| Wed 1 Jun 2005, 9:03 | | Results For The Year Ended 31 March 2005 |
|
Metboard - Audited Results For The Year Ended 31 March 2005 And Distribution
Declaration
Metboard Properties Limited
Registration no: 1998/005425/06
JSE share code: MPL
ISIN code: ZAE000014874
(`Metboard` or `the company`)
AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2005 AND DISTRIBUTION DECLARATION
* only focused industrial property company listed on the JSE
* industrial property assets of R1,85 billion
* market capitalisation exceeding R1,1 billion
* vacancies down to 2,4% of GLA
* distribution per linked unit up 3%
INCOME STATEMENT
Audited Audited
31 March 31 March
% 2005 2004
change R`000 R`000
Revenue 22,6 233 016 190 087
Property expenses 23,1 (41 403) (33 648)
Net property income 22,5 191 613 156 439
Fund expenses 46,5 (10 011) (6 835)
Trading income 21,4 181 602 149 604
Interest received 35,9 9 852 7 249
Interest paid 16,1 (80 381) (69 210)
Operating income after interest 111 073 87 643
Loss on disposal of
investment properties (1 568) (2 574)
Fair value adjustments
- investment properties 149 494 73 836
- interest bearing debt (17 024) (18 282)
- debenture capital (4 386) (6 305)
Net income before debenture
interest and taxation 237 589 134 318
Debenture interest paid 26,7 (110 891) (87 496)
Net income before taxation 126 698 46 822
Taxation ( 21 847) (11 928)
Current (69) (55)
Deferred (21 778) (11 873)
Net income after taxation 104 851 34 894
Linked units in issue 279 672 996 229 089 150
Weighted average number of
linked units in issue (`Wanolu`) 259 915 375 215 568 511
Distribution per linked unit (cents) 3,0 40,17 39,00
Interim distribution to September 2,8 18,50 18,00
Final distribution to March 3,2 21,67 21,00
Reconciliation of earnings to
distributable earnings
Net income before taxation 126 698 46 822
Taxation (21 847) (11 928)
Basic earnings attributable 104 851 34 894
to shareholders
Fair value adjustment
- investment properties (149 494) (73 836)
Deferred taxation 21 778 11 873
Loss on disposal of properties 1 568 2 574
Headline loss attributable
to shareholders (21 297) (24 495)
Debenture interest 110 891 87 496
Headline earnings attributable
to linked unitholders 89 594 63 001
Fair value adjustment
- interest bearing debt 17 024 18 282
Fair value adjustment - debentures 4 386 6 305
Distributable earnings 26,7 111 004 87 588
Cents Cents
Earnings per share 40,34 16,19
Headline loss per share (8,19) (11,36)
Headline earnings per linked
unit using Wanolu 34,47 29,23
Distributable earnings per linked
unit using Wanolu 42,71 40,63
Distribution per linked unit 40,17 39,00
BALANCE SHEET
Audited Audited
31 March 31 March
2005 2004
R`000 R`000
Assets
Investment properties 1 847 959 1 412 364
Current assets 39 290 66 571
Accounts receivable 14 155 28 740
Cash and cash equivalents 25 135 37 831
1 887 249 1 478 935
Equity and liabilities
Shareholders` equity 163 531 57 266
Non-current liabilities - debentures 839 019 687 267
Linked unitholders` interest 1 002 550 744 533
Other non-current liabilities 767 948 648 759
Interest bearing debt 733 033 547 680
Amount owing to vendors - 87 942
Deferred tax 34 915 13 137
Current liabilities 116 751 85 643
Accounts payable 21 085 25 384
Distribution to linked unitholders 60 605 48 109
Short-term portion of interest bearing debt 35 000 12 130
Taxation 61 20
1 887 249 1 478 935
Number of linked units in issue 279 672 996 229 089 150
Net asset value per linked unit (cents) 358 325
STATEMENT OF CHANGES IN EQUITY
Non-
distri- Accumu- Share-
Share Share butable lated holders`
Capital premium reserves profits equity
R`000 R`000 R`000 R`000 R`000
Balance at
31 March 2004 2 291 570 54 368 37 57 266
Shares issued 506 1 019 1 525
Fair value
adjustments 106 307 (106 307) -
Transfer of loss on
disposal (1 568) 1 568 -
Net income for
the period 104 851 104 851
Dividends (111) (111)
Balance at
31 March 2005 2 797 1 589 159 107 38 163 531
ABRIDGED CASH FLOW STATEMENT
Audited Audited
31 March 31 March
2005 2004
R`000 R`000
Cash generated by operations 191 888 148 202
Net financing costs (70 529) (61 961)
Taxation paid (28) (94)
Distributions to linked unitholders (98 506) (81 510)
Cash flow from operating activities 22 825 4 637
Cash flow from investing activities (375 611) (222 506)
Cash flow from financing activities 340 090 248 663
Net (decrease)/increase in cash
and cash equivalents (12 696) 30 794
Cash and cash equivalents at beginning of the year 37 831 7 037
Cash and cash equivalents at end of the year 25 135 37 831
BASIS OF ACCOUNTING
The annual financial statements are prepared in accordance with International
Financial Reporting Standards (`IFRS`) and the Companies Act of South Africa.
