Wrap Text
Unaudited Condensed Interim Financial Results
for the six months ended 31 December 2014
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 Condensed Interim Financial Results for the six months ended 31 December 2014
Financial Highlights
R27.01 million Revenue
(net of straight line accrual)
December 2013 R24.4 million (10.7% growth)
R19.6 million net property income
December 2013 R18.8 million (4.2% growth)
R342.6 million Gross Portfolio
December 2013 R286.2 million (19.8% growth)
11.0 cents Distribution
702 cents traded share price
December 2013 635 cents (10.6% growth)
1 407.7 cents net asset value per share
December 2013 1189.3 cents (18.4% growth)
Non-financial highlights
4.7% Vacancies
100% Tenant retention
81% Listing / Large tenant base
R4 430 Portfolio market value per M2
Summary of financial performance
Unaudited Unaudited Audited
Six months Six months Year
31 Dec 31 Dec 30 June
2014 2013 2014
Profit attributable to
equity holders (Rands) 17 991 16 240 71 510
Net asset value per share
(cents) 1 407.7 1 189.3 1 363.0
Distribution per share
(cents) 11 18 36
Headline earnings per share
(cents) 43.1 42.8 86.2
Commentary
Introduction
Putprop is a property investment fund, listed on the Main Board of
the JSE Limited under the real estate sector. The company offers
investors an opportunity to participate in an industrial sector
dominated, JSE listed property fund.
The portfolio currently comprises 16 strategically located
properties, located primarily in the Gauteng geographic area. The
total Gross Lettable Area (‘GLA’) of the invested properties is 77 332 m2
with a value of R342.6 million.
The board of directors (‘Board’) is pleased to announce the
interim results for the period ended 31 December 2014. These
results reflect a 10.7% increase over the previous period in
respect of property rental income. Property expenses continue to
be an area of focused management attention whilst corporate
expense increases remained within the parameters set by
management. The underlying portfolio continues to perform well.
We continue with our refurbishment and maintenance programs, in
order to enhance our earnings going forward.
However, the stagnant general economy has placed cash flow
pressures on several of our tenants, resulting in a slight
deterioration in collections within our contractual time frames.
Strategy-wise the company has embarked on an aggressive policy to
significantly reduce the dependence on its major tenant, Larimar
Limited, with a proposed rights offer in the first quarter of
2015. Proceeds from this capital exercise, will be utilised to
acquire properties with national, blue chip tenants with strong
contractual rentals.
As at 31 December 2014 the property portfolio reported a vacancy
level of 4.7%
Vacant Variant
Total 31 Dec 2014 31 Dec 2014
GLA (M2) % %
Office 0 0 0
Retail 0 0 0
Industrial 3 640 4.7 1.0
Total 3 640 4.7 1.0
Lease Expiry Profile – Gross Lettable Area
Lettable
area
Year % Cumulative (m2)
Monthly 5.3 15.3 4 125
Vacancies 4.7 10.0 3 640
2015 0.2 10.3 8 233
2016 78.2 88.5 49 985
2017 2.1 90.6 12 196
2018 4.90 95.5 6 918
2019 and Beyond 4.5 100 –
Total 100 100 77 332
Basis of accounting
The condensed unaudited interim financial results for the six
months ended 31 December 2014 and comparative information have
been prepared in accordance with and containing information
required by IAS34 - Interim Financial Reporting and the
information required by the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee; 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 in terms of International Financial
Reporting Standards (‘IFRS’) and are consistent with those applied
in the annual financial statements for the year ended 30 June
2014.
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 2014 prior to any straight-line income
adjustments increased by 10.7% to R27.01 million compared to R24.4
million for the 6 months ended 31 December 2013 (“the comparable
period”).
From this reporting period all tenant operating recoveries are
included in rental revenue. Previously tenant recoveries were
offset against operating costs incurred under operating expenses.
Rental revenues for December 2013 have been adjusted for
comparative purposes.
The group’s gross property rental, inclusive of straight-line
rental accruals however, has decreased over the comparable period,
due to the reversal of straight-line rental accruals previously
taken to profits in previous reporting periods. This reversal
effect is normal as contractual rental agreements approach
termination.
Property expenses increased by 8.9% over the comparable period.
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,
barring any unplanned maintenance issues. Administration expenses
increased by 12.7% over the comparable period. Investment income
decreased due to lower cash reserves. An investment of R17.4
million was made in a new development in Secunda, the Secunda
Value Centre, for a 51% holding. Anchor tenants are Massmart
(Builders Warehouse) and Burger King. Occupation is expected in
the second quarter of 2015.
