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PPR
PPR
Putprop Limited - Audited results for the financial year ended 30 June
2006
Putprop Limited(Incorporated in the Republic of South
Africa)(Registration number 1988/001085/06)Share code: PPR
ISIN: ZAE000072310("the Company" or "Putprop")
AUDITED RESULTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2006
ABRIDGED INCOME STATEMENTSfor the financial year ended 30 June 2006
Group
2005
2006 Restated
R"000 R"000
Rent received 22 826 24 201
Interest received 1 882 1 242
Revenue 24 708 25 443
Operating income 6 871 7 526
Operating expenses 3 334 2 592
Operating profit 28 245 30 377
Finance cost - 3
Profit before taxation 28 245 30 374
Taxation 7 711 8 561
Profit attributable to equity holders 20 534 21 813
Earnings per share (cents) 71,3 75,8
Dividend per share (cents) 45,0 55,0
- interim 20,0 25,0
- final 25,0 30,0
- final declared 20,0 25,0
Notes:
1. EARNINGS PER SHARE (IN CENTS) 71,3 75,8
The calculation is based on earnings of R20
534 000 (2005 : restated R21 813 000) and on
the weighted average number of 28 793 000
(2005 : 28 793 000) shares in issue for the
year
2. HEADLINE EARNINGS PER SHARE (IN CENTS) 50,9 50,3
Headline earnings per share have been
calculated in terms of circular 7 of 2002
and exclude profits of a capital nature
R"000 R"000
3. Reconciliation of headline earnings:
Net profit for the year 20 534 21 813
Adjusted for:
- Fair value adjustment of investment
properties (6 871) (7 526)
- Deferred tax on fair value adjustment
896 190
Headline earnings 14 659 14 477
ABRIDGED BALANCE SHEETSat 30 June 2006
Group
2005
2006 Restated
Notes R"000 R"000
ASSETS
Non-current assets
Investment properties 7 92 663 82 042
Other tangible assets 58 67
Investment in subsidiaries 8 - -
Other investments 9 13 200 -
105 921 82 109
Current Assets
Work in progress 10 13 664 13 616
Accounts receivable 11 11 421 16 721
Amount due by fellow subsidiary 20 - 1 659
Taxation receivable 12 1 584 1 675
Cash and cash equivalents 13 20 047 28 469
46 716 62 140
Total assets 152 637 144 249
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 14 4 146 4 146
Accumulated profit 140 783 133 206
144 929 137 352
Non-current liabilities
Deferred taxation 15 4 859 5 404
4 859 5 404
Current liabilities
Accounts payable 16 1 807 1 493
Amount due to fellow subsidiary 20 1 042 -
2 849 1 493
Total equity and liabilities 152 637 144 249
ABRIDGED STATEMENT OF CHANGES IN EQUITYfor the financial year ended 30
June 2006
Stated Accumulated
capital profit Total
R"000 R"000 R"000
GROUP
Balance at 30 June 2004 as 4 146 128 441 132 587
previously stated
Rent straightlining adjustments (1 212) (1 212)
Balance at 30 June 2004 restated 4 146 127 229 131 375
Profit attributable to equity 21 813 21 813
holders
Dividends paid (15 836) (15 836)
Balance at 30 June 2005 4 146 133 206 137 352
Profit attributable to equity 20 534 20 534
holders
Dividends paid (12 957) (12 957)
Balance at 30 June 2006 4 146 140 783 144 929
CASH FLOW STATEMENTSfor the financial year ended 30 June 2006
Group
2005
2006 Restated
R"000 R"000
Cash inflow from operating activities 8 534 3 036
Cash receipts from customers 29 778 33 338
Cash paid to suppliers (2 005) (2 119)
Cash generated from operations 27 773 31 219
Interest received 1 882 1 242
Finance costs - (3)
Taxation paid (8 164) (13 586)
Dividends paid (12 957) (15 836)
Cash (outflow)/inflow from investing (16 956) 9 928
activities
Proceeds on disposal of tangible assets - 10 000
Reduction in loan to subsidiary
Additions to tangible assets (3 756) (72)
Acquisition of other investments (13 200) -
Net (decrease)/increase in cash and cash (8 422) 12 964
equivalents
Cash and cash equivalents at beginning of 28 469 15 505
year
Cash and cash equivalents at end of year 20 047 28 469
RESULTS OVERVIEW
Background
Putprop is a property company which has investments in commercial and
industrial properties, including a property for future residential
development.
OverviewRevenue decreased by 3%, from R25,4 million to R24,7 million, as
compared to the previous year. This is mainly as a result of the sale of
some properties in 2005, as previously reported. These sales resulted in
an increase in Putprop"s cash resources and interest received for the
year which increased from R1,242 million to R1,882 million.
Treatment of Rental IncomeIn the past, operating lease income was
recognised by companies as they fell due by the lessee. Putprop is now
required to "straight-line" leases over a period of the finite lease
agreements, where such lease agreements contain fixed escalation clauses.
Putprop commenced this new process last year but two of the underlying
properties were incorrectly omitted from last year"s calculations. Those
properties have now been brought into account.