The accounting policies applied are consistent with those applied in the annual
financial statements for the year ended 31 March 2004 and the application of
IFRS has not resulted in any changes from the previous application of South
African Statements of Generally Accepted Accounting Practice. These results have
been audited by 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 trading income for the year ending March 2005 increased by 22,6% and
21,4% respectively. This is mainly as a result of the company having acquired 28
properties in the period, as well as the fact that vacancies reduced from 5,0%
at March 2004 to 2,4% at March 2005.
Total debenture interest payable to linked unitholders increased by 26,7% in the
period under review, whilst the aggregate distribution per linked unit for the
year to 31 March 2005 increased to 40,17 cents per linked unit compared to 39,0
cents for the prior year to 31 March 2004, an increase of 3%. The final
distribution increased by 3,2% to 21,67 cents for the six month period to 31
March 2005 compared to 21,0 cents for the comparable period ending 31 March
2004.
It is the company`s policy to revalue its property portfolio on an annual basis
in March of each year. Accordingly the investment properties were revalued
upward by R149,5 million to R1 848,0 million which represents an 8,8% increase
in the valuation of the property portfolio.
In accordance with IAS 39 the company revalues the interest bearing debt at each
reporting period. The mark to market fair value adjustment for the year to March
2005 resulted in a charge to the income statement of R17,0 million. As this mark
to market fair value adjustment is an unrealised loss it does not have any
impact on Metboard`s distributable income.
Total distributable earnings increased by 26,7% to R111,0 million from R87,6
million for the prior year.
NET ASSET VALUE PER UNIT
Metboard`s stated net asset value per linked unit increased to 358 cents from
325 cents at 31 March 2004. This represents growth of 10,2% in the net asset
value per linked unit. Ignoring the fair value adjustment of the fixed interest
bearing debt the net asset value per unit equated to 371 cents, an increase of
11,4% on the 333 cents reported at 31 March 2004.
METBOARD LINKED UNIT PRICE AND TRADEABILITY
Metboard`s linked units have traded actively on the Johannesburg Securities
Exchange South Africa (`JSE`) for the year ending 31 March 2005 with a marked
improvement in liquidity and tradeability. A total of 125,9 million units traded
during the year equating to 48,4% of the weighted linked units in issue and
represents a 224,4% increase on the previous year`s 56,1 million units traded.
Metboard`s linked units also recorded a record high in the period of 410 cents
on 22 February 2005. As expected this record high subsequently improved to 425
cents on 29 April 2005, as the linked unit moves closer to the ex-distribution
date. The Metboard linked unit closing price as traded on the JSE on 31 March
2005 increased by 17,6% to 381 cents from the 324 cents closing price on 31
March 2004.
