315 960 000 AMBIT Ar 06

User Manual: 315-960-000

Open the PDF directly: View PDF .
Page Count: 52

Download
Open PDF In Browser	View PDF

Annual Report 2006

Contents
Page
Executive Summary

1

Directorate & Administration

2-3

Chairman & Chief Executive Officer's Report

4-9

Corporate Governance Review

10 - 11

Unitholders' Diary

12

Analysis Of Linked Unitholders

13

Directors' Responsibility For & Approval Of The Annual Financial Statements

14

Independent Auditor’s Report

15

Annual Financial Statements
Directors' Report

16 - 17

Balance Sheets

18

Income Statements

19

Statements Of Changes In Equity

20

Cash Flow Statements

21

Notes To The Annual Financial Statements

22 - 39

Property Portfolio

40 - 41

Notice Of Annual General Meeting

42 - 44

Proxy Form

45 - 46

Directors’ Traditional Income Statement & Balance Sheet

47 - 49

This report together with additional information on the
property portfolio is available at: www.ambitprops.co.za

Park Meadows, Kensington, Gauteng

Executive Summary
PROFILE
Ambit Properties Limited (Ambit or The Company) is a property loan stock company which listed on the JSE Securities Exchange South
Africa (JSE) in the Financials – Real Estate sector on 4 February 2004. (Share Code: ABT, ISN: ZAE000051645).
The market capitalisation of the company as at 30 September 2006 was R606 million.
The Group (Ambit and its subsidiary, Whirlprops 37 (Proprietary) Limited) has an investment in a property portfolio of 27 properties and
an investment in Oryx Properties Limited (Oryx), a property loan stock company listed on the Namibian Stock Exchange.
INVESTMENT STRATEGY, OBJECTIVES AND PROSPECTS
To provide investors with sustainable and growing income, and the associated capital appreciation, from an investment portfolio of retail,
office and industrial properties. To maintain the existing high quality of the portfolio and expand it with property acquisitions largely in the
major metropolitan areas which offer good rental growth prospects. Ambit will also continue to seek investment opportunities in selected
neighbouring countries.

30 September 2006

30 September 2005
(Restated)

• Distribution (cents per unit)

29,60

27,50

• Income yield on unit price at beginning of year

9,2%

12,6%

• Weighted average headline earnings (cents per unit)

32,24

31,30

• Weighted average earnings (cents per unit)

77,20

77,91

27

29

• Value of property portfolio (R)

824 550 000

671 000 000

• Oryx investment (R)

110 927 000

82 944 000

326

275

186 482 837

173 814 215

325

323

(0,3%)

17,5%

315 960 000

267 199 000

33,8%

35,5%

• Number of properties

• Net asset value including distribution yet to be paid (cents per unit)
• Linked units in issue
• Market price (cents per unit)
• (Discount)/premium to net asset value
• Borrowings (R)
• Interest bearing borrowings as a percentage of long-term assets

1

Annual Report 2006

HIGHLIGHTS

Directorate & Administration

From top left to right
R D Jeffery, R R Emslie, N B S Harris, D L Brown, F Uys, J H Beare, I N Mkhari and W H Raffinetti

Directors of Ambit Properties Limited
(Registration number: 2001/007003/06)
as at 30 September 2006 and at the date of this report are:
D L Brown (59)
(FRICS, MIV (SA)) # *
Non-executive independent Chairman
He has 38 years experience in commercial real estate focused
principally on development, leasing and asset management. He was
previously the managing director of Equity Estates (Proprietary)
Limited, until his retirement earlier this year.

J H Beare (52)
(BComm, CA(SA)) # • (C)
Non-executive independent director
He has 18 years experience in the property industry. He is the
managing director of Beare Holdings (Proprietary) Limited which is
extensively involved in property investment, development and
administration. He was a business service partner of Pim Goldby
(now Deloitte & Touche).

N B S Harris (64)
(FRICS) #
Chief Executive Officer
Executive director
He has over 40 years experience in property. He was a director of
Marriott Property Services (Proprietary) Limited. He is a director of
Oryx Properties Limited (listed on the Namibian Stock Exchange),
is a past president of the South African Property Owners Association
and is chairman of the South African Board of the Royal Institution
of Chartered Surveyors.

R R Emslie (48)
(BComm (Hons), CA (SA))
Non-executive director
He has 19 years banking experience with Absa Bank Limited with
senior appointments in both ACMB and the Business Bank. In August
2004 he was appointed as an executive director of the Absa Group.
He is a director of Paramount Property Fund Limited.

2

R D Jeffery (61)
Alternate director to R R Emslie
(MBA)
Non-executive director
He has 41 years banking experience including 11 years experience
in commercial property finance. He is a general manager within the
Business Banking Services Division of Absa Bank Limited heading up
the Commercial Property Finance Department. He is a director of
Paramount Property Fund Limited.

Administration
Ambit has changed its registered office and as from 1 December
2006, the registered office is:
Ambit Properties Limited
First Floor, 4 Fricker Road
Illovo, 2196
P O Box 618, Melrose Arch, 2076
Company secretary and manager
Ambit Management Services (Proprietary) Limited
First Floor, 4 Fricker Road
Illovo, 2196
P O Box 618, Melrose Arch, 2076

I N Mkhari (32)
(BA Soc. Science) *
Non-executive independent director
Ipeleng is the Chief Investment Officer of Motseng Investment
Holdings (Proprietary) Limited. In 1998 she founded Phosa Iliso
CCTV; the first black woman-owned and managed CCTV business
in South Africa. She later co-founded Motseng Investment Holdings
and is a shareholder of Motseng Investment Holdings. She is a
director of all Motseng group subsidiaries, Kap International and
Marriott Property Fund Managers Limited.

Trustee
Steinway Trustees (Proprietary) Limited
The Manor House
14 Nuttall Gardens
Morningside
Durban, 4001
P O Box 37957, Overport, 4067

F Uys (59)
(BA, BComm (Hons), MComm)
(Namibian) •
Non-executive independent director
His experience includes being the managing director of Metje &
Ziegler Limited from 1996 to 2004, of TransNamib Limited from
1989 to 1996 and a senior executive of the Trencor Group from
1970 to 1989. He founded the Road Transport Association in
Namibia in 1976 and acted as chairman until 1980. He has served
on various Government and advisory bodies in Namibia as well as
in South Africa. He was chairman of the Namibian Stock Exchange
from 1999 to 2001. He has been the chairman of FP du Toit Transport
(Proprietary) Limited since 1999, is the chairman of Intercape Ferreira
Mainliner (Proprietary) Limited and is a director of Oryx Properties
Limited.

Merchant bank
Grindrod Bank Limited
Building Three, First Floor, North Wing
Commerce Square, 39 Rivonia Road
Cnr Helling Road, Sandton
PO Box 78011, Sandton, 2146

Member of the Investment Committee
Member of the Risk, Audit and Compliance Committee
Member of the Remuneration Committee
Chairman of relevant sub-committee

Auditors
Deloitte & Touche
Deloitte & Touche Place
2 Pencarrow Crescent
La Lucia, Durban, 4001
P O Box 243, Durban, 4000
Transfer secretary
Computershare Investor Services 2004 (Proprietary) Limited
70 Marshall Street
Johannesburg, 2001
P O Box 61051, Marshalltown, 2017
Sponsors
Exchange Sponsors (Proprietary) Limited
Building Three, First Floor, North Wing
Commerce Square, 39 Rivonia Road
Cnr Helling Road, Sandton
PO Box 78011, Sandton, 2146

3

Annual Report 2006

#
•
*
(C)

Commercial bank
Absa Bank Limited
Business Banking Services
Palazzo Towers West
Monte Casino Boulevard
Fourways, 2055
P O Box 782991, Sandton, 2146

Chairman & Chief Executive Officer’s Report
Ambit has performed well for the year under review providing investors with steady income growth. Ambit’s distributable earnings for the financial year
ended 30 September 2006 amounts to R55,2million or 29,6 cents per unit (cpu) which shows growth of 7,6% over the 2005 distribution (2005: 27,5cpu).
The second half distribution of 15,6cpu shows growth of 11,4% over the first half year distribution of 14,0cpu.
1. ECONOMIC REVIEW
The economy continued the sound 4% growth of the past few years and at last job creation was positive.
Inflation remained within the Reserve Bank target of 3 – 6%, albeit edging towards the upper end of the band. Consumer spending continued to grow,
but this was tempered by the 0,5% interest rate increases in June and August. However, the weakening of the Rand against the major currencies will
have a positive impact on exports.
Business confidence ended the period under review at the same positive levels at which it commenced the year.
10
9
8
7
6
5
4
3
2
1
0
Oct Nov Dec
05
05
05

Jan
06

Feb
06

Mar
06

Apr
06

May
06

Jun
06

ZAR/USD

R153

Jul
06

Aug
06

Sep
06

ECPIX

2. LISTED PROPERTY
The listed property sector started the period under review as a favoured asset class, with the strong investor demand driving the South African Property
Index (SAPY) index well below the benchmark Government long bond yields (the R153).
By May 2006, the SAPY index reached a peak of 465 from which it rapidly retreated 25% over the next 2 months following the global re-rating of
the emerging markets and the Reserve Bank increase in interest rates.
However, the underlying property fundamentals had not changed and ongoing growth in distributions from the sector soon had investors recognising
the over sold situation and returning to this asset class. By the end of September 2006 the index had recovered to 408, within 12% of its May high.
10
8
6
4
2
0
Oct Nov Dec
05
05
05

Jan
06

Feb
06

Mar
06

AMBIT

Apr
06
J253

May
06

Jun
06

Jul
06

Aug
06

Sep
06

R153

The market capitalisation of the sector commenced the period under review at R45 billion and, by the end of September 2006, stood at R57 billion.

