| Tue 20 Jun 2006, 11:02 | | CBS Property Portfolio Limited - Unaudited Interim |
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CBS
CBS
CBS Property Portfolio Limited - Unaudited Interim Results
CBS Property Portfolio Limited and its Subsidiaries
Registration number: 2003/009523/06
Share code: CBS & ISIN: ZAE000073995
UNAUDITED INTERIM RESULTS
for the six months ended 30 April 2006
Interim Highlights
Linked Unit Distribution 32 cents
Post Balance Sheet Acquisitions R616m
Property Assets Post Acquisition R1,7 bn
On track for 31 October 2006
forecast per linked unit of at least 69.9 cents
ABRIDGED CONSOLIDATED INCOME STATEMENT
6 months 12 months
ended ended
30 April 2006 31 October 2005
R"000 R"000
Revenue excluding straight-line lease accrual 69 598 70 270
Straight-line lease income accrual 451 7 444
Gross revenue 70 049 77 714
Fair value adjustment on investment property 1 834 41 564
Gross fair value adjustment 2 285 49 008
Less straight-line lease adjustment (451) (7 444)
Other operating income 561 5 454
Administrative expenses (2 808) (2 366)
Other operating expenses (23 554) (24 338)
Operating profit 46 082 98 028
Investment income 250 926
Finance costs - borrowings (14 770) (31 539)
Finance costs - debenture interest (29 515) (18 597)
Profit before taxation 2 047 48 818
Taxation (1 230) (22 170)
Profit after taxation 817 26 648
Attributable to outside shareholders - -
Earnings attributable to ordinary shareholders 817 26 648
Net profit 817 26 648
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Distributable
Share capital premium reserve Total
R"000 R"000 R"000 R"000
Balance at 1 November 2003 - - - -
Net profit for the year 27 255 27 255
Issue of share capital 135 1 059 1 194
Balance at 1 November 2004 135 1 059 27 255 28 449
Net profit for the year 41 925 41 925
Adjustment of deferred tax (15 277) (15 277)
Issue of share capital 77 22 069 22 146
Listing expenses (2 757) (2 757)
Balance at 31 October 2005 212 20 371 53 903 74 486
Net profit for the year 817 817
Issue of share capital 250 88 382 - 88 632
Dividend paid - - (30) (30)
Balance at 30 April 2006 462 108 753 54 690 163 905
ABRIDGED CONSOLIDATED BALANCE SHEET
As at As at
30 April 06 31 October 05
R"000 R"000
Assets
Non current assets 1 126 478 775 514
Plant and equipment 411 287
Goodwill 14 968 14 968
Investment properties 1 099 470 751 175
Straight-line debtor 10 902 9 084
Other financial assets/Loans to subsidiaries 727 -
Investment in subsidiaries - -
Current assets 52 170 92 227
Inventory 8 -
Trade and other receivables 8 667 19 714
Current portion of straight-line debtor - 2 271
Other financial assets 5 458 2 715
Non-current asset held for sale 19 401 19 401
Cash and cash equivalents 18 636 48 126
Total assets 1 178 648 867 741
Equity and liabilities
Capital and reserves 163 905 74 486
Share capital and premium 109 215 20 583
Distributable reserve 54 690 53 903
Non-current liabilities 969 710 710 611
Debentures 453 505 203 838
Amount owing to related party - -
Borrowings 479 325 471 119
Deferred tax 36 880 35 654
Current liabilities 45 033 82 644
Taxation 94 90
Trade and other payables 44 518 27 926
Other financial liabilities - 1 983
Current portion of borrowings 377 52 338
Bank overdraft - 263
Provisions 44 44
Total equity and liabilities 1 178 648 867 741
ABRIDGED SEGMENTAL INFORMATION
Industrial Retail Commercial Corporate Total
R"000 R"000 R"000 R"000 R"000
Gross revenue 1 280 39 141 24 391 4 786 69 598
Segmental result 1 074 26 528 16 003 (42 788) 817
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
6 months 12 months
ended ended
30 April 2006 31 October 2005
R"000 R"000
Cash flows from operating activities 682 (13 814)
Cash generated by operating activities 44 721 35 397
Interest received 250 926
Interest paid - borrowings (14 770) (31 540)
Interest paid - debentures (29 515) (18 597)
Tax paid (4) -
Cash flows from investing activities (346 409) (71 779)
Expenditure to maintain operating capacity
Plant and equipment acquired (199) (310)
Expenditure for expansion
Subsidiaries acquired - (968)
Investment properties acquired (346 210) (87 432)
Investment properties sold - 16 931
Cash flows from financing activities 316 500 124 623
Capital raised 88 632 5 020
Loans raised 220 329 121 729
Inventory acquired (8) -
Loans repaid 7 577 (2 126)
Dividends paid (30) -
Increase (Decrease) in cash
and cash equivalents (29 227) (39 030)
Cash and cash equivalents at
beginning of the period 47 863 8 833
Cash and cash equivalents
at end of the period 18 636 47 863
COMMENTARY
Basis of accounting
These results have been prepared in accordance with International Financial
Reporting Standards (IFRS). In order to comply with AC105 and circular 7/2005
issued by the South African Institute of Chartered Accountants, contracted
future rentals have been recognised on a straight-line basis over the lease
term. The comparative figures used are for the full year 1 November 2004 to
31 October 2005, as the portfolio has changed significantly and the interim
figures would be meaningless to linked unitholders.
