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Interim results of the group for the six months ended 29 February 2020
OCTODEC INVESTMENTS LIMITED
(Octodec, the company), its subsidiaries and associated company (the group)
(Incorporated in the Republic of South Africa)
(Registration number 1956/002868/06)
JSE share code: OCT
ISIN: ZAE000192258 (approved as a REIT by the JSE)
Interim results of the group for the six months ended 29 February 2020
This short form announcement is the responsibility of the directors. This short form announcement is only a summary of the information in the full
announcement and does not contain full or complete details. Copies of the full announcement may be requested at the company's registered office
(elizeg@octodec.co.za) or the office of the sponsor (sponsor@javacapital.co.za), at no charge, during office hours, Monday to Friday. Any investment
decisions made by shareholders and/or investors should be based on a consideration of the full announcement, released on the Stock Exchange News Service
(SENS) on 22 April 2020, which may be downloaded from:
https://senspdf.jse.co.za/documents/2020/JSE/isse/OCT/HY2020.pdf
The full announcement is also available on the Octodec Investments Limited website at:
https://www.octodec.co.za/investors-pres/interim-results-presentation-2020
Nature of business
Octodec Investments Limited (Octodec, the company), its subsidiaries and associated company (the group) are a real estate investment trust (REIT), listed on
the JSE Ltd, with a portfolio of 280 properties valued at R12.6 billion. The group is one of the major owners of property in the Tshwane and Johannesburg
central business districts (CBDs), with 67.6% of the portfolio's rental income derived from its Tshwane-based properties and 32.4% from Johannesburg.
Review of results
29 February 2020 28 February 2019 % change
Revenue (R'000) 1 004 561 976 180 2.9
Basic and diluted earnings per share (cents) 13.0 78.7 (83.5)
Headline and diluted headline earnings per share (cents) 92.1 86.0 7.1
Distribution per share (cents) - 101.7 (100.0)
Net asset value per share (cents) 2 761 2 916 (5.3)
Revenue earned on a contractual basis grew by R29.6 million or 3.0%. Growth in rental revenue was subdued due to an increase in rental freezes and rent
reversions in the commercial sector. A decrease in disposable income has also put pressure on the consumer and residential rental growth has been impacted
by both increased vacancies and a nominal increase in rental rates.
The core portfolio, represented by those properties held for the previous comparable period with no major development activity, reflected like-for-like
rental income growth of 2.2%. The weak growth in like-for-like rental income is mainly attributable to the poor economic environment.
Property costs, both on a gross and net basis, have increased compared to the prior year, mainly due to lower growth in rental income and increased
operating costs.
Developments
During the current year, Octodec did not undertake any significant new developments but rather focused on maintaining and carrying out smaller upgrades of
older properties to ensure that they remain relevant and attractive to tenants.
A curtailment on upgrades and projects has recently been implemented to make allowance for the anticipated costs and losses associated with the outcome of
the spread of COVID-19 and to strengthen the balance sheet.
Events after the reporting date
South Africa's economy and its ability to grow will be further impacted by the sovereign credit rating downgrade to subinvestment grade on 27 March 2020,
and the unprecedented uncertainty and fallout triggered by the COVID-19 pandemic. The lack of clarity as to how the lockdown will be lifted on 30 April 2020
and the subsequent socioeconomic impact of the continuing COVID-19 outbreak will have a material impact on our financial performance for at least the
remainder of the financial year.
The board of directors (the board) has considered the impact of the above factors on the sustainability of the business and the group and has concluded that
it has adequate resources and banking facilities for the foreseeable future, barring further deterioration in market conditions.
Prospects
The revised negative gross domestic product (GDP) growth, increasing unemployment, reduced disposable income and the uncertain sociopolitical environment
were already factors undoubtedly restraining local economic growth. The very fluid environment in which we find ourselves added to the unknown impact of
COVID-19, and the recent downgrade of South Africa's sovereign credit rating to subinvestment grade will certainly make 2020 a very challenging year.
In light of current market uncertainties, as announced on SENS on 7 April 2020, the company has withdrawn its distribution per share guidance as previously
communicated and will provide an update to the market when there is greater certainty. Future payout ratios will largely depend on the extent of the impact
of the abovementioned factors, including COVID-19 on Octodec as well as, inter alia, Octodec's capital requirements, proceeds from the sale of investment
property, liquidity and the need to strengthen the balance sheet.
Dividend
In these uncertain times, when the impact of the above factors cannot yet be assessed and quantified, Octodec's board, having regard to all the
circumstances and adopting a prudent approach, has resolved not to declare a dividend for the six-month period to 29 February 2020.
Sharon Wapnick Jeffrey Wapnick
Chairman Managing director
22 April 2020
Directors: S Wapnick (Chairman)1, JP Wapnick (managing director)2, AK Stein (financial director)2, DP Cohen3, GH Kemp4, NC Mabunda4, EMS Mojapelo4,
MZ Pollack1, PJ Strydom4, L van Breda4
1 Non-executive director
2 Executive director
3 Lead independent director
4 Independent non-executive director
Group company secretary
Elize Greeff
CPA House, 101 Du Toit Street, Tshwane, 0002
Tel: (012) 357 1564,
e-mail: elizeg@octodec.co.za
Registered address
CPA House, 101 Du Toit Street,Tshwane, 0002
Tel: (012) 319 8781
Fax: (012) 319 8812
E-mail: info@octodec.co.za
Transfer secretaries
Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue,
Rosebank, 2196
Private Bag X9000, Saxonwold, 2132
Tel: (011) 370 5000
E-mail: leon.naidoo@computershare.co.za
Property administrator and asset manager
CPA House, 101 Du Toit Street,
Tshwane, 0002
E-mail: elizeg@octodec.co.za
Sponsor
Java Capital, 6A Sandown Valley Crescent
Sandown, Sandton, 2196
Date: 22-04-2020 08:25:00
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