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Preliminary audited summarised consolidated results for the year ended 31 August 2012
INGENUITY PROPERTY INVESTMENTS LIMITED
Registration number 2000/018084/06
Share code: ING
ISIN: ZAE000127411
("Ingenuity") ("the Company")
PRELIMINARY AUDITED SUMMARISED CONSOLIDATED RESULTS
for the year ended 31 August 2012
2012 2011
KEY FINANCIAL INDICATORS R000 R000
Total contractual rental income 64 976 53 882
Investment property portfolio value 743 086 593 728
Investment property held for sale - 3 000
Development property 286 562 158 701
Borrowings 522 334 351 384
Loan to value ratio 46% 45%
Market capitalisation at year end 443 130 342 446
Earnings per share 9.0 cents 5.0 cents
Headline earnings per share 1.6 cents 1.8 cents
Net asset value per share 75 cents 68 cents
PRELIMINARY SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 August 2012
2012 2011
R000 R000
ASSETS
Non-current assets 1 065 960 782 948
Investment properties 743 086 593 728
Straight-line lease accrual 26 853 21 596
Investment properties under development 286 562 158 701
Equipment 75 20
Loans receivable 9 384 8 903
Current assets 37 038 7 182
Trade and other receivables 3 721 806
Investment property held for sale - 3 000
Straight-line lease accrual 1 093 -
Tax receivable 1 557 -
Cash and cash equivalents 30 667 3 376
Total assets 1 102 998 790 130
EQUITY AND LIABILITIES
Shareholders interest 504 654 402 922
Share capital 7 385 6 585
Share premium 321 024 281 824
Treasury shares (34 928) (34 928)
Non-distributable reserve 108 813 65 773
Share option reserve 863 863
Retained earnings 94 520 75 784
Total equity attributable to equity holders of the parent 497 677 395 901
Minority interest 6 977 7 021
Non-current liabilities 553 805 381 081
Borrowings 509 130 351 384
Financial instruments 10 152 15 349
Deferred tax 34 523 14 348
Current liabilities 44 539 6 127
Trade and other payables 27 236 3 131
Current portion of borrowings 13 204 -
Prepaid rent received 4 099 2 943
Tax payable - 53
Total equity and liabilities 1 102 998 790 130
PRELIMINARY SUMMARISED CONSOLIDATED INCOME STATEMENT
for the year ended 31 August 2012
2012 2011
R000 R000
Revenue 71 898 59 058
- Contractual 64 976 53 882
- Straight-lining 6 922 5 176
Net operating expenses (23 242) (18 211)
Profit before fair value adjustments 48 656 40 847
Fair value adjustments to investment properties 62 760 21 615
Profit before interest and taxation 111 416 62 462
Interest received 1 228 1 775
Interest paid (34 039) (27 067)
Profit before taxation 78 605 37 170
Taxation (20 295) (7 388)
Profit for the year 58 310 29 782
Attributable to:
Equity holders of the parent 58 034 29 533
Minority interest 276 249
58 310 29 782
Cents Cents
Basic and diluted earnings per share 9.0 5.0
Comments to the Income Statement
1. Headline and Diluted headline earnings per share 1.6 1.8
2. The calculation of earnings per share is based on a
weighted average number of 645 573 057 (2011: 593 080 961)
shares in issue during the year. The actual number of shares
in issue at the year-end is 738 550 000 (2011: 658 550 000).
