Wrap Text
Unaudited Condensed Interim Financial Results for the six months ended 31 December 2015
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 2015 and Dividend Declaration
Financial Highlights
• Gross property revenue up 10% to R29.8 million
• Net asset value of 1 308.3 cents per share
• Annual escalation on contractual rental income for new leases
maintained at 8% in difficult rental market
• Inclusion of Secunda Value Mart in Group’s financial reporting
• Market value per m2 of property portfolio up 28.4% to R5 835 per
m2
Non-financial highlights
Successful completion of Phase 2 of Secunda Value Mart
No Vacancies as at 31 December 2015
81% Listed / Large tenant base
Summary of financial performance
Unaudited Unaudited Audited
Six months Six months Year
31 Dec 31 Dec 30 June
2015 2014 2015
R’000 R’000 R’000
Profit attributable to
equity holders (R’000) 17 161 17 991 64 798
Net asset value per share
(cents) 1 308.3 1 407.7 1 219.0
Distribution per share
(cents) 10 11 26
Headline earnings per
share (cents) 34.1 43.1 85.1
Commentary
Overview
Putprop is a property investment company, listed on the Main Board
of the JSE Limited (‘JSE’) under the real estate sector. The
company offers investors an opportunity to participate in an
industrial sector dominated, JSE listed property company.
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 81
259m2 with a value of R474.2 million.
The board of directors (‘Board’ or ‘directors’) is pleased to
announce the interim results for the period ended 31 December
2015. These results reflect a 10.0% increase over the previous
period in respect of gross property rental revenue. Property
expenses were substantially higher due to maintenance spend on
certain of our older properties. This was necessary to preserve
the asset value and will continue to be an area of focused
management attention. Corporate expense increases remained within
the parameters set by management. Profit attributable to equity
holders decreased marginally by 4.6% over December 2014. The
underlying portfolio continues to perform well.
During this period the Group successfully concluded the sale of
its Selby property to the City of Johannesburg for a consideration
of R65 million. Transfer is expected to take place in February
2016. This property was one of those to be vacated in December
2015.
As detailed elsewhere in this report the Group’s major tenant,
Larimar Limited (‘Larimar’), which accounts for 81% of the
contractual rental income received, did not renew leases on six of
the properties they currently tenant. The loss of this tenant will
have a impact on the Group’s 2016 June results.
The Group has concluded lease agreements on the remaining
properties occupied by Larimar with the Putcoton property having a
60 month term and the remaining properties a 12 month term, with
an option to renew for a further 12 months. Our Montana property
was successfully tenanted in December for a 36 month term.
Management will focus its attention aggressively to find suitable
long term contractual rentals for those properties vacated with
acceptable yields.
We will continue with our refurbishment and maintenance programs
in order to protect the value of our property assets and enhance
our earnings going forward.
As at 31 December 2015 the property portfolio reflected a nil
vacancy level. However, as announced to shareholders in the
Group’s June 2015 published results, our major tenant, Larimar,
has not renewed leases on six of the properties currently
occupied. On one of these, the Selby depot, the Group has
concluded a transaction with the City of Johannesburg for the sale
of this property for R65 million (refer to SENS announcement
released on 14 September 2015). Transfer is expected by end
February 2016. Of the remaining five properties, the Mamelodi
depot has been leased to Autopax on a three month contract on
favourable terms with an option to renew on a rolling three month
basis. Larimar has indicated they wish to continue occupying the
properties they have given notice on for an additional three
months, from January to March 2016. Management, as stated above,
is actively focused on obtaining tenants for these properties once
Larimar vacates. As a result the vacancy level will increase to
18 053m2 or 23.5 % from 3 640 m2 or 4.7 % in December 2014.
Vacant Vacant/
Total 31 Dec Monthly Vacant
GLA 2015 rentals 31 Dec
(m2) 1 Jan 2016 2014
% % GLA (m2) %
Office – – –
Retail – – –
Industrial – 23.5 18 053 4.7
Total – – 23.5 18 053 4.7
Lease Expiry Profile – GLA
Year % Cumulative GLA(m2)
Monthly Rentals – – –
Vacancies – – –
2016 66.6 66.6 54 110
2017 14.6 81.2 11 867
2018 4.7 86.6 3 827
2019 onwards 14.1 100 11 455
Total 100 100 81 259
Basis of accounting
The condensed unaudited interim financial results for the six
months ended 31 December 2015 and comparative information have
been prepared in accordance with and containing information
required by IAS 34 - Interim Financial Reporting and the
information required by the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee; 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
2015.
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 director’s report that gross property revenue for the six
months ended 31 December 2015, including straight-line income
adjustments, increased by 10% to R29.8 million compared to R27.1
million for the six months ended 31 December 2014 (“the comparable
period”).