4

Listed Property Market Capitalisation
70 000
Rand (Billions)

60 000
50 000
40 000
30 000
20 000
10 000
0
Oct
05

Nov
05

Dec
05

Jan
06

Feb
06

Mar
06

Apr
06

May
06

Jun
Jul
Aug Sep
06
06
06
06
Source: Inet and Catalyst

3. THE PROPERTY MARKET
The strong economic conditions have had a substantial impact on the commercial property market. Demand for retail space has continued, only being
satisfied by further new centres being brought to the market.
According to SAPOA’s statistics, vacancies in A grade offices in the popular decentralised office nodes have halved from about 7% to 3,5%.
Industrial and warehousing demand in all popular areas has virtually filled the available space and there is pressure on remaining vacant land from end
users and developers.
Rentals are rising in both the office and industrial sectors driven by demand and increasing building costs, which have risen substantially over the past
two years.
The Investment Property Data Bank (IPD), which measures direct property returns, and at December 2005 reflected a database of R81 billion (2005:
R74,7 billion), recorded a total return of 30,1% for 2005. The retail and industrial sectors were the top performers as can be seen below.
Total return (%)
Retail
Office
Industrial
All Property

2002
11,0
5,0
8,8
9,6

2003
17,3
8,9
17,7
15,3

2004
26,2
16,6
24,4
23,4

2005
33,0
24,5
33,1
30,1

Income return (%)
Retail
Office
Industrial
All Property

9,0
10,3
12,3
9,8

9,7
10,9
13,6
10,5

9,9
10,7
13,6
10,6

9,5
10,9
12,4
10,3
Source: IPD

The consistent income return from each of the major sectors over the last few years is clearly demonstrated and it is this which forms the foundation
of distribution growth to unitholders.

4. REVIEW OF FINANCIAL RESULTS
Ambit has performed steadily for the year under review, with distributions showing 7,6% growth over 2005. The core property portfolio showed a
15% growth in value over 2005.
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) for the first time in the current year,
and IFRS 1 (First time adoption of IFRS) has been applied. The adoption of IFRS has not resulted in any adjustments to the amounts reported previously
in the annual financial statements for the year ended 30 September 2005 or to the opening IFRS balance sheet at 1 October 2004. However, a change
in accounting interpretation of IAS 32 has resulted in the reclassification of share premium to debenture premium and in the amortisation of the resultant
debenture premium. This will increase earnings over the life of the debentures, and the Group has elected to transfer the amount to non-distributable
reserves in order not to affect distributions. This has had the effect of increasing earnings by R1,8 million or 0,99 cents per weighted number of units
in the current year (2005: R1,2 million or 0,72 cents) and increasing the opening balance of non-distributable reserves in 2005 by R0,7 million.

5

Annual Report 2006

Ambit, with an income return of 11,5%, outperformed the listed fund index income return of 11% for the 2005 period, but marginally lagged the
growth index of 20,8% with 17,4%. This gave Ambit a total return of 30,8% for the year.

Chairman & Chief Executive Officer’s Report

(continued)

4. REVIEW OF FINANCIAL RESULTS (continued)
In terms of IAS 17: Leases, rental income is recognised on the straight line basis. The directors believe that the straight line basis is inappropriate and
this method of accounting does not add value to users of financial statements. The cash flows inherent in the leases and the straight line adjustment
are separately disclosed in the financial statements in order to assist users to calculate growth trends.
5. AMBIT UNIT PRICE
Ambit's unit price has shown very little growth over the 12 month period (325 cents at 30 September 2006, versus 323 cents at 30 September 2005).
This is due to the fall in the price of listed property stocks in June 2006. Ambit’s historic yield on its price at 30 September 2006 was 8,7%, versus
the SAPY index of 7,4%.
The volatility of 2006 resulting from the seemingly insatiable retail investment demand for listed property in the first half of 2006, and the corrective
interest rate increases thereafter, can be seen from the graph below. Ambit’s high of 435cpu in May, the low of 285cpu only two months later and
the year-end price of 325cpu clearly indicate just how the market over-reacted in June and July.

(Cents per unit)

500
400
300
200
Oct
05

Nov
05

Dec
05

Jan
06

Feb
06

Mar
06

Apr
06

May
06

Jun
06

Jul
06

Aug
06

Sep
06

During the year under review, 51% of Ambit's listed units were traded which represents a total value of R322,9 million.
6. THE PROPERTY PORTFOLIO
At year-end, the portfolio comprised 27 quality properties, with a rentable area of 154 029m2.
6.1

Geographic and sectoral profile

6.1.1 Sectoral spread
Ambit listed with a sectorally diversified property portfolio with a bias towards retail properties. It is management’s intention to maintain a spread
across the 3 major sectors of the commercial property market. The major sectors of the market operate on slightly different cycles of demand
and rental growth and thus at times opportunities arise in each sector for investment acquisitions which show good growth potential.
The sectoral spread of Ambit’s portfolio is set out below. All amounts exclude straight line adjustments.
By income

By value
24%

23%

Retail
Office
55%

Industrial

59%
18%

21%

By value, retail has increased from 57% in 2005 to 59% in 2006 and income contribution increased by 3% as a result of the acquisition of
Lowveld Lifestyle Centre.

6

6.1.2 Geographic Spread
Ambit’s strategy is to predominantly invest in properties located in the major metropolitan areas and this strategy has been maintained.
The geographic spread is set out below.

By income

By value
4%

3% 3%

3%

11%

5% 2%

12%

Gauteng
Pietermaritzburg
Durban

13%

Cape Town

10%

Nelspruit

66%

68%

East London

The acquisition of the Lowveld Lifestyle Centre in Nelspruit has marginally reduced the exposure to Gauteng by value by 3% from last year
to 68% this year-end.
6.2

Lease structure, vacancies and expiry profile
During the period under review, leases in respect of 14,6% by rental value (13 783m2) of the portfolio fell due for renewal and of these, 74%
by rental value (9 919m2) were successfully renewed. The space that was vacated was substantially re-let as can be seen in the continuing high
occupancy levels.
The vacancy is low at 3,80% by rental value (3,5% by area, 5 310m2) and is marginally above the levels at the end of last year of 3 981m2
(2,6%). The bulk of this vacancy (3 766m2) is in the office portfolio where the prospects of leasing are encouraging.

6.3

Lease expiry profile
The lease expiry profile determined by rental value is reflected below:
30%
26%

25%
19%

20%
15%

14%

13%

10%
5%

14%
10%

4%

0%
2007

2008

2009

2010

2011

2012+

The favourable lease expiry profile continues with no more than 26% of the portfolio's contractual income falling due for renewal in a particular
year. The increase in expiries in 2009 is a result of a number of 3-year leases being concluded during 2006. During 2007, the bulk of the
renewals lie within the office sector.
6.4

Operating costs
The operating costs of the buildings represent 25,3% of the gross rental income. These costs include all property related expenses without
netting off recoveries, include property management fees, but exclude the asset management fees of the portfolio and interest on borrowings.
Last year these costs represented 25,9% and in 2004 were 25,1% showing that the costs are being consistently maintained.
Of the total expenditure (excluding rates, municipal charges, collection commission and insurance) the value of procurement paid to black
owned companies increased from 35% in 2005 to 50% at year-end and is in line with the target Ambit set in 2004.

