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PMM
PMM
Premium - Unaudited results of the group for the six months ended
31 August 2006 and dividend declaration
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
The directors report the unaudited results of the group for the six
months ended 31 August 2006 set out herein, together with comparisons
with the results for the corresponding period in 2005 and the year ended
28 February 2006.
Distribution up by 20,4% to 33,7 cents per linked unit
Assets exceed R1,5 billion
Increase in net asset value by 15,9% to 694 cents
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Restated Restated
six months six months year
31 August 31 August 28 February
Change 2006 2005 2006
% R"000 R"000 R"000
Revenue 100,198 80,680 165,898
- earned on
contractual
basis 22.9 99,343 80,806 167,261
- straight line
lease adjustment 855 (126) (1,363
Operating costs (36,658) (31,128) (61,268)
Net rental income
from properties 63,540 49,552 104,630
- earned on
contractual
basis 26.2 62,685 49,678 105,993
- straight line
lease adjustment 855 (126) (1,363)
Adminitrative
expenses (4,486) (2,947) (6,996)
Depreciation (449) (253) (500)
Profit before
investment income 26.4 58,605 46,352 97,134
Investment income 14,036 2,764 31,356
- Interest received 378 408 752
- Investment income
- associate
equity earnings 182 - 654
fair value
adjustment/capital
reserves 10,586 - 25,564
other 2,890 2,356 4,386
Profit before
finance charges
and capital profit 47.9 72,641 49,116 128,490
Fair value
adjustments of
investment
properties
net revaluation 135,486 126 290,325
gross revaluation 136,341 - 288,962
straight line
lease adjustment (855) 126 1,363
Amortisation of
deemed debenture
premium 850 850 1,700
Capital loss on
disposal of
investment
properties (45) 0 (84)
Profit before
finance charges 208,932 50,092 420,431
Finance charges 33.9 22,794 17,019 34,554
Profit before
debenture interest 186,138 33,073 385,877
Debenture interest 20.4 38,092 31,651 68,959
Profit before
taxation 148,046 1,422 316,918
Taxation charge (39,539) 968 (84,164)
- Deferred taxation (39,539) 1,220 (83,892)
- Normal taxation - (252) (272)
Profit attributable
to ordinary
shareholders 108,507 2,390 232,754
Earnings per
share (cents) 4440.0 95.5 2.1 204.9
Earnings per
linked unit (cents) 330.7 129.0 30.0 265.6
Linked units
in issue (`000) 113,607 113,607 113,607
Distribution per
linked unit (cents)
Dividends 0.17 0.14 0.30
Interest 33.53 27.86 60.70
Total 20.4 33.70 28.00 61.00
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Restated Restated
2006 2005 2006
R"000 R"000 R"000
Cash flow from
operating activities
Net rental income
from properties 57,751 46,479 98,496
Adjustment for:
- Depreciation 449 253 500
- Working capital
changes (19,797) 3,150 3,945
Cash generated
from operations 38,403 49,882 102,941
Investment income 3,268 2,764 5,792
Finance costs (22,794) (17,019) (34,553)
Taxation refunded (0) 455 436
Distribution to linked
unit holders paid (37,490) (31,242) (63,052)
Net cash (outflow)/inflow
from operating activities (18,613) 4,840 11,564
Cash flow from
investing activities
Investing activities (115,156) (39,379) (111,123)
Proceeds from disposal
of investment properties 1,455 1,650 1,836
Net cash outflow used in
investing activities (113,701) (37,729) (109,287)
Cash inflow from financing
activities 124,844 31,938 97,118
Net decrease in cash
and cash equivalents (7,471) (951) (607)
Cash and cash equivalents
at beginning of year (109) 1,596 498
Cash and cash equivalents
at end of year (7,581) 645 (109)
DISTRIBUTABLE EARNINGS
The following additional information is provided and is aimed at
disclosing to the users the basis on which the distributions are
calculated.