The group continued to receive contributions from its investments
in associated companies.
Summit Place is on schedule.
Phase 1 is fully tenanted and occupied. Construction has commenced
on Phase 2. The group advanced additional funds of R7.8 million in
this review period and expects there to be an additional call on
funding going forward.
Trade and other receivables increased from December 2013. Our
major tenant, Larimar Limited, has arranged a payment plan to
bring their account in line with our contractual collection
parameters of 7 days. This is expected to last into the first
quarter of 2015.
Segmental analysis
The table within this report summarises by segment the performance
and position for the six months ended 31 December 2014. 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.
Acquisitions, expansions and refurbishments
During the period under review Putprop’s acquisition in Bank City,
Potchefstroom was effected. Anchor tenant in this commercial
office block is Standard Bank.
Although the group actively investigated many possible
opportunities, no other properties met the group’s investment
guidelines and criteria.
As noted above, a 51% investment in a new development in Secunda
was also finalised. No major capital projects are currently
underway. Refurbishments of the older properties will, as
mentioned, continue under a planned maintenance programme during
the second half of the year.
Valuation of property portfolio
It is in the group’s policy to value the entire investment
property portfolio on an annual basis by an independent external
valuer. The next independent external valuation will be as at 30
June 2015. 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 30 December 2014 at R342.6
million, an increase of R5.75 million or 1.8% on the external
valuation at 30 June 2014. This valuation was based on a review of
current market sales and purchase transactions in the property’s
location as well as reasonable judgments and estimates made by 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 specifically evaluated, due to the specialised nature of the
properties.
Borrowings and capital commitments
The company has no significant borrowings as at 31 December 2014
nor has it any capital commitments at that date.
Changes to the board of directors
Mr Paul Nucci resigned from the board of directors as an
independent, non-executive director, effective from 31 December
2014, due to reaching the compulsory retirement age of 70 years
for non-executives.
Subsequent to the close of this reporting period of 31 December
2014, Mr Paolo Senatore has resigned from the Board effective 2
March 2015 and Mr Andrew Adrian retired as non-executive Chairman
of the Board, a position he has held for over 10 years, with
effect from 29 January 2015.
We thank both Mr Senatore and Mr Adrian for their valuable
experience, considerable contributions and guidance over the past
years. Shareholders are advised that Mr Johan Van Zyl has been
appointed as acting Chairman until a full time replacement is
appointed.
In addition Richard Tiefenthaler, Mark Gemmill, Nonku Ntshona and
Kura Chihota have been appointed as independent non-executive
directors.
Subsequent events
The changes to the directorate of the group are detailed elsewhere
in this report.
On 6 February 2015, it was announced on SENS that Putprop intends
to raise R100 039 703 from its shareholders by way of partially
underwritten renounceable rights offer, in terms of which Putprop
will offer a total of 15 879 318 rights offer shares to
shareholders.
In terms of the rights offer, Putprop shareholders recorded in the
Register at the close of trade on Friday, 20 February 2015 will be
entitled to subscribe for the rights offer shares in the ratio of
55.15 rights offer shares for every 100 shares held, at a
subscription price of 630 cents per rights offer share.
The purpose of the rights offer is to provide Putprop with
additional capital in the amount of R100 039 703 so as to refocus
Putprop’s portfolio, with the aim of holding fewer, larger
properties with a greater predictability in earnings as well as to
facilitate a reduction in the company’s risk profile by
eliminating an excessive dependence of rental income from one
major tenant.
All funds raised will be utilised to purchase commercial or
industrial properties with medium to long term contractual rentals
at yields that fall within the parameters set by the company’s
investment committee. Putprop is currently considering a shortlist
of properties with blue chip, national tenants.
There have been no other significant reportable subsequent events
between 31 December 2014 and the release of this report.
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 still under consideration.
Payment of interim distribution- ordinary interim dividend number
51
Notice is hereby given that the Board has declared an interim
gross cash dividend (“the dividend”) for the six months ended 31
December 2014 of 11 cents per ordinary share (December 2013: 18
cents per ordinary share) reflecting a dividend cover of 2.4
times.
Due to the increase in the issued number of ordinary shares in
issue resulting from the rights offer, the dividend per ordinary
share is lower than that of the previous corresponding period
despite the rand value of the total dividend paid being
maintained. Shareholders who follow their rights in terms of the
rights offer will receive a dividend which is comparable to that
to that of the previous corresponding period.