7

Annual Report 2006

Vacant

Chairman & Chief Executive Officer’s Report
6.5

(continued)

Acquisitions
During the year Ambit took transfer of a building leased to Absa in Roodepoort on a 5-year lease at a price of R22,5 million on a forward yield
of 11,1%.
Lowveld Lifestyle Centre in Nelspruit was acquired at a cost of R43,2 million on a forward yield of 9,1%. This retail/ lifestyle centre is anchored
by Wetherleys and is 79% let to national companies or their franchisees.
In July 2006, Ambit acquired 50% of a property in Old Main Road, Pinetown, jointly with a subsidiary of Highpine Properties (Proprietary)
Limited, a company concentrating on retail property investment in the Pinetown area, at a joint cost of R28,3 million. The co-owners intend
to redevelop the site to create a shopping centre which will benefit from the site’s prime location between Pinecrest Shopping Centre and
the taxi terminus.
The development will be undertaken during 2007 but is presently let and is income producing.

6.6

Disposals
The five properties which Ambit contracted to sell in the 2005 financial year, were transferred in January 2006. These realised a post capital
gains tax profit of R1,0 million.

6.7

Portfolio revaluation
The portfolio was valued by independent valuers, CB Richard Ellis, as at 30 September 2006.
The valuation reflects a portfolio value of R824,6 million. The core portfolio (excluding additions and disposals) showed an increase in value
of 15% over the year.

7. INVESTMENT IN ORYX PROPERTIES LIMITED
Oryx comprises a quality portfolio of well tenanted investment properties, principally located in Windhoek.
Oryx again produced excellent results, with distributions amounting to 78 cents for the year ended 30 June 2006, showing an 11% growth over the
previous year's distributions. Realisable net asset value increased to 859 cents per unit (2005: 721cpu). During the year, Oryx completed its development
of Phase II of Maerua Mall. The expanded Maerua Complex (39 800m2 of retail space) is fully tenanted and is trading well. At its year-end, Oryx had
a portfolio of 17 properties with an open market value of N$560,6 million and a vacancy of 1%.
During the year Oryx undertook a rights issue, which, although slightly dilutionary to Ambit in 2006, due to the prepayment of distributions, offered
a sound yield for 2007 and beyond. Ambit followed its rights and applied for further units, thereby increasing its stake marginally to 30,6% (2005:
30,5%). At the date of this report Oryx was trading at 820 cents, which is 4,5% below its realisable net asset value. It therefore continues to offer
sound investment value to Ambit.

2-4 Golf Course Drive, Mount Edgecombe, Durban

8

7. INVESTMENT IN ORYX PROPERTIES LIMITED (continued)
Oryx is classified as an associate to Ambit. Ambit's share of the retained earnings of Oryx for the year was R12,5 million. This, combined with the
rights issue and increased unitholding, has taken Ambit's holding in Oryx to R110,9 million and represents 11,9% of Ambit's investment portfolio.
8. FUNDING ARRANGEMENTS
As at year-end Ambit had interest bearing borrowings of R316 million largely with ABSA and Nedbank who are Ambit's long-term financiers. This
reflects a long-term borrowings to long-term asset ratio of 33,8% (2005: 35,5%). During March 2006, Ambit renegotiated the interest rates on its
facilities and reduced the cost of variable borrowings by 50 basis points and fixed borrowings by 80 basis points.
At year-end, R183,7 million (58%) of the debt was on fixed interest contracts (2005: R145 million or 54%). Ambit's average cost of debt at year-end
was 9.7% p.a. (2005: 10,2% p.a.). The fixed and floating debt structure is set out in Note 14 to the financial statements. Management and the board
will continue to actively manage the funding and interest rate risk.
9. BLACK ECONOMIC EMPOWERMENT (BEE)
During the year management engaged in discussions to introduce an identified BEE group. However, these were terminated following differences
between the shareholders of the management Company, Ambit Management Services (Proprietary) Ltd (AMS). The Board and management are
committed to concluding a meaningful transaction with an appropriate BEE group during 2007.
10. MANAGEMENT COMPANY
In August 2006, Absa Bank Limited acquired the rights to the remaining 50% interest in AMS held by Marriott Corporate Property.
The AMS staff who were seconded from Marriott undertook to manage the year-end accounting, audit and the preparation of the financial statements.
AMS has recruited new staff and resources and will relocate its offices to 4 Fricker Road, Illovo from 1 December 2006.
11. PROSPECTS
The fundamentals of the underlying property market continue to firm notwithstanding the recent interest rate increases and the prospects of further
increases in the next 12 months. Office and industrial rentals are increasing which will provide income growth from the existing portfolio when leases
are renewed.
Ambit’s strategy is to increase its property portfolio to in excess of R1,5 billion and its market capitalisation to in excess of R1 billion during the next
year and management expects to be able to make announcements of acquisitions in the near future. There is no change to the strategy of owning
quality properties in good growth nodes.
Nick Harris has been requested and has accepted to remain on as the Chief Executive Officer of the Group until the end of June 2007 to manage
the transition of AMS and to conclude and bed down the initial tranches of the anticipated growth of the asset base.
During the first half of 2007, the Board will be appointing a new Chief Executive Officer to ensure a smooth handover.

D L Brown
Chairman
23 November 2006

N B S Harris
Chief Executive Officer
23 November 2006

9

Annual Report 2006

We would like to express our appreciation to management and in particular to those seconded to AMS from Marriott for their dedication and hard
work in what, for some of them, has been a difficult period. We would also thank the non-executive directors for their support, experience and advice
during the past year.

Corporate Governance Review
30 September 2006

The board of directors is committed to the implementation of good corporate governance within the group and endorses the principles of openness,
integrity, accountability and transparency. The board has adopted and applied the Code of Corporate Practices and Conduct as set out in the King II Report.
The Board is of the opinion that the Group currently complies with all the significant requirements as set out in the King II report and the Listings Requirements
of the JSE Limited.
In doing so, the directors recognise the need to conduct the enterprise with integrity in accordance with generally acceptable corporate policies. This
includes timely, relevant and meaningful reporting to its unitholders and other stakeholders; and providing a proper and objective perspective of Ambit.
The directors have accordingly established mechanisms and policies appropriate to the Group's business in keeping with its commitment to the best practices
in corporate governance in order to ensure compliance with the King II Report. The directors will review these from time to time.
BOARD OF DIRECTORS AND ITS SUB-COMMITTEES
The board of directors consists of an executive director and five non-executive directors, four of whom are independent non-executives and hence the
majority of the board comprises independent non-executives. These non-executive directors bring to the Group a wide range of skills and experience
that enable them to contribute an independent view and to exercise objective judgement in matters requiring directors' decisions. The chairman is a nonexecutive director, whose role is independent from the executive director.
The executive director holds a service contract. All non-executive directors are subject to retirement by rotation and re-election by Ambit unitholders at
least once every three years in accordance with the Articles of Association.
All new appointments to the board are done on a consensus basis between board members, subject to unitholder approval.
The board, which meets at least quarterly, retains full and effective control over the Group and service providers. The board has established a number of
committees to give detailed attention to its responsibilities and which operate within defined, written terms of reference. These are the investment committee,
the remuneration committee and the risk, audit and compliance committee, and the compositions thereof are set out on pages 2 and 3.

79 Hyde Park Lane, Hyde Park, Gauteng

10

The board has approved a Board Charter to regulate how the business is to be conducted by the board in accordance with the principles of good corporate
governance.
During the period under review, directors who did not attend all 5 board meetings were J Zidel (1 absence), F Uys (1 absence) and I N Mkhari (2 absences).
INVESTMENT COMMITTEE
The board has established an investment committee, which is responsible to the board for monitoring and supervising the Group's strategic investment
objectives and implementing the board's instructions as to acquisitions, disposals and the structuring of borrowings.
REMUNERATION COMMITTEE
The board has established a remuneration committee, which reviews the remuneration of the executive director and recommends non-executive directors’
fees.
RISK, AUDIT AND COMPLIANCE COMMITTEE
The board has established a risk, audit and compliance committee whose primary objectives are to provide the board with additional assurance regarding
the efficacy and reliability of the financial information used by the directors and to assist them in the discharge of their duties. The committee provides
comfort to the board that adequate and appropriate financial and operating controls are in place, that significant business, financial and other risks have been
identified and are being suitably managed and that satisfactory standards of governance, reporting and compliance are in operation. The committee is
responsible for setting the principles for recommending the use of the external auditors for non-audit services, and any significant non-audit work must be
approved by this committee. The committee has formal terms of reference for their responsibilities and the Board is of the opinion that these responsibilities
have been satisfied for the year under review.
Due to its size (one direct employee), Ambit does not have an internal audit function. Management and the Risk, Audit and Compliance Committee review
the internal controls, processes and systems of the Group and it’s service providers.
Within this context, the board is responsible for the Group's systems of internal financial and operational control.
DIRECTORS' DEALINGS
The group operates a policy of prohibiting dealings by directors and certain other managers in periods immediately preceding the announcement of its
interim and year-end financial results and at any other time deemed necessary by the board.
RISK MANAGEMENT
The objective of risk management is to identify, assess, manage and monitor the risks to which the business is exposed. This is a board responsibility. Ambit
pursues active management policies designed to minimise the impact of risk.
With the assistance of expert risk consultants, risks have been assessed and appropriate insurance cover provided for all material risks above pre-determined,
self-insured limits. Levels of cover are re-assessed annually.
DIRECTORS' RESPONSIBILITY
The directors are responsible for the preparation of the annual financial statements, as set out on pages 16 to 39, which fairly represent the state of affairs
of the Group at the end of the financial year.

