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Premium - Reviewed results of the group for the six months ended 31 August 2005
PREMIUM PROPERTIES LIMITED
Incorporated in the Republic of South Africa
Registration number: 1994/003601/06
Share Code: PMM & ISIN: ZAE000009254
("Premium" or "the company")
NOTICE TO LINKED UNITHOLDERS
Reviewed results of the group for the six months ended 31 August 2005
The directors report the reviewed interim results of the group for the six
months ended 31 August 2005 set out herein, together with comparisons with the
results for the corresponding period in 2004 and the year ended 28 February
2005.
- Gearing at 39% allowing for further expansion
- Distribution up by 24,4%
- Net rental income up 17.6%
NOTES TO THE FINANCIAL STATEMENTS
1. The principal accounting policies used by Premium and its subsidiary
companies are in accordance with the International Financial Reporting
Standards of the International Accounting Standards Board and the Companies
Act, 61 of 1973 (as amended) and are consistent in all material respects
with those applied in the financial statements for the year ended 28
February 2005.
2. In order to comply with International Accounting Standard IAS17, rental
income from leases with escalation clauses has been brought into account on
a straight line basis over the period of the lease. The comparative figures
have accordingly been restated. In order to avoid an over-statement of
assets the fair value of investment properties has been adjusted.
3. In terms of AC135 the company values its investment properties annually. A
valuation of the total portfolio will be undertaken for the year ending 28
February 2006.
4. The financial statements, which have been prepared in accordance with the
International Financial Reporting Standard applicable to interim reporting,
have been reviewed by Grant Thornton, whose unqualified review report is
available for inspection at the company"s registered office.
COMMENTS
Review of Results
The directors of Premium are pleased to report that the company has continued to
produce sustained growth in earnings and distribution to its linked unitholders.
Rental income and net rental income increased by 11,9% and 17,6% respectively,
compared with the prior corresponding period, due to a combination of stronger
trading activities, a number of yield enhancing acquisitions and new residential
conversions being included in the results.
Reductions in financing costs, and continued tight control over expenses
contributed to Premium"s strong growth in earnings and distribution for the
period.
The interim distribution of 28,0 cents (2004: 22,5 cents) per linked unit
equates to an increase of 24,4% per linked unit on that paid in the previous
corresponding period.
As a result of compliance with IAS17 the ordinary shareholders interest at 1
March 2004 reduced by R3,4 million. The cumulative effect of the straight line
lease adjustment included in investment properties is R24,1 million (2004: R24,2
million).
Property portfolio and investments
During the period, Premium acquired two properties, located in the Pretoria CBD
and Hatfield, for a total purchase price of R9 million. An amount of R29,7
million was spent on the renovation of properties and on residential projects.
Two residential projects are currently under development in the Pretoria CBD.
The projects are scheduled for completion early in 2006. The total investment of
R61 million is expected to yield an initial 12% return.
Planning is currently at an advanced stage for the redevelopment of a portfolio
of properties situated in Hatfield. The first phase of the project will create
500 units of residential accommodation and 4400m2 of retail space. The
investment of R230 million is expected to yield an initial return in excess of
10%.
Premium continues to actively pursue investment and redevelopment opportunities
that will enhance the overall quality and value of the portfolio.
Interest risk management and borrowings
Borrowings equate to 39% of the value of the property portfolio and interest
rates in respect of 63% of borrowings at 31 August 2005 have been fixed at
various maturity dates ranging from February 2006 to August 2007, at a weighted
average interest rate of 11,7%.
Prospects
The strong performance of the Pretoria CBD retail, office and residential
sectors, is expected to continue and management is of the view that, subject to
prevailing market conditions and the interest rate environment remaining
constant, Premium"s distributable income for the period 1 September 2005 to 28
February 2006 should be in line with the current distribution.
Declaration of dividend No. 23 and interest payment ("distribution")
Notice is hereby given that dividend No. 23 of 0,14 cent (2004: 0,11 cent) per
ordinary share together with interest of 27,86 cents per debenture (2004: 22,39
cents), has been declared for the period 1 March 2005 to 31 August 2005 payable
to linked unitholders recorded in the register on Friday, 18 November 2005. The
last date to trade "CUM" distribution is Friday, 11 November 2005. The units
will commence trading "EX" distribution on Monday, 14 November 2005. Payment
date will be Monday, 21 November 2005.
