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CLO
CLO
Calulo property fund - Reviewed abridged group financial results for the
year ended 30 June 2006 and distribution declaration
Calulo property fund
(Formerly Annuity Property Fund Limited)
(Reg No 1987/006274/06)
(Incorporated in the Republic of South Africa)
Share code: CLO
ISIN: ZAE000060711
Reviewed abridged group financial results
for the year ended 30 June 2006
- Total assets increased to R604 million (up 54,5%)
- Total return per linked unit for the year 44,9 cents (up 20,8%)
- NAV per linked unit of 266 cents (up 32,7%)
Abridged group income statement
Reviewed Restated
30 June 30 June
2006 2005
R"000 R"000
Revenue 70 677 13 540
Operating lease income 63 479 11 921
Straight line operating lease adjustment 7 198 1 619
Sundry income 152 114
Property expenses (12 912) (3 343)
Other operating expenses (4 094) (2 446)
Net fair value adjustment of investment
properties 68 412 1 381
Fair value adjustment of investment
properties 75 610 3 000
Straight line operating lease adjustment (7 198) (1 619)
Operating profit 122 235 9 246
Finance costs (30 832) (7 279)
Finance income 704 32
Movement in fair value of interest
rate swaps 3 208 (5 423)
Amortisation of debenture premium 220 67
Distribution to linked unitholders (16 698) (3 203)
- interim (8 789) -
- final (7 909) (3 203)
Profit/(loss) before taxation 78 837 (6 560)
Taxation (22 650) 1 937
Net profit/(loss) for the year 56 187 (4 623)
Reconciliation between earnings/(loss)
and headline earnings/(loss)
Reviewed Restated
30 June 30 June
2006 2005
R"000 R"000
Net profit/(loss) for the year 56 187 (4 623)
Fair value adjustment of investment
properties net of tax (48 572) (1 416)
Amortisation of debenture premium (220) (67)
Headline earnings/(loss) for
shareholders 7 395 (6 106)
Distribution to linked unitholders 16 698 3 203
Headline earnings/(loss) for linked
unitholders 24 093 (2 903)
Number of shares and linked units
in issue (000"s) 90 174 74 485
Weighted average number of linked units
in issue (000"s) 76 677 14 013
Weighted average number of shares
in issue (000"s) 76 677 14 013
Basic earnings/(loss) per share
(in cents) 73,3 (33,0)
Headline earnings/(loss) per share
(in cents) 9,6 (43,6)
Earnings/(loss) per linked unit
(in cents) 95,1 (10,1)
Headline earnings/(loss) per linked
unit (in cents) 31,4 (20,7)
Investors" distributable earnings
Reconciliation between distributable
Earnings/(loss) and net profit/(loss)
for the year
Reviewed Restated
30 June 30 June
2006 2005
R"000 R"000
Operating lease income 63 479 11 921
Sundry income 152 114
Property expenses (12 912) (3 343)
Other operating expenses (4 094) (2 446)
Finance costs net of amortised
borrowings costs (30 631) (7 279)
Finance income 704 32
Linked unitholders" distributable
earnings/(loss) 16 698 (1 001)
Linked unitholders" distributable
earnings/(loss) 16 698 (1 001)
Fair value adjustment of investment
properties 75 610 3 000
Distribution to linked unitholders (16 698) (3 203)
Movement in fair value of interest
rate swaps 3 208 (5 423)
Amortisation of debenture premium 220 67
Amortised borrowing costs (201) -
Taxation (22 650) 1 937
Net profit/(loss) for the year 56 187 (4 623)
Distribution to linked unitholders
(cents) - interim 11,80 -
Distribution to linked unitholders
(cents) - final 10,10 4,3
21,90 4,3
Abridged group balance sheet
Reviewed Restated
30 June 30 June
2006 2005
R"000 R"000
ASSETS
Non-current assets
Equipment, furniture and fittings 102 148
Investment properties 580 133 372 042
Straight line operating lease receivable 8 817 1 619
Deferred tax asset - 2 237
589 052 376 046
Current assets
Trade and other receivables 7 936 3 523
Investment properties held for sale - 8 000
Cash and cash equivalents 6 996 3 354
14 932 14 877
Total assets 603 482 390 923
EQUITY
Share capital and reserves
Share capital and share premium 943 770
Accumulated profit/(loss) 51 717 (4 470)
Total equity 52 660 3 700
LIABILITIES
Non-current liabilities
Interest-bearing borrowings 309 960 190 460
Debentures and debenture premium 187 435 153 106
