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Unaudited interim results for the six months ended 31 December 2012
UNAUDITED INTERIM RESULTS for the SIX MONTHS ended 31 December 2012
Property revenue up 5.3% to R20.3 million
Net profit before tax of R23 million
Headline earnings per share up 29.2% to 47.8 cents
Net asset value per share up 6.8% to 1053.3 cents
Interim dividend increased by 20% to 18 cents per share
These six month Interim Financial Statements have been issued in accordance with the requirements of the
Companies Act of South Africa, 2008 and are published on 19 March 2013.
Unaudited consolidated statement of comprehensive Income
for the six months ended 31 December 2012
Unaudited Unaudited
31 Dec 31 Dec
2012 2011 %
R000 R000 Change
Property revenue 20 366 19 330 5,3
Straight-line rental
income accrual (2 816) (1 097) 156,7
Gross property revenue 17 550 18 233 3,8
Property expenses (691) (1 490) 53,6
Net profit from property operations 16 859 16 743 0,7
Administration expenses (2 607) (2 031) 28,3
Investment and other income 544 933 41,6
Share of associated profits 1 617 272 494,4
Operating profit before capital items 16 413 15 917 3,1
Capital items
Fair value adjustments 6 601 8 600 23,2
Gross change in fair value
investment properties 3 785 7 503
Straight line rental income
adjustment 2 816 1 097
Net profit before taxation 23 014 24 517 6,1
Taxation (6 181) (6 481) 4,6
Net profit 16 833 18 036 6,6
Other comprehensive income
Total comprehensive income
and net profit attributable to:
Owners of the parent 16 833 18 036 6,6
Non controlling interest
16 833 18 036 6,6
Earnings and diluted earnings
per share (cents) 58,5 62,6 6,6
Unaudted consolidated statement of financial position
as at 31 December 2012
Unaudited Audited
31 Dec 30 Jun
2012 2012
R000 R000
ASSETS
Non-current assets 301 946 295 086
Net investment properties 250 989 244 312
Gross investment properties 254 135 250 274
Straight-line rental income adjustment (3 146) (5 962)
Other non-current assets
Furniture, fittings and
computer equipment 93 113
Investments in associates 49 986 48 369
Straight-line rental income asset 878 2 292
Current assets 28 498 24 545
Straight-line rental income asset 2 268 3 670
Trade and other receivables 1 753 6 580
Cash and cash equivalents 24 477 14 295
Total assets 330 444 319 631
EQUITY AND LIABILITIES
Capital and reserves 303 290 291 639
Non-current liabilities 22 089 21 065
Deferred tax 22 089 21 065
Current liabilities 5 065 6 927
Trade and other payables 4 433 5 301
Taxation payable 632 1 626
Total equity and liabilities 330 444 319 631
Unaudited consolidated statement of cash flowS
for the six months ended 31 December 2012
Unaudited Unaudited
31 Dec 31 Dec
2012 2011
R000 R000
CASH FLOW GENERATED FROM
OPERATING ACTIVITIES 10 258 7 258
Net cash generated from operations 21 049 15 275
Investment and other income 544 933
Taxation paid (6 153) (4 632)
Dividends paid (5 182) (4 318)
CASH FLOW UTILISED IN
INVESTING ACTIVITIES (76) (33)
Improvements to investment properties (76)
Acquisition of furniture fittings and
computer equipment (33)
NET INCREASE IN CASH AND
CASH EQUIVALENTS 10 182 7 225
Cash and cash equivalents
at beginning of period 14 295 28 847
Cash and cash equivalents at
end of period 24 477 36 072
Unaudited consolidated statement of changes in equity
for the six months ended 31 December 2012
Stated Accumulated
capital profits Total
R000 R000 R000
At 30 June 2011 4 146 266 063 270 209
Total comprehensive
income profit 18 036 18 036
Dividend paid (4 319) (4 319)
At 31 December 2011 4 146 279 780 283 926
At 30 June 2012 4 146 287 493 291 639
Total comprehensive
income profit 16 833 16 833
Dividend paid (5 182) (5 182)
Balance at 31 December 2012 4 146 299 144 303 290
Comments
Basis of preparation
The unaudited interim financial statements for the six months ended 31 December 2012 and
comparative information have been prepared in accordance with and containing the information
required by IAS34 Interim Financial Reporting as well as the AC 500 Standards as issued by the
Accounting Practices Board; the Listings Requirements of JSE Limited and the relevant sections
of the South African Companies Act, 2008 (Act 71 of 2008) as amended.
The accounting policies applied in the preparation of these condensed financial statements,
which are based on reasonable judgements and estimates are in accordance with International
Financial Reporting Standards (IFRS) and are consistent with those applied in the annual financial
statements for the year ended 30 June 2012. The presentation of the financial statements has changed
during the current year in order to better reflect the investment property valuations in accordance
with the requirements of IFRS. No third statement of financial position has been presented as the
changes do not meet the requirements for a third statement of financial position as required by the
amended IAS 1 which requires a third statement of financial position be presented if:
a. It applies an accounting policy retrospectively, makes a retrospective restatement of items in
its financial statements or reclassifies items in its financial statements"; and
b. The retrospective application, retrospective restatement or re-classification has
a minimal effect on the information in that statement of financial position at the beginning of the preceding period.