No dematerialisation or rematerialisation of linked unit certificates may take
place between Monday, 14 November 2005 and Friday, 18 November 2005, both days
inclusive.
By order of the Board
City Property Administration (Proprietary) Limited
24 October 2005
A Wapnick J P Wapnick
(Chairman) (Managing director)
Directors
A Wapnick* (Chairman), J P Wapnick* (Managing director), M J Holmes#,
R J Inggs*, M Z Pollack#, S Wapnick+
* Executive +Non-Executive #Independent non-executive
Registered Office
CPA House
101 du Toit Street
Pretoria, 0002
P O Box 15, Pretoria, 0001
Tel.: (012) 319 8811
Fax: (012) 319 8812
Transfer Secretaries
Computershare Investor Services 2004 (Pty) Ltd
(Registration number 2004/003647/07)
70 Marshall Street
Johannesburg 2001, P O Box 61051
Marshalltown, 2107
Tel.: (011) 370 7700
Fax: (011) 668 7712
Property Asset Managers
E-mail: propworld@cityprop.co.za
www.cityprop.co.za
ABRIDGED CONSOLIDATED INCOME STATEMENT
Reviewed Reviewed Restated
six months six months Year to
Change 31 Aug 2005 31 Aug 2004 28 Feb 2005
% R"000 R"000 R"000
Revenue
- earned on contractual 11.9% 71,349 63,734 131,432
basis
- straight lining of rental (126) 1,280 1,785
leases adjustment
Net property income
- earned on contractual 17.6% 46,731 39,738 85,451
basis
- straight lining of rental (126) 1,280 1,785
leases adjustment
Interest received 408 2,387 2,778
Investment income - 2,356 2,193 5,238
associate
Fair value adjustments
- investment property
net revaluation 126 (1,280) 132,786
gross revaluation 0 0 134,571
straight lining of rental 126 (1,280) (1,785)
leases adjustment
- associate, net of Capital 0 0 14,282
Gains Tax
Depreciation (253) (303) (541)
Capital profit on disposal - - 615
of investment properties
Profit before interest 11.9% 49,242 44,015 242,394
Interest paid (5.3%) 17,019 17,965 34,658
Profit before debenture 23.7% 32,223 26,050 207,736
interest
Debenture interest 24.4% 31,651 25,437 56,520
Profit before taxation 572 613 151,216
Taxation charge (968) 206 21,575
Net income attributable to 1,540 407 129,641
ordinary shareholders
Earnings per share (cents) 278.2% 1.4 0.4 114.1
Earnings per linked unit 28.4% 29.2 22.7 163.9
(cents)
Headline earnings per linked 17.5% 28.0 23.9 52.6
unit (cents)
Linked units in issue (`000) 113,607 113,607 113,607
Distribution per linked unit
(cents)
Dividends 0.14 0.11 0.25
Interest 27.86 22.39 49.75
Total 24.4% 28.00 22.50 50.00
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Reviewed Reviewed Restated
six months six months Year to
31 Aug 2005 31 Aug 2004 28 Feb 2005
R"000 R"000 R"000
CASH FLOW FROM OPERATING ACTIVITIES
Net rental income from properties 46,479 41,628 84,910
Adjustment for:
- Depreciation 253 303 541
- Working capital changes 3,150 2,735 4,413
Cash generated from operations 49,882 44,666 89,864
Investment income 2,764 2,387 6,473
Finance costs (17,019) (17,965) (34,658)
Taxation refunded /(paid) 455 (27) (239)
Distribution to linked unit holders (31,242) (21,816) (47,378)
paid
Net cash inflow from operating 4,840 7,245 14,062
activities
CASH FLOW FROM INVESTING ACTIVITIES
Investing activities (39,379) (18,931) (52,968)
Proceeds from disposal of investment 1,650 279 3,944
properties
Net cash outflow used in investing (37,729) (18,652) (49,024)
activities
CASH INFLOW FROM FINANCING 31,938 12,024 35,038
ACTIVITIES
NET (DECREASE)/ INCREASE IN CASH AND (951) 617 76
CASH EQUIVALENTS
Cash and cash equivalents at 1,596 1,520 1,520
beginning of period
Cash and cash equivalents at end of 645 2,137 1,596
period
RECONCILIATION -EARNINGS PER SHARE TO HEADLINE EARNINGS PER LINKED UNIT
Six months Six months Year to
31 Aug 2005 31 Aug 2004 28 Feb 2005
Cents Cents Cents
Earnings per share 1.4 0.4 114.1
Add: debenture interest per linked 27.8 22.4 49.8
unit
Earnings per linked unit 29.2 22.8 163.9
Fair value adjustments
- investment properties, net of (1.2) 1.1 (98.2)
deferred capital gains tax
- associate, net of Capital Gains - - (12.6)
Tax
Capital profit on disposal of - - (0.5)
investment properties
Headline earnings per linked unit 28.0 23.9 52.6
DISTRIBUTABLE EARNINGS
The following additional information is provided and is aimed at disclosing to
the users the basis on which the distributions are calculated.