INVESTMENT PROPERTIES
The carry value of investment properties at 31 March 2005 increased by 30,8% to
R1 848,0 million from R1 412,4 million at 31 March 2004. This movement is
explained in the table below:
%
change R`m
Carry value at 1 April 2004 1 412,4
Disposal of investment properties (51,5)
Acquisition of investment properties 295,0
Development and CAPEX 42,6
Value before revaluation 1 698,5
Revaluation of investment properties 8,8 149,5
Carry value at 31 March 2005 1 848,0
In terms of IAS 40 the company is required to revalue its properties on an
annual basis. Metboard`s policy is that one third of its portfolio is valued by
an independent external valuer on an annual basis, the results of which are
reflected below:
17 properties valued by Mr A Rostovsky
- an independent valuer R210,5 million
30 properties valued by Mills Fitchet
and Ass - an independent valuer R565,6 million
R776,1 million
The balance of the properties were revalued by management at year end and
represent directors` valuation. Going forward, Metboard will revalue its
properties semi-annually.
ACQUISITIONS
During the year under review, 28 properties were acquired at a total cost of
R295,0 million, 17 acquired from subsidiaries of the Lyons Corporate Lease Fund
Limited (`Lyons`), 8 from African Tubes and Pipes (`ATP`) with the remaining
three being separate third party transactions. In the year to March 2005 all the
properties, with the exception of the property known as Foreshore, acquired from
Lyons, were transferred to Metboard. This property will be transferred to
Metboard when all conditions precedent to the agreement are met.
The acquisitions were financed by the issue and placement of an additional 36
499 471 linked units at an average issue price of approximately 294,3 cents per
linked unit, R159,5 million of additional borrowings and the proceeds from the
sale of properties.
DISPOSALS
In line with the policy of disposing of under-performing properties the company
disposed of 17 properties for a net consideration of R50,5 million in the year
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 R59,5 million
have been concluded in respect of under performing properties. By the end of
April 2005 transfer of 7 of these properties had been concluded for a net
consideration of R26,0 million and a loss of R0,4 million.
POST BALANCE SHEET EVENT
Agreements for the purchase of two additional buildings with an aggregate
purchase consideration of R23,3 million have been concluded in May 2005.
Transfer of these properties are expected to take place by the end of July 2005
and the purchase consideration will be settled through a combination of
the issue of new Metboard linked units as well as additional borrowings from
existing facilities.
LETTING, CAPEX AND CHARACTERISTICS OF PROPERTY PORTFOLIO
At 31 March 2005 the portfolio consisted of 176 properties with a gross lettable
area (`GLA`) of 1 467 184m2. Vacancies reduced to 35 304m2, or 2,4% of GLA, at
the end of March 2005 from the 65 915m2 or 5,0% of GLA, at the end of March
2004.
Vacant space reconciliation in square metres for the twelve months to March
2005:
2005 2004
m2 m2
Vacant space 1 April 65 915 59 667
Leases expired in the period 395 649 269 158
Renewals during the period (323 283) (177 800)
New lettings during the period (94 768) (60 956)
Vacancies in buildings on acquisition 1 290 -
Vacancies in buildings sold (9 499) (24 154)
Vacant space 31 March 35 304 65 915
The renewal rate for the twelve months to March 2005 has been 81,7% compared to
66,6% for the corresponding period in 2004. New lettings in the twelve months
ended March 2005 exceed those of the corresponding period in the prior year by
33 812m2 or 64,3%. In the twelve months to the end of March 2005 vacancies have
fallen by 30 611m2. This clearly reflects the improvement in the letting
conditions in the industrial sector and efficient management of the property
portfolio.
An ongoing capital expenditure programme is in place to ensure that the property
portfolio remains well maintained and in good lettable order. During the year an
amount of R31,0 million was spent on capital improvements and R11,6 million was
spent on completing the Ebony building in Meadowdale for Magpie foods.
BORROWINGS AND CASH RESOURCES
At 31 March 2005 total borrowings amounted to R768,0 miillion. The nominal value
of the borrowings amounted to R732,7 million of which 83,5% of the interest
rates had been fixed for periods ranging from one to seven years. The fair value
adjustment of the fixed debt had a carry value of R35,3 million, consisting of
the aggregate of the R17,0 million charge for March 2005 and the R18,3 million
charge for March 2004. The weighted average cost of finance amounts to 11,87%
and borrowings (`LTV`) represent 41,5% of the value of the property portfolio.