Six months Six months Year to
31 August 31 August 28 February
Change 2006 2005 2006
% R"000 R"000 R"000
Revenue
- earned on
contractual basis 22.9 99,343 80,806 167,261
Operating costs (36,658) (31,128) (61,268)
Net rental income
from properties 26.2 62,685 49,678 105,993
Adminitrative
expenses (4,486) (2,947) (6,996)
Depreciation (449) (253) (500)
Profit before
investment income 24.3 57,750 46,478 98,497
Investment income
- Interest received 378 408 752
- Investment
income - associate 3,072 2,356 5,040
Distributable profit
before finance
charges 24.3 61,200 49,242 104,289
Finance charges 33.9 (22,794) (17,019) (34,554)
Distributable
income before
taxation 19.2 38,406 32,223 69,735
Taxation charge 0 (252) (272)
Unit holders
distributable
earnings 20.1 38,406 31,971 69,463
Linked units
in issue - (`000) 113,607 113,607 113,607
Distributable
earnings per
linked unit
- (cents) 20.1 33.8 28.1 61.1
Distribution per
linked
unit (cents) 20.4 33.7 28.0 61.0
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited Restated
year to year to
31 August 28 February
2006 2006
R"000 R"000
Assets
Non-current assets 1,570,351 1,310,033
Investment properties 1,441,986 1,197,743
Investment properties - straight lining
of rental leases 31,115 30,260
Property, plant and equipment 18,698 18,999
Investments - associated company 78,552 63,031
Current assets 16,472 9,820
Total assets 1,586,823 1,319,853
Equity and liabilities
Share capital and reserves 586,913 478,351
Share capital and premium 12,271 11,421
Non-distributable reserve 548,576 441,591
Retained earnings 26,066 25,339
Non-current liabilities 931,458 758,717
Debentures and premium 200,854 201,704
Interest bearing borrowings 538,932 404,630
Deferred taxation 191,672 152,383
Current liabilities 68,452 82,785
Interest bearing 373 11,744
Non-interest bearing 29,793 33,551
Linked unit holders 38,286 37,490
Total equity and liabilities 1,586,823 1,319,853
Linked units in issue (`000) 113,607 113,607
Net asset value per linked unit (cents) 693 599
Net asset value per linked unit (cents)
- before providing for deferred tax 862 733
STATEMENT OF CHANGES IN EQUITY
Revalu- Distri-
Share ation butable
capital Capital reserves capital
reserves reserves reserves reserves Total
R"000 R"000 R"000 R"000 R"000
Balance at
1 March
- 2005
before
restatement 1,136 8,985 201,465 25,767 237,353
Restatement
- deemed
debenture
premium
Reallocation
to share
premium 213 213
Amortisation
of deemed
debenture
premium 8,372 - 8,372 -
Reallocation
of deemed
debenture
premium 8,372 - (8,372) -
Balance at
March 2005
restated 9,721 8,985 201,465 25,767 245,938
Profit
attributable
to ordinary
areholders 232,754 232,754
Reallocation
of deemed
debenture
premium 1,700 (1,700) -
Dividends
paid (341) (341)
Transfer to
non-
distri-
butable
reserve - 231,141 (231,141) -
Balance at
1 March 2006
- restated 11,421 8,985 432,606 25,339 478,351
Profit
attributable
to ordinary
shareholders 108,507 108,507
Reallocation
of deemed
debenture
premium 850 (850) -
Dividends
paid (193) (193)
Transfer to
non-
distri-
butable
reserve
Fair value
adjustments
- Investment
properties,
net of
deferred
taxation 96,444 (96,196) 248
- associate,
net of
deferred
tax 10,586 (10,586) -
Capital loss
on disposal
of investment
property (45) - 45 -
Balance at
31 August
2006 12,271 8,940 539,636 26,066 586,913
RECONCILIATION - EARNINGS PER SHARE
TO HEADLINE EARNINGS PER LINKED UNIT
Unaudited Restated
six six Restated
months to months to year to
31 August 31 August 28 February
2006 2005 2006
Cents Cents Cents
Earnings
per share 95.5 2.1 204.9
Add: debenture interest
per linked unit 33.5 27.9 60.7
Earnings per linked unit 129.0 30.0 265.6
Fair value adjustments
- investment properties,
net of deferred capital
gains tax (84.7) (1.2) (181.6)
- associate, net of
deferred tax (9.3) - (22.5)
Capital loss on disposal of
investment properties - - 0.1
Headline earnings
per linked unit 35.1 28.8 61.4
NOTES TO THE FINANCIAL STATEMENTS
1. The results have been prepared and presented in accordance with IAS
34, Interim Financial Reporting and are consistent in all material
respects with those applied in the financial statements for the year
ended 28 February 2006.
2. The prior year"s retained income, share premium and debenture premium
have been restated to take into account the requirements of accounting
standards to allocate the deemed debenture premium on issue of linked
units. The debenture premium is amortised through the income statement
over the life of the debenture and subsequently transferred through the
statement of changes in equity to the share premium account.
The effect of the above on the prior year balance sheet and income
statement is as follows:
31 August 2005 28 February 2006
R"000 R"000
Income statement
- Increase in profit
before finance charges 850 1 700
- Increase in profit
before taxation 850 1 700
- Increase in profit
attributable to linked
unitholders 850 1 700
Balance sheet
- Share capital and Reserves
increase in share capital
and premium 9 435 10 285
- Non-current liabilities
decrease in debenture
capital and premium (9 435) (10 285)
Increase in earnings
per share (cents) 0.7 1.5
Increase in earnings
per linked unit (cents) 0.7 1.5
Increase in headline
earnings per linked
unit (cents) 0.7 1.5
3. In order to comply with International Accounting Standard IAS 17,
rental income from leases is recognised on a straight-line basis over
the period of the lease. In order to avoid an overstatement of assets
the fair value of investment properties has been reduced by the
cumulative straight-line rental accrual.