Reviewed Reviewed Audited
six six Year
months months to
Change 31 Aug 31 Aug 2004 28 Feb
2005 2005
% R"000 R"000 R"000
Revenue
- earned on contractual 11.9% 71,349 63,734 131,432
basis
Net property income 17.6% 46,731 39,738 85,451
Interest received 408 2,387 2,778
Investment income - 7.4% 2,356 2,193 5,238
associate
Depreciation (253) (303) (541)
Profit before interest 11.9% 49,242 44,015 92,926
Interest paid (5.3%) 17,019 17,965 34,658
Profit before taxation 23.7% 32,223 26,050 58,268
Taxation charge 252 14 30
Unit holders distributable 22.8% 31,971 26,036 58,238
earnings
Linked units in issue - 113,607 113,607 113,607
(`000)
Distributable earnings per 22.8% 28.1 22.9 51.3
linked unit (cents)
Distribution per linked unit 24.4% 28.0 22.5 50.0
(cents)
ABRIDGED CONSOLIDATED BALANCE SHEET
Reviewed Restated
31 Aug 2005 28 Feb 2005
R"000 R"000
ASSETS
Non - current assets
Investment properties 849,022 811,485
Investment properties - straight lining of 24,075 24,201
rental
leases adjustment
Property, plant and equipment 17,139 17,393
Investments - associated company 34,043 33,725
Current assets 8,284 7,845
Total assets 932,563 894,649
EQUITY AND LIABILITIES
Share capital 1,136 1,136
Non-distributable reserve 246,059 244,748
Accumulated profit 20,324 20,255
Ordinary shareholders" interest 267,519 266,139
Debentures 211,989 211,989
Linked unitholders" interest 479,508 478,128
Interest bearing borrowings 346,266 301,618
Deferred taxation 38,485 39,705
Current liabilities - interest bearing 163 15,726
- non interest bearing 68,141 59,472
Total equity and liabilities 932,563 894,649
Linked units in issue (`000) 113,607 113,607
Net asset value per linked unit (cents) 422 421
STATEMENT OF CHANGES IN EQUITY
Share Capital Revaluation Distributable Total
capital reserve reserve reserve
R"000 R"000 R"000 R"000 R"000
Balance at 1 March
2004
before restatement 996 8,370 128,759 1,875 140,000
Straight line (19,054) 15,691 (3,363)
lease adjustment
Balance at 1 March 996 8,370 109,705 17,566 136,637
2004 - restated
13 982 047 linked 140 140
units issued
Profit 129,641 129,641
attributable to
ordinary
shareholders
Dividends paid (280) (280)
Transfer to non- 614 126,059 (126,673) -
distributable
reserve
Balances at 1 1,136 8,984 235,764 20,254 266,138
March 2005 -
restated
Profit 1,540 1,540
attributable to
ordinary
shareholders
Dividends paid (159) (159)
Fair value
adjustments
- Investment 108 (108) -
properties -
straight lining of
rental leases
adjustment
Deferred Capital 1,203 (1,203) -
Gains Taxation -
rate adjustment
Balances at 31 1,136 8,984 237,075 20,324 267,519
August 2005
Date: 24/10/2005 11:32:16 AM Produced by the JSE SENS Department
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