D L Brown
Chairman
23 November 2006

J H Beare
Chairman – Risk, audit and compliance committee
23 November 2006

11

Annual Report 2006

GOING CONCERN
The directors are of the opinion that the Company and the Group have adequate resources to continue in operation for the foreseeable future and the
annual financial statements and Group annual financial statements have accordingly been prepared on a going concern basis.

Unitholders’ Diary
Financial year-end
Annual general meeting

30 September
21 February 2007

Distribution plan dates in respect of the financial year ending 30 September 2007:
Financial period

Declaration date

Record date

Payment date

18 May 2007

7 June 2007

11 June 2007

9 November 2007

30 November 2007

3 December 2007

1st half to
31 March 2007
2nd half to
30 September 2007

Park Meadows, Kensington, Gauteng

12

Analysis Of Linked Unitholders
30 September 2006

Number of
unitholders

% of
unitholders

Number of
units held

% of
issued units

Size of holding
1

–

10 000

699

46,94

3 640 819

1,95

10 001

–

25 000

432

29,01

7 654 281

4,10

25 001 –

50 000

176

11,82

6 771 823

3,63

50 001 –

100 000

86

5,78

6 464 015

3,47

100 001 –

500 000

64

4,30

14 823 169

7,95

500 001 –

1 000 000

14

0,94

10 401 439

5,58

`Over 1 000 000

18

1,21

136 727 291

73,32

1 489

100,00

186 482 837

100,00

Type of unitholders
Corporates and investment companies

74

4,97

93 252 379

50,01

1 184

79,52

68 817 124

36,90

Nominee holders and trusts

168

11,28

14 685 002

7,87

Pension and provident funds

63

4,23

9 728 332

5,22

1 489

100,00

186 482 837

100,00

Redefine Income Fund

43 660 824

23,41

Absa

39 150 567

20,99

Marriott

21 381 327

11,47

Individuals and private companies

Significant unitholders
Unitholders invested in 5% or more of the company

Oasis Asset Management

10 218 610

5,48

114 411 328

61,35

103 895 568

55,72

Unitholder spread
Held by public

1 482

99,53

– directors

4

0,27

500 000

0,26

– unitholders with more than 10% unitholding

3

0,20

82 087 269

44,02

1 489

100,00

186 482 837

100,00

Held by non-public

Units traded
Number of units traded

92 200 304

Units traded as a percentage of issued capital

51,44%

12 month high (cents)

435

12 month low (cents)

285

13

Annual Report 2006

JSE price history

Directors’ Responsibility For &
Approval Of The Annual Financial Statements
for the year ended 30 September 2006
The directors are responsible for the preparation and integrity of the annual financial statements and the related information included in the annual report.
In order for the board to discharge its responsibilities, management has developed and continues to maintain a system of internal control. The board has
ultimate responsibility for the system of internal controls and reviews its operation, primarily through the risk, audit and compliance committee.
The internal controls include a risk-based system of internal accounting and administrative controls designed to provide reasonable but not absolute assurance
that assets are safeguarded and that transactions are executed and recorded in accordance with generally accepted business practices and the Group's
policies and procedures. These controls are implemented by trained, skilled personnel with appropriate segregation of duties, are monitored by management
and the risk, audit and compliance committee and include a comprehensive budgeting and reporting system operating within an appropriate control
framework.
The external auditors are responsible for reporting on the annual financial statements, and their unmodified opinion is included on page 15. The annual
financial statements are prepared in accordance with International Financial Reporting Standards and incorporate disclosures in line with the accounting
philosophy of the Group. They are based on appropriate accounting policies consistently applied, except where otherwise stated, and are supported by
reasonable and prudent judgements and estimates.
The directors believe that the Group will be a going concern in the year ahead. Accordingly, in preparing the annual financial statements and Group annual
financial statements, the going concern basis has been adopted.
The annual financial statements for the year ended 30 September 2006 as set out on pages 16 to 39 were approved by the board of directors on
23 November 2006 and are signed on its behalf by:

D L Brown
Chairman
23 November 2006

J H Beare
Chairman – Risk, audit and compliance committee
23 November 2006

Declaration By Secretary
The Secretary certifies that the Company has lodged with the Registrar of Companies all such returns as are required of a public company, in terms of
Section 268G(d) of the Companies Act No 61 of 1973, as amended, and that all such returns are true, correct and up to date.

Ambit Management Services (Proprietary) Limited
Company Secretary
23 November 2006

14

Independent Auditor’s Report
TO THE MEMBERS OF AMBIT PROPERTIES LIMITED
We have audited the annual financial statements and Group annual financial statements of Ambit Properties Limited set out on pages 16 to 39 for the year
ended 30 September 2006. These financial statements are the responsibility of the Company's directors.
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements fairly present, in all material respects, the financial position of the Company and of the Group at 30 September
2006, and the results of their operations and cash flows for the year then ended in accordance with International Financial Reporting Standards and in the
manner required by the Companies Act in South Africa.

Deloitte & Touche
Registered Auditors
Per GD Kruger
Partner
23 November 2006

National Executive:

GG Gelink – Chief Executive, AE Swiegers – Chief Operating Officer, GM Pinnock – Audit, DL Kenney – Tax,
L Geeingh – Consulting, MG Crisp – Financial Advisory, L Bam – Strategy, CR Beukman – Finance, TJ Brown – Clients
& Markets, SJC Sibisi – Public Sector and Corporate Social Responsibility, NT Mtubu – Chairman of the Board, J Rhynes
– Deputy Chairman of the Board

Regional Leader:

GC Brazier

15

Annual Report 2006

2 Pencarrow Crescent
La Lucia Ridge Office Estate
Durban

Directors’ Report
30 September 2006

NATURE OF BUSINESS
Ambit Properties Limited is a property investment company and is listed on the JSE under the “Financials – Real Estate” sector.
The Group derives its income from a portfolio of investment properties in the retail, office and industrial sectors and an investment in Oryx Properties
Limited, a Namibian property investment company listed on the Namibian Stock Exchange.
ISSUED SHARE CAPITAL
As at 30 September 2006 there were 186 482 837 linked units in issue (2005: 173 814 215), each comprising one ordinary share of 1 cent and one
unsecured variable rate debenture of 180 cents. In order to fund the acquisition of the Lowveld Lifestyle Centre in Nelspruit, 12 668 622 units were issued
on 13 April 2006 at a price of 341 cents. An additional 14 cents per unit was received in respect of the interim distribution subsequently paid.
FINANCIAL REVIEW

2006
cents

2005
(restated)
cents

Weighted average headline earnings per linked unit
Weighted average earnings per linked unit
Distribution per linked unit

32,24
77,20
29,60

31,30
77,91
27,50

International Financial Reporting Standards (IFRS) were adopted for the first time in the current year, and the adoption thereof has not resulted in any
changes to the reported numbers. However, a change in accounting interpretation has resulted in the share premium being reclassified to debenture
premium and amortised over the life of the debenture. Details are reflected in Notes 6 and 13.
SUBSIDIARY
Details of the Company's subsidiary are reflected in Note 8. The profit after tax of the subsidiary which is attributable to Ambit amounts to R11,2 million
(2005: R10,4 million).
ASSOCIATE
Details of the Company's associate are reflected in Note 9.
DIRECTORATE
Details of the directors are set out on pages 2 and 3 of this report. The composition of the board, together with changes from 1 October 2006 to the
date of this report, are set out below:
Director
D L Brown (Chairman)
N B S Harris *
C J Ewin
J H Beare
I N Mkhari
F Uys
R R Emslie
J Zidel
R D Jeffrey (alternate)

Date appointed

Date resigned

16/08/2006

07/02/2006

03/05/2006
Salaries
R'000

2006
Directors’ fees
R'000

Salaries
R'000

2005
Directors’ fees
R'000

–

95

–

95

–
–
–
48
90
50
–
50
65
13

920
795#
125
–
–
–
–
–
–
–

–
–
–
65
90
12,5
37,5
50
65
–

1 061
411
920
* Executive
The executive director holds a service contract until 30 June 2007.
No other directors have service contracts.
# The executive director's salary is deducted off asset management fees paid to Ambit Management Services (Proprietary) Limited.