4. Deferred taxation on the fair value adjustment of investment property
has been provided at the company income taxation rate which is currently
29% and not at the Capital Gains Tax rate of 14.5%, which would be
payable if properties were sold.
5. Related party: City Property Administration (Proprietary) Limited is
responsible for the property and asset management of the group. Full
details of the fees payable are disclosed in the annual report.
COMMENTS
Review of results
Premium"s results for the 6 months ended 31 August 2006 reflect the
continuation of the Group"s impressive growth record.
Rental income and net rental income increased by 22.9% and 26.2%
respectively, compared with the previous six month period.
The interim distribution for the period of 33.7 cents (2006: 28.0 cents)
represents an increase of 20.4% on that paid in the previous
corresponding period.
The continuing strong trading conditions and management"s pro-active
approach to letting combined with strict expense control and
management"s ongoing programme of redevelopment, have all contributed to
the increase in distributable earnings per linked unit.
Property portfolio
Premium has continued to focus on its strategic objective of acquiring
and redeveloping properties in the Pretoria and Johannesburg CBD and
surrounding areas.
During the period, Premium acquired eight properties, located in the
Pretoria and Johannesburg CBD"s and Braamfontein, for a total purchase
price of R92,7 million. These properties are strategically situated and
the purchases will enhance the overall quality of the existing portfolio
and further add to the sustainability of long-term income streams. Due
to strong demand for residential accommodation, work has already
commenced on an additional residential development at a cost of R28,8
million in the Johannesburg CBD.
The redevelopment of a portfolio of properties situated in Hatfield has
commenced. This project will create 661 residential units as well as
4000 m2 of retail space. The investment is expected to yield an initial
return of approximately 10%. The total cost is expected to be R230
million. It is anticipated that the project will be completed early
into 2008.
Borrowings
Premium"s gearing level is at 34.3%, increasing from 31.8% at 28
February 2006. It is the policy of the company to hedge the majority of
its exposure to interest rate fluctuations thereby ensuring the
sustainability of future growth in distributions.
Interest rates in respect of 66% of borrowing at 31 August 2006 are
fixed at an average weighted interest rate of 10.7% maturing at various
dates ranging from August 2007 to September 2010.
Revaluation of property portfolio
It is the Group"s policy to perform directors" valuations of the
property portfolio on an annual basis. Each year one-third of the
properties are valued on a rotational basis by an external valuer. The
increase in valuation of the property portfolio by R135,9 million to
R1,4 billion represents an increase of 10.0%.
Prospects
The Premium board is confident that, subject to market conditions
remaining favourable, the company will continue to grow earnings,
however the recent increase in interest rates will have a consequence of
slowing distribution growth.
DECLARATION OF DIVIDEND NO. 25 AND INTEREST PAYMENT ("the distribution")
Notice is hereby given that dividend number 25 of 0.17 cents per
ordinary share together with interest of 33.53 cents per debenture, has
been declared for the period 1 March 2006 to 31 August 2006, payable to
linked unitholders recorded in the register on Friday, 17 November 2006.
The last date to trade "CUM" distribution is Friday, 10 November 2006.
The units will commence trading "EX" distribution on Monday, 13 November
2006. Payment date will be Monday, 20 November 2006.
No dematerialisation or rematerialisation of linked unit certificates
may take place between Monday, 13 November 2006 and Friday, 17 November
2006, both days inclusive.
By order of the Board.
City Property Administration (Proprietary) Limited
19 October 2006
A Wapnick J P Wapnick
(Chairman (Managing director)
Directors
A Wapnick* (Chairman), JP Wapnick* (Managing director), MJ Holmes#, RJ
Inggs*, MZ Pollack#, S Wapnick?
* Executive director
# Independent non-executive director
?Non-executive director
Registered Office Transfer Secretaries
CPA House, 101 du Toit Street Computershare Investor Services 2004
Pretoria, 0002 (Pty) Limited
(Reg. No: 2004/003647/07)
70 Marshall Street, Johannesburg 2001
PO Box 15, Pretoria 0001 PO Box 61051, Marshalltown 2107
Tel: (012) 319-8811 Tel: (011) 370-7700
Fax: (012) 319-8812 Fax: (011) 688-7712
CITY PROPERTY
Property Asset Manager
e-mail address: propworld@cityprop.co.za
website address: www.cityprop.co.za
Member of the
Property Loan Stock Association
Date: 19/10/2006 05:27:39 PM Produced by the JSE SENS Department
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