| Thu 16 Nov 2006, 17:15 | | Ambit- Reviewed financial results and distribution |
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ABT
ABT
Ambit- Reviewed financial results and distribution: year ended 30 September 2006
AMBIT PROPERTIES LIMITED
Registration number: 2001/007003/06
Share code: ABT
ISIN code: ZAE000051645
REVIEWED FINANCIAL RESULTS AND DISTRIBUTION FOR THE YEAR ENDED
30 SEPTEMBER 2006
CONDENSED GROUP INCOME STATEMENT
Reviewed Restated
30 September 30 September
2006 2005
Notes R"000 R"000
Revenue 103 620 99 448
Rental - cash flows inherent in leases 99 813 93 530
- straight line adjustment 3 807 5 918
Property expenses (25 239) (24 229)
Net rental income from properties 78 381 75 219
Interest income and dividends
from associate 9 868 8 338
Interest earned 2 040 2 373
Amortisation of debenture premium 1 776 1 191
Finance costs (23 902) (25 992)
Administrative expenses (5 266) (4 484)
Other expenses (2 026) (1 708)
Profit before fair value adjustments 60 871 54 937
Change in fair value of investment
properties 93 450 87 495
- As per valuations 97 257 93 413
- Straight line adjustment (3 807) (5 918)
Profit on disposal of investment properties 72 711
Profit before debenture interest and
taxation 154 393 143 143
Share of associate company"s after
tax profits 12 465 12 972
Debenture interest to unitholders (55 199) (47 799)
Profit before taxation 111 659 108 316
Taxation (28 125) (26 509)
Profit attributable to linked unitholders 83 534 81 807
Earnings per linked unit (cents) (weighted) 3.2 77,20 77,91
Basic and diluted earnings per share (cents)
(weighted) 3.2 46,48 49,18
Distribution per linked unit (cents) 29,60 27,50
CONDENSED GROUP BALANCE SHEET
Reviewed Restated
30 September 30 September
2006 2005
Notes R"000 R"000
ASSETS
Non-current assets
Investment properties 809 329 659 288
- At valuation 824 550 671 000
- Straight line adjustment (15 221) (11 712)
Investment in associate 110 927 82 944
Rental receivable - straight
line adjustment 14 551 11 437
Total non-current assets 934 807 753 669
Current assets
Trade and other receivables 6 446 9 679
- Trade and other receivables 5 776 9 404
- Rental receivable - straight line
adjustment 670 275
Cash and cash equivalents 56 128 28 929
Total current assets 62 574 38 608
TOTAL ASSETS 997 381 792 277
EQUITY AND LIABILITIES
Capital and reserves
Share capital and reserves 1,3.1 193 115 109 454
Non-current liabilities
Debentures 335 669 312 866
Debenture premium 3.1 49 586 31 094
Interest bearing borrowings 4.5 315 960 267 199
Deferred taxation 64 499 36 433
Total non-current liabilities 765 714 647 592
Current liabilities
Trade and other payables 9 087 9 890
Taxation payable 367 308
Linked unitholders for distribution 29 098 25 033
Total current liabilities 38 552 35 231
TOTAL EQUITY AND LIABILITIES 997 381 792 277
CONDENSED GROUP CASH FLOW STATEMENT
Reviewed
30 September 30 September
2006 2005
R"000 R"000
OPERATING ACTIVITIES
Cash generated by operating activities 70 105 63 450
Interest received and dividend
income from associate 11 908 10 711
Finance costs (23 902) (25 992)
Distribution of debenture interest
to linked unitholders (51 134) (49 286)
Cash inflow/(outflow) from operating
activities 6 977 (1 117)
INVESTING ACTIVITIES
Acquisition of investment properties (79 850) (44 800)
Improvements to investment properties (1 753) (8 592)
Proceeds on disposal of investment
properties 25 382 32 011
Acquisition of holding in associate
company (15 518) (4 136)
Cash outflow from investing activities (71 739) (25 517)
FINANCING ACTIVITIES
