Wrap Text
Reviewed interim results 2016
OCTODEC INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1956/002868/06)
Share code: OCT ISIN: ZAE000192258
("Octodec" or “the company”)
REIT status approved
Reviewed interim results 2016
Unlocking value in living, working and playing spaces
Octodec Investments Limited ("Octodec" or "the group" or "the company") is listed on the JSE Limited
("JSE") as a real estate investment trust ("REIT"), with a portfolio of 324 properties in Gauteng valued
at R11,8 billion as well as three equity-accounted investments, with its 50% interest in these investments
valued at R161,0 million.
Octodec invests in the residential, retail, shopping centre, industrial and office property sectors and all
of its properties are situated in Gauteng.
Octodec contracted with City Property Administration Proprietary Limited, one of South Africa's
leading property asset management companies, to perform its asset management, property management and
company secretarial functions.
The rental Octodec receives from the property portfolio, including the distributable income from its
equity-accounted investments, less operating costs, interest on debt and normal taxation, is distributed
to shareholders bi-annually. Octodec does not distribute capital profits.
Portfolio sectors: rental income (%)
Residential 30,2%
Retail: non-shopping centres 27,6%
Offices 19,5%
Retail: shopping centres 10,0%
Industrial 8,4%
Parking 4,3%
Measuring our performance
> Forecast distribution growth per share for the year to 31 August 2016 of approximately 6%
> 3,3% increase in net asset value per share ("NAV") to R28,60 for the six months to 29 February 2016
- increase in valuation of investment properties and interest rate swaps contribute to increase
> 86,6% of exposure to interest rate risk hedged
> Loan to investment value ("LTV") at 38%
> All-in weighted average cost of borrowings at 8.9%
> Like-for-like growth in rental income of 5% for the six- month period
> Distributions up by 1,7% to 98,4 cents per share for the six-month period compared to the
comparative six-month period
Geographical analysis of rental income %
Tshwane Central 32,2%
JHB Central 21,1%
JHB and surrounding areas 12,1%
Hatfield 7,1%
Tshwane Arcadia 5,6%
Silverton and surrounding area 4,3%
Waverley, Gezina, Moot 4,2%
Tshwane Other 13,4%
Review of results
Octodec, which is well-positioned to continue taking advantage of opportunities in the Tshwane and
Johannesburg CBDs, has delivered interim results in line with the board of directors expectations in
a tough business environment with muted economic growth. One of the group's primary objectives continues
to be the improvement of its existing properties in order to attract new tenants.
The successful upgrading of a number of our properties, together with a proactive approach to letting,
resulted in an increase in rental income.
The total distribution per share for the six-month period of 98,4 cents (2015: 96,8 cents) represents an
increase of 1,7% on that paid in the comparative six-month period. The anticipated phased take-up of
residential units at Frank's Place commencing June 2015, as well as an environment of rising interest
rates, negatively impacted distribution growth.
The increase in revenue of 5,7% (excluding amounts attributable to straight-line rental income accrual)
was mainly due to contractual escalations, improved letting and an increase in the recovery of utility
and assessment rate charges. The portfolio continued to perform in line with expectations. The like-for-like
growth in rental income was 5,0% from the following sectors:
Residential 5,1%
Shops 5,2%
Offices 4,8%
Shopping centres 3,1%
Industrial 4,2%
Parking 11,8%
TOTAL 5,0%
The ratio of net property expenses (property expenses less recoveries excluding administration costs) to
rental income (excluding amounts attributable to straight- line rental income accrual) for the group
decreased to 29,7% (31 August 2015: 30,4%). The improvement of the ratio reflects the continued focus on
cost control. Bad debt write-offs and provisions during the year were at 1,0% (31 August 2015: 0,8%) of
total tenant income. Arrears and doubtful debt provisions remain at acceptable levels as a result of tight
credit risk management and no significant deterioration is anticipated.