415

Director
D L Brown (Chairman)
N B S Harris *
– salary
– bonus
C J Ewin
J H Beare
R R Emslie
N P Mageza
I N Mkhari
F Uys
J Zidel

1 061
861#
200
–
–
–
–
–
–
–

16

DIRECTORS' INTERESTS
The joint beneficial interests of directors in the equity of the company as at 30 September 2006 was 0,26% (500 000 units) and can be analysed as follows:
Director

Direct beneficial
Linked units
%

Indirect beneficial
Linked units
%

Total
Linked units

%

50 000
50 000
200 000
200 000
–

0,02
0,02
0,11
0,11
–

500 000

0,26

50 000
50 000
210 000
200 000
200 000
–

0,03
0,03
0,12
0,12
0,12
–

710 000

0,42

2006
D L Brown (Chairman)
N B S Harris *
F Uys
R D Jeffery (alternate) *
R R Emslie *

50 000
25 000
200 000
200 000
–

0,02
0,01
0,11
0,11
–

–
25 000
–
–
–

–
0,01
–
–
–

2005
D L Brown (Chairman)
N B S Harris *
C J Ewin *
F Uys
R D Jeffery (alternate) *
R R Emslie *

50 000
25 000
210 000
200 000
200 000
–

0,03
0,01
0,12
0,12
0,12
–

–
25 000
–
–
–
–

–
0,01
–
–
–
–

* These directors have insignificant indirect interests in Ambit as a result of having insignificant interests in either Absa Bank Limited or RMBT Holdings
Limited as shareholders.
In April 2006, Ambit acquired 50% of 17-19 and 21-35 Old Main Road, Pinetown in conjunction with Pinespring Properties (Proprietary) Limited, a wholly
owned subsidiary of Highpine Properties (Proprietary) Limited, a company in which Mr J H Beare has an interest.
BORROWINGS
The directors are authorised to borrow funds up to an amount not exceeding 60% of the directors' bona fide valuation of the consolidated total assets of
the Company and its subsidiaries. The Group's interest bearing borrowings at 30 September 2006 are disclosed in Note 14 to the annual financial statements.
ACQUISITIONS, IMPROVEMENTS AND DISPOSALS
Refer to paragraphs 6.5 to 6.7 of the Chairman and CEO's report.
POST BALANCE SHEET EVENTS AND GOING CONCERN
Other than the acquisitions and disposals referred to above, the directors are not aware of any material post balance sheet events and are of the opinion
that the Group has adequate resources to continue in operation for the foreseeable future. The financial statements have accordingly been prepared on a
going concern basis.
MANAGEMENT BY THIRD PARTY
Ambit has a service agreement with Ambit Management Services (Proprietary) Limited (AMS), the rights to which are 100% held by Absa Bank Limited,
in respect of the property asset management, property management and the financial accounting and reporting of the company. During August 2006,
Marriott Property Services (Proprietary) Limited disposed of the rights to its 50% share in the management company to Absa Bank Limited.

Postal:
P.O. Box 618
Melrose Arch
2076

Business:
First Floor, 4 Frikker Road
Illovo
2196

D L Brown
Chairman
23 November 2006

N B S Harris
Chief Executive Officer
23 November 2006

17

Annual Report 2006

COMPANY SECRETARY
The company secretary is Ambit Management Services (Proprietary) Limited, whose business and postal address is as follows:

Balance Sheets
30 September 2006

Group
Notes

2006

Company

R'000

2005
(restated)
R'000

2006
R'000

2005
(restated)
R'000

809 329

659 288

673 558

538 896

– At valuation

824 550

671 000

686 350

548 600

– Straight line adjustment

(15 221)

(11 712)

(12 792)

(9 704)

ASSETS
Non-current assets
Investment properties

Investment in associate company

7

9

110 927

82 944

83 998

68 480

14 551

11 437

12 122

9 429

934 807

753 669

769 678

616 805

6 446

9 679

5 048

9 273

5 776

9 404

4 378

8 998

670

275

670

275

10

56 128

28 929

56 620

28 839

8

–

–

93 652

92 931

62 574

38 608

155 320

131 043

997 381

792 277

924 998

747 848

Rental receivable – straight line adjustment
Total non-current assets
Current assets
Trade and other receivables
– Trade and other receivables
– Rental receivable – straight line adjustment
Cash and cash equivalents
Interest in subsidiary company
Total current assets
TOTAL ASSETS
EQUITY AND LIABILITIES
Capital and reserves
Share capital

11

1 865

1 738

1 865

1 738

Non-distributable reserves

12

190 886

107 386

134 873

75 039

364

330

(1 966)

(1 999)

193 115

109 454

134 772

74 778

335 669

312 866

335 669

312 866

Distributable reserves/ (in deficit)
Total capital and reserves
Non-current liabilities
Debentures
Debenture premium

13
6,13

49 586

31 094

49 586

31 094

Interest bearing borrowings

14

315 960

267 199

315 960

267 199

Deferred taxation liability

15

Total non-current liabilities

64 499

36 433

51 666

28 175

765 714

647 592

752 881

639 334

9 087

9 890

7 880

8 395

367

308

367

308

Current liabilities
Trade and other payables
Current tax liabilities
Linked unitholders for distribution

29 098

25 033

29 098

25 033

Total current liabilities

38 552

35 231

37 345

33 736

997 381

792 277

924 998

747 848

TOTAL EQUITY AND LIABILITIES

18

Income Statements
for the year ended 30 September 2006

Group
Notes

REVENUE
– Rental – cash flows inherent in leases

16

– Rental – straight line adjustment
Property expenses

17

NET RENTAL INCOME FROM PROPERTIES
Interest income

2006

Company

R'000

2005
(restated)
R'000

2006
R'000

2005
(restated)
R'000

103 620

99 448

86 844

81 177

99 813

93 530

83 458

76 154

3 807

5 918

3 386

5 023

(25 239)

(24 229)

(21 432)

(20 486)

78 381

75 219

65 412

60 691

18

2 040

2 373

14 571

15 816

Debenture interest and dividend income from associate company

9

9 868

8 338

9 868

8 338

Amortisation of debenture premium

6

Finance costs

1 776

1 191

1 776

1 191

(23 902)

(25 992)

(23 902)

(25 992)

Administrative expenses

19

(5 266)

(4 484)

(5 250)

(4 252)

Other expenses

20

(2 026)

(1 708)

(2 026)

(1 750)

OPERATING PROFIT

60 871

54 937

60 449

54 042

Change in fair value of investment properties

93 450

87 495

78 095

73 905

– As per valuations

97 257

93 413

81 481

78 928

– Straight line adjustment

(3 807)

(5 918)

(3 386)

(5 023)

Profit on disposal of investment properties
Share of associate company's after tax profits

6, 9

72

711

72

711

12 465

12 972

–

–

166 858

156 115

138 616

128 658

TO UNITHOLDERS
Debenture interest – linked unitholders

(55 199)

(47 799)

(55 199)

(47 799)

PROFIT BEFORE TAXATION

111 659

108 316

83 417

80 859

(28 125)

(26 509)

(23 550)

(22 446)

83 534

81 807

59 867

58 413

Taxation

21

PROFIT ATTRIBUTABLE TO LINKED UNITHOLDERS

Cents

Cents

Cents

Cents

EARNINGS PER LINKED UNIT (weighted)

22

77,20

77,91

64,03

63,84

EARNINGS AND DILUTED EARNINGS PER SHARE (weighted)

22

46,48

49,18

33,31

35,11

DISTRIBUTION PER LINKED UNIT

22

29,60

27,50

29,60

27,50

19

Annual Report 2006

PROFIT BEFORE TAXATION AND DISTRIBUTION

Statements Of Changes In Equity
for the year ended 30 September 2006

Share
capital
R'000

Share
premium
R'000

Distributable
reserves
R'000

Nondistributable
reserves
R'000

Total
R'000

1 583

26 284

257

24 952

53 076

Reclassification to debenture premium

–

(26 284)

