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Unaudited interim results for the six months ended 31 December 2013 and interim cash dividend
Putprop Limited
Incorporated in the Republic of South Africa
(Registration number 1988/001085/06)
Share code: PPR • ISIN: ZAE000072310
(“Putprop” or “the company” or “the group”)
Unaudited interim results
for the six months ended 31 December 2013 and interim cash dividend
• Gross property revenue up 13,5% to R19,9 million
• Net profit before tax of R22,2 million
• Net asset value per share up 12,9% to 1189,3 cents
• Interim dividend maintained at 18 cents per share
Unaudited consolidated statement of financial position
As at 31 December 2013
Unaudited Unaudited Audited
31 Dec 31 Dec 30 Jun
2013 2012 2013
R'000 R'000 R'000
ASSETS
Non-current assets 333 975 301 946 331 965
Net investment properties 280 459 250 989 276 855
Gross investment properties 286 208 254 135 281 396
Straight-line rental income
adjustment (5 749) (3 146) (4 541)
Other non-current assets
Furniture, fittings and
computer equipment 54 93 75
Investments in associates 48 160 49 986 50 728
Straight-line rental income
asset 5 302 878 4 307
Current assets 43 768 28 498 33 712
Straight-line rental
income asset 447 2 268 234
Trade and other receivables 1 751 1 753 1 693
Cash and cash equivalents 41 570 24 477 31 785
Total assets 377 743 330 444 365 677
EQUITY AND LIA BILITIES
Capital and reserves 342 432 303 290 331 374
Non-current liabilities 28 894 22 089 27 661
– Deferred tax 28 894 22 089 27 661
Current liabilities 6 417 5 065 6 642
Trade and other payables 4 918 4 433 5 143
Taxation payable 1 499 632 1 499
Total equity and liabilities 377 743 330 444 365 677
Unaudited consolidated statement of comprehensive income
For the six months ended 31 December 2013
Unaudited Unaudited Audited
31 Dec 31 Dec 30 Jun
2013 2012 % 2013
R'000 R'000 Change R'000
Property revenue 18 704 20 366 (8,2) 38 875
Straight-line rental
income accrual 1 208 (2 816) (142,9) (1 419)
Gross property revenue 19 912 17 550 13,5 37 456
Property expenses (1 125) (691) 62,8 (2 016)
Net profit from property
operations 18 787 16 859 11,4 35 440
Administration expenses (2 767) (2 607) 6,1 (4 830)
Investment and other income 884 544 62,5 1 040
Share of associated profits 1 745 1 617 7,9 2 034
Operating profit before
capital items 18 649 16 413 13,6 33 684
Impairment provision associate
company write back – – – 763
Capital items
Fair value adjustments 3 592 6 601 (45,6) 32 269
Gross change in fair value
investment properties 4 800 3 785 26,8 30 850
Straight-line rental income
adjustment (1 208) 2 816 (142,9) 1 419
Net profit before taxation 22 241 23 014 (3,4) 66 716
Taxation (6 001) (6 181) (2,9) (16 615)
Net profit 16 240 16 833 (3,5) 50 101
Other comprehensive income
Total comprehensive income
and net profit attributable to:
– Owners of the parent 16 240 16 833 (3,5) 50 101
– Non-controlling interest – – – –
16 240 16 833 (3,5) 50 101
Earnings and diluted earnings
per share (cents) 56,4 58,5 (3,6) 174,0
Unaudited consolidated statement of Cash flows
For the six months ended 31 December 2013
Unaudited Unaudited Audited
31 Dec 31 Dec 30 Jun
2013 2012 2013
R'000 R'000 R'000
CASH FLOW GENERATED FROM
OPERATING ACTIVITIES 5 483 10 258 17 770
Net cash generated from
operations 14 549 21 049 37 228
Investment and other income 884 544 1 054
Taxation paid (4 768) (6 153) (10 146)
Dividends paid (5 182) (5 182) (10 366)
CASH FLOW UTILITISED IN
INVESTING ACTIVITIES 4 302 (76) (280)
Improvements to investment
properties (12) (76) (273)
Proceeds on sale of associate
company 5 396 – –
Acquisition of furniture
fittings and computer equipment – – (7)
Acquisition of associates (1 082) – –
NET INCREASE IN CASH AND
CASH EQUIVALENTS 9 785 10 182 17 490
Cash and cash equivalents at
the beginning of the period 31 785 14 295 14 295
Cash and cash equivalents at
the end of the period 41 570 24 477 31 785
Unaudited consolidated statement of changes in equity
For the six months ended 31 December 2013
Accu-
Stated mulated
capital profits Total
R’000 R’000 R’000
At 30 June 2012 4 146 287 493 291 639
Total comprehensive income
profit – 16 833 16 833
Dividend paid – (5 182) (5 182)
At 31 December 2012 4 146 299 144 303 290
At 30 June 2013 4 146 327 228 331 374
Total comprehensive income
profit – 16 240 16 240
Dividend paid – (5 182) (5 182)
Balance at 31 December 2013 4 146 338 286 342 432
Comments
Basis of preparation
The unaudited interim financial statements for the six months ended
31 December 2013 and comparative information have been prepared
in accordance with and containing the information required by IAS34
Interim Financial Reporting as well as the SAICA Financial Reporting
Guides as issued by the Accounting Practices Board; the Financial
Reporting Pronouncements as issued by the Financial Reporting
Standards Council; 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 2013.