Investment property portfolio
Investing for growth
Developments
The group had three major projects under construction during the period under review. The total cost of
these projects is approximately R708,9 million, of which an amount of R278,6 million was spent by
29 February 2016.
These projects include:
> 1 on Mutual, a mixed-use property, which is adjacent to Church Square in the Tshwane central
business district ("CBD"). This project consists of 142 residential units, ground floor retail
premises and parking. The total cost of the project is R152,7 million and the expected completion
date is July 2016 at a fully let annual yield of 7,6%.
> The Manhattan, a 180-unit residential development in Sunninghill, Johannesburg is progressing well.
The total development cost of this 50%-held joint operation amounts to R80,9 million and completion is
expected by late 2016. The fully let initial annual yield is expected to be 9,5%.
> The redevelopment of Sharon's Place (previously named Centre Forum), which is adjacent to the new Tshwane
House municipal development in the Tshwane CBD, is a residential development consisting of 400 units, ground
floor retail and parking. The total cost of this project, the completion of which is expected to be in
April 2017, is R394,3 million at a fully let initial annual yield of 7,0%.
The group has several small projects under- way, in line with Octodec's strategy to upgrade and extract
value from its property portfolio. These projects will not only enhance the value of the portfolio, but
will also contribute to the upliftment of the Tshwane and Johannesburg CBDs.
The group's three major projects as well as the other smaller projects, will be funded out of existing
banking facilities totalling R716,4 million.
Acquisitions and disposals
Octodec acquired the Van Riebeeck Medical building in the Tshwane CBD during the period under review
for a total consideration of R29,0 million. The property will be converted into 195 residential units
at a cost of approximately R110 million. The fully let initial annual yield is expected to be 8,0%.
The group disposed of three non-core properties during the period under review for a total consideration
of R14,6 million.
Vacancies
Vacancies in the Octodec portfolio at 29 February 2016, including properties held for redevelopment,
amounted to 16,1% (31 August 2015: 15,0%) of gross lettable area. The core vacancies, which exclude
the gross lettable area relating to properties held for development and those currently being
redeveloped, amount to 10,1% (31 August 2015: 8,9%).
Total lettable Total Properties held Core
area m2 vacancies% for redevelopment% vacancies%
29 February 2016
Offices 481 377 35,9 (19,7) 16,2
Retail - shops 443 136 11,2 (1,0) 10,2
Retail - shopping centres 98 895 4,5 - 4,5
Industrial 305 257 12,0 - 12,0
Residential 367 121 2,9 (0,5) 2,4
Total 1 695 786 16,1 (6,0) 10,1
31 August 2015*
Offices 474 563 34,1 (18,4) 15,7
Retail - shops 440 066 9,6 (1,8) 7,8
Retail - shopping centres 98 830 1,4 - 1,4
Industrial 315 192 9,3 (0,6) 8,7
Residential 367 198 5,3 (1,8) 3,5
Total 1 695 849 15,0 (6,1) 8,9
*Some properties were remeasured and some reclassifications were made to the 31 August 2015 values to
ensure comparability to the current period.
Most properties in the Octodec portfolio remained fully let.
As expected, a number of properties under development, or those which were recently upgraded, had
vacancies. In recent years, certain properties, such as Centre Walk, Fedsure, Re-insurance and
Van Riebeeck Medical building, were acquired with high vacancy levels. These properties offer
significant redevelopment opportunities, the value of which will be realised over time.
As opportunities arise, the value of these vacancies is being realised. Centre Walk was recently
upgraded at a cost of R28,9 million and 9 365 m2 of office space was let to a government tenant.
The lease is effective from 1 March 2016 at a total monthly rental of R870 800.
Lease expiry profile
Octodec's portfolio features a mix of short- to long-term leases with the majority of short-term
leases providing for a monthly agreement at expiry which is typical of the residential market.