Fair value of interest rate swaps 2 214 4 884
Deferred tax liability 20 643 10
520 252 348 460
Current liabilities
Trade and other payables 16 870 4 270
Distribution payable 7 909 3 203
Fair value of interest rate swaps - 539
Borrowing 6 258 1 500
Short-term portion of interest-bearing
borrowings 35 36 651
31 072 46 163
Total liabilities 551 324 394 623
Total equity and liabilities 603 984 390 923
Net asset value per share (cents) 58,4 (5,0)
Net asset value per linked unit (cents) 266,3 200,6
Abridged group cash flow statement
Reviewed Restated
30 June 30 June
2006 2005
R"000 R"000
Net cash generated/(utilized)
from operating activities 3 452 (1 696)
Net cash utilized in investing
activities (123 615) (373 846)
Net cash generated from financing
activities 117 571 377 082
Net inflow of cash and cash equivalents (2 592) 1 540
Cash, cash equivalents and bank
overdraft at the beginning of the year 1 854 314
Cash, cash equivalents and bank
overdraft at the end of the year (738) 1 854
Abridged group statement of changes in equity
Accumulated
Share Share profit/
capital premium (loss) Total
R"000 R"000 R"000 R"000
Balance at
1 July 2004 as
previously stated 3 54 152 209
Issue of linked units
restated 742 (29) 1 714
Issue of linked
units as previously
stated 742 7 470 - 8 212
Issue costs
previously deducted - (2 497) - (2 497)
Reallocation to
debenture premium - (7 486) 1 (7 485)
Issue cost reallocated
to debentures - 2 484 - 2 484
Net loss for the year
restated - - (4 623) (4 623)
Net loss for the year
as previously stated - - (2 224) (2 224)
Prior year
adjustments - - (2 466) (2 466)
Amortisation of
debenture premium - - 67 67
Balance at
30 June 2005
restated 745 25 (4 470) (3 700)
Issue of linked
units 157 19 - 176
Issue costs - (3) - (3)
Net profit for
the year - - 56 187 56 187
Balance at
30 June 2006 902 41 51 717 52 660
Segmental reporting
Retail/ Indust-
Showrooms Office rial
R"000 R"000 R"000
Primary segment
Revenue 33 483 18 599 13 968
Operating lease income 30 500 16 626 11 726
Straight line operating lease
adjustment 2 983 1 973 2 242
Operating profit 56 551 40 576 23 721
Fair value adjustment of
investment properties 33 233 29 606 12 771
Assets 313 586 156 698 124 123
Trade and other payables 227
Segmental reporting (continued)
Sold
properties Other Total
R"000 R"000 R"000
Primary segment
Revenue 4 627 - 70 677
Operating lease income 4 627 - 63 479
Straight line operating lease
adjustment - - 7 198
Operating profit 3 623 (2 236) 122 235
Fair value adjustment of
investment properties - - 75 610
Assets 305 9 272 603 984
Trade and other payables - 16 643* 16 870
*Includes amounts for the settlement of purchase price of Vista Communications
and portfolio creditors
Geographical segment
Investment properties
Retail/ Indust-
Showrooms Office rial
R"000 R"000 R"000
Eastern Cape - - 94 500
Freestate 16 750 15 100 -
Gauteng 226 450 117 150 12 600
Kwa-Zulu Natal - 6 350 15 800
Mpumalanga 24 250 - -
North West 11 600 - -
Western Cape 32 600 15 800 -
311 650 154 400 122 900
Geographical segment
Investment properties
(continued)
Other Total
R"000 R"000
Eastern Cape - 94 500
Freestate - 31 850
Gauteng - 356 200
Kwa-Zulu Natal - 22 150
Mpumalanga - 24 250
North West - 11 600
Western Cape - 48 400
- 588 950
Operating lease income Retail/ Indust-
Showrooms Office rial
R"000 R"000 R"000
Eastern Cape - - 10 549
Freestate 911 663 -
Gauteng 23 941 13 053 600
Kwa-Zulu Natal - 858 577
Mpumalanga 1 824 - -
North West 671 - -
Western Cape 3 153 2 052 -
30 500 16 626 11 726
Operating lease income
(continued)
Sold
Properties Total
R"000 R"000
Eastern Cape - 10 549
Freestate - 1 574
Gauteng - 37 594
Kwa-Zulu Natal - 1 435
Mpumalanga 3 310 5 134
North West - 671
Western Cape 1 317 6 522
4 627 63 479
Basis of presentation
The abridged financial results have been prepared in accordance with
International Financial Reporting Standards ("IFRS"), specifically IAS 34
applicable to abridged financial reporting, the requirements of the Companies
Act of South Africa, 1973 and the Listing requirements of the JSE Limited
("JSE").