As a result, the rent escalation adjustment increased from R3,469 million
to R5,291 million.
Operating Income and ExpensesThe change in operating income from R7,526
million to R6,871 million is the result of the revaluation of Putprop"s
properties.
Operating expenses increased from R2,592 million to R3,334 million,
mainly due to an increase in administration fees, property maintenance
and director"s salaries.
MaintenanceThe cost of maintenance of the properties was R1,233 million
(2005: R0,983 million), an increase of 25,4%. This is in line with
Putprop"s budgeted maintenance plan.
InsurancePutprop"s building insurance premiums increased by 21,7% from
R0,212 million to R0,258 million, in line with the adjustment in
estimated replacement costs.
Net ProfitThe net profit before taxation is R28,245 million(2005
Restated: R30,374 million). Net profit after taxation is R20,534 million
(2005 Restated: R21,813 million).
Employment Equity ActPutprop has submitted the required equity reports to
the Employment Equity Registry in compliance with Section 21 of the
Employment Act 55, of 1998.
Valuation of PropertiesA registered valuer conducted a valuation of
Putprop"s properties at year-end. The revaluation increase amounted to
R6,871 million and that adjustment is shown in the income statement.
Lonehill PropertyAs reported in the interim report in March 2006, there
was a delay in the rezoning application due to an environmental report
that was required by GDACE (Gauteng Department of Agriculture,
Conservation and Environment).
The Board expects that the Town Planning decision will now take place
later in October 2006. (Refer to "Future Prospects" below as well).
LoansThe company has no loans.
Capital CommitmentsThe company has to-date incurred development costs of
R93 000, specifically related to the Lonehill property. These costs are
shown under "property held for development" in the balance sheet.
Future ProspectsPutprop"s investment in the Studio Park, Lonehill
Boulevard business complex is now providing the company with a good
income stream. The official valuer has also increased the estimated value
of the property to R4,472 million (purchased at R3,6 million February
2006).
Putprop owns a 17,5% share in a shopping/office complex in Mooikloof,
Eastern Tswane. The official opening is expected to take place in March
2007. (Previously expected in December 2006.)
Putprop has also purchased a 15% share in a major
shopping/office/hotel/apartment complex in Centurion, Tswane. This major
development is partly complete.
The above two investments are basically longer-term in nature and the
income streams will only materialise in 2007/2008. The Board nevertheless
anticipates an increase in the value of the underlying investments as
well.
Putprop received an offer to purchase our property situated at Portion 6
of the farm Lonehill, Province of Gauteng, subject to the potential buyer
conducting a due diligence investigation and accepting the contents of
the report.
Renewal negotiations regarding the rental agreements with Putco Limited
will take place shortly.
Putprop"s strategy is to continue to look to invest in suitable
office/retail/warehousing complexes to improve the company"s income
streams.
Dividend DeclarationThe Board of Directors has resolved to declare a
final dividend of 20 cents per share to all ordinary shareholders
recorded in the share register on the record date. The dividend is
declared out of consolidated current year profits before tax of R28,245
million. Including the interim dividend of 20 cents per share, the total
dividend declared for the year is 40 cents per share (2005 : 50 cents per
share).
Despite the relevant dates in the Annual Report being incorrectly
reflected as a week earlier than those outlined below, in compliance with
the requirements of STRATE and Schedule 24 of the JSE Listings
Requirements, the following dates are applicable:
Last day to trade cum the dividend Friday, 27 October 2006
Date trading commences ex the dividend Monday, 30 October 2006
Record date Friday, 03 November 2006
Date of payment Monday, 06 November 2006
Share certificated may not be dematerialise or rematerialise between
Monday 30 October 2006 and Friday 3 November 2006, both days inclusive.
REPORT ON TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS
Introduction
Up to 30 June 2005, Putprop Ltd prepared financial statements in
accordance with South African Statements of Generally Accepted Accounting
Practice (SA GAAP). In line with its counterparts, Putprop is adopting
International Financial Reporting Standards (IFRS) for the financial year
ended 30 June 2006. As the Group publishes comparative information for
one year in its financial statements, the date of transition to IFRS is
effectively 1 July 2004, which represents the start of the earliest
period of comparative information presented.
Basis of preparation
Putprop has adopted the requirements of IFRS for its financial year ended
30 June 2006. The standards applied are those issued by the
International Accounting Standards Boards as at 30 June 2006, including
the interpretations issued by the International Financial Reporting
Interpretations Committee (IFRIC) as applicable to Putprop. The financial
statements have been prepared on the basis of the Standards that are
effective together with expected amendments as at 30 June 2006 which have
been applied retrospectively as if those Standards have always been
applied, except for any of the transitional exemptions or exceptions
which have been applied as described elsewhere herein.
Transitional arrangements
The key principle of IFRS 1 - First Time Adoption of International
Financial Reporting Standards is full retrospective application of IFRS.
However, in addition to exempting companies from the requirement to
restate certain comparatives, this statement provides exemptions from
retrospective application in certain instances due to cost and practical
considerations. Putprop did not apply any exemptions or exceptions
available to it.
