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Pangbourne-Unaudited Financial Results For The Six Months Ended 31 December 2004
Pangbourne Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/002352/06)
Share code: PAP ISIN: ZAE000005252
(`Pangbourne`)
UNAUDITED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2004
Issued share capital
178 840 514 (2003: 176 033 514) ordinary shares of 1 cent each
Issued debentures
1 609 564 626 (2003: 1 584 301 626) unsecured variable rate debentures of 50
cents each
Issued combined units
178 840 514 (2003: 176 033 514)
Weighted average combined units
178 750 914 (2003: 176 033 514)
4,7% increase in distribution to 44,50 cents
Occupancies up to 94,95%
Gearing at 40,58% allowing for further expansion
Total assets R2,2 billion
COMMENTARY
FINANCIAL RESULTS
Pangbourne, in its commitment to provide growth to investors, has declared a
4,7% (2003: 3,7%) increase in its interim distribution to 44,50 cents per
combined unit.
PROPERTY MANAGEMENT
For the half year Pangbourne has had success in renewing 105 leases,
representing 95 588 m2 of lettable area. In the same period 128 new leases were
concluded representing 98 719 m2. The Pangbourne portfolio is currently 94,95%
occupied and the expectations are that these levels of occupancies will continue
for the rest of the financial year. Pangbourne due to its short lease expiry
profile as illustrated in the graph below, allows the company to take advantage
of the firming rental market in South Africa.
ASSET MANAGEMENT
During the interim period 16 buildings were sold realising a net loss of R767
000. These buildings were disposed of as part of the asset management strategy
to improve the quality of the Pangbourne portfolio. A further 26 buildings were
purchased as part of the Strupot portfolio and were transferred into Pangbourne
between November and December 2004 at a forward yield of 13,97%. This
acquisition was funded by debt.
INVESTOR RETURNS
The Pangbourne share price moved from R7,20 at 1 July 2004 to R8,75 at 31
December 2004. This, together with the 49,00 cents distribution which was paid
in October 2004 gave investors a total return of 28,3%. The liquidity in the
market in the interim period for Pangbourne shares was 30,48% of issued combined
units.
Over the last ten calendar years a Pangbourne investor has enjoyed a net
annualised return of 19%.
SNAPSHOT OF PANGBOURNE AT 31 DECEMBER 2004
Pangbourne has a property portfolio of 250 buildings with 914 tenants. The
properties are mainly diversified into Gauteng and KwaZulu-Natal regions, as
these are seen as two of South Africa`s important industrial hubs. Pangbourne
manages all its own properties and those of iFour Properties Limited. The total
value of properties managed by Pangbourne is R3,4 billion.
Pangbourne has a 49,00% investment in iFour Properties Limited which has an A
grade listed portfolio. In this period, iFour has declared an increased
distribution of 5,4%. The average purchase price of this investment was R5,45
per linked unit over a period from March 2003 to October 2004. On 31 December
2004 the iFour Properties Limted`s share price traded at R8,00 reflecting a
capital growth in the investment of 46,79% in just less than two years.
Pangbourne has a 95% investment in Paforma Property Finance (Pty) Limited, which
specialises in short-term financing of property transactions, relating
specifically to transfer duties, agents commission and bridging finance. Paforma
Property Finance (Pty) Limited`s net income grew 226,91% when compared with
prior year`s interim.
BORROWINGS
The board has approved an increase in gearing levels from 40% to 50% of income-
producing assets in order to take advantage of the current low interest rate
cycle and the present economic stability. Pangbourne has hedged 78% of its
borrowings, at an average interest rate of 11,43%.
PROSPECTS
The final distribution is expected to increase to an extent similar to that of
the interim distribution. This expectation of increased distribution has not
been reviewed by or reported on by Pangbourne`s auditors.
On behalf of the board
P L Campbell
Chairman
A M A Campbell
CEO
17 February 2005
Pangbourne Properties Limited
2nd Floor, Pangbourne House, 382 Jan Smuts Avenue
Craighall, Johannesburg, 2196
ADDITIONAL INFORMATION FOR INVESTORS
Compliance with SA Statements of GAAP, which are in the process of being
harmonised with IAS, and their application on the property loan stock structure,
which is unique to South Africa, has made it difficult for users to interpret
these financial statements. This investor information insertion is aimed at
disclosing to the users the basis on which the distribution per weighted average
number of combined units in issue, was calculated.