Financial results
The results for the period under review have exceeded budget, enabling CBS to
distribute 32 cents per linked unit, which equates to 46% of the projected
annual distribution of 69.9 cents.
Reconciliation between basic earnings and headline earnings
2006 2005
R"000 R"000
Net income after tax 817 26 648
Less fair value adjustment (1 834) (41 564)
Add taxation attributable thereto 532 12 054
Headline loss (485) (2 862)
Headline loss per share - cents (0.5c) (7c)
The disclosure of earnings per share set out above, whilst obligatory in terms
of accounting standards, is not meaningful to investors as the shares are
traded as part of a linked unit and 499.5/500 of the revenue is distributed in
the form of debenture interest. In addition, earnings include fair value
adjustments and straight-line income adjustments, which do not affect
distributable earnings. The calculation of distributable earnings per linked
unit as shown is meaningful to investors. The figure shown above equates to 32
cents per linked unit.
Post balance sheet events
Acquisitions
Announcements were made via SENS on 12 April 2006, and published in the press
on 13 April 2006, that CBS had concluded agreements to acquire 12 prime
Gauteng properties for R616m from:
- various associated companies and trusts of Zenprop Property Holdings
(Proprietary) Limited (`Zenprop");
- Deventon Properties Limited (`Deventon") and one of its associated companies
(`the Deventon portfolio"); and
- the vendor of JGM House.
The majority of these quality office buildings benefit from long triple net
leases, the bulk of which expire between 2011 and 2014. These acquisitions
will increase the number of properties in the portfolio to 47, covering a
gross lettable area of 270 842m2, and will raise CBS" property asset base from
R1.1bn to in excess of R1.7bn at an average increased cost of R10 860m2. The
Average effective forward yield of the properties aquired is 8.44%.
For CBS linked unitholders the deal has been structured to be immediately
yield-enhancing and represents solid earnings growth for many years. The high
annual net rental escalations add to the ability to provide above average and
sustainable growth in distributions.
These acquisitions will contribute both to a growth in income and capital over
the medium to long term, resulting from the enhanced quality and critical mass
of the company"s property portfolio, and to the long-term sustainable growth
of the company.
The Deventon portfolio consists of mainly quality commercial properties with
primarily A-Grade tenants. The effective average forward net monthly rental
after operating costs attributable to the Deventon portfolio amounts to
R56.42/m2 (excluding parking, levies and operating costs). The properties to
be acquired from Deventon have above average annual rental escalations with a
weighted average annual rental escalation of 8.6% per annum.
The Zenprop portfolio consists of mainly quality commercial properties with A-
Grade tenants. The effective average forward net monthly rental attributable
to the Zenprop portfolio amounts to R80.43/m2 (excluding parking, levies and
operating costs). The properties to be acquired from Zenprop have above
average annual rental escalations with a weighted average annual rental
escalation of 11.3% per annum. Furthermore, properties comprising 95.4% of the
Zenprop purchase consideration are occupied by single tenants and are triple
net leases, with the tenant being responsible for all expenses.