This reporting period is the first where the operating results for
the Group’s subsidiary, Secunda Value Mart has been included in
the published results.
Property expenses increased by 23.5% over the comparable period.
This was due to an increased spend on our preventative maintenance
policy for several of our older properties. This program had been
scheduled for completion by June 2015 but was delayed. Maintenance
and refurbishment costs are expected to continue to be high in the
second half of the year, as there are substantial upgrades needed
to several of our older properties on a health and safety level as
well as roofing renovation projects. Administration expenses
increased by 2.9% over the comparable period due to strict cost
saving measures implemented. The period to June 2016 is likely to
see an increase over this reporting period for corporate expenses.
Investment income increased due to high cash reserves resulting
from the rights issue undertaken in 2015.
The Group reflected a small loss in respect of contributions
received from its investments in associated companies. This arose
due to higher than expected costs in its investment in Summit
Place, phase 2. Tenanting for this phase was completed towards the
end of this reporting period and a positive contribution is
expected for the next reporting period.
Profit for the year after taxation deceased by 5.3% to R17.0
million (2014: 17.9 million). This was as a result of the increase
in property expenses noted above as well as a conservative
approach to the directors valuation of the Group’s property
portfolio as at 31 December 2015 - an increase of 2.5 million
(2014: R5.8 million increase).
Trade and other receivables increased marginally from December
2014. Our major tenant, Larimar, is no longer in arrears as to
contractual rentals. There has been a slight deterioration in
collections from certain of our tenant base, due to the stagnant
general economy placing cash flow pressures on several tenants.
Management is focused on remedial actions where necessary. The
Group’s subsidiary has added to the receivables balance
outstanding, but payments are made in terms of the Group’s
collection policy.
Segmental analysis
The table within this report summarises by segment, the
performance and position for the six months ended 31 December
2015. 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
Although the Group actively investigated many possible
opportunities, no properties met the Group’s investment guidelines
and criteria.
A refurbishment and workshop extension was approved for our
Putcoton property based on Larimar renewing their lease for an
additional five years. No other capital projects are planned.
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 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
2016. 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 2015 at R 474.2
million, an increase of R 34.8 million or 7.9% on the external
valuation at 30 June 2015. Secunda Value Mart is mainly
responsible for this increase. 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 Industrial property portfolio as at this
reporting date with reference being made to the Larimar tenanted
properties, within the industrial segment.
Borrowings and capital commitments
The company has borrowings as at 31 December 2015 of R68.9 million
(December 2014: R Nil). There are no capital commitments as at the
reporting date. The reflected borrowings relate entirely to the
acquisition of Secunda Value Centre.
Changes to the Board
Mr. Kurawone Chihota, Ms. Nonkululeko Ntshona, and Mr. Mark
Gemmill resigned from the Board as independent, non-executive
directors, and Mrs. Anna Novello as executive director effective
from 3 November 2015. Mr. Paul Nucci and Mr. Daniele Torricelli
were appointed as independent non-executive directors with effect
from 3 December 2015. In addition they were also appointed members
of the Audit and Risk Committee.
Subsequent to the close of this reporting period of 31 December
2015, Mr. Johann van Zyl resigned as non-executive Acting Chairman
of the Board, with effect from 29 January 2016 and Mr. Hayden
Hartley was appointed as an independent non-executive director and
member of the Audit and Risk Committee with effect from 17
February 2016.
We thank Messrs. Van Zyl, Chihota and Gemmill and Ms. Ntshona for
their valuable experience, considerable contributions and guidance
over the past period. Shareholders are advised that Mr. Daniele
Torricelli has been appointed Chairman of the Board effective from
3 February 2016.
Subsequent events
There have been no other significant reportable subsequent events
between 31 December 2015 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.
Proposed Delisting and Scheme of Arrangement
Shareholders were advised on 8 September 2015 on SENS that the
Board was considering delisting the Group from the Johannesburg
Stock Exchange. The Delisting would be implemented through a
scheme of arrangement that would involve the repurchase of all
shares (and subsequent cancellation of these shares) not held by
Carleo Enterprises Proprietary Limited, the Group’s largest
shareholder. Further cautionary announcements in this regard were
issued on 4 November 2015 and 29 January 2016, confirming that
this process is still ongoing. Shareholders are advised that the
process is close to finalisation and an offer to repurchase those
shares affected will be forthcoming in the near future.
Payment of interim distribution - ordinary interim dividend number
53
Notice is hereby given that the Board has declared an interim
gross cash dividend (“the dividend”) for the six months ended 31
December 2015 of 10 cents per ordinary share (December 2014: 11
cents per ordinary share).
The dividend is payable to shareholders recorded in the register
of the company at close of business on Friday, 1 April 2016.
The current local Dividend Withholding Tax (‘DWT’) rate is 15%.
