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SYA
SYA
SYA - Siyathenga - Unaudited Interim Results: Period ended 31 December 2006
Siyathenga Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2004/005198/06)
Share code: SYA & ISIN: ZAE000069530
("Siyathenga")
Member of the Property Loan Stock Association
www.siyathenga.co.za
2nd Floor, Pangbourne House
382 Jan Smuts Avenue
Craighall, 2196
T: +27 11 889 8740
F: +27 11 787 9933
PO Box 781706
Sandton
2146
Distribution growth 11.38%
Total return for 6 months 46.12%
Occupancies of 97.44%
Development pipeline of R500 million
Portfolio value R1,5 billion
Commentary
Financial Results
Siyathenga`s Board of Directors is pleased to announce an interim distribution
of 27.50 cents per linked unit for the six months ended 31 December 2006,
an increase of 11.38% over the previous comparative distribution. This,
together with the increase in its share price from R5.80 at 1 July 2006 to
R8.20 at 31 December 2006, has resulted in a total return to investors of
46.12%.
This compares favourably against the JSE/FTSE PLS index, which recorded a
total return of 32.3% for the same six month period.
Portfolio Review
The property portfolio`s occupancy levels have remained consistently high,
ending on 97.44% at 31 December 2006 (2005: 96.96%). Having reviewed the
portfolio, management is confident that these occupancy levels will be
maintained.
The exciting Boardwalk refurbishment project commenced in January and is
expected to be finalised in November 2007.
The Company is also finalising plans for the refurbishment of the Crescent
shopping centre in Umhlanga, at an approximate cost of R10 million. The
Umhlanga node has shown very high levels of growth over a short period of
time. This project will commence in April 2007 and will be completed in
September 2007.
Siyathenga and associate company, Pangbourne, are to co-operate in the
development of a 32,000m2 extension to the existing Boardwalk centre,
bringing the total size to approximately 60,000m2. Market research, as well
as feedback from existing and prospective tenants and the Richards Bay
public has indicated the potential and need for the expansion of the retail
offering in the area. The finished product is expected to add approximately
R450 million to Siyathenga`s asset base.
Management is also currently adding value to the portfolio by the staged
development of the additional bulk at the Willowbridge lifestyle centre in
Tyger Valley, Cape Town. Plans are at finalisation stages with the Pro-Shop
for a stand alone building on the south side of the shopping centre. In
addition to this, extra space will be constructed in the existing mall to
accommodate other lifestyle tenants, such as Harley Davidson and Footgear.
Siyathenga currently owns a 50% undivided share in Willowbridge, and is
purchasing an additional 25%, details of which were announced in the press
in December 2006. Transfer of the 25% undivided share should take place on
or before
30 June 2007, and will increase the asset value by approximately R110 million.
The properties acquired from the Transnet Retirement Funds Property Trust in
December 2005, have all performed very well.
Borrowings
The company`s current gearing level is 47,43% as at 31 December 2006, with 85%
of its total debt exposure hedged against interest rate fluctuations using
a combination of derivative instruments. Management is constantly
monitoring movements in interest rates to take advantage of positive
changes in the market, thereby ensuring the sustainability of future
earnings.
Future Prospects
Siyathenga is committed to the implementation of the Property Sector`s
Transformation Charter, and is currently in advanced negotiations with
consortia of broad based emerging entrepreneurs whose business vision and
ethics match those of the Company.
Siyathenga is presently negotiating, together with Pangbourne, for the
securitisation of a major portion of its debt. The anticipated saving in
interest rate costs will result in sustained future earnings and
distributions to unitholders.
Management is constantly evaluating the portfolio to extract maximum potential
value, and have ear-marked certain centres in the portfolio for
refurbishment. Gezina Centre in Pretoria and Thrupps Centre in Illovo will
be refurbished in the next financial year.
In spite of tighter economic conditions, following a rising interest rate
environment, property fundamentals remain positive. The South African
retail property market is expected to deliver a good performance in 2007.
Management anticipates that the pleasing trading results achieved for the
period ending 31 December 2006 will continue into the next reporting
period.
Investors distributable earnings
This investor information is aimed at disclosing to the users the basis on
which the distribution was calculated.
A reconciliation has been included to illustrate the accounting adjustments
which were not taken into account in calculating the distribution.
