| Wed 10 Nov 2004, 17:59 | | Results For The Six Months Ended 30 September 2004 |
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Metboard - Interim Results For The Six Months Ended 30 September 2004 And
Distribution Declaration
METBOARD PROPERTIES LIMITED
(Registration number 1998/005425/06
JSE Share code: MPL
ISIN code: ZAE000014874
(`Metboard` or `the company`)
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2004 AND DISTRIBUTION
DECLARATION
Unaudited Unaudited Audited
30 September 30 September 31 March
2004 2003 2004
Income Statement R`000 R`000 R`000
Revenue 107,182 90,104 190,087
Property expenses (19,642) (16,133) (33,648)
Net property income 87,540 73,971 156,439
Fund expenses (4,889) (3,751) (6,835)
Net operating income 82,651 70,220 149,604
Interest received 3,280 1,434 7,249
Interest paid (38,245) (34,678) (69,210)
Net operating income 47,686 36,976 87,643
after interest
Profit/(Loss) on (1,466) 16 (2,574)
disposal of investment
property
Fair Value Adjustments
- investment property - - 73,836
- interest bearing debt (23,090) - (18,282)
- debenture capital (3,535) - (6,305)
Net income before 19,595 36,992 134,318
debenture interest and
taxation
Debenture interest paid (47,297) (36,825) (87,496)
Net income before (27,702) 167 46,822
taxation
Taxation (123) (49) (11,928)
Current (123) (49) (55)
Deferred - - (11,873)
Net income after (27,825) 118 34,894
taxation
Linked units in issue 255,913,910 204,785,577 229,089,150
Weighted average number
of linked units
in issue (`Wanolu`) 240,604,852 204,785,577 215,568,511
Distribution per linked 18.50 18.00 39.00
unit (cents)
Distributable earnings
per linked unit (cents)
using Wanolu 19.77 18.03 40.63
Distributable earnings
per linked unit (cents)
using linked units in 18.59 18.03 38.23
issue
Reconciliation of R`000 R`000 R`000
earnings to
distributable earnings
Net income before (27,702) 167 46,822
taxation
Taxation (123) (49) (11,928)
Earnings (27,825) 118 34,894
Fair value adjustment - - - (73,836)
investment property
Fair value adjustment - 23,090 - 18,282
interest bearing debt
Fair value adjustment - 3,535 - 6,305
debentures
Deferred Taxation - - 11,873
Loss/(Profit) on sale 1,466 (16) 2,574
of property
Debenture interest 47,297 36,825 87,496
Distributable earnings 47,563 36,927 87,588
Distribution per linked 18.50 18.00 39.00
unit (cents)
Interim distribution to 18.50 18.00 18.00
September
Final distribution to - - 21.00
March
Unaudited Unaudited Audited
30 September 30 September 31 March
2004 2003 2004
Balance Sheet R`000 R`000 R`000
Assets
Investment property 1,556,159 1,158,092 1,412,364
Current assets 42,595 75,462 66,571
Accounts receivable 20,301 41,911 28,740
Cash and cash 22,294 33,551 37,831
equivalents
1,598,754 1,233,554 1,478,935
Equity and Liabilities
Shareholders` equity 29,973 98,359 57,266
Non-current liabilities 767,742 535,894 687,267
- debentures
Linked unitholders` 797,715 634,253 744,533
interest
Other non-current 723,671 475,819 648,759
liabilities
Interest bearing debt 710,534 474,555 547,680
Amount owing to vendors - - 87,942
Deferred tax 13,137 1,264 13,137
Current liabilities 77,368 123,482 85,643
Accounts payable 17,777 39,494 25,384
Distribution to linked 47,344 36,861 48,109
unitholders
Short-term interest 12,130 47,127 12,130
bearing debt
Taxation 117 - 20
1,598,754 1,233,554 1,478,935
Number of linked units 255,913,910 204,785,577 229,089,150
in issue
Net asset value per 312 310 325
linked unit (cents)
Statement of Changes in Equity
Total
share
Non capital
Share Share distributable Accumulated and
capital premium reserves profits reserves
R`000 R`000 R`000 R`000 R`000
Balance at 2,291 570 54,368 37 57,266
31 March
2004
Shares 268 311 579
issued
Fair value (26,625) 26,625 -
adjustments
Transfer of (1,466) 1,466 -
loss on
disposal
Net income (27,825) (27,825)
for the
period
Dividends (47) (47)
Balance at 2,559 881 26,277 256 29,973
30 September
2004
Unaudited Unaudited Audited
30 September 30 September 31 March
2004 2003 2004
Abridged Cash Flow R`000 R`000 R`000
Statement
Cash generated by 83,484 69,649 148,202
operations
Net financing costs (34,965) (33,244) (61,961)
Taxation paid (27) - (94)
Distributions to linked (48,109) (42,036) (81,510)
unitholders
Cash flow from operating 383 (5,631) 4,637
activities
Cash flow from investing (143,795) (39,480) (222,506)
activities
Cash flow from financing 127,875 71,625 248,663
activities
Net increase/(decrease) (15,537) 26,514 30,794
in cash and cash
equivalents
Cash and cash equivalents 37,831 7,037 7,037
at beginning of the year
Cash and cash equivalents 22,294 33,551 37,831
at end of the year
Basis of accounting
The interim results have been 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
used in the annual financial statements for the year ended 31 March 2004. The
unaudited results for the six months to September 2003 have been restated to
include operating cost recoveries as part of revenue, instead of netting against
expenses which is consistent with Metboard`s accounting policy.