The gross local dividend amount is 10.00 cents per share for
shareholders exempt from paying DWT whilst the net local dividend
payable is 8.50 cents per share for shareholders liable to pay
DWT. The issued share capital of Putprop is 44 672 279 (2014: 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, 23 March 2016
Shares trade ex-dividend Thursday, 24 March 2016
Record Date Friday, 1 April 2016
Payment date Monday, 4 April 2016
Share certificates may not be dematerialised or rematerialised
between Thursday, 24 March 2016 and Friday, 1 April 2016, both
days inclusive.
On behalf of the Board
BC Carleo JE Smith
Chief Executive Officer Chief Financial Officer
3 March 2016
Condensed statement of financial position
Unaudited Audited Unaudited
31 Dec 30 June 31 Dec
2015 2015 2014
R’000 R’000 R’000
ASSETS
Non-current assets
Net investment property 470 708 434 634 336 829
Gross investment property 474 210 439 419 342 601
Straight-line rental income
adjustment (3 502) (4 785) (5 772)
Other non-current assets
Straight-line rental
income asset 1 591 2 874 4 315
Furniture, fittings computer
equipment and motor vehicles 106 116 48
Investment in associates 126 679 114 473 92 171
Total non-current assets 599 084 552 097 433 363
Current assets 99 710 111 881 15 107
Straight-line rental income asset 1 911 1 911 1 457
Trade and other receivables 7 014 6 319 5 521
Cash and cash equivalents 90 785 103 651 8 129
Total assets 698 794 663 978 448 470
Equity and liabilities
Equity attributable to owners of
the parent 555 503 545 043 405 328
Stated capital 101 969 101 969 4 146
Accumulated profit 453 534 443 074 401 182
Non-controlling interest 29 070 26 780 –
Total equity 584 573 571 823 405 328
Non-current liabilities 102 405 73 682 35 374
Deferred taxation 36 448 36 914 35 374
Loan liabilities 65 957 36 768 –
Current liabilities 11 816 18 473 7 768
Trade and other payables 7 149 14 250 5 912
Loan Liabilities 2 985 – –
Taxation payable 1 682 1 682 1 856
Total equity and liabilities 698 794 663 978 448 470
Net asset value per ordinary 1 308.3 1 219.0 1 407.7
share (cents)
Number of shares in issue. 2015: 44 672 279 (2014: 28 792 961).
Condensed statement of comprehensive income
Unaudited Audited Unaudited
six months year six months
ended ended ended
Dec 2015 June 2015 Dec 2014
R’000 R’000 R’000
Contractual rental revenue -
investment properties 24 328 42 519 20 603
Operating cost recoveries 6 761 12 533 6 407
Straight-line rental income
accrual (1 285) (916) 71
Gross property revenue 29 804 54 136 27 081
Property expenses (9 233) (14 958) (7 479)
Net profit from property
operations 20 571 39 178 19 602
Corporate administration
expenses (3 213) (5 848) (3 121)
Investment and other income 2 256 2 629 434
Share of associates’ profits (117) 13 167 1 114
Operating profit before
finance costs 19 497 49 126 18 029
Finance costs (2 512) (889) –
Operating profit before
capital items 16 985 48 237 18 029
Profit on sale of associates – 800 –
and investments purchase
Gain on bargain – 10 918 –
Profit before fair value
adjustments 16 985 59 955 18 029
Fair value adjustments 3 785 17 391 5 679
Gross change in fair value
investment property 2 500 16 475 5 750
Straight-line rental
adjustment 1 285 916 (71)
Net profit before taxation 20 770 77 346 23 708
Taxation (3 731) (12 874) (5 717)
Profit for the year 17 039 64 472 17 991
Attributable to owners
of parent 17 161 64 798 17 991
Attributable to non-
controlling interest (122) (326) –
Other Comprehensive income – – –
Total comprehensive income for
the year 17 039 64 472 17 991
Attributable to owners
of parent 17 161 64 798 17 991
Attributable to non-
controlling interest (122) (326) -
Earnings and diluted earnings
per share (cents) 38.3 193.9 62.5
Headline earnings per share
(cents) 34.1 85.1 43.1
Earnings and headline earnings per share are calculated on a
weighted average number of shares in issue of 44 672 279 (2014:
28 792 961). There is no dilution.