Unaudited Restated Audited
Six months Six months Year ended
ended ended
R`000 31 Dec 06 31 Dec 05 30 Jun 06
Revenue
- Gross rentals received 90 275 43 733 113 359
Net building costs (20 258) (8 034) (24 479)
Administrative costs (5 245) (3 020) (6 830)
Interest received 1 146 533 1 501
Finance costs (35 419) (19 209) (45 872)
Distributable profit before 30 499 14 003 37 679
disposal of trading property
Profit on disposal of trading 2 089 - 759
property
- Proceeds on disposal of 6 368 - 5 501
trading property
- Costs of trading property (4 279) - (4 742)
disposed of during the
period/year
Linked unitholders 32 588 14 003 38 438
distributable earnings
Weighted average number of 110 725 104 69 984 623 76 060 501
linked units for the
period/year
Distributable earnings per
linked unit before profit on
disposal of trading property 27.54 20.01 49.54
(cents)
Distributable earnings per
linked unit for the
period/since listing (cents) 29.43 20.01 47.41
Distribution per linked unit 27.50 20.00 47.00
(cents)
Number of linked units in 110 725 104 69 984 623 110 725 104
issue
RECONCILIATION BETWEEN LINKED
UNITHOLDERS DISTRIBUTABLE
EARNINGS
TO PROFIT FOR THE YEAR
Linked unitholders 32 588 14 003 38 438
distributable earnings
Revaluation of investment 56 801 49 597 112 783
properties
Movement in fair value in 12 520 (167) (1 806)
interest rate hedges
Goodwill written off - - (49 982)
Amortisation of debenture 1 599 489 1 563
premium
Profit before tax and 103 508 63 922 100 996
distribution to unitholders
Debenture interest (32 588) (14 002) (38 601)
distributed to unitholders
Profit before taxation 70 920 49 920 62 395
Taxation (19 672) (14 276) (31 934)
Net profit for the 51 248 35 644 30 461
period/year
Return to unitholders
Unaudited Restated Audited
Six months Six months Year ended
ended ended
31 Dec 06 31 Dec 05 30 Jun 06
Share price at 1 July 2006/5 580 500 500
August 2005 (cents)
Share price at 31 December 820 660 580
2006/31 December 2005/30 June
2006 (cents)
Capital return (cents) 240 160 80
Distributions for the 27.50 20.00 47.00
period/year (cents)
Total return (cents) 267.5 180 127
Total return for the 46.12 36.00 25.40
period/year (%)
Month high during period/year 850 660 800
(cents)
Month low during period/year 530 500 500
(cents)
Segmental information
Six months ended 31 December 2006
Primary segment Retail Office Other Corporate Total
R`000 Unallo-
cated
Revenue - rentals 59 723 13 717 16 835 - 90 275
Proceeds on 6 368 - - - 6 368
disposal of trading
property
Straight line 5 879 905 1 406 - 8 190
operating lease
adjustment
Segment results
Profit from 57 586 10 573 12 137 (5 245) 75 051
operations
Segment assets 1 064 769 222 010 257 128 38 702 1 582 609
Segment liabilities - - - 1 501 998 1 501 998
Six months ended 31
December 2005
Primary segment Retail Office Other Corporate Total
R`000 Unallo-
cated
Revenue - rentals 24 400 9 682 9 651 - 43 733
Proceeds on - - -
disposal of trading
property
Straight line 3 558 483 781 - 4 822
operating lease
adjustment
Segment results
Profit from 27 111 5 928 7 482 (3 020) 37 501
operations
Segment assets 743 391 122 065 25 220 6 994 897 670
Segment liabilities - - - 863 128 863 128
Segment revenue and expenses
Revenue and expenses that are directly attributable to a segment are allocated
to those segments. Items not directly attributable to a segment are
allocated to the corporate segment.