Gross lettable Monthly
area m2 % contractual rent R %
Residential 367 121 21,6 35 916 175 32,0
Monthly commercial 176 349 10,4 11 320 575 10,1
to 28 February 2017 286 644 16,9 18 616 836 16,6
to 28 February 2018 252 376 14,9 19 650 157 17,5
to 28 February 2019 133 040 7,9 10 404 301 9,3
to 29 February 2020 65 050 3,8 5 346 810 4,7
thereafter 141 356 8,4 11 052 418 9,8
Vacancies 273 850 16,1 - -
Total 1 695 786 100,0 112 307 272 100,0
Borrowings and working capital
Weighted average
interest rate
Amount R'million per annum %
Bank loans 3 917,1 8,9
DCM Corporate paper 658,8 7,4
Total borrowings 4 575,9 8,7
Cost of swaps - 0,2
Total borrowings 4 575,9 8,9
Interest rate Weighted average
swap expiry interest rate
for financial per annum
periods Amount above/below
ending: R'million JIBAR
August 2017 1 250 0,65
August 2018 1 050 0,15
August 2019 1 250 (0,24)
Total 3 550 0,24
The group's loan to value ratio ("LTV"), measured by dividing the value of interest- bearing borrowings
(net of cash) by the fair value of its investment portfolio at 29 February 2016, was 38,0%
(31 August 2015: 37,3%).
Octodec's exposure to interest rate risk in respect of 86,6% (31 August 2015: 94,2%) of borrowings at
29 February 2016 is hedged by entering into interest rate swap contracts. The hedges in place are for
a weighted average period of 2,1 years. The all-in average weighted interest rate of all borrowings is
8,9% per annum (28 February 2015: 8,7%). Details of borrowings are set out in the adjacent table.
Octodec participates in the Debt Capital Market ("DCM") through its subsidiary, Premium
Properties Limited. As at the date of this report the total issuance was at R658,8 million,
or 12,4% of the group's borrowings. Global Credit Rating's long- and short-term national scale ratings
of Premium were maintained at A(ZA) and A1(ZA) respectively.
Octodec had unutilised banking facilities amounting to R716,4 million at 29 February 2016.
Changes in fair value
It is the group's policy to perform directors' valuations of all the properties at the interim stage
and at year-end. The valuations are based on the income capitalisation method, which is consistent with
the basis used in prior years. The internal valuation of the property portfolio of R11,8 billion
represents an increase in the valuation amounting to R158,8 million or 1,4% for the six-month period
ended 29 February 2016.
The mark-to-market value of interest rate swap contracts, which protects the group against adverse
interest rate movements, increased by R51,2 million.
The increase in the valuation of investment properties and interest rate swaps contributed to the 3,3%
increase in the net asset value ("NAV") to R28,60 per share.
Prospects
While the current challenging trading conditions are expected to continue, and possibly deteriorate even
further, indications are that the dividend per share for the twelve-month period ending 31 August 2016
should increase by approximately 6% compared to the previous year.
This guidance is based on the following key assumptions:
> Forecast investment property income is based on contractual rental escalations and market related
renewals;
> Appropriate allowance for vacancies has been incorporated into the forecast; and
> No major corporate and tenant failures will occur.
This forecast has been neither reviewed nor reported on by the group's auditors.
Declaration of cash dividend with the option to elect to reinvest the cash dividend in return for
Octodec shares
The Board of Directors of Octodec declared an interim cash dividend of 98,4 cents per share, for
the six months ended 29 February 2016, out of the company's distributable income ("the cash dividend").
Shareholders will be entitled, in respect of all or part of their shareholdings, to elect to reinvest
the cash dividend in return for Octodec shares ("the dividend reinvestment alternative"). Those
shareholders who elect not to reinvest will receive the cash dividend of 98,4 cents per share.
The entitlement for shareholders to receive the dividend reinvestment alternative is subject to
the Board agreeing on the pricing and terms of the dividend reinvestment alternative.
The Board in its discretion may withdraw the dividend reinvestment alternative and such withdrawal
will be communicated to shareholders prior to the finalisation announcement to be published by 11:00
on Friday, 13 May 2016.
A circular providing further information in respect of the cash dividend and dividend reinvestment
alternative will be posted to shareholders on 3 May 2016.