–

–

(26 284)

Amortisation of debenture premium

–

–

700

–

700

GROUP
Balance at 30 September 2004 as previously reported
Prior year adjustment:

Transfer of amortisation to non-distributable reserves

–

–

(700)

700

–

1 583

–

257

25 652

27 492

155

–

–

–

155

–

–

81 807

–

81 807

–

–

80 616

–

80 616

Amortisation of debenture premium

–

–

1 191

–

1 191

Transfer to non-distributable reserves (restated)

–

–

(81 734)

81 734

–

1 738

–

330

107 386

109 454

127

–

–

–

127

Net profit attributable to linked unitholders

–

–

83 534

–

83 534

Transfer to non-distributable reserves

–

–

(83 500)

83 500

–

1 865

–

364

190 886

193 115

1 583

26 284

289

15 130

43 286

Share of associates retained earnings

–

–

(1 492)

–

(1 492)

Reclassification to debenture premium

–

(26 284)

–

–

(26 284)

Amortisation of debenture premium

–

–

700

–

700

Restated balance at 30 September 2004
Shares issued during the period
Net profit attributable to linked unitholders
As previously reported
Prior year adjustment:

Balance at 30 September 2005
Shares issued during the year

Balance at 30 September 2006
COMPANY
Balance at 30 September 2004 as previously reported
Prior year adjustments:

Transfer of amortisation to non-distributable reserves
Restated balance at 30 September 2004
Shares issued during the period
Net profit attributable to linked unitholders
As previously reported

–

–

(700)

700

–

1 583

–

(1 203)

15 830

16 210

155

–

–

–

155

–

–

58 413

–

58 413

–

–

70 194

–

70 194

Prior year adjustments:
Share of associates retained earnings

–

–

(12 972)

–

(12 972)

Amortisation of debenture premium

–

–

1 191

–

1 191

Transfer to non-distributable reserves (restated)
Balance at 30 September 2005
Shares issued during the year
Net profit attributable to linked unitholders
Transfer to non-distributable reserves
Balance at 30 September 2006

–

–

(59 209)

59 209

–

1 738

–

(1 999)

75 039

74 778

127

–

–

–

127

–

–

59 867

–

59 867

–

–

(59 834)

59 834

–

1 865

–

(1 966)

134 873

134 772

20

Cash Flow Statements
for the year ended 30 September 2006

Group
Notes

2006
R'000

Company
2005
R'000

2006
R'000

2005
R'000

OPERATING ACTIVITIES
Cash generated by operating activities

23

Interest received and income from associate
Finance costs
Distributions paid to linked unitholders

24

Cash inflow/ (outflow) from operating activities

70 105

63 450

58 853

48 758

11 908

10 711

24 439

24 154

(23 902)

(25 992)

(23 902)

(25 992)

(51 134)

(49 286)

(51 134)

(49 286)

6 977

(1 117)

8 256

(2 366)

(80 431)

(44 800)

(80 431)

(44 800)

INVESTING ACTIVITIES
Acquisition of investment properties
Improvements to investment properties

(1 172)

(8 592)

(1 148)

(7 677)

Proceeds on disposal of investment properties

25 382

32 011

25 382

32 011

(Increase)/ decrease in loan to subsidiary

–

–

(721)

444

Acquisition of holding in associate company

(15 518)

(4 136)

(15 518)

(4 136)

Cash outflow from investing activities

(71 739)

(25 517)

(72 436)

(24 158)

43 200

35 000

43 200

35 000

Linked units issued
Share issue expenses

–

(268)

–

(268)

48 761

(8 455)

48 761

(8 455)

Cash inflow from financing activities

91 961

26 277

91 961

26 277

Increase/ (decrease) in cash and cash equivalents

27 199

(357)

27 781

(247)

Cash and cash equivalents at beginning of year

28 929

29 286

28 839

29 086

56 128

28 929

56 620

28 839

Interest bearing borrowings raised/ (repaid)

CASH AND CASH EQUIVALENTS AT END OF THE YEAR

10

Scottsville Mall, Durban Road, Pietermaritzburg

21

Annual Report 2006

FINANCING ACTIVITIES

Notes To The Annual Financial Statements
30 September 2006

1. GENERAL INFORMATION
Ambit Properties Limited (the Company) is a public company listed on the JSE and is incorporated in South Africa. The address of its registered office
and principal place of business is disclosed in the introduction to the annual report. The principal activities of the Company and its subsidiary (the Group)
are described in the Directors’ Report
2. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS
In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards
Board (the IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective
for accounting periods beginning on or before 1 October 2005. The adoption of IFRS has not resulted in any adjustment to the amounts reported
previously in the annual financial statements for the year ended 30 September 2005.
3. ACCOUNTING POLICIES
The annual financial statements have been prepared in accordance with International Financial Reporting Standards. The accounting policies used in
the preparation of the financial statements are consistent with those applied in the prior year, with the exception of accounting for the premium on
units issued as disclosed under Debentures in Note 3.10 below and the Company’s carrying value of its investment in associate as described in note
3.4 below.
The principal accounting policies are set out below :
3.1

Basis of consolidation
The consolidated financial statements incorporate the results and financial position of the Company and all its subsidiaries, which are defined
as entities over which the Group has the ability to exercise control so as to obtain benefits from their activities. The results of subsidiaries are
included from the effective dates of acquisition and up to the effective dates of disposal. All inter-company transactions and balances between
Group companies are eliminated.
The accounting policies of the subsidiaries are consistent with those of the holding company.

3.2

Business combinations
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured
as the aggregate fair value of the underlying assets acquired, equity instruments issued and liabilities incurred or assumed at the date of exchange,
plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination
are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of
acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill and is tested for impairment
on an annual basis.
If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income
statement. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposal of a subsidiary, attributable goodwill
is included in the determination of the profit or loss on disposal.

3.3

Investment in subsidiaries
Investments in subsidiaries are recognised at cost less accumulated impairment losses.

3.4

Investment in associates
Associates are those companies, which are not subsidiaries or joint ventures, over which the Group exercises significant influence. Results of
associates are accounted for in the Group using the equity method of accounting, except when the investment is classified as held for sale, in
which case it is accounted for under IFRS 5: Non-Current Assets Held for Sale and Discontinued Operations. Any losses of associates are
brought to account until the investment in, and loans to, such associates are written down to a nominal amount. Thereafter losses are accounted
for only insofar as the Group is committed to providing financial support to such associates. The carrying value of investments in associates
represents the cost of each investment including unamortised goodwill, the share of post acquisition retained earnings or losses and other
movements in reserves. Equity accounted income represents the Group’s proportionate share of the associate’s post-acquisition accumulated
profit after accounting for dividends declared by those entities. Any significant movements between the year-end of associates and the Group
are accounted for. Where a Group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s
interest in the associate. Undistributed equity accounted earnings may be transferred to non-distributable reserves.
In the company the investment in associate is held at cost in accordance with IAS 27. The effects of this change in accounting policy are set
out in Note 6 below.

3.5

Investment properties
Investment properties are properties held to earn rental income and appreciate in capital value based on the increase in rental
income.

22

3. ACCOUNTING POLICIES (continued)
Investment properties are initially recognised at cost and are stated at their fair value at each reporting date. Gains or losses arising
from changes in the fair values are reflected in the income statement in the period in which they arise. Unrealised gains are
transferred to a non-distributable reserve in the statement of changes in equity. Unrealised losses are transferred against a nondistributable reserve to the extent that the decrease does not exceed the amount held in the non-distributable reserve. On
disposal of investment properties, the difference between the net disposal proceeds and the carrying value is charged or credited
to the income statement and then transferred from / to non-distributable reserves. Buildings are not depreciated.
Properties purchased by the company and settled by issuing linked units are recorded at the fair value of the properties acquired,
unless that fair value cannot be reliably estimated. If the entity cannot reliably estimate the fair value of the property, the entity
shall measure the value of the equity issued, and the corresponding increase in equity, indirectly, by reference to the fair value
of the equity instruments granted in terms of IFRS2: Share Based Payments. This excludes purchases of properties which are
regarded as business combinations as described in 3.2 above.
Buildings under development are carried at cost as property, plant and equipment and are transferred to investment property
upon completion.
3.6

Capitalisation of interest
Where the Group undertakes a major development or refurbishment of a property, interest is capitalised to the cost of the
property concerned during the construction period. Capitalisation of interest is suspended during extended periods in which
active development is interrupted.

3.7

Assets held for sale
Properties held for sale are classified as assets for sale and are measured at the lower of the assets’ previous carrying amount
and the fair value less costs to sell.