These interim results have not been audited or reviewed by the
company’s auditors.
These statements have been prepared under the supervision of
James E Smith B.Sc., BAcc, CIEA, the financial director of the company.
The directors take full responsibility for the preparation of these
interim financial statements.
These interim financial statements are available for inspection at
Putprop’s registered office.
Financial results
The directors report that property revenue for the six months ended
31 December 2013 prior to any straight-line income adjustments
decreased by 8,2% to R18,7 million compared to R20,3 million for the
six months ended 31 December 2012 (“the comparable period”). This
decline in contractual rentals arose from a reduction of 11,1% of the
head lease re-negotiated with our major tenant, Larimar Proprietary
Limited ("Larimar"), effective from 1 January 2013. The group’s gross property
rental, inclusive of straight-line rental accruals however, has increased by
13,5% over the comparable period, due to the smoothing effect of the straight-line
rental asset, of the group’s major tenant, Larimar, as a result of the new
lease agreement signed.
Property expenses increased by 62,8%, from R691 000 to R1,125 million.
This increase was a result of the implementation of our 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 6,1%
over the comparable period. Investment and other income increased
by 62,5% due to high cash reserves. The group’s contribution
from its investments in associated companies increased from
R1,6 million in December 2012 to R1,7 million as at 31 December
2013, an increase of 7,9%. Summit Place, did not make a contribution
to reported profits for this period. The development however,
continues to be on schedule. Contributions are expected within the
next 12 months.
During this reporting period, the retail shopping centre held by
Breaking Waves Proprietary Limited, in which the group held a 22,8%
holding was disposed of. A small profit was realised.
Trade and other receivables decreased marginally from December 2012.
All collection periods are within the group’s stated parameters. Cash
reserves increased during the period from 31 December 2012 as no material acquisitions were made in this reporting period.
The board of directors has declared an interim dividend for the six
months ended 31 December 2013 of 18 cents per ordinary share
(December 2012: 18,0 cents per ordinary share). This reflects a
dividend cover of 2,4 times which continues to be more favourable
than the group’s 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 Audited
31 Dec 31 Dec 30 Jun
2013 2012 % 2013
R'000 R'000 Change R'000
Reconciliation of headline
earnings
Net profit for the period 16 240 16 833 (3,5) 50 101
Adjusted for:
Fair value adjustment of
investment properties (4 800) (3 785) (26,8) (30 850)
Taxation effect of fair
value adjustments 893 704 26,8 5 738
Headline earnings 12 333 13 752 (10,3) 24 989
Shares in issue
(weighted average number)
(millions) 28 793 28 793 – 28 793
Dividends paid per share
(cents) 18,0 18,0 – 36,0
Headline earnings per share
(cents) 42,8 47,8 (10,5) 86,8
RATIOS
Net asset value per share
(cents) 1 189,3 1 053,3 12,9 1 151,0
Property portfolio
At 31 December 2013 the portfolio comprised 15 properties
(2012: 15) with a gross lettable area of 74 993m2.
The sectoral spread by gross rentals comprised 88% industrial, 10,6%
retail and 1,4% commercial. Vacancies decreased during the period to
less than 1% (2012: 0,4%) 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,
28% of the portfolio expires during the next 12 months, 63% in 2015
and 9% from 2017 onwards.