Shareholders who have dematerialised their shares through a Central Securities Depository Participant
("CSDP") or broker should instruct their CSDP or broker with regard to their election in terms of the
custody agreement entered into between them and their CSDP or broker.
Salient dates and times
The salient dates and times for the cash dividend and dividend reinvestment alternative are as
set out below:
Salient dates and times 2016
Circular and form of election posted to shareholders Tuesday, 3 May
Announcement of dividend reinvestment alternative issue price and
finalisation information by Friday, 13 May
Last day to trade ("LDT") cum dividend Friday, 20 May
Shares trade ex-dividend Monday, 23 May
Listing of maximum possible number of dividend reinvestment alternative
shares commences on the JSE Wednesday, 25 May
Last day to elect to receive the dividend reinvestment alternative (no late
forms of election will be accepted) by 12:00 (SA time) Friday, 27 May
Record date for the election to receive shares in terms of the dividend
reinvestment alternative or to receive a cash dividend (record date) Friday, 27 May
Announcement of results of cash dividend and dividend reinvestment
alternative released on SENS Monday, 30 May
For shareholders not electing the dividend reinvestment alternative
Cash dividend cheques posted to certificated shareholders Monday, 30 May
Accounts credited for cash dividend by CSDP or broker to dematerialised
shareholders Monday, 30 May
Announcement of results of cash dividend and dividend reinvestment
alternative in the press Tuesday, 31 May
For shareholders electing the dividend reinvestment alternative
Share certificates posted to certificated shareholders Wednesday, 1 June
Accounts credited with shares by CSDP or broker to dematerialised
shareholders Wednesday, 1 June
Adjustment to shares listed on or about Friday, 3 June
Notes:
Shareholders electing the dividend reinvestment alternative are alerted to the fact that the new shares
will be listed on LDT + 3 and that these new shares can only be traded on LDT + 3, due to the fact that
settlement of the shares will be three days after the record date, which differs from the conventional
one day after record date settlement process.
Shares may not be dematerialised or rematerialised between Monday, 23 May 2016 and Friday, 27 May 2016,
both days inclusive.
The above dates and times are subject to change. Any changes will be announced on SENS.
Tax implications for non-resident shareholders
Dividends received by non-resident shareholders from a REIT will not be taxable as income and will be exempt
from income tax in terms of the exemption in section 10(1) (k)(i) of the Income Tax Act. With effect from
1 January 2014, any dividend received by a non-resident from a REIT is subject to dividend tax at 15%,
unless the rate is reduced in terms of any applicable agreement for the avoidance of double taxation
agreements ("DTA") between South Africa and the country of residence of the non-resident shareholders.
Assuming dividend tax will be withheld at a current rate of 15%, the net dividend amount due to
non-resident shareholders is 83,64 cents per share. A reduced dividend tax in terms of the applicable
DTA may only be relied on if the non-resident shareholder has submitted the following forms to his/ her
CSDP or broker, as the case may be, in respect of uncertificated shares, or the transfer secretaries,
in respect of certificated shares:
> A declaration that the dividend is subject to a reduced rate as a result of the application of the
DTA; and
> A written undertaking to inform the CSDP, broker or the transfer secretaries, as the case may be,
should the circumstances affecting the reduced rate change or the beneficial owner cease to be
the beneficial owner.
> Both in the form prescribed by the Commissioner for the South African Revenue Services ("SARS").
If applicable, non-resident shareholders are advised to contact the CSDP, broker or the transfer
secretaries, as the case may be, to arrange for the abovementioned documents to be submitted prior
to payment of the dividend, if such documents have not already been submitted.
Tax implications for South African resident shareholders
Dividends received by or accrued to South African tax residents must be included in the gross income
of such shareholders. They are not exempt from income tax in terms of the exclusion to the general
dividend exemption contained in section 10(1)(k)(i)(aa) of the Income Tax Act because they are
dividends distributed by a REIT. These dividends are, however, exempt from dividend withholding tax
(dividend tax) in the hands of South African resident shareholders, provided that the South African
resident shareholders have made submissions to the CSDP or broker, as the case may be, in respect of
uncertificated shares, or the transfer secretaries in respect of certified shares, a DTD (EX)
(Dividend Tax: declaration and undertaking to be made by the beneficial owner of a share) form to
prove their status as a South African resident and indicating the exemption upon which they are
relying.