Financial results of the company
Revenue and net operating income increased for the six months ending September
2004 by 18.9% and 17.7% respectively. This is mainly as a result of the company
having acquired 16 new properties, as well as the reduction in vacancies
throughout the portfolio.
Total debenture interest payable to linked unitholders increased by 28.4% in the
period under review. The distribution per linked unit for the six months to
September 2004 increased to 18.5 cents per linked unit compared to 18.0 cents
for the six months to September 2003, an increase of 2.8%.
It is the company`s policy to revalue it`s property portfolio on an annual basis
in March of each year. Accordingly there was no revaluation of investment
property as at September 2004.
In accordance with AC133 the company revalues the fixed interest bearing debt at
the end of September and March each year. The mark to market fair value
adjustment as at September 2004 resulted in a charge to the income statement of
R23.0 million. As this mark to market fair value adjustment is an unrealised
loss it does not have any impact on Metboard`s distributable income. Linked
unitholders should assess the performance of the company on the distributable
earnings and not the accounting net income after taxation. The rationale for
this is that Metboard distributes all `income profit` to unitholders via a
distribution and that unrealised and realised capital profits and losses are non
distributable. The distributable earnings increased by 28.7% to R47.5 million
from R36.9 million for the comparable period.
Net asset value per unit
Metboard`s stated net asset value per linked unit reduced to 312 cents from 325
cents at 31 March 2004. This resulted purely from a timing difference between
the fair value adjustment of the fixed interest bearing debt and that of the
investment property as Metboard has a policy of fair value adjusting the
property at the year end only. The improvement in the interest rate environment
would have improved the market value of the property portfolio. Ignoring the
fair value adjustment of the fixed interest bearing debt, the net asset value
per linked unit equated to 328 cents.
Acquisitions
During the six month period under review, 16 properties were acquired for a
total cost of R144.3 million, 8 of which were from the subsidiaries of Lyons
Corporate Lease Fund Limited (`Lyons`) and the other 8 were from African Tubes
and Pipes (`ATP`). In October and November 2004 the remaining 14 properties from
Lyons will be transferred to Metboard. All the acquisitions totalling R272
million will be financed by the issue and placement of an additional 34,646,276
linked units at an average issue price of approximately 300 cents per linked
unit and R168.0 million of additional borrowings. Agreements for the purchase of
2 additional buildings with an aggregate purchase consideration of R28.1 million
were also concluded during the period. Transfer of these properties is expected
to take place during November 2004 and the purchase consideration will be
settled by a combination of the issue of new Metboard linked units as well as
additional borrowings from existing facilities.
Disposals
In line with the policy of disposing of under performing properties the company
disposed of 6 properties for a consideration of R19.8 million in the six-month
period under review. The loss on disposal of these properties amounted to R1.5
million. A further 14 agreements of sale for an aggregate consideration of R47.2
million have been concluded in respect of under performing properties and
transfer of these properties is expected to take place between November 2004 and
January 2005 at no significant capital loss.
Property portfolio
At 30 September 2004 the portfolio consisted of 175 properties with a gross
lettable area of 1,423,248m2. Vacancies at September 2004 were 51,515m2 or 3.6%
of gross lettable area. Vacancies at September 2003 were 62,211 square meters or
5.2% of gross lettable area. After transfer to Metboard of the remaining 14
Lyons properties and the transfer of the sold buildings, vacant space in the
portfolio is expected to be 39,419m2 or 2.7% of gross lettable area.
Vacant space reconciliation in square metres for the six months to September
2004:
Square metres
Vacant space 1 April 2004 65,915
Leases expired in the period 169,957
Renewals during the period (134,528)
New lettings during the period (45,150)
Vacant buildings sold (4,679)
Vacant space 30 September 2004 51,515
The renewal rate for the six months to September 2004 has been 79.2% compared to
49.0% for the corresponding prior period in 2003. New lettings in the six months
ended September 2004 exceeded those of the corresponding period by 15,716m2 or
65.6%. In the six months to the end of September 2004 vacancies have fallen by
14,400m2. This clearly reflects the improvement in the letting conditions in the
industrial sector.