A reconciliation has been included to illustrate the accounting adjustments
which were not taken into account in calculating the distribution.
DISTRIBUTABLE EARNINGS
for the six months ended 31 December 2004
Six months to Year to
31.12.04 31.12.03 30.06.04
R`000 R`000 R`000
Revenue 160 007 133 007 291 907
Net building costs (24 216) (23 820) (44 779)
Administrative costs (30 746) (15 247) (49 215)
Net profit on disposal of
investments 2 251 6 483 15 831
Non-cash portion of profit on
disposal of loans - - (2 200)
Interest received 6 780 7 846 13 269
Finance costs (35 105) (34 998) (64 321)
Cash share of profits from
associates 835 1 138 1 347
STC on dividend declared (195) (183) (400)
Distributable earnings 79 611 74 226 161 439
Investors` distributable earnings
per combined unit
Weighted average number of
combined units in issue (`000) 178 751 176 034 176 131
Distributable earnings per
combined unit (cents) 44,54 42,16 91,66
RECONCILIATION OF DISTRIBUTABLE
EARNINGS TO (LOSS)/PROFIT FOR
THE PERIOD
Distributable earnings 79 611 74 226 161 439
Revaluation of investment
properties - - 36 743
Revaluation of investments
held-for-trade - 11 545 1 683
Net (loss)/profit on disposal of
investment properties (767) 8 531 14 703
Goodwill amortised and realised (1 418) (1 787) (11 559)
Negative goodwill amortised
and realised 5 212 10 125 28 307
Non-cash portion of profit on
disposal of loans - - 2 200
Movement in fair value of
interest rate swaps (48 310) (2 102) (949)
Amortisation of intangible asset (2 440) - (3 253)
Non-cash portion of profits
from associate - 467 2 363
Profit before taxation and
distribution to unitholders
(excluding STC and equity
earnings) 31 888 101 005 231 677
Debenture interest - debt portion (40 930) (40 930) (81 860)
Amortised debenture interest (1 298) (1 114) (2 316)
(Loss)/profit before taxation
(excluding STC and equity
earnings) (10 340) 58 961 147 501
Taxation 3 365 (13 503) (15 802)
(Loss)/profit for the period (6 975) 45 458 131 699
Net asset value per combined
unit with iFour investment
carried at market value (cents) 687 583 642
(excluding negative goodwill
and including debenture
debt portion)
Abridged consolidated income statement
Six months to Year to
R`000 31.12.04 31.12.03 30.06.04
Revenue 160 007 133 007 291 907
Profit from rental income,
investment income and fees
received 105 045 94 407 197 913
Net profit on disposal of
investments 2 251 6 483 15 831
Net trading profit 107 296 100 890 213 744
Revaluation of investment
properties - - 36 743
Revaluation of investments
held-for-trade - 11 545 1 683
Net (loss)/profit on disposal of
investment properties (767) 8 531 14 703
Goodwill amortised and realised (1 418) (1 787) (11 559)
Negative goodwill amortised and
realised 5 212 10 125 28 307
Profit before interest and
taxation 110 323 129 304 283 621
Interest received 6 780 7 846 13 269
Finance costs (35 105) (34 998) (64 321)
Movement in fair value of interest
rate swaps (48 310)** (2 102) (949)
Amortisation of intangible assets (2 440) - (3 253)
Profit before taxation and
distribution to unitholders 31 248 100 050 228 367
Debenture interest - debt portion (40 930) (40 930) (81 860)
Amortised debenture interest (1 298) (1 114) (2 316)
(Loss)/profit before taxation (10 980) 58 006 144 191
Taxation 14 298 (3 961) 6 934
Notional taxation reversed in
statements of changes in equity* (11 128) (9 725) (23 136)
Share of profit from associates 835 1 138 3 710
(Loss)/profit for the period (6 975)** 45 458 131 699
*GAAP requires that the company segregate its debentures and debenture interest
into debt and equity components in the balance sheet, income statement and
statement of changes in equity. This gives rise to a profit in the income
statement in respect of which a notional tax charge of R11,1 million has been
raised, which provision is reversed in the statement of changes in equity where
the equity portion of interest is reflected.