Headline earnings are calculated as follows:
Earnings attributable to equity holders 58 034 29 533
Fair value adjustments to investment properties (62 760) (21 615)
Deferred tax on fair value adjustments 11 105 3 027
Deferred tax on change in Capital Gains Tax rate 4 016 -
10 395 10 945
PRELIMINARY SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 August 2012
2012 2011
R000 R000
Profit for the year 58 310 29 782
Other comprehensive income:
Cash flow hedges 5 197 550
Income tax relating to components of other comprehensive income (1 455) 2 238
Other comprehensive income for the year, net of tax 3 742 2 788
Total comprehensive income for the year 62 052 32 570
Total comprehensive income attributable to:
Equity holders of the parent 61 776 32 321
Minority interest 276 249
62 052 32 570
PRELIMINARY SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 August 2012
Non-distri-
Share Share Treasury butable
capital premium shares reserve
R000 R000 R000 R000
GROUP
Balance at 1 September 2010 6 585 281 824 (27 254) 40 829
Changes in equity - - (7 674) 24 944
Decrease in minority interest - - - -
Total comprehensive income for the year - - - 2 788
- other comprehensive income,
net of tax: cash flow hedges - - - 2 788
- net profit for the year - - - -
Purchase of treasury shares - - (7 674) -
Transfer to non-distributable reserve
- fair value adjustments to
investment properties - - - 22 156
Balance at 31 August 2011 6 585 281 824 (34 928) 65 773
Changes in equity 800 39 200 - 43 040
Decrease in minority interest - - - -
Total comprehensive income for the year - - - 3 742
- other comprehensive income, net
of tax: cash flow hedges - - - 3 742
- net profit for the year - - - -
Issue of 80 000 000 shares 800 39 200 - -
Transfer to non-distributable reserve
- fair value adjustments to
investment properties - - - 42 496
Realisation of non-distributable
reserve
- fair value adjustments
realised on properties sold - - - (3 198)
Balance at 31 August 2012 7 385 321 024 (34 928) 108 813
Comprising:
Fair value reserve 116 165
Net hedging reserve (7 352)
108 813
Share
option Retained Minority
reserve income interest Total
R000 R000 R000 R000
GROUP
Balance at 1 September 2010 863 68 407 7 117 378 371
Changes in equity - 7 377 (96) 24 551
Decrease in minority interest - - (345) (345)
Total comprehensive income for
the year - 29 533 249 32 570
- other comprehensive income, net
of tax: cash flow hedges - - - 2 788
- net profit for the year - 29 533 249 29 782
Purchase of treasury shares - - - (7 674)
Transfer to non-distributable reserve - - - -
- fair value adjustments to
investment properties - (22 156) - -
Balance at 31 August 2011 863 75 784 7 021 402 922
Changes in equity - 18 736 (44) 101 732
Decrease in minority interest - - (320) (320)
Total comprehensive income for the year - 58 034 276 62 052
- other comprehensive income, net
of tax: cash flow hedges - - - 3 742
- net profit for the year - 58 034 276 58 310
Issue of 80 000 000 shares - - - 40 000
Transfer to non-distributable reserve
- fair value adjustments to
investment properties - (42 496) - -
Realisation of non-distributable
reserve
- fair value adjustments
realised on properties sold - 3 198 - -
Balance at 31 August 2012 863 94 520 6 977 504 654
PRELIMINARY SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 August 2012
2012 2011
R000 R000
Cash flows from operating activities
Cash generated from operations 65 595 39 062
Interest received 427 1 409
Interest paid (34 907) (26 838)
Taxation paid (3 186) (2 260)
Net cash inflow from operating activities 27 929 11 373
Cash flows from investing activities
Additions to equipment (95) -
Acquisitions/additions to investment properties (129 561) (98 635)
Acquisitions/additions to investment properties
under development (126 854) (62 702)
Proceeds on disposal of investment properties 44 743 -
Decrease in financial assets - 6 500
Net cash outflow from investing activities (211 767) (154 837)
Cash flows from financing activities
Proceeds from the issue of shares 40 000 -
Treasury shares purchased - (7 674)
Financial liabilities raised 171 129 148 575
Net cash inflow from financing activities 211 129 140 901
Net increase (decrease) in cash and cash equivalents 27 291 (2 563)
Cash and cash equivalents at beginning of year 3 376 5 939
Cash and cash equivalents at end of year 30 667 3 376
PRELIMINARY SUMMARISED CONSOLIDATED SEGMENTAL INFORMATION
at 31 August 2012
Segmental Segmental
operating operating
profit profit
Revenue before tax Revenue before tax
2012 2012 2011 2011
R000 R000 R000 R000
Offices 40 804 72 384 30 849 39 357
Retail 11 937 25 172 10 718 7 273
Industrial 1 755 1 858 3 704 4 788
Gym 3 177 6 531 2 960 4 218
Parking 6 671 13 857 5 629 8 752
Other 632 (7 325) 22 (165)
64 976 112 477 53 882 64 223
Reconciliation to profit for the year in the preliminary consolidated income statement:
2012 2011
R000 R000
Total segmental operating profit before tax 112 477 64 223
Unsegmental operating expenses (7 983) (6 937)
Interest received 1 228 1 775
Interest paid (34 039) (27 067)
71 683 31 994
Straight-lining 6 922 5 176
Profit before tax 78 605 37 170
SEGMENTAL INFORMATION
at 31 August 2012
2012 2011
R000 R000
PROPERTY ASSETS
Offices 537 758 379 857
Retail 114 337 101 283
Industrial - 34 424
Gym 41 000 37 000
Parking 77 607 65 524
Other 330 236
771 032 618 324
COMMENTARY
1. PRESENTATION OF PRELIMINARY SUMMARISED CONSOLIDATED FINANCIAL RESULTS
The preliminary summarised consolidated financial results for the year ended
31 August 2012 have been prepared in accordance with International Accounting
Standard 34: Interim Financial Reporting, the Listings Requirements of the
JSE Limited, the AC500 Standards as issued by the Accounting Practices Board and
the South African Companies Act, 2008, as amended.