In October 2004 Metboard announced that it had acquired a site in Alrode
adjacent to 3 currently owned buildings. A redevelopment plan for the site as
well as for the 3 owned buildings is currently in process and it is planned that
building operations will commence in the new year.
An ongoing capital expenditure program is in place to ensure that the property
portfolio remains well maintained and in good lettable order. During the six
months ended September 2004 an amount of R7.7 million was spent on capital
improvements.
The acquisitions and disposals referred to above are yield enhancing and should
have a positive impact on the future distributions of the company. Metboard`s
management will continue to actively seek opportunities to acquire new
properties and sell older, less desirable properties.
Share and debenture capital
During the six months ended 30 September 2004 26,824,760 linked units were
issued. These linked units were issued as follows, 14,084,375 linked units were
issued at R2.80, 9,627,000 linked units were issued at R2.95, and a further
3,113,385 linked units were issued at R3.11.
Borrowings and cash resources
At 30 September 2004 total borrowings amounted to R680.3 million of which 72.3%
has been fixed for periods ranging from 2 to 10 years. The weighted average cost
of finance amounts to 12.3% and borrowings represent 46.4% of the value of the
property portfolio (`LTV`). If the cumulative fair value adjustment of R41.3
million is ignored the LTV is 43.8%. The company is currently investigating
alternative ways of reducing the cost of it`s debt by accessing new
securitisation structures currently available in the market.
Cash resources at 30 September 2004 amounted to R22.3 million. The cash balance
is less than the comparable period due to Metboard employing the funds in
temporarily reducing the variable debt.
Fund management
In terms of the management agreement between Metboard and Investec Property
Group Limited (`IPG`), IPG are responsible for the asset management of Metboard
and have appointed Mr. Estienne de Klerk and Mr. Jeffrey Sher as joint fund
managers to manage the company with immediate effect.
Prospects
In the 31 March 2004 results announcement published on 2 June 2004 the board of
directors of Metboard highlighted that Metboard was experiencing reversionary
pressures on the rental levels when renewing leases resulting in the board`s
expectation that the distributions for the period ending March 2005 would be in
line with the year ending 31 March 2004. The results however exceeded director`s
expectations for the period under review due to the reduction in the vacancies
and the overall improvement in the sector`s rental levels. Assuming the trend
continues the directors are of the view that the total distributions to March
2005 will show an improvement over the results of the prior year ending March
2004.
Trading statements
In terms of paragraph 3.4 (b)(v) of the Listing Requirements of the JSE,
Metboard in agreement with the JSE has adopted distributable earnings per linked
unit as the financial results measurement for trading statement purposes. It is
effective for the financial year ending 31 March 2005.
Declaration of dividend and interest payment
Notice is hereby given of interim dividend declaration number 16 of 0.0185 cents
per share and debenture interest payment number 16 of 18.4815 cents per
debenture for the period 1 April 2004 to 30 September 2004 (`the interim
distribution`).
The interim distribution of 18.50 cents per linked unit will be payable to
Metboard linked unitholders in accordance with the abbreviated timetable set out
below:
2004
Last date to trade `cum` the interim Friday, 3 December
distribution
Linked units commence trading `ex` the Monday, 6 December
interim distribution
Record date to participate in the interim Friday, 10 December
distribution
Payment of the dividend and debenture Monday, 13 December
interest
No dematerialisation or rematerialisation of linked unit certificates may take
place between Monday, 6 December 2004 and Friday, 10 December 2004, both days
inclusive.
By order of the board
C M Liebenberg
Secretary
11 November 2004
REGISTERED OFFICE:
GROUND FLOOR, 100 GRAYSTON DRIVE, SANDOWN, SANDTON 2196.
P O BOX 78949, SANDTON, 2146
TRANSFER SECRETARIES:
COMPUTERSHARE INVESTOR SERVICES 2004 (PTY) LIMITED
REG NO. 2004/003647/07
70 MARSHALL STREET, JOHANNESBURG 2001. PO BOX 610513, MARSHALLTOWN, 2107
SPONSOR
INVESTEC BANK LIMITED
INVESTEC BANK LIMITED REGISTRATION NO. 1969/004763/06
100 GRAYSTON DRIVE, SANDOWN, SANDTON, 2146. P O BOX 78979,
SANDTON 2146
MANAGED BY
INVESTEC PROPERTY GROUP
