on Whirlprops 33 (Pty) Limited in the immediate future.
3.5 Trading statements
In terms of paragraph 3.4 (b) (v) of the Listing Requirements of the JSE, S A
Retail in agreement with the JSE has adopted distributable earnings per linked
unit as a proxy for cash flow per linked unit as the financial results
measurement for trading statement purposes. It is effective for the financial
year ending 31 March 2005.
3.6 Prospects
The company has successfully disposed of three non-core investments and
acquired an undivided share in two superior regional shopping centres during
the period under review. The quality of the portfolio has been enhanced as a
result of this investment activity.
Negotiations are advanced regarding additional investment in substantial retail
centres which satisfy the company`s investment criteria.
The company is well positioned to take advantage of continued consumer
confidence and increased tenant trading densities.
4. DECLARATION OF DIVIDEND AND INTEREST PAYMENT NUMBER 7
Notice is hereby given that dividend number 7 of 0,01 cents per ordinary share
and interest of 32,49 cents per debenture totalling 32,50 cents per linked unit
have been declared in respect of the income distribution period 1 April 2004 to
30 September 2004.
Last date to trade cum distribution Friday, 19 November 2004
Units will trade ex distribution Monday, 22 November 2004
Record date to participate in the distribution Friday, 26 November 2004
Payment of the dividend and debenture interest Monday, 29 November 2004
Linked unit certificates may not be dematerialised or re-materialised between
Monday, 19 November 2004 and Friday, 26 November 2004, both days inclusive.
BY ORDER OF THE BOARD
S A RETAIL PROPERTIES LIMITED
5 November 2004
Registered office
Marriott at Kingsmead
Kingsmead Office Park
Durban, 4001
PO Box 207
Durban, 4000
Tel: 031 366 1111
Property Asset Managers
MARRIOTT
PROPERTY SERVICES
(Registration number 1982/006032/07)
Sponsor
EXCHANGE SPONSORS (PTY) LIMITED
(Registration number 1999/024433/07)
Transfer secretaries
Computershare Investor
Services 2004 (Pty) Ltd
70 Marshall Street
Johannesburg, 2001
PO Box 61051
Marshalltown, 2107
Tel: 011 370 7700
Date: 04/11/2004 05:40:22 PM
Produced by the JSE SENS Department