The dividend is payable to shareholders recorded in the register
of the company at close of business on Friday 10 April 2015.
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 11.00 cents
per share for shareholders exempt from paying DWT whilst the net
local dividend payable is 9.35 cents per share for shareholders
liable to pay DWT. The issued share capital of Putprop is
44 672 279 (2013: 28 792 961) shares.
Putprop’s 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 share cum dividend Wednesday, 1 April 2015
Shares trade ex dividend Thursday, 2 April 2015
Record Date Friday, 10 April 2015
Payment date Monday, 13 April 2015
Share certificates may not be dematerialised or rematerialised
between Thursday, 2 April 2015 and Friday, 10 April 2015, both
days inclusive.
On behalf of the Board
BC Carleo JE Smith
Chief Executive Officer Chief Financial Officer
2 March 2015
Consolidated statement of financial position
Unaudited Audited Unaudited
31 Dec 30 Jun 31 Dec
2014 2014 2013
R’000 R’000 R’000
ASSETS
Non-current assets
Net investment property 336 829 309 564 280 459
Gross investment property 342 601 315 264 286 208
Straight-line rental income
adjustment (5 772) (5 700) (5 749)
Other non-current assets
Straight-line rental income asset 4 315 4 243 5 302
Furniture, fittings, computer
equipment
and motor vehicles 48 64 54
Investment in associates and
subsidiaries 92 171 66 068 48 160
433 363 379 939 333 975
Current assets
Straight-line rental income asset 1 457 1 457 447
Trade and other receivables 5 521 8 736 1 751
Cash and cash equivalents 8 129 45 032 41 570
15 107 55 225 43 768
Total assets 448 470 435 164 377 743
Equity and liabilities
Capital and reserves
Share capital 4 146 4 146 4 146
Accumulated profit 401 182 388 373 338 286
405 328 392 519 342 432
Non-current liabilities
Deferred taxation 35 374 34 279 28 894
35 374 34 279 28 894
Current liabilities
Trade and other payables 5 912 6 804 4 918
Taxation payable 1 856 1 562 1 499
7 768 8 366 6 417
Total equity and liabilities 448 470 435 164 377 743
Consolidated statement of comprehensive income
Unaudited Unaudited
6 months Audited 6 months
ended year ended ended
Dec-14 Jun-14 Dec-13
R’000 R’000 R’000
NET RENTAL AND RELATED
REVENUE 19 602 38 388 18 787
Contractual rental &
recoveries 27 010 50 510 24 444
Straight-line rental
adjustment 71 1 158 1 208
Rental revenue 27 081 51 668 25 652
Property Operating expenses (7 479) (13 280) (6 865)
Income from Investments 434 2 306 1 166
Administrative expenses (3 121) (5 300) (2 767)
OPERATING PROFIT 16 915 35 394 17 186
FAIR VALUE GAIN ON INVESTMENT
PROPERTIES 5 679 32 697 3 592
Fair value Gain Investment
properties 5 750 33 855 4 800
Adjustment on straight-line
of rental revenue (71) (1 158) (1 208)
Distributable income from
associates 1 114 19 410 1 463
PROFIT BEFORE TAX EXPENSE 23 708 87 501 22 241
Income Tax (5 717) (15 991) (6 001)
PROFIT FOR THE PERIOD
ATTRIBUTABLE TO EQUITY
HOLDERS 17 991 71 510 16 240
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD 17 991 71 510 16 240
Consolidated statement of cash flow
Unaudited Audited Unaudited
31 Dec 30 Jun 31 Dec
2014 2014 2013
R’000 R’000 R’000
CASH FLOW GENERATED FROM
OPERATING ACTIVITIES 9 869 8 973 5 483
Net cash generated from
operation 18 748 26 585 14 549
Investment and other income 631 2 063 884
Taxation paid (4 328) (9 310) (4 768)
Dividends paid (5 182) (10 365) (5 182)
CASH FLOW UTILISED IN
INVESTING ACTIVITIES (46 772) 4 274 4 302
Improvements to investment
properties - (12) (12)
Acquisition of Investment
properties (21 587) - -
Proceeds on sale of associate
company - 5 393 5 396
Acquisition of furniture,
fittings
and computer equipment - (25) -
Acquisition of interest in
investment property (17 446) - -
Acquisition of/Loans to
associates (7 739) (1 082) (1 082)
NET (DECREASE)/INCREASE IN
CASH
AND CASH EQUIVALENTS (36 903) 13 247 9 785
Cash and cash equivalents
at the beginning of the
period 45 032 31 785 31 785
Cash and cash equivalents
at the end of the period 8 129 45 032 41 570
Reconciliation of group net profit to headline earnings
Unaudited Audited Unaudited
6 months year 6 months
ended ended ended
Dec-14 Jun-14 Dec-13
R’000 R’000 R’000
Earnings attributable to
equity holders 17 991 71 510 16 240
Adjusted for:
Net change in fair value of
investment property (5 750) (33 855) (4 800)
Tax effects of fair value
adjustments property 1 070 6 297 893
Equity accounted earnings of
associates (1 114) (23 124) -
Tax effect of equity
accounting 207 4 301 -
Profit on disposal associate - (282) -
Headline earnings and diluted
earnings 12 404 24 847 12 333
Headline earnings per share
(cents) 43.1 86.2 42.8
Earnings and headline earnings per share are calculated on a weighted
average number of shares in issue of 28 792 961 (2013: 28 792 961).