Linked units issued 43 200 35 000
Share issue expenses - (268)
Interest bearing borrowings
raised/(repaid) 48 761 (8 455)
Cash inflow from financing activities 91 961 26 277
Increase/(decrease) in cash and
cash equivalents 27 199 (357)
Cash and cash equivalents at beginning
of year 28 929 29 286
CASH AND CASH EQUIVALENTS AT
END OF YEAR 56 128 28 929
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Non-
Distri- distri-
Share Share butable butable
capital premium reserves reserves Total
(reviewed) R"000 R"000 R"000 R"000 R"000
Balance at
30 September 2004
as previously
reported 1 583 26 284 257 24 952 53 076
Prior year adjustment:
Recognition of
debenture premium - (26 284) - - (26 284)
Amortisation of
debenture premium - - 700 - 700
Transfer of
amortisation to
non-distributable
reserves - - (700) 700 -
Restated balance at
30 September 2004 1 583 - 257 25 652 27 492
Shares issued during
the year 155 - - - 155
Net profit
attributable to linked
unitholders - as
previously reported - - 80 616 - 80 616
Prior year adjustment:
Amortisation of
debenture premium - - 1 191 - 1 191
Transfer to
non-distributable
reserves - - (81 734) 81 734 -
Restated balance at
30 September 2005 1 738 - 330 107 386 109 454
Shares issued during
the year 127 - - - 127
Net profit
attributable to
linked unitholders - - 83 534 - 83 534
Transfer to
non-distributable
reserves - - (83 500) 83 500 -
Balance at
30 September 2006 1 865 - 364 190 886 193 115
1. OTHER INFORMATION 30 September 2006 30 September 2005
Linked units in issue 186 482 837 173 814 215
Weighted average linked units 179 707 418 166 351 253
Net asset value (cents per linked
unit) (prior to distribution) 326 275
Listed market price (cents per
linked unit) 325 323
(Discount)/premium to net asset
value (%) (0,3) 17,5
To fund the acquisition of the Lowveld Lifestyle Centre in Nelspruit,
12 668 622 units were issued on 13 April 2006 at a price of 341 cents. In
addition, 14 cents per unit was received in respect of the interim distribution
yet to be paid.
2. REVIEW BY THE INDEPENDENT AUDITORS
These preliminary financial results have been reviewed by Deloitte & Touche,
Ambit"s auditors. Their unmodified review report is available at Ambit"s
registered office.
3. NOTES TO THE FINANCIAL STATEMENTS
3.1 Accounting policies
The preliminary condensed financial statements are prepared in accordance with
IAS 34 Interim Financial Reporting. They have been prepared in accordance with
International Financial Reporting Standards (IFRS) for the first time in the
current year, and IFRS 1 (First time adoption of IFRS) has been applied. All
IFRS and IFRIC interpretations issued and effective as at 30 September 2006 have
been applied. The adoption of IFRS has not resulted in any adjustments to the
amounts reported previously in the annual financial statements for the year
ended 30 September 2005 or to the opening IFRS balance sheet at 1 October 2004.
However, a change in accounting interpretation of IAS 32 has resulted in the
reclassification of share premium to debenture premium and in the amortisation
of the resultant debenture premium. This will increase earnings over the life of
the debentures, and the group has elected to transfer the amount to non-
distributable reserves in order not to affect distributions. This has had the
effect of increasing earnings by R1,8 million or 0,99 cents per weighted number
of units in the current year (2005: R1,2 million or 0,72 cents) and increasing
the opening balance of non-distributable reserves in 2005 by R0,7 million.
