To view the PDF file, sign up for a MySharenet subscription.

PUTPROP LIMITED - Unaudited Condensed Interim Financial Results for the six months ended 31 December 2014

Release Date: 03/03/2015 11:22
Code(s): PPR     PDF:  
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'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Share This Story