Impact from the adoption of IFRS
There were no effects on 2005 opening balances or the comparative
reporting period as a result of the transition to IFRS.
Effect on the first time adoption of IFRS and other restatements
Property, plant and equipment
Where components of property, plant and equipment have significantly
different useful lives, they are accounted for as separate assets. The
useful lives and residual values of all assets are assessed annually. The
increase in carrying values of property, plant and equipment relates to
changes in their estimated useful lives with a resulting adjustment to
deferred taxation, other reserves and minority interest.
Presentation of minority interest in subsidiary companies
Minority interests are now reflected as part of equity. Any change in
ownership interest in subsidiary companies without a change in control is
recognised as an equity transaction in the consolidated financial
statements.
Rebates and discounts
In accordance with circular 9/2006 issued by the South African Institute
of Chartered Accountants regarding the treatment of settlement discounts
and cash discounts, the valuation of inventories and accounts receivable
and payable as well as the measurement of cost of sales and revenue have
been adjusted retrospectively by the settlement discounts received from
suppliers in respect of purchases, and discounts granted to customers in
respect of sales. The impact on the balance sheet was minimal.
Reclassifications and disclosure adjustments
In addition to the above, certain reclassifications and disclosure
adjustments were made to the balance sheet presentation:
- Intangible assets - Acquired computer software, previously reflected
in property, plant and equipment as furniture, fittings and
equipment, has been reclassified as an intangible asset. The useful
life of computer software is assessed annually.
- Foreign exchange contract derivative revaluations were in the past
classified as financial assets or liabilities. These balances have
been reclassified to either trade and other receivables, or trade and
other payables.
- The only adjustments to the cash flow statement relate to
reclassifications between categories.
IFRSs and IFRIC Interpretations not yet effective
The Group has not applied the following IFRSs and IFRIC Interpretations
that have been issued but are not yet effective:
IFRS 6 Exploration for and Evaluation of Mineral Resources
This standard does not apply to the activities of Putprop.
IFRS 7 Financial Instruments: Disclosures
This standard is required for years commencing on or after 1 January
2007. This Standard primarily deals with disclosure and will not have any
quantitative effect on Putprop.
IFRIC 4 Determining whether an arrangement contains a lease
This interpretation deals with schemes of arrangement and is effective 1
January 2006. Arrangements are currently under review to determine
whether they should in fact be accounted for as a lease. To date the
effect of this standard is not considered to have a material effect on
Putprop.
IFRIC 5 Rights to interest arising from decommissioning, restoration and
environmental rehabilitation fund. This interpretation is required for
years commencing on or after 1 January 2006 but is not expected to be
relevant to the activities of Putprop.
IFRIC 7 Applying the restatement approach under IAS29
Reporting in Hyperinflationary Economies
This interpretation is required for years commencing on or after 1 March
2006 but is not expected to be relevant to the activities of the Group.
IFRIC 8 Scope of IFRS 2
This interpretation is required for years commencing on or after 1 March
2006. The interpretation applies to BEE and similar schemes involving
ownership where equity instruments are issued at less than market value
and currently has no effect on the Group.
IFRIC 9 Reassessment of embedded derivatives
This interpretation is required for years commencing on or after 1 June
2006 but is not expected to be relevant to the current activities of the
Group.
IFRIC 10 Interim Reporting and Impairment
This interpretation is required for years commencing on or after 1 July
2006 but is not expected to be relevant to the current activities of the
Group.
Audit report
Putprop"s abridged consolidated results and the annual financial
statements for the financial year ended 30 June 2006, from which they
have been extracted, have been audited by the company"s auditors, Ernst &
Young. Their audit report which did not contain any qualification is
available for inspection at the company"s registered office.
Annual General Meeting
The annual financials statements and the notice convening the 19th Annual
General Meeting of the shareholders of Putprop which meeting is to be
held at the registered office of the Company, Carlin House, No 8, 4th
Street, Wynberg, Johannesburg, at 11:00 on Wednesday, 15 November 2006,
was sent to shareholders on Friday, 6 October 2006.
DIRECTORATE
A B Adrian (Chairman and Independent non-executive)A Carleo (Chief
executive officer)E M R L Oldham (Managing director)B C Carleo (Non-
executive)A L Carleo-Novello (Non-executive)(Appointed 20 September
2006)P Senatore (Non-executive)P Nucci (Independent non-executive)
D CampbellCompany Secretary
Registered OfficeCarlin House8, 4th Street, Wynberg, Johannesburg 2090(P
O Box 39002, Bramley, 2018)
Share Transfer SecretariesComputershare Investor Services 2004 (Pty)
Limited70 Marshall StreetJohannesburg, 2001(P O Box 61051, Marshalltown,
2107)
Sponsor:
Ernst & Young Sponsors (Pty) Ltd
(Registration number 2000/031843/07)
52 Corlett Drive
Illovo, 2196
AuditorsErnst & YoungWanderers Office Park52 Corlett Drive, Illovo(P O
Box 2322, Johannesburg, 2000)
Sandton13 October 2006
Date: 13/10/2006 02:00:29 PM Produced by the JSE SENS Department