The accounting policies applied in the presentation of the preliminary summarised
financial results are consistent with those applied for the year ended 31 August 2012.
The preliminary financial results should be read in conjunction with those accounting
policies. These, together with the methods of computation, are in terms of
International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board.
Mazars, the Company's auditors, have audited the consolidated annual financial
statements for the year ended 31 August 2012. These preliminary summarised
consolidated financial statements have been extracted from the audited consolidated
annual financial statements for the purposes of this announcement. Mazars' unqualified
audit report is available for inspection at the registered office of the company.
During the current year, the property portfolio valuation increased by R62.8 million
(2011: R21.6 million) as a result of the developments undertaken by the Company, which
have enhanced the values of the development properties and those in the surrounding
precincts owned by the Company.
2. GENERAL REVIEW OF OPERATIONS
Continued uncertainty prevails in economic markets and growth in most countries
remains subdued. Despite these circumstances Ingenuity has remained steadfast in its
course and delivered a solid financial result for the year. We have grown our core
asset base by 24% and embarked on further developments that when completed will add
further value exceeding R500 million to the asset base. The Company is well positioned
for growth with additional exciting opportunities to further grow the business. Our
goal is to create an enduring long-term business, continually seeking to maximise
shareholder wealth and net asset growth.
The year ended 31 August 2012 delivered solid performance and significant inroads have
been made particularly on the development side of the business where it has always
been stated as a core activity of the Company. During the year under review the total
asset base including development assets increased in value by R277.2 million or 36.8%,
whilst borrowings were maintained at conservative levels. The three developments which
are currently in progress, namely the redevelopment of Newspaper House situated in
St Georges Mall, Cape Town; the redevelopment of Atlantic Centre situated in Culemborg
on the Foreshore, Cape Town; and the development of a third building on the Santam
site in Tyger Valley will all be completed in the new financial year and will
substantially enhance our net rental base.
Property held for development remains a major component of the asset base and
management remains focused to unlock and realise these non-income producing assets.
The two opportunities held are situated at prime locations and we are confident that
they will add value to the Company.
Our core strategy to remain focused in the Western Cape places us in a unique position
relative to our peers. This enables us to extract maximum value in a region where we
are well networked and positioned to take advantage of opportunities when they arise.
3. BORROWINGS
The Company achieved a weighted average borrowing cost of 9.04% (2011: 9.8%) for the
current year. Total borrowings at year-end amounted to R522.3 million
(2011: R351.4 million) of which R200 million is fixed at an all-inclusive rate of
10.65% until November 2013. The balance remains floating at rates linked to prime.
The increase in borrowings for the current year came about as a result of the
acquisition of Newspaper House and the additional development funding used for
Atlantic Centre and Building 3 on the Santam site.
Total cash on hand at year-end amounted to R30.7 million (2011: R3.4 million). Excess
cash is applied to reduce borrowings or to grow the asset base where appropriate.
The Companys gearing ratio is 46% (2011: 45%) at year-end. This is considered
acceptable considering the development nature of the Company and the fact that
we seek to grow the business through leverage of the existing asset base.