If resident shareholders have not submitted the abovementioned documentation to confirm their status
as a South African resident, they are advised to contact their CSDP or broker, as the case maybe,
to arrange for the documents to be submitted prior to payment of the cash dividend.
Shareholders are encouraged to consult with their professional advisors should they be in any doubt
as to the appropriate action to take.
The number of shares in issue at the date of this declaration is 252 321 784 and Octodec's tax
reference number is 9925/033/71/5.
By order of the Board
S Wapnick Chairman
JP Wapnick Managing Director
28 April 2016
Notes to the condensed consolidated financial statements
Basis of preparation
The reviewed condensed consolidated interim financial statements are prepared in accordance with the
requirements of the JSE Limited Listings Requirements and the requirements of the Companies Act of
South Africa. The interim report has been prepared in accordance with the conceptual framework, the
measurement and recognition requirements of International Financial Reporting Standards ("IFRS") IAS
34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee and financial pronouncements as issued by the Financial Reporting Standards
Council. The accounting policies applied in the preparation of the reviewed condensed consolidated
interim financial statements are consistent with those applied in the previous consolidated
financial statements.
These results have been prepared under the historical cost convention, except for investment
properties, which are measured at fair value, and certain financial instruments, which are
measured at either fair value or amortised cost.
These reviewed condensed consolidated interim financial statements were prepared under the supervision
of Mr AK Stein CA (SA), in his capacity as group financial director.
Fair value measurement
The fair value of investment properties is arrived at on the basis of a valuation technique using
the net income capitalisation method, carried out at 29 February 2016 by taking into account
prevailing market rentals, occupation levels and capitalisation rates. The other key input used in
the valuation calculation is the expected long- term net operating income margin, of which the
expense ratio and long range vacancy factor is the significant unobservable input. There have been
no changes in judgements or estimates of amounts or valuation techniques as reported in previous
reporting periods. The directors value the entire property portfolio on a bi-annual basis.
The effect of the fair value measurement on investment properties resulted in an increase in profits
of R158,8 million in the statement of profits and loss and other comprehensive income. Independent
valuations are obtained annually on a rotational basis to determine the reasonableness of the
directors' valuations, ensuring that every property is valued every three years. This is a JSE
Listings Requirement.
Financial instruments measured at fair value include derivatives. The fair values of the interest
rate swaps are determined on a mark- to-market valuation calculated by the various financial
institutions with whom the swaps are held, by discounting the estimated future cash flows based on
the terms and maturity of each contract and using the market interest rate indicated on the SA
swap curve.
Fair value hierarchy
The fair value hierarchy reflects the significance of the inputs used in making fair value
measurements. The level within which the fair value measurement is categorised in its entirety is
determined on the basis of the lowest level input that is significant to the fair value measurement
in its entirety.
The different levels have been defined as follows:
> Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities
> Level 2: Input other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
> Level 3: Input for the asset or liability that is not based on observable market data
(unobservable input)
Investment properties and derivative financial instruments have been categorised as Level 3 and
Level 2 respectively and there have been no significant transfers made between Levels 1, 2 and 3
during the year under review. There have been no material changes in judgements or estimates of
amounts or valuation techniques as reported in previous reporting periods.
Fair value measurements using significant unobservable inputs (Level 3)
Reviewed investment
Property
R'000
Balance as at 31 August 2015 11 449 157
Total gains for the period included in profit and loss 158 817
Transfers into/(out of) Level 3 -
Acquisitions, disposals and other movements:
Acquisitions and subsequent expenditure 215 728
Disposals (14 102)
Closing balance 11 809 600
Included in profit and loss for the period:
Changes in fair value of investment property 158 817
Relationship of unobservable inputs to fair value
The significant unobservable inputs used in the fair value measurement of the group's
investment properties are the capitalisation rates, the expense to income ratios as well as
the long range vacancy factor. Significant increases/(decreases) in any of these inputs in
isolation would result in a significantly lower/ (higher) fair value measurement.