Condensed statement of cash flow
Unaudited Audited Unaudited
31 Dec 30 June 31 Dec
2015 2015 2014
R’000 R’000 R’000
Cash flow generated from
operating activities 2 226 26 477 9 869
Net cash generated from
operations 10 868 44 064 18 748
Investment income 2 256 2 629 631
Taxation paid (4 197) (10 119) (4 328)
Dividends paid (6 701) (10 097) (5 182)
Cash flow utilised in
investing activities (44 625) (104 519) (46 722)
Additions and improvement to
investment property (32 289) (68 127) (21 587)
Acquisition of furniture,
fittings, computer equipment
and motor vehicles (12) (81) –
Cash on business combination – (6 773) –
Proceeds on sale investment
property – 5 700 –
Acquisition of interest in
investment property – – (17 446)
Acquisition of and loans to
associates (12 324) (35 238) (7 739)
Cash flow from
financing activities 29 533 136 661 –
Proceeds from issue of share
capital 97 823 –
Proceeds received on
borrowings 29 533 38 838 –
Net increase(decrease) in cash
and cash equivalents (12 866) 58 619 (36 903)
Cash and cash equivalents at
beginning of period 103 651 45 032 45 032
Cash and cash equivalents at
end of period 90 785 103 651 8 129
Condensed statement of changes in equity
Attributable to owners of
the parent
Accumu- Share Non-
Stated lated holders’ controlling
capital profit interest interest Total
R’000 R’000 R’000 R’000 R’000
GROUP
Balance at 1 July
2014 4 146 388 373 392 519 – 392 519
Total comprehensive
income for the year – 17 991 17 991 – 17 991
Dividends paid – (5 182) (5 182) – (5 182)
Balance at
31 Dec 2014 4 146 401 182 405 328 – 405 328
Balance at
1 July 2015 101 969 443 074 545 043 26 780 571 823
Total comprehensive
income(loss)for the
year – 17 039 17 039 – 17 039
Non-controlling
interest recognised
in respect of
subsidiary – – – 2 412 2 412
Share of
profit/(loss) to
non-controlling
interest – 122 122 (122) –
Dividends paid – (6 701) (6 701) – (6 701)
Balance at
31 Dec 2015 101 969 453 534 555 503 29 070 584 573
Reconciliation of group
net profit to headline earnings
Unaudited Audited Unaudited
six months year six months
ended ended ended
Dec-15 Jun-15 Dec-14
R’000 R’000 R’000
Earnings attributable to
equity holders 17 161 64 798 17 991
Adjusted for:
Net change in fair value of
investment property (2 500) (16 475) (5 750)
Bargain purchase – (10 918) –
Tax effects of fair value
adjustments property 465 3 064 1 070
Equity accounted earnings
of associates 117 (14 088) (1 114)
Tax effect of equity
accounting (22) 2 627 207
Profit on disposal of
investment property – (800) –
Capital gain on disposal of
investment property – 216 –
Headline earnings and
diluted earnings 15 221 28 424 12 404
Headline earnings per share
(cents) 34.1 85.1 43.1
Earnings and headline earnings per share are calculated on a
weighted average number of shares in issue of 44 672 279 (2014:
28 792 961). There is no dilution.
Segmental Analysis
for the six Industrial Retail Commercial Corporate Total
months
ended 31 Dec
2015 R’000 R’000 R’000 R’000 R’000
Extract from
the statement
of
comprehensive
income
Property
revenue and
recoveries 23 355 5 145 2 589 – 31 089
Straight -line
rental income
accrual (1 044) (241) – (1 285)
Property
expenses (7 251) (1 464) (518) – (9 233)
Segmental
Results 15 060 3 440 2 071 – 20 571
Extract from
the statement
of financial
position
Non-Current
assets
Net Investment
properties 282 422 166 997 21 289 – 470 708
Other non-
current assets 1 082 53 437 73 751 106 128 376
Current Assets
Straight-line
rental income
asset 1 619 204 88 – 1 911
Trade and
other
receivables 1 622 2 405 – 2 987 7 014
Cash and cash
equivalents – - – 90 785 90 785
Non- Current
Liabilities – 65 957 – 36 448 102 405
Current
Liabilities
Taxation
payable – - – 1 682 1 682
Trade and
other payables 1 888 1 709 – 3 673 7 270
for the six Industrial Retail Commercial Corporate Total
months ended
31 Dec 2014 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 - 27 010
Straight-line
rental income
accrual 31 49 (9) - 71
Property
expenses (6 006) (853) (621) - (7 479)
Segmental
Results 16 620 1 869 1 113 19 602
Extract from
the statement
of financial
position
Non-Current
assets
Net 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 11 651 204 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
Corporate information
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”)
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
(Chief Financial Officer)
Paul Nucci *^
Daniele Torricelli*^
(Chairman)
Hayden Hartley*^
* Independent
^ Non-executive
Investor Relations
James Smith
91 Protea Road,
Chislehurston
Sandton 2196
+27 11 883 8650
Sponsors
Merchantec Capital
2nd Floor, North Block
Hyde Park Office Tower
Corner 6th Road and
Jan Smuts Avenue
Hyde Park 2196
Date: 04/03/2016 07:05:00 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
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