3.2 Earnings and headline earnings
Earnings and headline earnings for the year are based on the weighted average
number of linked units in issue for the year and are calculated as follows:
Reviewed Restated
30 September 2006 30 September 2005
Cents per Cents per
R"000 unit R"000 unit
Profit (earnings) per share 83 534 46,48 81 807 49,18
Debenture interest 55 199 30,72 47 799 28,73
Profit (earnings) per
linked unit 138 733 77,20 129 606 77,91
Amortisation of debenture
premium (1 776) (0,99) (1 191) (0,72)
Capital surpluses (net of
deferred taxation) (79 015) (43,97) (76 339) (45,89)
Headline earnings per
linked unit 57 942 32,24 52 076 31,30
Debenture interest (55 199) (30,72) (47 799) (28,73)
Headline earnings per share 2 743 1,52 4 277 2,57
Reconciliation to undistributed
earnings:
Debenture interest 55 199 30,72 47 799 28,73
Rental straight lining
(net of deferred tax) (2 703) (1,50) (4 202) (2,53)
Distributable earnings 55 239 30,74 47 874 28,77
Debenture interest (55 199) (30,72) (47 799) (28,73)
Undistributed income 40 0,02 75 0,04
Distribution per linked unit
in issue 29,60 27,50
3.3 Guarantees
Guarantees amounting to R0,8 million (2005: R0,9 million) have been issued in
lieu of municipal service deposits.
3.4 Primary business segments - all amounts exclude straight line adjustments
30 September 2006 (R"000) Retail Office ndustrial Group
Rental 55 556 25 818 18 439 99 813
Net property income 41 257 18 011 15 306 74 574
Fair value adjustment 58 270 18 861 20 126 97 257
Profit on disposal of investment
properties (29) 77 24 72
Investment properties -
at valuation 487 950 190 200 146 400 824 550
30 September 2005 (R"000)
(restated)
Net property income 36 083 20 343 12 875 69 301
Investment properties -
at valuation 381 900 155 800 133 300 671 000
4. COMMENTS
4.1 Results
Ambit has performed well for the year under review providing investors with
steady income growth. Ambit"s distributable earnings for the financial year
ending 30 September 2006 amounts to R55,2 million or 30,72 cents per weighted
number of units (2005: R47,8 million or 28,73 cents). Adding in net capital
gains, the amortisation of debenture premium and the straight-lining adjustment,
the earnings amount to R138,7 million or 77,20 cents per weighted number of
units in issue (2005: R129,6 million or 77,91 cents). The decrease in earnings
per unit is due to having lower capital profits per weighted number of units in
2006, as an additional 12,7 million units were issued for the acquisition of the
Lowveld Centre in April 2006.
The distribution for the year is R55,2 million or 29,6 cents per unit in issue
at 30 September 2006 (cpu) which shows growth of 7,6% over the 2005 distribution
(27,5 cpu). The second half distribution of 15,6 cpu shows growth of 11,4% over
the first half year distribution of 14,0 cpu.
Deferred taxation has been provided at the company tax rate of 29% on the
revaluation surplus of R97,3 million. To the extent that properties are disposed
of, the amount provided at this rate will be reversed and tax will be paid on
the capital gains at the rate of 14,5%. This had a total cumulative effect of
reducing net asset value by 17 cpu (2005: 8 cpu).
4.2 Property portfolio
The property portfolio of 27 properties was valued by independent valuers,
CB Richard Ellis as at 30 September 2006. The portfolio continues to be biased
towards retail 59%, offices 23%, industrial 18% and is predominantly in Gauteng
(68%).
The value of the portfolio before straight line rental adjustments is
R824,6 million. This represents a 15% increase on the core portfolio from 30
September 2005.
The five disposals awaiting transfer at 30 September 2005 were transferred by
early January 2006. The Horizon Park property at Roodepoort leased to Absa was
transferred to Ambit during the year. The Lowveld Lifestyle Centre in Nelspruit
was purchased for R43,2 million. A predominantly industrial property with retail
potential in Old Main Road, Pinetown, was purchased jointly (50/50) with
Pinespring Investments (Pty) Limited for a cost to Ambit of R14,15 million. A
new retail centre has been designed and pre-leasing is in hand. Development of a
+/- R100 million retail centre is planned to commence early in 2007 with
occupation before the end of the year. The upgrade of Scottsville Mall has been
postponed to early 2007 so as not to adversely effect the 2006 Christmas trading
period.
Vacancies continued to be contained within the portfolio at a low 3,5% by
rentable area and operating costs as a percentage of gross rental income have
been marginally reduced to a satisfactory 25,3% (2005: 25,9%).
4.3 Oryx investment - equity accounted associate
Oryx comprises a portfolio of well-tenanted investment properties, principally
located in Windhoek, Namibia. In March 2006, Oryx completed a R182 million
extension to Maerua Mall. The extended Mall is trading well.