An increase of 1% in the capitalisation rate, while all other variables remain constant,
would result in a decrease in the carrying amount of investment property by R1,2 billion.
A decrease of 1% in the capitalisation rate, while all other variables remain constant, would
result in an increase in the carrying amount of investment property of R1,5 billion.
An increase of 1% in the weighted average expense ratio used to calculate the long-term net
operating income margin, while all other variables remain constant, would result in a decrease in
the carrying amount of investment property by R158,2 million. A decrease of 1% in the weighted
average expense ratio used to calculate the long-term net operating income margin, while all other
variables remain constant, would result in an increase in the carrying amount of investment property
by R158,2 million.
The third key input used in the valuation calculation is the long range vacancy factor. The expected
long range vacancy factor takes into account historic and future expected vacancy trends. The long
range vacancy factor indicates the expected vacancy to be applied over the long term that best
approximates the actual experience. The range of long range vacancy factors used was from 0,0% to 55,0%.
Events after the reporting date
There have been no subsequent events that require reporting.
Commitments
The group has capital commitments in an amount of R603,2 million, relating to various redevelopments
and upgrades of properties. These would be funded out of existing unused banking facilities.
Related party transactions
Total payments made to City Property Administration Proprietary Limited amount to R94,4 million.
This included fees for collections, asset management, leasing, property management, acquisitions and
disposals as well as upgrades and developments.
Independent auditor's report
Deloitte & Touche have issued their unmodified review report on the reviewed condensed consolidated
interim financial statements for the period ended 29 February 2016. The review was concluded in accordance
with ISRE 2410 Review of Interim Financial Information performed by the independent auditor of the entity.
A copy of their unmodified review report is available for inspection at Octodec's registered office.
The auditor's review report does not necessarily report on all of the information contained in this
announcement/financial results. Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditor's engagement, they should obtain a copy of the report
together with the accompanying fi information from Octodec's registered office.
Financial statements
Condensed consolidated statement of financial position
Reviewed Audited
R'000 29 February 2016 31 August 2015
ASSETS
Non-current assets 12 055 953 11 644 922
Investment property 11 809 600 11 449 157
Other financial assets 20 290 -
Derivative financial instruments 65 056 34 451
Investment in joint ventures 161 007 161 314
Current assets 124 808 158 091
Receivables 100 546 102 822
Bank and cash 24 262 55 269
12 180 761 11 803 013
EQUITY AND LIABILITIES
Equity 7 216 023 6 987 679
Stated capital 3 907 819 3 907 819
Non-distributable reserve 3 008 826 2 799 231
Distributable reserve 299 378 280 629
Non-current liabilities 3 913 451 3 012 937
Interest-bearing borrowings 3 838 902 2 917 174
Derivative financial instruments 1 564 22 778
Deferred taxation 72 985 72 985
Current liabilities 1 051 287 1 802 397
Interest-bearing borrowings 737 001 1 463 699
Derivative financial instruments 602 -
Non-interest-bearing borrowings 311 073 335 216
Dividends payable 2 611 3 482
12 180 761 11 803 013
Shares in issue ('000) 252 322 252 322
Net asset value ("NAV") per share (cents) 2 860 2 769
Loan to investment value ("LTV") ratio (%) 38,0 37,3
Condensed consolidated statement of comprehensive income
Reviewed Reviewed Audited
six months six months 12 months
Change 29 February 28 February 31 August
R'000 % 2016 2015 2015