The acquisitions Initial
Property Purchase Gross average
location price rentable rental
Property Vendor (Gauteng) R"million area m2 R/m2
Zenprop
portfolio 382 26 758 81,6
Bristol Myers
Squibb Truzen 18 Trust Bedfordview 60 4 578 77,8
South African Lemmi Investments
Revenue Service (Pty) Ltd Alberton 66 4 760 77,7
SITA Truzen 16 Trust Sunninghill 100 5 437 99,1
Palm Grove 110 Ferndale Trust Randburg 16 3 599 61,5
Sun
International Intersun Trust Sandown 140 8 384 85,0
Deventon
portfolio 187 25 330 61,3
Birchwood Court Deventon Midrand 28 3 488 70,5
Royal Palms Deventon Midrand 12 5 729 30,6
Waterfall Close Deventon Midrand 23 2 954 73,0
Waterfall Edge Deventon Midrand 24 3 251 65,1
Waterfall View
& Crescent Deventon Midrand 20 2 415 74,8
Verizon Erfbel no.9 (Pty) Ltd Gallo Manor 80 7 493 69,9
JGM House NIB 2 Shareblock
(Pty) Ltd Sandown 37 4 614 86,2
Commissions 10
Total 616 56 702 73,3
Rationale for the Zenprop development agreement
Zenprop is recognised as one of the foremost developers of retail, commercial,
industrial and residential property in South Africa. The Zenprop development
agreement inter alia:
- secures CBS development expertise, which aligns both CBS" and Zenprop"s
interests and commercial insight; and
- secures the flow of quality private properties by way of a first refusal
undertaking provided by Zenprop to CBS.
Salient details of the Zenprop development agreement
The Zenprop development agreement contains the following salient provisions:
- CBS has a right of first refusal on certain of those properties which
Zenprop may offer for sale in the market;
- Zenprop will acquire the right, subject to CBS approval of the type, scale
of development and the amount of expenditure, and subject to certain other
terms and conditions and some exclusions, for a period of five years, to the
exclusive development of the CBS property portfolio;
- Zenprop will be entitled to receive up to 40% of the increased value added
in any properties developed with CBS, subject to there being no yield
dilution to CBS, on each development undertaken;
- Development fees ranging from 3.5% to 5% will be payable to Zenprop; and
- 70% of SAPOA tariffs on leasing commissions, or three months of the first
years" rental, will be paid on those tenants introduced by Zenprop to any
developments undertaken by Zenprop and CBS, jointly.
Prospects
The CBS Board anticipates that, subject to market conditions remaining stable,
CBS distribution for the full year ending 31 October 2006 should at least
equate the updated profit forecast of 69.90c, as disclosed in the Circular to
linked unitholders dated 19 May 2006, which was reviewed by CBS" auditors and
posted to all linked unitholders.
Dividend and interest payment
Notice is hereby given of interim dividend declaration Number 1 of 0,032 cent
and debenture interest payment Number 1 of 31,968 cents per linked unit,
totaling 32,0 cents per linked unit for the income distribution period 1
November 2005 to 30 April 2006.
Timetable for distribution
2006
Last day to trade `cum" the interim distribution Friday, 7 July
Linked units commence trading `ex" the interim distribution Monday, 10 July
Record date to participate in the interim distribution Friday, 14 July
Payment date of the interim distribution Monday, 17 July
No dematerialisation or rematerialisation of CBS linked unit certificates may
take place between Monday, 10 July 2006 and Friday, 14 July 2006, both days
inclusive.
By order of the Board
Cape Town
20 June 2006
Directors
Ivan Klerck* (Chairman), Gary Fisher, Martin Ettin, Derek Greenberg,
Eugene Loubser*, Sean Mackay, Jeff Molobela*, Paul Sulcas*, Colin Traub*
(*Non-executive)
Company secretary: Charmaine Loydall
CBS Property Portfolio Limited and its Subsidiaries
Registration number: 2003/009523/06
Registered office: 7th Floor, Buitengracht Centre, 125 Buitengracht Street,
Cape Town, 8001
Share code: CBS & ISIN: ZAE000073995
Sponsor:
Investec Bank Limited
Auditor
BDO Spencer Steward
Chartered Accountants
Financial and Taxation Advisers
Date: 20/06/2006 11:02:39 AM Produced by the JSE SENS Department