There is no dilution.
Consolidated statement of changes in equity
Stated Accumulated
capital profits Total
R’000 R’000 R’000
At 30 Jun 2013 4 146 327 228 331 374
Total comprehensive income 16 240 16 240
Dividend paid (5 182) (5 182)
at 31 December 2013 4 146 338 286 342 432
At 30 June 2014 4 146 388 373 392 519
Total comprehensive income 17 991 17 991
Dividend paid (5 182) (5 182)
Balance at 31 December 2014 4 146 401 182 405 328
Segmental analysis for the six months ended 31 December 2014
Industrial Retail Commercial Corporate Total
R’000 R’000 R’000 R’000 R’000
Extract from
the statement
of comprehensive
income
Property
revenue and
recoveries 22 595 2 673 1 743 - 27 011
Straight -line
rental income
accrual 31 49 (9) - 71
Property
expenses (6 006) (853) (621) - (7 480)
Segmental
Results 16 620 1 869 1 113 - 19 602
Extract from
the statement
of financial
position
Non-Current
assets
Investment
properties 267 080 43 481 26 268 - 336 829
Other non-
current assets 3 543 53 684 39 259 48 96 534
Current Assets
Straight-line
rental income
asset 1 165 204 88 - 1 457
Trade and other
receivables 5 010 133 - 378 5 521
Cash and cash
equivalents - - - 8 129 8 129
Non- Current
Liabilities - - - 35 374 35 374
Current
Liabilities
Taxation
payable - - - 1 856 1 856
Trade and other
payables 2 409 - - 3 503 5 912
for the six months
ended Industrial Retail Commercial Corporate Total
31 December 2013 R’000 R’000 R’000 R’000 R’000
Property
revenue and
recoveries 21 510 2 200 734 - 24 444
Straight-line
rental income
accrual 1 085 122 1 - 1 208
Property
expenses (6 384) (343) (138) - (6 865)
Segmental
Results 16 211 1 979 597 - 18 787
Extract from
the statement
of financial
position
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
Corporate information
Physical / Registered and Postal Address
Putprop House 91 Protea Road
Chislehurston, Sandton, 2196
Telephone: +27 11 883 8650
Facsimile: +27 11 301 4387
email: info@putprop.co.za
www.putprop.co.za
Company Secretary
Acorim Proprietary Limited
2nd Floor, North Block
Hyde Park Office Tower
Corner 6th Road and
Jan Smuts Avenue
Hyde Park 2196
Transfer Secretaries
Computershare Investor Services Proprietary Limited
70 Marshall Street
Johannesburg 2001
Directors
Bruno Carleo (Chief Executive Officer)
James Smith (Financial Director)
Anna Carleo-Novello
Paolo Senatore *^
Johann Van Zyl*^ (Acting Chairman)
Richard Tiefenthaler*^
Nonku Ntshona*^
Mark Gemmill*^
Kura Chihota*^
* Independent
^ Non-executive
Investor Relations
James Smith
91 Protea Road, Chislehurston
Sandton 2196
+27 11 883 8650
Sponsor
Merchantec Capital
2nd Floor, North Block
Hyde Park Office Tower
Corner 6th Road and
Jan Smuts Avenue
Hyde Park 2196
Date: 03/03/2015 11:22:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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