Wrap Text
Reviewed provisional results for the year ended 31 August 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)
Group annual results
for the year ended 31 August 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 16 November 2020, which may be downloaded from
https://senspdf.jse.co.za/documents/2020/JSE/isse/OCT/FY2020.pdf.
The full announcement is also available on the Octodec Investments Limited website at https://www.octodec.co.za/wp-content/uploads/2020/11/Reviewed-
Provisional-Annual-Results-2020.pdf
Octodec Investments Limited (Octodec or the company), its subsidiaries and associated company (the group) is a real estate investment trust (REIT) listed
on the JSE Ltd (JSE). Octodec has a diversified portfolio of 277 residential, retail, office, industrial and specialised properties situated in the major
metropolitan areas of Tshwane and Johannesburg valued at R11.8 billion.
Review of results
31 August 31 August %
2020 2019 change
Revenue (R'000) 1 880 496 1 982 695 (5.2)
Basic and diluted earnings per share (cents) (335.0) 111.1 (401.6)
Headline and diluted headline earnings per share (cents) 60.0 161.0 (62.7)
Distributable earnings per share (cents) 156.8 200.9 (22.0)
Distribution per share (cents) - 200.9 (100.0)
Net asset value per share (cents) 2 413 2 847 (15.2)
This year our country's weakening economic condition, which influenced a further sovereign downgrade in March 2020, was aggravated by the economic fallout
as a result of COVID-19 and the subsequent lockdown. This led to a decrease of 22.0% in Octodec's distributable income, largely attributable to the rent
relief granted by Octodec to its tenants detrimentally affected by the COVID-19 shutdown and the increase in credit loss allowances, rental reversions and
increased vacancies. The relief granted by way of rental discounts, totalling 5.2% of rental income, resulted in a decrease in rental income of 5.3%
compared to a 0.1% decrease before the rent relief.
Property costs, both on a gross and net basis, have increased relative to rental income when compared to the prior year, largely due to reduced rental
income, mainly as a result of COVID-19 discounts given. While most property costs were reduced or contained during the lockdown period, an increase in bad
debts and expected credit loss provisions against trade receivables amounting to R20.5 million, impacted the expense ratio.
Dividends
COVID-19, as well as a pre-existing weakening economic environment, is having a major impact on South Africa's economy, which has impacted Octodec's
ability to fund the group's capital expenditure requirements and at the same time maintain an acceptable loan to value ratio. In these uncertain times, the
long-term impact of the above factors cannot yet be assessed and quantified.
In light of market uncertainty, Octodec has deferred its decision regarding the declaration of its final dividend for FY2020 until February 2021. This is
in line with the extension granted by the Financial Sector Conduct Authority on 28 June 2020. If a decision to declare a dividend is taken, Octodec intends
to declare no more than the minimum distribution requirement of 75% of its distributable income for FY2020, so as to retain its REIT status.
This is to enable greater capital flexibility, retain cash for essential capital expenditure to preserve our balance sheet and to reduce the risks which
the company could be exposed to.
Prospects
The negative GDP growth outlook, rife unemployment, reduced disposable income and the uncertain political environment will undoubtedly continue to restrain
local economic growth. Added to this, the environment in which we find ourselves is fluid with the continuing economic uncertainty as a result of COVID-19.
The cost of vacancies and rent relief are the variables that may have the most influence on our financial performance in FY2021. While it is difficult to
predict the outcome of FY2021 with certainty, in the coming months we are committed to the continuation of our strategy and positioning the business for
the future. We have confidence in the management team that we have in place to respond to the current challenges and balance our response with the long-
term interests of our stakeholders.
Attracting new tenants and reducing vacancies as well as portfolio consolidation will remain of primary importance in FY2021, and the group will continue
to optimise its balance sheet, ensuring that we retain more cash to bolster cash flow and our balance sheet. Due to uncertainty arising from COVID-19 and
the continued impact on operating conditions, Octodec will not be providing distributable income guidance at this point.
Sharon Wapnick Jeffrey Wapnick
Chairman Managing director
16 November 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, LP 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 (Pty) Ltd
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
Private Bag X9000, Saxonwold, 2132
Tel: (011) 370 5000
E-mail: leon.naidoo@computershare.co.za
Sponsor
Java Capital, 6th Floor, 1 Park Lane, Wierda Valley, Sandton 2196
PO Box 522606, Saxonwold, 2132
Tel: (011) 722 3050
E-mail: sponsor@javacapital.co.za
Date: 16-11-2020 07:05:00
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