If the mark to market fair value adjustment is ignored the LTV is 39,6%.
The company has successfully negotiated the reduction in the bankers` lending
margins from 2,25% to 2,00% on a substantial portion of its borrowings, with
effect from 1 March 2005. The company is also currently investigating
alternative ways of reducing the cost of its debt by accessing new
securitisation structures currently available in the market.
Cash resources at 31 March 2005 amounted to R25,1 million. The cash balance is
less than the prior reporting period due to Metboard employing the funds in
temporarily reducing the variable debt.
SHARE AND DEBENTURE CAPITAL
During the year ended 31 March 2005, 50 583 846 linked units were issued.
14 084 375 were issued at R2,80, 23 305 085 were issued at R2,95, 3 000 000 were
issued at R3,00 and a further 10 194 386 were issued at R3,11.
FUND MANAGEMENT
Estienne de Klerk, the fund manager for Metboard, was appointed as executive
director of the company with effect from 1 April 2005.Tyrone Govender was
appointed as property fund manager, following the resignation of joint fund
manager Jeffrey Sher and was subsequently appointed as an executive director
with effect from 26 May 2005.
In terms of the management agreement between Metboard and Investec Property
Group Limited (`IPG`), IPG is responsible for the asset management of Metboard
and has appointed a dedicated team to manage the company.
RELATED PARTY TRANSACTIONS
As noted above IPG is responsible for the management of the company.
Two executive directors and four non-executive directors are directors or
employees of Investec Bank Limited (`Investec`) or its group companies and the
non-executive chairman of Metboard is also the non-executive chairman of IPG.
The following market related fees were paid during the year ended 31 March 2005:
2005 2004
R`000 R`000
Management fees:
Letting commissions paid to IPG 3 031 2 286
Property management fees paid to IPG 8 777 7 174
Asset management fees paid to IPG 7 713 5 839
Transaction fees:
Corporate sponsor fees to Investec 85 85
Corporate finance fees to Investec 2 348 943
Sales commissions based on SAPOA
tariff paid to Investec 3 900 -
The transaction fees represent 2,1% (2004: 0,4%) of the total value of the
acquisitions concluded during the year
PROSPECTS
Metboard has delivered growth of 3,0% in distribution for the reporting period.
Although the market conditions in the industrial sector have improved the
company is still experiencing reversionary pressures on the renewal of expiring
long leases. However, the directors expect the overall improvement in the
sector`s rental levels to continue and are of the view that the total
distributions for the year ending 31 March 2006 should exceed that of the
current year.
DECLARATION OF DIVIDEND AND INTEREST PAYMENT
Notice is hereby given of final dividend declaration number 17 of 0,0216 cents
per share and debenture interest payment number 17 of 21,6484 cents per
debenture for the period 1 October 2004 to 31 March 2005 (`the final
distribution`).
The final distribution of 21,67 cents per linked unit will be payable to
Metboard linked unitholders in accordance with the abbreviated timetable set out
below:
2005
Last date to trade `cum` the final distribution Friday, 17 June
Linked units commence trading `ex` the
final distribution Monday, 20 June
Record date to participate in the
final distribution Friday, 24 June
Payment of the dividend and debenture
interest Monday, 27 June
No dematerialisation or rematerialisation of linked unit certificates may take
place between Monday, 20 June 2005 and Friday, 24 June 2005, both days
inclusive.
By order of the board
R Krabbenhoft
Secretary
1 June 2005
Metboard Properties Limited
Registration no: 1998/005425/06
JSE share code: MPL
ISIN code: ZAE000014874
(`Metboard` or `the company`)
Transfer secretaries
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street, Johannesburg 2001
PO Box 61051, Marshalltown, 2107
Sponsor Managed by
Investec Bank Limited Investec Property Group
Registration no: 1969/004763/06 Member of
100 Grayston Drive Property Loan Stock Sandown Association
Sandton 2146
PO Box 78979
Sandton 2146
Date: 01/06/2005 09:00:21 AM
Produced by the JSE SENS Department