Condensed consolidated income statement
Unaudited Restated Audited
Six months Six months Year ended
ended ended
R`000 31 Dec 06 31 Dec 05 30 Jun 06
Revenue 96 643 43 733 118 860
Straight line operating 8 190 4 822 5 150
lease adjustment
Net building costs (20 258) (8 034) (24 479)
Costs of trading property
disposed of
during the period/year (4 279) - (4 742)
Administrative costs (5 245) (3 020) (6 830)
Profit from operations 75 051 37 501 87 959
Net revaluation of 48 611 44 775 107 633
investment properties
Attributable to straight (8 190) (4 822) (5 150)
line operating lease
adjustment
Gross revaluation of 56 801 49 597 112 783
investment properties
Profit before financing 123 662 82 276 195 592
costs and taxation
Interest received 1 146 533 1 501
Finance costs (35 419) (19 209) (45 872)
Amortisation of debenture 1 599 489 1 563
premium
Movement in the fair value 12 520 (167) (1 806)
of interest rate hedges
Goodwill written off - - (49 982)
Debenture interest (32 588) (14 002) (38 601)
distributed to linked
unitholders
Profit before taxation 70 920 49 920 62 395
Taxation (19 672) (14 276) (31 934)
Profit for the period/year 51 248 35 644 30 461
Reconciliation between
earnings and headline
earnings
Profit for the period/year 51 248 35 644 30 461
Adjustments:
Revaluation of investment
properties and straight line
operating lease adjustment, (34 514) (31 791) (76 420)
net of tax
Goodwill written off - - 49 982
Headline profit per share 16 734 3 853 4 023
Debenture interest 32 588 14 002 38 601
distributed to unitholders
Headline profit per linked 49 322 17 855 42 624
unit
Earnings per linked unit 75.72 70.94 90.80
(cents)
Diluted earnings per linked 75.72 70.94 90.80
unit (cents)
Headline earnings per linked 44.54 25.51 56.04
unit (cents)
Net asset value per linked 647 548 602
unit (cents)
Earnings per share (cents) 46.28 50.93 40.05
Diluted earnings per share 46.28 50.93 40.05
(cents)
Diluted headline earnings
per share based on
110 725 104 units (2005: 69 15.11 5.51 5.29
984 623 units) (cents)
Headline earnings per share 15.11 5.51 5.29
(cents)
Net asset value per share 2 - 1
(cents)
Condensed consolidated balance sheet
Unaudited Restated Audited
R`000 31 Dec 06 31 Dec 05 30 Jun 06
ASSETS
Non-current assets
Investment properties** 1 537 440 882 998 1 466 419
Equipment furniture and 226 151 258
fittings
Loans to participants of the 11 244 6 428 11 224
Siyathenga Unit Purchase
Trust
Derivative financial 8 634 - -
instruments
Deferred taxation
1 557 544 889 577 1 477 901
Current assets
Trading property - - 4 279
Trade and other receivables 25 065 8 093 11 678
Cash and cash equivalents - - 8 278
25 065 8 093 24 235
Total assets 1 582 609 897 670 1 502 136
EQUITY
Capital and reserves
Share capital and premium 3 205 528 1 606
Retained earnings 77 406 34 014 27 757
Total equity 80 611 34 542 29 363
LIABILITIES
Debenture debt and premium 635 439 349 047 637 038
Linked unitholders` interest 716 050 383 589 666 401
Other non-current
liabilities
Interest-bearing borrowings 729 932 430 783 732 572
Derivative financial - 2 247 3 886
instruments
Deferred taxation liability 50 440 13 731 31 071
780 372 446 761 767 529
Current liabilities
Trade and other payables 43 201 46 765 20 964
Bank balances 9 698 6 505 -
Loan from related party - - 16 943
Current income tax 700 48 397
liabilities
Linked unitholders for 32 588 14 002 29 902
distribution
86 187 67 320 68 206
Total equity and liabilities 1 582 609 897 670 1 502 136
** The effect of the straight-line operating lease adjustment of R8 190
million (2006: R4 822 million) is included in the value of investment
properties. The cumulative effect of the straight-line operating lease
adjustment included in Investment properties is R13 million
Condensed consolidated cash flow statement
Unaudited Restated Audited
Six months Six months Year ended
ended ended
R`000 31 Dec 06 31 Dec 05 30 Jun 06
Cash flow from operating
activities
Cash generated from 56 697 70 778 40 346
operations
Interest received 1 146 533 1 501
Finance costs (35 419) (19 209) (45 872)
Distributions made to (29 902) - (8 700)
unitholders
Net cash (outflow)/inflow (7 478) 52 102 (12 725)
from operating activities
Cash flow from investing
activities
Additions to Investment (14 144) (187 275) (716 561)
properties
Additions to equipment (62) (156) (254)
furniture and fittings
Proceeds from the sale of 6 368 - 5 501
investment properties
Loans advanced to The (20) (6 428) (11 224)
Siyathenga Unit Purchase
Trust participants
Net cash outflow from (7 858) (193 859) (722 538)
investing activities
Cash flow from financing
activities
Issue of linked units net of - 199 172 488 729