Segmental analysis
The table below summarises by segment the performance and position for the six
months ended 31 December 2013. 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
R'000 R'000 R'000 R'000 R'000
GROUP INCOME FOR THE SIX MONTHS
ENDED 31 DECEMBER 2013
Property revenue 16 317 2 159 228 – 18 704
Straight-line rental income accrual 1 085 122 1 – 1 208
Property expenses (1 077) (21) (27) – (1 125)
Net profit from property operations 16 325 2 260 202 – 18 787
GROUP FINANCIAL POSITION AT
31 DECEMBER 2013
Non-current assets
Investment properties 235 736 40 396 4 327 – 280 459
Other non-current assets 4 728 22 501 26 233 54 53 516
Current assets
Straight-line rental income asset 311 75 61 – 447
Trade and other receivables 1 395 – – 356 1 751
Cash and cash equivalents – – – 41 570 41 570
Non-current liabilities – – – 28 894 28 894
Current liabilities
Taxation payable – – – 1 499 1 499
Trade and other payables 1 157 – – 3 761 4 918
GROUP INCOME FOR THE SIX
MONTHS ENDED 31 DECEMBER 2012
Property revenue 18 135 2 012 219 – 20 366
Straight-line 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
Non-current assets
Investment properties 211 948 34 575 4 466 – 250 989
Other non-current assets 711 24 299 25 854 93 50 957
Current assets
Straight-line 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
Non-current liabilities – – – 22 089 22 089
Current liabilities
Taxation payable – – – 632 632
Trade and other payables 955 – – 3 478 4 433
Acquisitions, expansions and refurbishments
During the period under review no material acquisitions were made. Although
the group actively investigated many possible opportunities, no
properties met the group’s 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 group’s 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 2014. In addition, the
property portfolio is valued by the directors on a six monthly basis.
The directors have valued the group’s investment portfolio at
31 December 2013 at R286.2 million, an increase of R4,8 million or
1,7% on the external valuation at 30 June 2013. This valuation was
based on a review of current market sales and purchase transactions
in the property’s 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
Larimar tenanted properties, within the industrial segment, have
been conservatively evaluated, due to the specialised nature of the
properties and the reduction of rental income in terms of the new
leases effective from January 2013.
Borrowings and capital commitments
The company has no significant borrowings as at 31 December 2013
nor has it any capital commitments at that date.
Directorate
Mr Johann van Zyl was appointed to the board of directors as an
independent, non-executive director, effective from 22 October 2013.
There were no other changes in the composition of the board of
directors during this reporting period.
Company secretary
Acorim Proprietary Limited was appointed as Company Secretary
effective 15 August 2013, replacing Mr James Smith.
Subsequent events
There have been no significant reportable subsequent events between the
period 31 December 2013 and the release of this report, 17 March 2014.
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.
Ordinary Interim Dividend number 49
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 2013 of 18 cents per
ordinary share (December 2012:18 cents per ordinary share) reflecting a dividend
cover of 2,4 times. The dividend is payable to shareholders recorded in the books
of the company at close of business on Friday, 11 April 2014.
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. The issued share capital of Putprop is 28 792 961
(2012: 28 792 961) shares. The income tax reference number is 9100097717.
This dividend is payable from income reserves.
The salient dates relating to the dividend are as follows:
Last date to trade shares cum dividend Friday, 4 April 2014
Shares trade ex dividend Monday, 7 April 2014
Record date Friday, 11 April 2014
Payment date Monday, 14 April 2014
Share certificates may not be dematerialised or rematerialised during
the period Monday, 7 April 2014 to Friday, 11 April 2014 both days
inclusive.
On behalf of the board
17 March 2014
A B Adrian B C Carleo
Chairman Chief Executive Officer
Directorate
A B Adrian*^ (Chairman),
B C Carleo (Chief Executive Officer),
J E Smith (Financial) (British),
A L Carleo-Novello,
P Senatore*^, P Nucci*^, J van Zyl*^
*Independent ^Non-executive
Transfer Secretaries
Computershare Investor Services
Proprietary Limited
70 Marshall Street, Johannesburg
P O Box 61051,
Marshalltown, 2107
Auditors
Mazars
Sponsor
Merchantec Capital
Company secretary
Acorim Proprietary Limited
Registered Office
91 Protea Road,
Chislehurston,
Sandton, 2196
Date: 17/03/2014 11:53:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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