Revenue 856 032 808 204 1 639 089
earned on contractual basis 5,7 852 417 806 296 1 634 159
straight-line rental income accrual 3 615 1 908 4 930
Property operating costs 5,6 (384 930) (364 528) (742 212)
Net rental income from properties 6,2 471 102 443 676 896 877
Administrative costs (0,2) (37 465) (37 543) (72 915)
Operating profit 6,8 433 637 406 133 823 962
Fair value changes 210 033 209 935 535 309
investment property 158 817 208 531 486 054
interest rate derivatives 51 216 1 404 49 255
Profit/(loss) on sale of
investment property 483 (61) (61)
Gain on bargain purchase - 319 647 319 647
Interest Income 3 294 3 058 5 953
Finance costs 4,2 (192 745) (185 016) (376 491)
interest on borrowings (202 589) (192 996) (396 050)
interest capitalised 9 844 7 980 19 559
Share of income from joint ventures 6 787 11 172 32 575
Profit before taxation (39,7) 461 489 764 868 1 340 894
Taxation charge - (2 451) (3 166)
deferred taxation - (2 466) (3 181)
normal taxation - 15 15
Profit for the period (39,5) 461 489 762 417 1 337 728
Other comprehensive income for the period – - - -
Items that will not be reclassified to
profit and loss
Total comprehensive income for the period
attributable to equity holders (39,5) 461 489 762 417 1 337 728
Weighted shares in issue - ('000) 252 322 236 403 238 148
Shares in issue ('000) 252 322 236 403 252 322
Basic earnings per share (cents) (43,3) 182,9 322,5 561,7
Diluted earnings per share (cents) (43,3) 182,9 322,5 530,2
Distribution per share (cents)
Interim 98,40 96,80 96,80
Final 92,40
Total 1,7 98,40 96,80 189,20
Condensed consolidated statement of changes in equity
Non
Stated distributable Retained
R'000 capital reserve earnings Total
Balance at 31 August 2014 (Audited) 918 478 1 928 522 42 449 2 889 449
Total comprehensive income for the period - - 1 337 728 1 337 728
Issue of new shares 2 989 341 - - 2 989 341
Dividends paid - - (228 839) (228 839)
Loss on sale of investment property - (61) 61 -
Transfer to non-distributable reserve
Gain on bargain purchase - 319 647 (319 647) -
Fair value changes
investment property - 486 054 (486 054) -
investment property–joint ventures - 19 082 (19 082) -
interest rate derivatives - 45 987 (45 987) -
Balance at 31 August 2015 (Audited) 3 907 819 2 799 231 280 629 6 987 679
Total comprehensive income for the period – – 461 489 461 489
Dividends paid – – (233 145) (233 145)
Transfer to non-distributable reserve
Profit on sale of investment property – 483 (483) –
Fair value changes
investment property – 158 817 (158 817) –
investment property–joint ventures – (921) 921 –
interest rate derivatives – 51 216 (51 216) –
Balances at 29 February 2016 (Reviewed) 3 907 819 3 008 826 299 378 7 216 023
Reconciliation - earnings to distributable earnings
Reviewed Reviewed Audited
six months six months six months
29 February 28 February 31 August
R'000 2016 2015 2015
Total comprehensive income attributable to
equity holders 461 489 762 417 1 337 728
(Profit)/loss on sale of investment property (483) 61 61
Gain on bargain purchase - (319 647) (319 647)
Fair value changes
joint ventures 921 (4 421) (19 082)
investment properties (158 817) (208 531) (486 054)
Headline earnings attributable to equity
holders 303 110 229 879 513 006
Straight-line rental income accrual (3 615) (1 908) (4 930)
Fair value changes of interest rate
derivatives, net of deferred tax (51 216) (1 404) (45 987)
Deferred taxation - 2 466 (87)
Distributable earnings attributable to equity
holders 248 279 229 033 462 002
Headline earnings per share (cents) 120.1 97.2 215.4
Condensed consolidated statement of cash flows
Reviewed Reviewed Audited
six months six months six months
29 February 28 February 31 August
R'000 2016 2015 2015
CASH FLOW FROM OPERATING ACTIVITIES 430 022 404 225 819 032
Net rental income from properties
Adjustment for : - - -
depreciation and amortisation 11 041 12 674 24 954
working capital changes (21 870) 133 663 37 514
