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Annual results of the group for the year ended 31 August 2019
OCTODEC INVESTMENTS LIMITED
(Octodec or the group or the company)
(Incorporated in the Republic of South
Africa) (Registration number 1956/002868/06)
JSE share code: OCT ISIN: ZAE000192258
(Approved as a REIT by the JSE)
ANNUAL RESULTS OF THE GROUP FOR THE YEAR ENDED 31 AUGUST 2019
Creating value beyond financial return
This short form announcement is the responsibility of the directors and is only a summary of the information
in the full announcement. Accordingly, it does not contain full or complete details. The full announcement
was published on 29 October 2019, and is available on the Octodec Investments Limited (Octodec or the group
or the company) website at https://www.octodec.co.za/investor-community-and-media/#sens-announcements. Copies
of the full announcement may also be requested at the company's registered office or the office of the sponsor,
at no charge, during office hours, Monday to Friday. Any investment decisions made by shareholders and/or
investors should be based on a consideration of the full announcement, as a whole, released on SENS and
published on the company's website.
Octodec is a real estate investment trust (REIT) with a portfolio of 285 properties valued at R12.8 billion
and is listed on the JSE Limited. The group is a long-term investor in a Gauteng-focused property portfolio
with most of its properties situated in the Tshwane and Johannesburg CBDs.
Octodec has contracted City Property Administration Proprietary Limited (City Property), to perform its
asset and property management functions.
The rental Octodec receives from its 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 its capital profits.
Review of results
31 August 31 August %
2019 2018 Change
Revenue R'000 1 982 695 1 895 288 4.6
Basic and diluted earnings per share (cents) 111.1 203.0 (45.3)
Headline and diluted headline earnings per 161.0 223.4 (27.9)
share (cents)
Distribution per share (cents) 200.9 203.4 (1.2)
Net asset value per share (cents) 2 847 2 939 (3.1)
Octodec continues investigating how best to take advantage of opportunities in the Tshwane and Johannesburg
CBDs. The group's primary objective is to improve and develop its existing properties in strategic and well
located investment nodes in order to attract new tenants and retain existing tenants while improving rental
income. The group invests in various property sectors including the defensive residential sector, with a focus
on properties that offer affordable rentals and which are located in densely populated urban areas.
The prevailing poor economic and trading environment has weighed heavily on consumer confidence and spending
power. The group continues to focus on the core property fundamentals and has positioned itself to provide
shareholders with long-term sustainable value.
Octodec's board has declared a dividend of 200.9 cents per share for the year ended
31 August 2019, a year-on-year decrease of 1.2%. The dividend is in line with the guidance of negative
growth of between 0% and 2% given previously to shareholders. This amounts to a first-half dividend of
101.7 cents and a second-half dividend of 99.2 cents. The dividend was negatively impacted by pressure
on rental income growth as well as an increase in property operating costs.
Revenue increased year-on-year by R87.4 million or 4.6%. This was mainly due to the increase in rental
income from Sharon's Place as well as the inclusion of 100% of Gerlan Properties (Pty) Ltd (Gerlan) (Toyota
Auto dealership) and Jardtal Properties (Pty) Ltd (Jardtal) (Kempton Place and The Brooklyn). The remaining
50% shareholdings in Gerlan and Jardtal were acquired on 1 July 2018 and 1 November 2018 respectively. Both
of these investments were previously equity accounted and in these results are consolidated as wholly-owned
subsidiaries.
The core portfolio, represented by those properties held for the previous comparable period with no major
development activity, reflected like-for-like rental income growth of 2.0%. The weaker growth in like-for-like
rental income is mainly attributable to the poor economic environment.
Property costs, both on a gross and net basis, have increased compared to the prior year, mainly due to an
increase in repairs and maintenance costs which were required and budgeted for in the current year.
Developments
During the current year, the group did not undertake any new major developments. The group has several
smaller projects underway. One of these is the refurbishment of The Park (previously known as Elarduspark
Shopping Centre), a community shopping centre in a south-eastern suburb of Tshwane, at a cost of R44.2 million,
which was completed in October 2019.
Disposals
In line with the decision to dispose of non-core or underperforming properties, the group disposed of a
further 19 properties during the year. At 31 August 2019, 11 of these properties have been transferred for
a total consideration of R129.2 million. The remaining 8 properties were sold for a total consideration of
R83.7 million and transfer is expected to take place during the first half of the 2020 financial year.
Prospects
The flat GDP growth, rife unemployment, reduced disposable income and the uncertain political environment
remain at levels that are not conducive to local economic growth. This continued pressure will diminish the
economic outlook for South Africa. As such, 2020 is expected to be another challenging year, which will have
a negative impact on the company's ability to deliver growth in distributions.
Despite these obstacles, Octodec is looking to ways of unlocking value. The group's experienced management
team, diversified portfolio, large tenant base, sound operating fundamentals and prudent capital management,
provide Octodec with the resilience and flexibility necessary to continue navigating through these uncertain
times.
The forecast dividend for the period ending 31 August 2020 is expected to be similar to the dividend for the
year ended 31 August 2019 and therefore no growth in dividend per share is expected for FY2020.
This forecast has been neither reviewed nor reported on by the group's auditors.
Declaration of cash dividend
The board of directors of Octodec declared a cash dividend of 99.2 cents per share, for the six months ended
31 August 2019, out of the company's distributable income.
An announcement in this regard will be made on SENS on 29 October 2019.
http://www.octodec.co.za
29 October 2019
Directors: S Wapnick (Chairman)1, JP Wapnick
(Managing director)2, AK Stein (Financial director)2,
DP Cohen3, GH Kemp4, NC Mabunda4, MZ Pollack1,
PJ Strydom4
1 Non-executive director, 2 Executive director,
3 Lead independent director,
4 Independent non-executive director
Registered office: CPA House, 101 Du Toit Street, Tshwane, 0002,
Tel: (012) 319 8781, Fax: 012 319 8812
E-mail: info@octodec.co.za
Transfer secretaries: Computershare Investor
Services Proprietary Limited. Rosebank Towers,
15 Biermann Avenue, Rosebank, 2196
PO Box 61051, Marshalltown, 2107, Tel: (011) 370 5000
E-mail: leon.naidoo@computershare.co.za
Property administrator and asset manager:
City Property Administration Proprietary Limited
CPA House, 101 Du Toit Street, Tshwane 0002
Group company secretary: : Elize Greeff, CPA House,
101 Du Toit Street, Tshwane 0002
E-mail: elizeg@octodec.co.za
Sponsor: Java Capital, 6A Sandown Valley Crescent,
Sandown, Sandton, 2196, Tel: (011) 722 3059
E-mail: sponsor@javacapital.co.za
The full announcement is available at:
https://senspdf.jse.co.za/documents/2019/JSE/isse/OCT/FY2019.pdf
Date: 29/10/2019 07:30:00
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