4. PROPERTY PORTFOLIO ACTIVITIES
INVESTMENT PROPERTIES
ATLANTIC CENTRE, REEDS, 31 AND 33 MARTIN HAMMERSCHLAG WAY
This significant grouping of four properties situated in the heart of Culemborg on
the Cape Town Foreshore area has made available substantial additional bulk for
development. During the year under review, the commencement of the redevelopment of
Atlantic Centre was implemented. The scheme comprises a total revamp and includes an
extension to the existing structure by adding four floors. The total capital
expenditure of this project is estimated to be R156.4 million. On completion, the
building will provide 11 000 sqm of attractive A-grade space. Marketing has commenced
and keen interest in the building has been received. Completion of this project is
expected to take place in the second quarter of 2013.
The extension of the Reeds building will be a second phase of the development and
utilisation of the bulk on the site. Planning is well underway to add a further four
floors of parking to the existing Reeds structure. This phase will use over 18 000 sqm
of bulk. The parking will serve the newly completed Atlantic Centre offices and the
planned future office extension of the Reeds building. This grouping of properties
remains strategically situated and represents a significant holding of the portfolio
with attractive upside still in hand.
SANTAM BUILDING 3 TYGER VALLEY
Construction of this new building commenced in November 2011 and is due for completion
in March 2013.
On completion, the building will provide an additional 10 639 sqm of premium grade
space. Over 80% of the building has already been pre-let to Santam Ltd and
Glacier Financial Holdings (Pty) Ltd for long-term lease periods. The new Building 3,
combined with those that are already owned and let to Santam on the rest of the site,
represents a significant and core holding of Ingenuitys portfolio. On completion,
the total scheme will comprise 27 847 sqm of GLA with 1 037 parking bays.
The new building is also set to become one of Ingenuitys first 4-star, Green Rated
buildings and represents a significant milestone in our development history.
VIRGIN ACTIVE
Application for the additional development rights for this site is well underway.
The public participation process that was required has commenced and has received
favourable response thus far. This process is likely to be completed during the next
financial year. Once approved, this will add significant value to the site, as the
combined erven will have over 22 000 sqm of available bulk for development. The
building situated on the land remains well let and provides a solid return.
DEVELOPMENT PROPERTIES
1 DOCK ROAD
Marketing of this prime city site remains a core focus. Together with
Redefine Properties Ltd, our joint venture partner, we continue to seek to secure
suitable tenants to obtain an acceptable pre-let percentage required to commence
development. The site is situated adjacent to the Portside Development of Old Mutual
and FNB where development has commenced for the erection of Cape Towns tallest
building. This development is likely to provide a catalyst for our scheme.
ERF 38746 TYGER VALLEY
Marketing of the development of this site is ongoing. Interest in the area remains
subdued and we continue to seek ways to realise this investment.
ACQUISITIONS
During the year under review Newspaper House, situated in St Georges Mall, Cape Town,
was acquired for a consideration totalling R86 million funded in part by the issue of
80 million shares at 50 cents each. This historic landmark property provided a unique
opportunity to be upgraded and to convert old industrial space into A-grade offices
and retail premises. On-site parking has also been created in the basement of the
building. The total building has just over 14 000 sqm of GLA. The refurbishment
commenced in March 2012 and is due for completion at the end of October 2012. The
total estimated capital expenditure on the property is R155.8 million. The property
has been well let on long-term leases to Independent Newspapers and Fruit and
Veg City Holdings as core tenants. Other tenants are Groupon and Serco BPO.
DISPOSALS
During the year under review, the Midas Port Elizabeth property, the Natural Stone
Warehouse property in Paarden Eiland and the Mobile Road property situated in
Airport Industria Cape Town were sold. The combined net consideration of R43.1 million
was applied to reduce debt through reducing access facilities and then used partly to
fund the new acquisitions and associated development costs. The properties were
considered to be non-core and provided an opportunity to realise some good profits
and allow funds to be applied elsewhere.
PORTFOLIO INFORMATION
VACANCIES
Vacancies amount to 14% (2011: 10%) of the total GLA of the portfolios. The retail
component has been let as from 1 November 2012. The office vacancy is largely made up
of space at Newspaper House which was under refurbishment and not completed for
occupation at year-end. 50% of this space has subsequently been leased with effect
from 1 November 2012. No significant vacancies are anticipated in the forthcoming
financial year.
