| Tue 15 Nov 2005, 8:00 | | Metboard - Interim results and distribution declar |
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Metboard - Interim results and distribution declaration
METBOARD PROPERTIES LIMITED
Registration No: 1998/005425/06
JSE share code: MPL
ISIN: ZAE000014874
("Metboard" or "the company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2005 AND DISTRIBUTION
DECLARATION
* Distribution per linked unit up 7.0%
* Vacancies down to 2.1% of GLA
* Market capitalisation exceeding R1.4 billion
* Industrial property assets of R1.9 billion
* Only focused industrial property company listed on the JSE
INCOME STATEMENT
Unaudited Unaudited Audited
30 September 30 September 31 March
2005 2004 2005
R"000 R"000 R"000
Revenue 131 641 110 237 240 980
Contractual rental income 124 555 107 182 233 016
Straight line lease adjustment 7 086 3 055 7 964
Property expenses (21 574) (19 642) (41 403)
Net property income 110 067 90 595 199 577
Fund expenses (7 126) (4 889) (10 011)
Net operating income 102 941 85 706 189 566
Interest received 842 3 280 9 852
Interest paid (41 289) (38 245) (80 381)
Net operating income after
interest 62 494 50 741 119 037
Loss on disposal of
investment properties (1 308) (1 466) (1 568)
Fair value adjustments 43 607 (29 680) 120 120
- investment properties 54 423 - 149 494
- straight line lease
adjustment (7 086) (3 055) (7 964)
- interest bearing debt (3 730) (23 090) (17 024)
- debenture capital - (3 535) (4 386)
Net income before debenture
interest and taxation 104 793 19 595 237 589
Debenture interest paid (55 320) (47 297) (110 891)
Net profit/(loss) before
taxation 49 473 (27 702) 126 698
Taxation (8 950) (566) (23 002)
- Current (32) (123) (69)
- Deferred (8 918) (443) (22 933)
Net income after taxation 40 523 (28 268) 103 696
Reconciliation of earnings to
headline
earnings and distributable
earnings
Net profit/(loss) after
taxation 40 523 (28 268) 103 696
Headline earnings adjustments (39 165) 4 078 (119 340)
- Fair value adjustment -
investment properties (54 423) - (149 494)
- Fair value adjustment -
straight line lease 7 086 3 055 7 964
- Deferred taxation 6 864 (443) 20 622
- Loss on disposal of
properties 1 308 1 466 1 568
Debenture interest 55 320 47 297 110 891
Headline earnings 56 678 23 107 95 247
Distributable earnings
adjustments (1 301) 24 456 15 756
- Fair value adjustment -
interest bearing debt 3 730 23 090 17 024
- Fair value adjustment -
debentures - 3 535 4 386
- Straight line lease
adjustment
(net of deferred taxation) (5 031) (2 169) (5 654)
Distributable earnings 55 377 47 563 111 003
Weighted average linked units
in
issue ("Wanolu") 279 672 996 240 604 852 259 915 375
Distribution per linked unit
(cents) 19,80 18,50 40,17
Earnings/(loss) per share
(cents) 14,49 (11,75) 39,90
Earnings per linked unit
(cents) 34,27 7,91 82,56
Headline earnings per linked
unit (HEPLU)
using Wanolu (cents) 20,27 9,60 36,65
Distributable earnings per
linked unit
using Wanolu (cents) 19,80 19,77 42,71
BALANCE SHEET
Unaudited Unaudited Audited
30 September 30 September 31 March
2005 2004 2005
R"000 R"000 R"000
ASSETS
Non-current assets
Investment properties * 1 887 184 1 556 159 1 847 959
Current assets 26 948 42 595 39 290
Total Assets 1 914 132 1 598 754 1 887 249
Equity and Liabilities
Linked unitholders interest 1 036 737 792 146 996 269
Shareholders" equity 197 718 24 404 157 250
Non-current liabilities -
debentures 839 019 767 742 839 019
Other non-current liabilities 757 038 729 240 774 229
Interest bearing debt 706 924 710 534 733 033
Deferred taxation 50 114 18 706 41 196
Current liabilities 120 357 77 368 116 751
Total equity and liabilities 1 914 132 1 598 754 1 887 249
Number of linked units in
issue 279 672 996 255 913 910 279 672 996
Net asset value per linked
unit (cents) 371 310 356
* Including straight line lease accrual
STATEMENT OF CHANGES IN EQUITY
Share Share Non-distributable
capital premium reserves
R"000 R"000 R"000
Balance at 1 April 2004
- as previously reported 2 291 570 54 368
- straight line lease adjustment (5 126)
Restated balance at 1 April 2004 2 291 570 49 242
Shares issued 268 311
Net loss for the period
Transfer of fair value adjustments (27 068)
Transfer of loss on disposal (1 466)
Dividends
Balance at 30 September 2004 2 559 881 20 708
Shares issued 238 708
Net income for the period
Transfer of fair value adjustments 132 220
Transfer of loss on disposal (102)
Dividends
Balance at 1 April 2005 2 797 1 589 152 826
Transfer of fair value adjustments 41 775
Transfer of loss on disposal (1 308)
Net income for the period
Dividends
Balance at 30 September 2005 2 797 1 589 193 293
Retained Total linked
income unit holders"
interest
R"000 R"000
Balance at 1 April 2004
- as previously reported 37 57 266
- straight line lease adjustment (5 126)
Restated balance at 1 April 2004 37 52 140
Shares issued 579
Net loss for the period (28 268) (28 268)
Transfer of fair value adjustments 27 068 -