**IMPACT OF AC 133 ON THE RESULTS FOR THE PERIOD
In accordance with the company`s policy to reduce exposure to interest rate
increases, the company has hedged 78% of its loan book as at 31 December 2004
for 3 to 5 year periods. AC 133 requires that loan facilities negotiated for
fixed terms be revalued using the interest rate applicable at the date of the
financial statements. As a consequence of the decline in interest rates this
revaluation adjustment resulted in a book loss of R48 million before tax and a
loss of R7 million after tax for the period. The provision may fluctuate during
the periods of the loans and will be reduced to zero at the loan repayment
dates. This transaction has no effect on the cash flow of the company nor its
ability to finance the distribution to combined unitholders.
ACCOUNTING POLICIES
The interim financial statements are prepared in accordance with South African
Statements of Generally Accepted Accounting Practice and are consistent with
prior periods.
CHANGE IN COMPARATIVE FIGURES
Comparative figures have been restated as required.
Abridged consolidated balance sheet
Six months to Year to
R`000 31.12.04 31.12.03 30.06.04
ASSETS
Non-current assets
Investment properties 1 525 279 1 055 448 1 100 223
Equipment, furniture and
fittings 8 567 5 963 8 454
Intangible asset 8 944 - 11 384
Goodwill 6 383 17 573 7 801
Negative goodwill (23 617) (47 011) (28 829)
Investments in and loans to
associates 420 977 318 768 394 811
Long-term loans 3 805 554 3 836
Deferred taxation assets 29 441 14 722 14 948
Loans for purchase scheme units 72 239 67 659 78 971
Current assets
Investment properties
held-for-trade 3 856 - -
Bank and cash 10 428 3 727 9 072
Receivables 137 429 63 675 89 122
Other receivables 30 046 31 013 78 875
Investments held-for-trade - 129 287 23 290
Current portion of long-term
loans 1 039 916 1 090
Total assets 2 234 816 1 662 294 1 793 048
EQUITY AND LIABILITIES
Capital and reserves 359 984 318 040 387 420
Debenture debt portion 663 224 660 724 661 926
Other interest-bearing
borrowings 954 206 461 309 523 462
Fair value of interest
rate swaps 60 316 13 158 12 006
Deferred taxation liabilities 57 085 67 530 56 632
Current liabilities
Payables 45 126 31 915 32 712
Current portion of
interest-bearing borrowings 12 682 33 138 28 833
Unitholders for distribution 82 193 76 480 90 057
Total equity and liabilities 2 234 816 1 662 294 1 793 048
Net debt: income earning
assets (%) 40,58 27,90 33,90
Net asset value per combined
unit excluding negative goodwill
and including debenture debt
portion (cents) 585 583 612
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Six months to Year to
R`000 31.12.04 31.12.03 30.06.04
Cash generated from operations 100 264 68 794 68 000
Net finance costs (28 325) (27 152) (51 052)
Investment income 27 006 23 014 49 402
Taxation paid (206) (381) (228)
Cash flows from operating
activities before distribution
to unitholders 98 739 64 275 66 122
Distributions to unitholders (87 450) (84 497) (158 327)
Cash flows from operating
activities 11 289 (20 222) (92 205)
Cash flows from investing
activities (429 022) 726 23 256
Cash flows from financing
activities 419 089 11 549 66 347
Net increase/(decrease) in cash
and cash equivalents 1 356 (7 947) (2 602)
Cash and cash equivalents at
beginning of the period 9 072 11 674 11 674
Cash and cash equivalents
at end of the period 10 428 3 727 9 072
Abridged consolidated statement of changes in equity
Six months to Year to
R`000 31.12.04 31.12.03 30.06.04
Balance at beginning of year 387 420 298 091 297 959
- as previously stated - 298 594 -
- consolidation of share trust - (503) -
(Loss)/profit for the period (6 975) 45 458 131 699
Arising on issue of treasury
shares during the year 3 199 - 16 276
Reversal of notional taxation
on debenture interest
- equity portion 11 128 9 725 23 136
Distribution to unitholders:
debenture interest
- equity portion (37 094) (32 417) (77 120)
Distribution to unitholders:
dividend portion (1 561) (1 467) (3 180)
Net profit/(loss) on disposal
of investments available
for sale 3 022 (1 350) (1 350)
Deferred taxation on profit of
disposal of investments
available for sale (453) - -
Realised prior year marked to
market on sale of treasury