transaction costs
Long-term borrowings (2 640) 45 822 347 611
(repaid)/raised
Related party loan decrease - (115 639) (98 696)
Net cash (outflow)/inflow (2 640) 129 355 737 644
from financing activities
Net (decrease)/increase in (17 976) (12 402) 2 381
cash and cash equivalents
Cash and cash equivalents at 8 278 5 897 5 897
the beginning of the
period/year
Cash and cash equivalents at (9 698) (6 505) 8 278
the end of the period/year
Consolidated statement of changes in equity
Share Share Retained
R`000 Capital Premium earnings Total
Balance at 31 7 27 607 33 619 61 233
December 2005 - as
previously stated
Restated loss for - - (1 109) (1 109)
the period ending
June 2005
Restated profit - - 2 025 2 025
for the 6 month
period ending
December 2005
IFRS adjustments:
Reallocation of - (27 987) - (27 987)
debenture premium
Reallocation of - 380 - 380
unit issue costs
to debenture
premium
Amortisation of - 521 (521) -
debenture premium
Balance at 31 7 521 34 014 34 542
December 2005 -
restated
Arising on issue 4 - - 4
of units during
the period
Profit for the - - (5 183) (5 183)
period
Transfer of - 1 074 (1 074) -
amortised
debenture premium
Balance at 30 June 11 1 595 27 757 29 363
2006 - audited
Profit for the - - 51 248 51 248
period
Transfer of - 1 599 (1 599) -
amortised
debenture premium
Balance at 31 11 3 194 77 406 80 611
December 2006
Notes to the financial statements
1. Basis of preparation
1.1 The unaudited interim financial report has been prepared on the
historical cost basis as modified by the revaluation of available-
for-sale financial assets, financial liabilities through profit
or loss and investment properties which are carried at fair
value. These are in accordance with International Financial
Reporting Standards ("IFRS"), IAS34 - Interim Financial
Reporting, the requirements of the South African Companies Act
1973 as amended.
Accounting policies applied are similar to those applied in the
previous reporting period.
2. Related party transactions
Related party transactions were concluded during the reporting period
at arm`s length terms as would be negotiated between unrelated willing
parties.
3. Contingent liabilities
Guarantees and surities in respect of the subsidiaries amount to R731
million in respect of the mortgage facility granted by the financial
institutions.
4. Capital commitments
The Directors have approved the following capital expenditure
projects:
- The acquisition of an additional 25% undivided share in
Willowbridge has been concluded amounting to approximately R110,5
million. This will be financed through the issue of linked units.
- The refurbishment to the Boardwalk amounting to approximately R50
million. Loan financing will be used to fund the refurbishment.
- The upgrade of the Crescent amounting to approximately R10
million, will be funded through existing facilities.
5. Subsequent events
In management`s opinion there has been no material adjusting nor non
adjusting events that have occurred after 31 December 2006.
6. Restatement of December 2005 results
The restatement of the prior year interim results was based on two
factors:
a) The previously stated interim results included income since
listing (5 August 2005). The December 2005 results, as restated
now reflect six months of trade for the group (1 July 2005 to 31
December 2005).
b) IFRS adjustments relating to the treatment of debenture premium
and the related amortisation thereof, have been made.
Distribution declaration
Notice is hereby given that a distribution of 27.50 cents per linked unit has
been declared and approved by the Board of Directors for the six months
ended 31 December 2006.
Distribution timetable
Event Date
a Last date to trade cum distribution Thursday, 29 March 2007
b Linked units trade ex distribution from
the commencement of business Friday, 30 March 2007
c Record date for unitholders to participate
in the interim distribution Thursday, 5 April 2007
d Payment of distribution to unitholders Tuesday, 10 April 2007
e Linked unit certificate may not be
dematerialised or rematerialized
(both days inclusive) Friday, 30 March 2007 -
Thursday, 5 April 2006
On behalf of the Board
AJWL Richards APF von Bulow
Chairman Managing Director
21 February 2007
Directorate and Secretary
AJWL Richards (Chairman), APF von Bulow (Managing Director), B Frigenti
(Italian - Non-executive), CM Hutchison (Non-executive), JB Gibbon (Non-
executive), EPM Moses (Non-executive), LX Mtumtum (Non-executive), MD
Bosman (Secretary).
Date: 21/02/2007 15:16:00 Produced by the JSE SENS Department.
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