The change in the disclosure is adding to the information already provided clarifying the position in
accordance with the requirements of IAS 40; the value of the investment property has not changed.
The amended IAS 1 was early adopted during the year as management believes that it clarifies the requirements to
be considered. It has no effect on the numbers as reported.
These interim results have not been audited or reviewed by the companys auditors.
These statements have been prepared by James E Smith B.Sc., BAcc, CIEA, the financial director of the company.
Financial results
The directors are pleased to report that property revenue for the six months ended 31 December 2012 prior to any
straight-line income adjustments increased by 5.3% to R20.3 million compared to R19.3 million for the six months
ended 31 December 2011 (the comparable period). The groups rental, inclusive of straight-line rental accruals,
has increased nominally by 3.5% over the comparable period, due to the reversing effect of the straight-line asset,
of the companys major tenant, Putco.
Property expenses decreased by 53.6%, from R1.49 million to R691 000. This decrease was a result of the completion
of phase 1 of the preventative maintenance policy for projects on several of our older properties. Maintenance and refurbishment
costs are expected to be relatively consistent in the second half of the year, bearing any unplanned maintenance issues.
Administration expenses increased by 28.3% over the comparable period. Investment and other income decreased by 41.6% due to lower
cash reserves. The group's contribution from its investments in associated companies increased from R272 000 in December 2011 to
R1.6 million as at 31 December 2012, an increase of 494%. This increase represents the first full six month contribution from
Breaking Waves Proprietary Limited and Belle Isle Investments Proprietary Limited. Summit Place is expected to make a contribution
in the reporting period ending December 2013.
Trade and other receivables decreased substantially from June 2012 due to the collecting of arrear rentals owing from major tenants.
All collection periods are now within the groups stated parameters. Cash reserves increased during the period from 30 June 2013 as no acquisitions were
made for the reported period.
The board of directors has declared an interim dividend for the six months ended 31 December 2012 of 18.0 cents per ordinary share
(December 2011: 15.0 cents per ordinary share). This reflects a dividend cover of 2.7 times which continues to be more favourable
than the groups stated dividend policy. In terms of the South African Revenue Services (SARS), the company is required to
withhold a 15% Dividend Withholding Tax (DWT) on the dividend declared. This DWT must then be paid to the SARS on behalf of the shareholder,
unless the shareholder has exemption from this tax.
Unaudited Unaudited
31 Dec 31 Dec
2012 2011 %
R000 R000 Change
Reconciliation of
headline earnings
Net profit for the period 16 833 18 036 (6,7)
Adjusted for:
Fair value adjustment
of investment properties (3 785) (8 600) 56,0
Taxation effect of fair
value adjustments 704 1 204 41,3
Headline earnings 13 752 10 640 29,2
Shares in issue (weighted
average number) (millions) 28 793 28 793
Dividends paid per
share (cents) 18,0 15,0 20,0
Headline earnings per
share (cents) 47,8 37,0 29,2
RATIOS
Net asset value per
share (cents) 1 053,3 986,1 6,8
Property portfolio
At 31 December 2012 the portfolio comprised 15 properties (2011:15) with a gross lettable area of 74 993m2.
The sectoral spread by gross rentals comprised 89% industrial, 9.9% retail and 1.1% commercial. Vacancies
decreased during the period to less than 1% (2011: 3.4%) of gross lettable area.
The company continues to transact primarily with A grade tenants. The company continues to evaluate individual
properties within the portfolio to ensure the stated objectives, investment policy and returns are achieved.
Lease expiry profile
The lease expiry profile reflects that in terms of gross lettable area, 84% of the portfolio expires during the
next 12 months, 10% in month 13 to 24, and 67% in 2015 and 9% from 2017 onwards. The head lease with our major
tenant Putco expired on 31 December 2012. After extensive negotiations the company is pleased to announce that
all leases were successfully renewed for 3 years. However, a reduction in rental income of 11.1% resulted, over the 11 properties.
Segmental analysis
The table below summarises by segment the position for the six months ended 31 December 2012. Segment assets include
all operating assets used by a segment and consist of investment properties, receivables and cash. Assets not directly
attributable to a particular segment are allocated to the corporate segment. Segment liabilities include all operating
liabilities of a segment and consist principally of outstanding accounts.