shares 1 298 - -
Balance at end of the period 359 984 318 040 387 420
RECONCILIATION BETWEEN EARNINGS AND HEADLINE EARNINGS
Profit before
taxation Taxation
Cents Cents
per per
R`000 unit R`000 unit
(Loss)/profit after
share of profit from
associates (10 145) (5,67) 3 170 1,78
Adjustments
Net goodwill
amortised and realised (3 794) (2,13) - -
Net profit on disposal
of investment properties 767 0,43 (116) (0,07)
Adjustments for associates 2 284 1,27 (635) (0,36)
Headline earnings as
per South African
Statements of GAAP
per combined unit (10 888) (6,10) 2 419 1,35
RECONCILIATION BETWEEN EARNINGS AND HEADLINE EARNINGS (continued)
Profit after Six months to
taxation 31.12.03
Cents Cents
per per
R`000 unit R`000 unit
(Loss)/profit after
share of profit from
associates (6 975) (3,89) 45 458 25,82
Adjustments
Net goodwill
amortised and realised (3 794) (2,13) (8 338) (4,74)
Net profit on disposal
of investment properties 651 0,36 (7 251) (4,11)
Adjustments for associates 1 649 0,91 (467) (0,28)
Headline earnings as
per South African
Statements of GAAP
per combined unit (8 469) (4,75) 29 402 16,69
Six months to Year to
31.12.04 31.12.03 30.06.04
Diluted and non-diluted
earnings and distribution
per combined unit
Headline earnings per
combined unit (cents) (4,75) 16,69 38,12
Distribution per combined
unit (cents) 44,50 42,50 91,50
Diluted and non-diluted
earnings and distribution
per share
Earnings per share before
equity portion of
debenture interest (cents) (3,89) 25,82 74,77
Distribution per
share (cents) 0,87 0,83 1,81
R`000
Distributions to combined
unitholders
Debenture interest
debt portion 40 930 40 930 81 860
Debenture interest equity
portion 37 094 32 417 77 120
Dividends 1 561 1 467 3 180
Total distribution 79 585 74 814 162 160
SEGMENTAL INFORMATION
Property
Property stock
Property stock invest-
R`000 management trading ments
Primary segment
Revenue
Rentals 112 074 - -
Fees 7 334 - -
Investment income - - 27 006
Total revenue 119 408 - 27 006
Segment results
Profit before taxation and
distribution to unitholders (1 794) 1 051 27 006
(1 794) 1 051 27 006
SEGMENTAL INFORMATION (continued)
Transfer Agents`
duty Bridging com-
R`000 finance finance mission
Primary segment
Revenue
Rentals - - -
Fees 4 931 5 067 3 595
Investment income - - -
Total revenue 4 931 5 067 3 595
Segment results
Profit before taxation and
distribution to unitholders 1 842 1 892 1 342
1 842 1 892 1 342
SEGMENTAL INFORMATION (continued)
R`000 Corporate Total
Primary segment
Revenue
Rentals - 112 074
Fees - 20 927
Investment income - 27 006
Total revenue - 160 007
Segment results
Profit before taxation and
distribution to unitholders (91) 31 248
(91) 31 248
Segment revenue and expenses
Revenue and expenses that are directly attributable to a segment are allocated
to those segments.
Expenses not directly attributable to a segment are allocated to the corporate
segment.
Distribution declared per combined unit
Notice is hereby given that a distribution of 44,50 cents (2003: 42,50 cents)
per combined unit, comprising dividend number 37 of 0,8725 cents per share and
interest on debentures calculated at 43,6275 cents per combined unit has been
declared and approved by the board of directors for the period ended 31 December
2004.
Timetable of events
Event Date
a. Last date to trade `cum` distribution Friday, 8 April 2005
b. Combined units trade `ex` distribution Monday, 11 April 2005
c. Record date for unitholders to
participate in the distribution Friday, 15 April 2005
d. Payment of distribution to unitholders Monday, 18 April 2005
e. Combined unit certificates may not be Between Monday,
rematerialised or dematerialised 11 April 2005
and Friday,
15 April 2005
(both days inclusive)
On behalf of the board
J J Groenewald
Secretary
17 February 2005
Pangbourne Properties Limited
2nd floor, 382 Jan Smuts Avenue, Craighall, Johannesburg, 2196
Directors: P L Campbell (Chairman), A M A Campbell* (CEO), J A A Diepenbroek*, J
B Gibbon, C K Hickling, B D Hopkins, C M Hutchison*, D J Kennedy*, Y K N Molefi,
A J W L Richards*, B M H Tsita.
Secretary: J J Groenewald
*Executive
Date: 17/02/2005 04:48:15 PM
Produced by the JSE SENS Department
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