IFRS 1-First time adoption of International Financial Reporting Standards has
been applied. Due to the fact that the adoption of IFRS had no effect on the
comparative amounts, a reconciliation to South African Statements of Generally
Accepted Accounting Practice ("SA GAAP"), the previous basis of preparation, has
not been prepared. The accounting policies applied are consistent with those
applied in the most recent audited financial statements unless otherwise stated.
The abridged results have been reviewed by PricewaterhouseCoopers Inc. whose
unqualified review opinion is available for inspection at the company"s
registered address.
Prior year adjustments
During the year to 30 June 2005 certain expenses (principally occupational
interest) amounting to R3,473 million (after tax R 2,466 million) was not
brought to account. Furthermore amounts previously allocated to share premium
amounting to R 7,432 million have been reallocated to debenture premium to more
correctly reflect the premium received on linked units issued. A portion of the
costs amounting to R 2,484 million related to the issue of the linked units,
previously allocated against share premium, has been deducted from debentures to
more correctly reflect the net proceeds received on the issue. The debenture
premium and the debenture issue costs are amortised through profit and loss over
the life of the debentures (25 years ).
Comparative figures have been restated to reflect these adjustments.
Commentary
The board has declared a final distribution of 10,10 cents per linked unit with
the total distribution for the year amounting to 21,90 cents and weighted annual
distribution of 23,07 cents. This represents an annualised income return of 11%.
This amount is less than the 12% forecast in the prelisting statement. This
shortfall results from the underperformance, post the rental warranty period of
Orchards Village and a defensive decision to early renew leases, with negative
reversions, in respect of Baby City and Sportsman"s Warehouse at Blackheath
Pavillion. These leases are now in place for ten years at market related
rentals. The Calulo linked unit opened at a price of 216 cents last year and
closed at 240 cents at 30 June 2006, thus a total return of 44,9 cents has been
achieved for the year which on an opening linked unit price of 216 cents
provides a year on year total return of 20,8%.
Valuations
The entire property portfolio has been independently re-valued at 30 June 2006
resulting in an increase in the portfolio value to R588,9 million. A deferred
tax liability of R 21,9 million has been provided in respect of the current year
fair value adjustment. This deferred tax liability has been calculated using
the corporate use rate of 29%, although in the event of a disposal, the company
will recognise the CGT (Capital Gains Tax) rates to determine any tax liability.
The Net Asset Value per linked unit increased accordingly to 266,26 cents per
linked unit, from 200,59cents, an increase of 32,7% on June 2005 figures.
Acquisitions and disposals
During the year under review, the group acquired the following ten properties
for R155,7 million:
Property Sector Price
(R"m)
Sinoville Sentrum Retail 70,7
Edgars Sasolburg (Trichardt Square) Retail 15,4
Edgars Ermelo Retail 11,8
Morkels Store (Witbank) Retail 3,0
Massstores (Klerksdorp) Retail 1,2
Fruit and Vegetable City - Carltonville Retail 8,6
Brits Office Park Office 5,7
Old Mutual Hoffman Plein (Bloemfontein) Office 12,5
Vista Communications Media - Roodeport Industrial 12,6
BSI House - Pietermaritzburg Industrial 14,2
Total cost of acquisitions 155,7
The acquisitions were funded by the issue of 15,689,037 new linked units at 225
cents, debt and from existing cash resources.
The group disposed of three properties, Albert Road, De Waal Centre in Cape Town
and Orchards Village in Nelspruit.