Transfer of loss on disposal 1 466 -
Dividends (47) (47)
Balance at 30 September 2004 256 24 404
Shares issued 946
Net income for the period 131 964 131 964
Transfer of fair value adjustments (132 220) -
Transfer of loss on disposal 102 -
Dividends (64) (64)
Balance at 1 April 2005 38 157 250
Transfer of fair value adjustments (41 775) -
Transfer of loss on disposal 1 308 -
Net income for the period 40 523 40 523
Dividends (55) (55)
Balance at 30 September 2005 39 197 718
ABRIDGED CASH FLOW STATEMENT
Unaudited Unaudited Audited
30 September 30 September 31 March
2005 2004 2005
R"000 R"000 R"000
Cash generated by operations 99 492 83 484 191 888
Net financing costs (40 447) (34 965) (70 529)
Taxation paid (39) (27) (28)
Distributions to linked
unitholders (60 605) (48 109) (98 506)
Cash flows from operating
activities (1 599) 383 22 825
Cash flows from investing
activities 13 890 (143 795) (375 611)
Cash flows from financing
activities (30 654) 127 875 340 090
Net decrease in cash and cash
equivalents (18 363) (15 537) (12 696)
Cash and cash equivalents at
beginning of the period 25 135 37 831 37 831
Cash and cash equivalents at
end of the period 6 772 22 294 25 135
BASIS OF ACCOUNTING
This interim report has been prepared in accordance with International Financial
Reporting Standards (IFRSs) and the requirements of the South African Companies
Act.
In order to comply with international interpretation of IAS17 - Leases, rental
income from leases with escalation clauses is brought to account on a smoothed,
straight line basis over the period of the relevant leases. To avoid double
counting, the fair value adjustment to investment properties has been reduced by
the straight line lease accrual. The comparative figures have been restated
accordingly. All other accounting policies used are consistent with those
applied in the annual financial statements for the year ended 31 March 2005.
The company"s directors believe that accounting for lease income on a straight
line basis is misleading and does not fairly represent the results of the
operations of the company. The directors emphasise that the "straight line lease
adjustment" revenue reflected in the income statement has not been earned by the
company and is not due to the company.
Further, this "revenue" has no impact on distributable earnings. The company"s
directors believe that this method of accounting does not add any value to the
users of the financial statements.
The change in accounting policy referred to above has no effect on the company"s
distributions or distributable earnings, either in the current period or in
future periods. The effect on the prior period"s earnings, headline earnings and
net asset value per linked unit is as follows:
30 September 2004 31 March 2005
Earnings per linked unit (cents) - as
previously reported 8,09 83,00
Change in accounting policy (0,18) (0,44)
Earnings per linked unit (cents) -
restated 7,91 82,56
Headline earnings per linked unit
(cents) - as previously reported 8,70 34,47
Change in accounting policy 0,90 2,18
Headline earnings per linked unit
(cents) - restated 9,60 36,65
Net asset value per linked unit (cents)
- as previously reported 312 358
Change in accounting policy (2) (2)
Net asset value per linked unit (cents)
- restated 310 356
FINANCIAL RESULTS OF THE COMPANY
Revenue and net operating income, before accounting for the straight-line lease
adjustment, increased by 16.2% and 24.0%, respectively, over the comparative
period. This is mainly as a result of the properties acquired from Lyons
Corporate Lease Fund Limited and African Tubes and Pipes, a reduction in
vacancies, normal rental escalations and interest savings from the restructuring
of fixed loans with a nominal value of R222.0 million.
Total distributable earnings increased by 16.4% to R55.4 million from the R47.6
million reported for the six months ended 30 September 2004 whilst total
debenture interest payable to linked unitholders increased by 17.0% in the
period under review.
The company has revised its policy of revaluing its property portfolio on an
annual basis in March each year. The portfolio was valued by management at 30
September 2005 resulting in a fair value adjustment of R54.4 million at that
date. This represents a revaluation of 2.97% resulting from the improved yields
that industrial properties are trading at. Deferred capital gains taxation of
R7.9 million has been provided in respect of the fair value adjustment of
investment properties.
The net asset value per linked unit increased by 19.7% to 371 cents from 310
cents at 30 September 2004.
In accordance with IAS 39, the company revalues the interest bearing debt at
each reporting period. The mark to market fair value adjustment as at 30
September 2005 resulted in a charge to the income statement of R3.7 million. As
this mark to market fair value adjustment is unrealised, it has no impact on
Metboard"s distributable income.