LEASE EXPIRY PROFILE
The lease expiries for the financial year 2012 equates to 6% of the total GLA, and to
12% of revenue of the portfolio. Management continue to strive to renew all expiries
as they arise.
COST-TO-INCOME RATIOS
Gross expenses are reflected as a percentage of gross income including recoveries. The
net cost-to-revenue ratio of 14% (2011: 9%) is what the company carries as a landlord.
These ratios are within acceptable norms for the industry.
SECTORAL SPREAD OF THE PORTFOLIO
The concentration of the portfolio is in the office (68%) (2011: 51%) and retail (26%)
(2011: 32%) sectors.
GEOGRAPHICAL SPREAD OF THE PORTFOLIO
In line with our core strategy, 100% of the Companys buildings are situated in the
Western Cape.
6. PROSPECTS
Broader economic factors continue to place negative pressures on growth. Ingenuity,
however, remains well poised for expansion. The significant development activity
undertaken in the past year should enhance our asset base substantially and ultimately
reward shareholders in the forthcoming periods.
The above information has not been reported on by the Companys auditors.
7. DIVIDENDS TO SHAREHOLDERS
In respect of the current year, the Board of directors have declared a maiden cash
dividend of 1 cent per share, to be paid to shareholders who are registered on the
record date of 14 December 2012. The total estimated dividend to be paid by the
Company is R7.385 million.
The dividend has been declared from income reserves and no Secondary Tax on Companies
credits have been used. A dividend withholding tax of 15% will be applicable to all
shareholders who are not exempt.
Company tax reference number 9635/047/14/6
Gross cash dividends per share 1 cent
Net cash dividend amount per share 0.85 cents
Issued number of shares 738 550 000
Last day to trade cum dividend Friday, 7 December 2012
First day to trade ex dividend Monday, 10 December 2012
Record date Friday, 14 December 2012
Payment date Tuesday, 18 December 2012
Shares may not be dematerialised or rematerialised between Monday, 10 December 2012
and Friday, 14 December 2012, both days inclusive.
For and on behalf of the Board
ARNOLD AARON MARESKY MARK WAGENHEIM
Chief Executive Officer Chief Financial Officer
Cape Town
12 November 2012
PREPARER OF THE PRELIMINARY SUMMARISED CONSOLIDATED RESULTS
In compliance with the disclosure requirements of the Companies Act, No 71 of 2008,
these preliminary summarised consolidated results have been prepared by the Chief
Financial Officer, Mr M Wagenheim B.Com (Hons), CTA, CA (SA).
Directors: RC Squire-Howe (Chairman)*, AJ Branch * (British), J Bielich,
LH Cohen*, DB Fabian*, AA Maresky (CEO), RS Schur*, M Wagenheim
*Non-executive
Company secretary: M Wagenheim
Registered office:
Suite 102, 1st Floor Intaba Building, 25 Protea Road, Claremont, Cape Town, 7708.
Postal address:
Suite 102, 1st Floor Intaba Building, 25 Protea Road, Claremont, Cape Town, 7708.
Contact details:
Tel: 021 674 5170. Fax: 021 674 5135.
e-mail: info@ingenuityproperty.com
www.ingenuityproperty.com
Transfer secretaries:
Computershare Investor Services (Pty) Ltd
70 Marshall Street, Johannesburg, 2001. (PO Box 61051, Marshalltown, 2107)
Bank:
ABSA Bank Ltd, 1st Floor Tijgerpark IV Building,
Willie van Schoor Drive, Tyger Valley, Bellville, 7530.
(PO Box 4453, Tyger Valley, 7536)
Investment bank and sponsor:
Nedbank Capital, a division of Nedbank Ltd
3rd Floor, Corporate Place, Nedbank Sandton,
135 Rivonia Road, Sandton, 2196. (PO Box 1144, Johannesburg, 2000)
Auditors:
Mazars, Mazars House, Rialto Road, Grand Moorings Precinct, Century City,
Cape Town, 7441. (PO Box 2785, Cape Town, 8000)
Attorneys:
Edward Nathan Sonnenbergs Inc., 1 North Wharf Square, Loop Street,
Cape Town, 8001. (PO Box 2293, Cape Town, 8000)
Date: 15/11/2012 04:28:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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