Debt
The company has total borrowing facilities of R324 million (a loan to value of
55%). R205m or 63% of the total long term debt is fixed at average cost of
10,08% and the balance is floating, currently at 8,93%.
Lease expiry
The vacancies in the fund have reduced from 3,3% to 2,4%
(3,412 m2) the over year. The major part of the vacancy is in the office market,
where the group is also experiencing some rental reversions particularly at Parc
Nicol 1 and 3.
Related Parties
During the year the group entered into various transactions with related
parties:
30 June 2006 30 June 2005
Company Nature R"000 R"000
Calulo Asset Asset
Management (Pty) Ltd management 2 140 459
Calulo Property Property management
Management (Pty) Ltd services 2 863 353
Calulo Properties Promoter"s fee
(Pty) Ltd and commissions - 2 337
Rand Merchant Bank
(RMB)* Funding - 227 041
Rand Merchant Bank
(RMB)* Interest paid - 3 880
*RMB sold their holding to Matemeku Property Acquisitions 104 (Pty) Ltd and is
no longer a related party.
Post balance sheet events
On 24 May 2006 the group announced that, subject to Competition Commission
approval, Matemeku Property Acquisitions 104 (Pty) Ltd had disposed of their
40,6% holding in the fund to Pangbourne Properties Limited ("Pangbourne"). In
addition, and also subject to Competition Commission approval, Pangbourne has
acquired 100% of the asset and property management companies. In the light of
the acquisition of control, Pangbourne is required to make an offer to minority
linked unit holders at 300 c per linked unit. The circular detailing the
mandatory offer to Calulo minority unitholders by Pangbourne, is expected to be
posted to unit holders in the first half of October 2006. The fund will likely
focus its strategy on building the office component of its portfolio in the year
ahead as it is believed that the office market is set to enjoy above average
growth through declining vacancies, firming market rentals and rising
replacement costs.
Prospects
Pangbourne intends injecting an office property portfolio into Calulo as part of
a "bulking up" exercise, which is expected to take place during the first half
of 2007, subject to the necessary regulatory approvals being obtained. This
would be in line with Pangbourne"s strategy of holding significant interests in
specialised listed property funds, of which Calulo would form the specialised or
focused office vehicle. The initial settling of the portfolio and the rental
reversion risks inherent in certain of the initial properties has now been
largely normalised and management believes future growth prospects should now be
in line with market.
Resignation of director
Richard Harman, the Chief Executive Officer of Calulo Property Fund Limited, has
tendered his resignation with effect from 31 August 2006 to pursue his personal
interests.
Richard will be available to address any residual management issues relating to
the business, on a contract basis, until the approval of the Competition
authorities for the acquisition by Pangbourne Properties Limited ("Pangbourne")
of a majority holding in Calulo has been obtained.
The board of Calulo has expressed its appreciation to Mr Harman for his
contribution to the company during his tenure.
Cheryl Wendelken has been nominated as the new CEO designate of Calulo, subject
to the granting of approval of the Competition authorities which is expected on
or about 29 September 2006, and subject also to the posting of a mandatory offer
to minority unitholders of Calulo by Pangbourne, as announced on SENS on 19 July
and 4 August 2006.
Distribution
Notice is hereby given that distribution number 3 of 10,10 cents per linked unit
for the six months to 30 June 2006 has been approved by the Board.
Last day to trade cum-distribution Friday, 29 September 2006
Trading ex-distribution Monday, 2 October 2006
Record date Friday, 6 October 2006
Payment date Monday, 9 October 2006
Linked unit certificates may not be rematerialised or dematerialised between
Monday 2 October 2006 and Friday 6 October 2006, both days inclusive.
For and on behalf of the board
M Faku
Chairman
8 September 2006
Registered office: Calulo Property Fund Limited 2a Delany Road, Plumstead, 7800
PO Box 610, Plumstead, 7801, Cape Town
Directors: M Diale, M Faku, N Madikizela, M Mashishi, T Khobane Company
Secretary: CK Loydall (Mrs)
Transfer secretaries: Computershare Investor Services 2004 (Proprietary)
Limited, 70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Date: 08/09/2006 04:55:15 PM Produced by the JSE SENS Department
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