DISTRIBUTION
The distribution per linked unit for the six months ended 30 September 2005
increased by 7.0% to 19.80 cents per linked unit compared to 18.50 cents for the
six months to 30 September 2004.
INVESTMENT PROPERTIES
As at 30 September 2005, the portfolio consisted of 164 properties with a
carrying value of R1 887 million. During the period, the company disposed of 14
properties for R54.0 million, equating to the fair value of the properties at 31
March 2005. Expenses amounting to R1.3 million were incurred in respect of the
disposals. The company acquired a further two properties at a cost of R23.3
million during the period.
Metboard"s 164 properties have a gross lettable area ("GLA") of 1 417 475 m2.
Vacancies have reduced from 35 304 m2 at 31 March 2005 to 29 455 m2 at 30
September 2005. Vacancies account for 2.08% of gross lettable area. Vacant space
in square metres for the six months to 30 September 2005 is reconciled as
follows:
Six months ended Year ended
30 September 31 March
2005 2005
m2 m2
Vacant space at beginning of period 35 304 65 915
Leases expired in the period 183 723 395 649
Renewals during the period (161 040) (323 283)
New lettings during the period (18 920) (94 768)
Vacancies in buildings on acquisition 339 1 290
Vacancies in buildings sold (9 951) (9 499)
Vacant space at end of the period 29 455 35 304
In line with management"s stated objective of renewing at least 85.0% of all
expiring leases, 87.7% of the expiring leases were renewed during the period.
In October 2005, after the reporting date, the company took transfer of 3
properties at a cost of R35.8 million and disposed of 1 property for R4.8
million.
BORROWINGS AND CASH RESOURCES
At 30 September 2005, total borrowings amounted to R741.9 million. The interest
rates have been fixed in respect of 87.0% of the borrowings for periods ranging
from one to seven years. The nominal value of the borrowings amounted to R702.9
million. The mark to market value adjustment of the fixed debt had a carrying
value of R39.0 million at 30 September 2005. The weighted average cost of
finance amounts to 11.4%. Borrowings represent 39.3% of the value of the
property portfolio and 37.2% if the mark to market adjustment is ignored.
VALUE-ADDED TAX ("Vat")
The company has lodged an appeal against the disallowance of an objection to
certain additional Vat assessments. SARS has disallowed the input tax relating
to transaction costs on acquisitions and corporate activities. The disputed
amount is not considered material and has been fully provided in the financial
results for the period.
METBOARD LINKED UNIT PRICE AND TRADEABILITY
Metboard"s linked units have traded actively on the JSE Limited ("JSE") for the
six-month period ended 30 September 2005. A total of 62.5 million units traded
during the period, equating to 22.3% of the linked units in issue.
Metboard"s linked units recorded a record high in the period of 464 cents on 7
September 2005. The record high subsequently improved to 520 cents on 25 October
2005 as the linked unit moved closer to the ex-distribution date.
The linked unit closing price as traded on the JSE on 30 September 2005
increased by 18.1% to 450 cents from the 381 cents closing price on 31 March
2005. The linked units achieved a return of 50.3% for the 12-month period ended
30 September 2005.
PROSPECTS
Metboard has delivered growth of 7.0% in distributions for the reporting period.
The directors anticipate that, subject to market conditions remaining stable,
distributions for the period ending 31 March 2006 will show similar growth to
that experienced for the six months ended 30 September 2005.
DECLARATION OF DIVIDEND AND INTEREST PAYMENT
Notice is hereby given of interim dividend declaration number 18 of 0.0198 cent
per share and debenture interest payment number 18 of 19.7802 cents per
debenture for the period 1 April 2005 to 30 September 2005 ("the interim
distribution").
The interim distribution of 19.80 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 interim distribution Friday 2 December
Linked units commence trading "ex" the interim
distribution Monday 5 December
Record date to participate in the interim distribution Friday 9 December
Payment of the dividend and debenture interest Monday 12 December
No dematerialisation or rematerialisation of linked unit certificates may take
place between Monday, 5 December 2005 and Friday, 9 December 2005, both days
inclusive.
By order of the board
R A Krabbenhoft
Secretary
15 November 2005
Directors
D Kuper (Chairman), E K de Klerk*, N T Govender*, F N Haslett, S Hackner,
H S Herman, S R Leon, G Z Liebenberg, S Maitisa, H S P Mashaba, L N Sasse
(*Executive director)
Transfer secretaries
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street, Johannesburg, 2001
(P O Box 61051, Marshalltown, 2107)
Sponsor
INVESTEC BANK LIMITED
Managed by
INVESTEC PROPERTY GROUP
Registration No: 1969/004763/06
100 Grayston Drive, Sandown
Sandton, 2196
PO Box 78979
Sandton, 2146
Member of
PROPERTY LOAN STOCK
ASSOCIATION
Date: 15/11/2005 08:00:16 AM Produced by the JSE SENS Department