Industrial Retail Commercial Corporate Total
R000 R000 R000 R000 R000
GROUP INCOME FOR THE SIX MONTHS
ENDED 31 DECEMBER 2012
Property revenue 18 135 2 012 219 20 366
Straightline rental income accrual (3 130) 294 20 (2 816)
Property expenses (612) (48) (31) (691)
Net profit from property operations 14 393 2 258 208 16 859
GROUP FINANCIAL POSITION AT
31 DECEMBER 2012
Noncurrent assets
Investment properties 211 948 34 575 4 466 250 989
Other noncurrent assets 711 24 299 25 854 93 50 957
Current assets
Straightline rental income asset 1 859 283 126 2 268
Trade and other receivables 905 542 306 1 753
Cash and cash equivalents 24 477 24 477
Noncurrent liabilities 22 089 22 089
Current liabilities
Taxation payable 632 632
Trade and other payables 955 3 478 4 433
GROUP INCOME FOR THE SIX MONTHS
ENDED 31 DECEMBER 2011
Property revenue 16 971 1 670 689 19 330
Straightline rental income accrual (1 560) 463 (1 097)
Property expenses (1 157) (94) (239) (1 490)
Net profit from property operations 14 254 2 039 450 - 16 743
GROUP FINANCIAL POSITION AT 30 JUNE 2012
Noncurrent assets
Investment properties 205 266 34 500 4 546 244 312
Other non-current assets 1 948 23 598 25 115 113 50 774
Current assets
Straight-line rental income asset 3 009 441 220 3 670
Trade and other receivables 5 925 571 84 6 580
Cash and cash equivalents 14 295 14 295
Non-current liabilities 21 065 21 065
Current liabilities
Taxation payable 1 626 1 626
Trade and other payables 1 437 64 3 800 5 301
Acquisitions, expansions and refurbishments
During the period under review no acquisitions were made. Although the group actively investigated many possible opportunities,
no properties met the groups investment guidelines and criteria. No major capital projects are currently under way. Refurbishments
of the older properties will, as mentioned above, continue under a planned maintenance programme during the second half of the year.
Valuation of property portfolio
It is the groups policy to value the entire investment property portfolio on an annual basis by an independent external valuer.
The next valuation will be as at 30 June 2013. In addition, the property portfolio is valued by the directors on a six monthly basis.
The directors have valued the groups investment portfolio at 31 December 2012 at R254.1 million, an increase of R3.8 million or 1.5%
on the external valuation at 30 June 2012. This valuation was based on a review of current market sales and purchase transactions in
the propertys location as well as reasonable judgements and estimates of the directors. The effects of any acquisitions made during the year
of acquisition are not included in any revaluation. The board has taken a conservative approach in respect of its valuation of the property
portfolio as at this reporting date. In particular the Putco rented properties, of the industrial segment, have been conservatively examined,
due to the specialised nature of the properties, together with the reduction of rental income in terms of the new leases negotiated.
Borrowings and capital commitments
The company has no significant borrowings as at 31 December 2012 nor has it any capital commitments at that date.
Directorate
There have been no changes in the composition of the board of directors during the current period.
Subsequent events
There have been no significant reportable subsequent events between the period 31 December 2012 and the release of this report, 13 March 2013.
Prospects
Trading conditions during the next reporting period are expected to continue to be challenging. The property market both locally and internationally
is expected to remain subdued in the second half of the year. We will continue to focus on growing the portfolio, with the possibility of joint ventures
with partners with similar strategies considered.
The board is of the opinion that a reasonable growth in earnings will still be achieved in the second half of the year and our current dividend trend
will continue.
Ordinary Interim Dividend number 47
Notice is hereby given that the board of directors have declared an interim gross cash dividend (the dividend) for the six months ended
31 December 2012 of 18.0 cents per ordinary share (December 2011: 15 cents per ordinary share) reflecting a dividend cover of 2.7 times. The dividend
is payable to shareholders recorded in the books of the company at close of business on Friday, 19 April 2013.
The current local Dividend Withholding Tax (DWT) rate is 15%. No Secondary Tax on Companies credits have been utilised against the dividend declared.
The gross local dividend amount is 18 cents per share for shareholders exempt from paying the DWT whilst the net local dividend payable is 15.3 cents
per share for shareholders liable to pay the DWT. Issued share capital of Putprop is 28 792 961 (2011: 28 792 961) shares. Putprop's tax reference
number is: 9100097717.
The salient dates relating to the dividend are as follows:
Last date to trade shares cum dividend Friday, 12 April 2013
Shares trade ex dividend Monday, 15 April 2013
Record date Friday, 19 April 2013
Payment date Monday, 22 April 2013
Share certificates may not be dematerialised or rematerialised during the period Monday, 15 April 2013 to Friday, 19 April 2013 both days inclusive.
On behalf of the board
13 March 2013
A B Adrian
Chairman
B C Carleo
Chief Executive Officer
PutPROP Limited
(Incorporated in the Republic of South Africa)
(Registration number 1988/001085/06)
Tax reference number: 9100097717
Share code: PPR ISIN: ZAE000072310
(Putprop or the company or the group)
Directorate
A B Adrian*^ (Chairman),
B C Carleo (Chief Executive Officer),
J E Smith (Financial) (British),
A L Carleo-Novello,
P Senatore*^,
P Nucci*^
*Independent
^Non-executive
Registered Office
91 Protea Road,
Chislehurston,
Sandton, 2196
Transfer Secretaries
Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg
P O Box 61051,
Marshalltown, 2107
Sponsor
Merchantec Capital
Date: 13/03/2013 03:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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