Cash generated from operations 419 193 550 562 881 500
Interest income 8 619 3 058 5 953
Finance costs (192 745) (185 016) (376 491)
Taxation paid/(received) - 15 (34)
Distribution to equity holders paid (234 016) (226 300) (454 710)
Net cash inflow from operating activities 1 051 142 319 56 218
CASH FLOW FROM INVESTING ACTIVITIES
Investing activities (241 674) (172 723) (481 149)
Net cash inflow from business combination - - 135 904
Proceeds from disposal of investment property 14 586 15 950 16 046
Net cash outflow used in investing activities (227 088) (156 773) (329 199)
CASH FLOW FROM FINANCING ACTIVITIES
Issue of new shares - - 387 806
Increase/(decrease) in
interest-bearing
borrowings 195 030 86 959 (64 424)
Net cash generated from financing activities 195 030 86 959 323 382
NET (DECREASE)/INCREASE IN CASH AND CASH
EQUIVALENTS (31 007) 72 505 50 401
Cash and cash equivalents at beginning of
period 55 269 4 868 4 868
Cash and cash equivalents at end of period 24 262 77 373 55 269
Condensed segmental information
The group earns revenue in the form of property rentals. On a primary basis the group is organised into
six major operating segments:
Reviewed Reviewed
six months six months
29 February 2016 28 February 2015
Rental income by sector R'000 % R'000 %
Residential 199 851 30,2 181 260 28,8
Retail 182 782 27,6 173 848 27,6
Offices 129 227 19,5 133 836 21,2
Shopping centres 65 910 10,0 63 930 10,1
Industrial 55 359 8,4 51 709 8,2
Parking 28 751 4,3 25 849 4,1
Total rental income 661 880 100,0 630 432 100,0
Recoveries and other income 194 152 177 772
Revenue 856 032 808 204
Further segment results cannot be allocated on a reasonable basis due to the "mixed use" of certain of
the properties. It is the company's philosophy to invest predominantly in properties situated in the
Gauteng area, therefore the company has not reported on a geographical basis.
In the current year the group included a new sector, Parking, as it has become a significant revenue
component. Parking was previously included in the other sectors. The comparative amounts were restated
to reflect the new sector separately.
Distributable earnings
The following additional information is provided and is aimed at disclosing to the users the basis of
which the distribution is calculated:
Reviewed Reviewed
six months six months Audited
29 February 28 February 31 August
R'000 2016 2015 2015
Revenue earned on contractual basis 852 417 806 296 1 634 159
Property operating costs (384 930) (364 528) (742 212)
Net rental income from properties 467 487 441 768 891 947
Administrative costs (37 465) (37 543) (72 915)
Operating profit 430 022 404 225 819 032
Interest income 3 294 3 058 5 953
Share of income from joint ventures 7 708 6 751 13 493
Distributable profit before finance costs 441 024 414 034 838 478
Finance costs (192 745) (185 016) (376 491)
Distributable income before taxation 248 279 229 018 461 987
Taxation – 15 15
Equity holders distributable earnings 248 279 229 033 462 002
Registered address
CPA House, 101 Du Toit Street, Tshwane 0002
Tel: 012 319 8781, Fax: 012 319 8812, E-mail: info@octodec.co.za
Company Secretary
City Property Administration Proprietary Limited
CPA House, 101 Du Toit Street Tshwane 0002
Tel: 012 357 1564, E-mail: elizeg@octodec.co.za
Sponsor
Nedbank Corporate and Investment Banking
Box 1144, Johannesburg 2000
Transfer secretaries
Computershare Investor Services Proprietary Limited
Box 61051, Marshalltown 2107
Investor relations
Instinctif Partners
E-mail: investorrelations@octodec.co.za
Directors
Sharon Wapnick (Chairman)^, Jeffrey Wapnick (Managing director)+, Anthony Stein (Financial director)+,
Myron Pollack^, Derek Cohen*, Pieter Strydom#, Gerard Kemp#
* Lead independent director # Independent non-executive director ^ Non-executive director + Executive director
Date: 03/05/2016 07:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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