Ambit increased its investment in Oryx Properties to 30,6% through the Oryx
rights issue, where additional units were taken up. The value of Ambit"s
investment in Oryx has increased from R82,9 million to R110,9 million, of which
R15,5 million was for 2 025 869 new units acquired during the rights issue. The
balance of the value is attributable to Ambit"s share of Oryx"s retained
earnings, which is effectively the increase in the value of Oryx"s property
portfolio.
Oryx"s unit price has shown considerable appreciation over the last twelve
months, closing at 815 cpu on 30 September 2006 (2005: 545 cpu). Oryx is
currently trading at 860 cents, which is almost identical to its realisable net
asset value. It therefore continues to offer sound investment value to Ambit.
4.4 Net asset value
The revaluations of investment properties have given rise to a fair market
adjustment of R97,3 million.
The net asset value, before making provision for the debenture interest payable
but after providing for deferred taxation at 29% on the fair market adjustment,
is 326 cpu (2005: 275 cpu). Adjusting the deferred taxation to the capital gains
tax rate of 14,5%, this would increase to 343 cpu
(2005: 283 cpu).
The market price of units traded on the JSE Securities Exchange at
30 September 2006 was 325 cents which represents a 0,3% discount to the
underlying net asset value.
4.5 Borrowings
At 30 September 2006 Ambit"s borrowings were R316,0 million (2005:
R267,2 million), which represents a long-term borrowings to long-term assets
ratio of 33,8% (2005: 35,5%). R183,7 million (58%) of these borrowings
(2005: 54%) are subject to fixed interest agreements for periods from 2007 to
2010. The average interest rate as at 30 September 2006 was 9,7% (2005: 10,2%).
Surplus cash is invested at Ambit"s variable borrowing rate.
4.6 Liquidity
Ambit units have continued to show liquidity with over 50% of the units in issue
being traded during the financial year.
4.7 Management company
In August 2006, Absa Bank Limited acquired the rights to the remaining 50%
interest in Ambit Management Services (Pty) Limited held by Marriott Property
Services (Pty) Limited. Marriott will, however, continue to manage the bulk of
the properties in terms of the existing property management contract.
4.8 Prospects
The fundamentals of the underlying property market continue to firm
notwithstanding the recent interest rate increases and the prospects of further
increases in the next 12 months. Office and industrial rentals are increasing
which will provide income growth on the existing portfolio when leases are
renewed.
Ambit"s strategy is to increase its property portfolio to in excess of
R1,5 billion and its market capitalisation to in excess of R1 billion during the
next year and management expects to be able to make announcements of
acquisitions in the near future. There is no change to the strategy of owning
quality properties in good growth nodes.
5. DECLARATION OF DISTRIBUTION
Notice is hereby given of distribution Number Five amounting to 15,60 cents per
unit interest on debentures, for the six month period to
30 September 2006.
Last date to trade cum distribution Friday, 1 December 2006
Units will trade ex distribution Monday, 4 December 2006
Record date to participate in the distribution Friday, 8 December 2006
Payment of distribution Monday, 11 December 2006
Linked unit certificates may not be dematerialised or re-materialised between
Monday, 4 December 2006 and Friday, 8 December 2006, both days inclusive.
On behalf of the board
DL Brown
Chairman
NBS Harris
Chief Executive Officer
16 November 2006
Directors
DL Brown (Chairman), NBS Harris (CEO)*, JH Beare, RR Emslie, IN Mkhari, F Uys,
RD Jeffrey (alternate) *executive
news@ambitprops.co.za
http://www.ambitprops.co.za
Registered Office
Ambit Properties Limited, 1st Floor, Palazzo Towers West
Monte Casino Boulevard, Fourways, 2055
PO Box 783676, Sandton, 2196
Auditors
Deloitte & Touche Chartered Accountants SA.
Registered Accountants and Auditors
Sponsor
Exchange Sponsors
Transfer Secretaries
Computershare Investor Services 2004 (Pty) Limited
Date: 16/11/2006 05:15:17 PM Produced by the JSE SENS Department