3.8

Taxation
Income tax expense comprises the sum of current tax payable, Secondary Tax on Companies and deferred taxation. Tax currently
payable is based on the taxable profit for the year. Taxable profit differs from accounting profit as it excludes income or expenses
that are taxable or deductible in other years and it excludes items never deductible or taxable.
Deferred taxation is provided for using the balance sheet liability method, based on temporary differences. Temporary differences
are differences between the carrying amounts of assets and liabilities for financial reporting purposes and their taxation bases.
Deferred taxation is charged to the income statement except to the extent that it relates to a transaction that is recognised directly
in equity, or a business combination that is an acquisition. A deferred taxation asset is recognised to the extent that it is probable
that future taxable profits will be available against which the associated unused tax losses and deductible temporary differences
can be utilised. Deferred taxation assets are reduced to the extent that it is no longer probable that the related tax benefit will
be realised. Deferred taxation assets and liabilities are only set off when there is a legally enforceable right to set off current tax
assets and liabilities.
Deferred taxation assets and liabilities are not recognised if the temporary difference arises from goodwill, or from the initial
recognition (other than business combinations) of other assets and liabilities in a transaction which effects neither the taxable profit
nor the accounting profit.

3.9

Impairment (excluding goodwill)
The carrying amount of the Group's assets is reviewed at each balance sheet date to determine whether there is any indication
of impairment. An impairment loss is recognised in profit or loss whenever the carrying amount of an asset exceeds its recoverable
amount, which is the higher of an asset's net selling price and value in use. Where an impairment loss is subsequently reversed,
the carrying amount of the asset is increased to the extent that the increased carrying amount does not exceed the original carrying
amount. A reversal of impairment loss is recognised immediately in profit or loss.

3.10 Financial instruments
A financial asset or financial liability is recognised on the balance sheet for as long as the group is party to the contractual provisions
of the instrument.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits held on call with banks and investments in money market instruments,
net of bank overdrafts where legal set-off is permissible.

23

Annual Report 2006

Deferred taxation is raised at the company tax rate on all temporary differences, including those arising from the revaluation of
properties. When a property is earmarked for future sale, deferred taxation is computed using the capital gains tax rate.

Notes To The Annual Financial Statements

(continued)

30 September 2006

3. ACCOUNTING POLICIES (continued)
Trade receivables
Trade and other receivables originated by the Group are held at amortised cost, using the effective interest rate method, after
deducting accumulated impairment losses. Receivables with no fixed maturity are held at cost.
Receivable- straight line basis adjustment
Rental income is recognised on the straight-line basis. Future rentals receivable over the lease period as a result of escalations
are recorded at the differential between the cash received inherent in the lease agreements and the smoothed revenue.
Investments
Financial instruments are initially measured at cost, including directly attributable transaction costs. Subsequent to the initial recognition these
instruments are measured as follows:
• Held-to-maturity investments are held at amortised cost using the effective interest rate method after deducting accumulated impairment
losses.
• Held-for-trading and available-for-sale financial assets are held at fair value.
Gains or losses on Available-for-sale financial assets and Held-for-trading financial assets and liabilities are recognised in net profit for the
year.
Financial liabilities and equity
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered
into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in
the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments
are set out below.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Debentures
Debentures are recognised at original cost less principal repayments. The premium arising on the issue of linked units is split between the
premium relating to the share and the premium relating to the debenture. The debenture premium is amortised over the remaining life of
the debenture (i.e. to 2029) and the resultant income may be transferred to non-distributable reserves.
Interest bearing borrowings
Interest bearing borrowings are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest
rate method. Amounts repayable in the next twelve months are classified as current borrowings.
Trade payables
Trade payables are carried at the fair value of the consideration to be paid in the future for goods or services that have been received or supplied
and invoiced or formally agreed with the supplier.
Financial guarantee contracts
Financial guarantee contracts are accounted for as insurance contracts and are initially recorded at cost. Subsequently, they are valued in terms
of IAS 37: Provisions, Contingent Liabilities and Contingent Assets.
3.11 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, for which it is probable that
an outflow of economic benefits will occur, and where a reliable estimate can be made on the settlement amount of the obligation.
3.12 Revenue recognition
Revenue comprises gross rental income, including all recoveries from tenants. Variable operating cost recoveries are recognised on the accrual
basis. Rental income and fixed operating cost recoveries are recognised on the straight line basis in accordance with IAS 17: Leases. The difference
between the rental income recognised on a cash flow/ accrual basis and the straight line basis is transferred to/ from non-distributable reserves.
Interest income is recognised at the effective rates of interest on a time related basis.
Dividend income and debenture interest are recognised when the right to receive them is established.
3.13 Leases
Investment properties leased out under operating leases are reflected as investment properties on the balance sheet. Where there are fixed
incrementals in rental, the income is recognised on a straight line basis in terms of IAS 17: Leases.

24

3. ACCOUNTING POLICIES (continued)
3.14 Deferred expenses
Deferred expenses comprise tenant installation costs and letting commissions which are amortised on a straight line basis over the lease period
to which they relate. These are currently included in accounts receivable due to the immaterial size thereof.
3.15 Distributions
In terms of the Debenture Trust Deed the interest entitlement on each debenture shall be not less than 90% of the net earnings of the company
before providing for debenture interest, depreciation, amortisation and taxes and before taking into account any revaluation surpluses or deficits
and income transferred to any non-distributable reserves, but after provision for funding cost, whether interest or dividend in nature.
3.16 Segment reporting
On a primary basis the group operates in the following segments:
• Retail
• Office
• Industrial
• Corporate
On a secondary basis the group reports on geographical locations as follows:
• Gauteng
• Pietermaritzburg
• Durban
• Other
3.17 Changes in accounting policy
Where there has been a change in accounting policy, all comparative numbers are retrospectively adjusted.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgments are continually evaluated and are based on historical experience as adjusted for current market conditions and other factors.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the
related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are discussed below.
(a) Estimate of fair value of investment properties
The best evidence of fair value is current prices in an active market for similar leases and other contracts. In the absence of such information,
the Group determines the amount within a range of reasonable fair value estimates. In making its judgement, the Group considers
information from a variety of sources including:
i) current prices in an active market for properties of different nature, condition or location (or subject to different lease or other
contracts), adjusted to reflect those differences;
ii) recent prices of similar properties in less active markets, with adjustment to reflect any changes in economic conditions since the date
of the transactions that occurred at those prices; and
iii) discounted cash flow projections based on reliable estimates of future cash flows, derived from the terms of any existing lease and
other contracts and (where possible) from external evidence such as current market rents for similar properties in the same location
and condition, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the
cash flows.
(b) Principal assumptions for management’s estimation of fair value
If information on current or recent prices is not available, the fair values of investment properties are determined using discounted cash
flow valuation techniques. The Group uses assumptions that are mainly based on market conditions existing at each balance sheet date.
The principal assumptions underlying management’s estimation of fair value are those related to: the receipt of contractual rentals, expected
future market rentals, maintenance requirement and appropriate discount rates. These valuations are regularly compared to actual market
yield data, and actual transactions by the Group and those reported by the market.
The expected future market rentals are determined with reference to current market rentals for similar properties in the same location
and condition.

25

Annual Report 2006

4.1

Notes To The Annual Financial Statements

(continued)

30 September 2006

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
4.2 Critical judgments in applying the Group’s accounting policies
Allocation of share premium and debenture premium
The Group has determined, in terms of the requirements of accounting standards, that the linked unit premium should be classified as debenture
premium and not share premium. Debenture premium will be amortised over the minimum contractual period of the debentures, namely
the remaining portion of 25 years from February 2004.
Non-distributable reserves
The Group transfers all capital profits and unrealised profits to non-distributable reserves.
In addition, balances arising due to accounting anomalies are transferred to non-distributable reserves at the discretion of the directors and these
currently comprise:
- straight line adjustments to rental income and fair value adjustments to investment properties
- deferred taxation on fair value adjustments to investment properties
- amortisation of debenture premium
5. NEW ACCOUNTING STANDARDS AND IFRIC INTERPRETATIONS
Certain new additional accounting standards and IFRIC interpretations have been published that are mandatory for accounting periods beginning on
or after 1 January 2006. These new standards and interpretations have not been early adopted by the Group. The directors do not expect that the
adoption of the standards and interpretations will have a material impact on future financial statements. The standards and interpretations in issue, but
not yet effective, that are relevant to the Group are:
IFRS 7: Financial Instrument Disclosures
IFRIC 10: Interim Reporting and Impairment
6. PRIOR YEAR ADJUSTMENTS
The accounting policy for the premium arising on the issue of linked units has been changed. This used to be accounted for as share premium but is
now accounted for as debenture premium in terms of IAS 32. The full amount of share premium has therefore been transferred to debenture premium
and is being amortised over the period until 2029. The prior year figures have been restated. The effect of the change in policy on the Group results
is as follows:
Gross
Tax
Net
R’000
R’000
R’000
Increase in profit for the year
2005
1 191
1 191
2006
1 776
1 776
The additional profit has been transferred to a non-distributable reserve through the statement of changes in equity.
The above has had the effect of increasing earnings by R1,8 million or 0,99 cents per weighted number of units in the current year (2005: R1,2 million
or 0,72 cents).
Balance sheet effect:

2006
R’000
32 985
20 268
(3 667)
49 586

Debenture premium as previously reported
Reclassification from share premium
Premium arising on current year unit issues
Amortisation
Debenture premium closing balance

2005
R’000
26 284
6 701
(1 891)
31 094

In accordance with IAS 27, the share of associate’s reserves is no longer accounted for in the Company, and is only accounted for in the Group financial
statements. The effect of this change in policy on the Company results is as follows:
Gross
Tax
Net
R’000
R’000
R’000
Decrease in profit for the year
2005
12 972
12 972
2006
12 465
12 465
The effect on the Company’s balance sheet is as follows:

2006
R’000
110 927
(26 929)
83 998

Investment in associate as previously reported
Removal of share of associate’s retained earnings
Investment in associate as restated

26

2005
R’000
82 944
(14 464)
68 480

Group

Company

R'000

2005
(restated)
R'000

R'000

2005
(restated)
R'000

659 288
671 000
(11 712)
80 431
(25 310)
1 172

549 706
555 500
(5 794)
44 800
(31 305)
8 592

538 896
548 600
(9 704)
80 431
(25 310)
1 148

443 819
448 500
(4 681)
44 800
(31 305)
7 677

97 257
(3 509)
809 329

93 413
(5 918)
659 288

81 481
(3 088)
673 558

78 928
(5 023)
538 896

15 221
824 550

11 712
671 000

12 792
686 350

9 704
548 600

–
93 652

–
92 931

(93 652)

(92 931)

–

–

139 102

112 946

Interest received from Whirlprops 37 amounts to

12 546

13 452

Profit after tax of subsidiary attributable to the holding company

11 202

10 422

2006

7. INVESTMENT PROPERTIES
Carrying value at beginning of the year
– At valuation
– Straight line adjustment
Acquisition of Investment properties
Disposals
Improvements to investment properties
Fair value adjustment
– At valuation
– Straight line adjustment
Carrying value at end of the year
Reconciliation to valuation:
Add: cumulative straight line adjustments
Investment properties at valuation

2006

Property descriptions are detailed on pages 40 and 41 of this report.
The property portfolio is subject to mortgage bonds in favour of Absa Bank
Limited and Nedcor Bank Limited as detailed in Note 14.
The cost of the investment properties is R604 million (2005: R547 million)
and they were valued by CB Richard Ellis (Pty) Ltd, independent valuers.
These fair values were approved by the directors, and the ranges of discount
and capitalisations rates in the respective sectors were as follows:
Sector
Discount rates
Terminal capitalisation rates
%
%
Retail
13,5 to 16,0
9,0 to 12,0
Industrial
14,5 to 16,3
10,0 to 13,0
Office
15,5 to 16,5
11,0 to 13,0
8. INTEREST IN SUBSIDIARY COMPANY

Less: Current portion
Long term portion
Directors' valuation
These loans bear interest at variable rates and have no fixed repayment
terms. The properties in the company have been sold to Ambit and will be
transferred to Ambit in the 2007 financial year.

27

%
Holding
100

Annual Report 2006

Whirlprops 37 (Pty) Ltd (incorporated in South Africa)
Shares at cost
Loans

Issued share
capital
R
100

Notes To The Annual Financial Statements

(continued)

30 September 2006

Group

Company

R'000

2005
(restated)
R'000

R'000

2005
(restated)
R'000

83 998
26 929
110 927

68 480
14 464
82 944

83 998
–
83 998

68 480
–
68 480

Directors' valuation

110 927

82 944

110 927

82 944

Market value

118 617

68 278

118 617

68 278

543 820
560 630
(16 810)
–
16 119
16 089
(34 679)
(55 714)
(123 416)

283 698
296 350
(12 652)
86 034
11 908
12 625
(28 714)
(31 667)
(62 075)

543 820
560 630
(16 810)
–
16 119
16 089
(34 679)
(55 714)
(123 416)

283 698
296 350
(12 652)
86 034
11 908
12 625
(28 714)
(31 667)
(62 075)

362 219

271 809

362 219

271 809

45 814

36 388

–

–

107 278
(7 147)
(34 645)
65 486
(24 029)
41 457
–

101 338
(6 652)
(28 454)
66 232
(18 202)
48 030
(452)

–
–
–
–
–
–
–

–
–
–
–
–
–
–

Net profit after dividends declared

41 457

47 578

–

–

Group's share
Share of Oryx's prior year adjustments

12 465
–

13 589
(617)

–
–

–
–

Group's share of profit after tax

12 465

12 972

–

–

2006

2006

8. INTEREST IN SUBSIDIARY COMPANY (continued)
Whirlprops 37 (Proprietary) Limited is a property investment company, the
shares and loan account of which have been pledged as security for obligations
in connection with the borrowing facilities set out in Note 14. The company
has the same year-end as Ambit.
9. INVESTMENT IN ASSOCIATE COMPANY
Oryx Properties Limited is a property loan stock company incorporated in
Nambia and listed on the NSX. The carrying value of the Group's 30,56%
(2005: 30,49%) interest in Oryx comprises:
Shares (at cost)
Cumulative share of post acquisition reserves
Carrying value

Financial information of associate at 30 June:
Investment properties
– At valuation
– Straight line adjustment
Property and equipment
Rent receivable– straight line adjustment
Current assets
Current liabilities
Deferred taxation
Non-current liabilities
Net asset value
Group's share of income since acquisition:
Results for the year to 30 June
Rental revenue before straight line adjustments
Profit before finance costs
Finance costs
Debenture interest
Profit before taxation
Taxation
Net profit for the year
Dividends declared

28

Group

Company

R'000

2005
(restated)
R'000

R'000

2005
(restated)
R'000

9 868
–
12 465

8 215
123
12 972

9 868
–
–

8 215
123
–

22 333

21 310

9 868

8 338

4
53 185
2 939

2
28 065
862

4
53 185
3 431

2
28 065
772

56 128

28 929

56 620

28 839

20 000

20 000

20 000

20 000

1 865

1 738

1 865

1 738

2006

2006

9. INVESTMENT IN ASSOCIATE COMPANY (continued)
During the 2006 year, Oryx restated its prior year figures in respect of the
reallocation of share premium to debenture premium and the amortisation
thereof. This did not have an effect on the profit accounted for by the Group.
Income received from associate comprises:
Debenture interest
Dividends
Share of retained income

Oryx has a 30 June year-end, but there were no significant items between
that date and 30 September 2006 that required adjustment.
Guarantee
The Company's investment in Oryx is pledged as security for obligations in
connection with the borrowing facilities set out in Note 14.
10. CASH AND CASH EQUIVALENTS
Petty cash
Cash on call
Current accounts

11. SHARE CAPITAL AND PREMIUM
Share capital
Authorised
2 000 000 000 ordinary shares of 1 cent each
Issued 186 482 837
(2005: 173 814 215) ordinary shares
of 1 cent each
In order to fund property acquisitions, 12 668 622 units were issued for cash
on 13 April 2006 at a price of 341 cents. An additional 14,00 cents per unit
was received in respect of the interim distribution subsequently paid.
Each share is linked to a debenture, which together comprise a linked unit
(refer Note 13).

29

Annual Report 2006

The unissued shares are under the control of the directors, until the next
Annual General Meeting.

Notes To The Annual Financial Statements

(continued)

30 September 2006

Group

12. NON-DISTRIBUTABLE RESERVES
Balance at beginning of the year
Movement:
Revaluation/ disposal of investment properties net of deferred tax
Undistributed equity accounted income
Amortisation of debenture premium
Straight line adjustments:
– Rental accrued in advance (net of deferred taxation)
– Revaluation effect (net of deferred taxation)
Balance at end of the year
Comprising:
Capital reserves
Realised capital surpluses (net of capital gains tax)
Unrealised
– Revaluations
– Deferred taxation
Straight line adjustments:
– Rental accrued in advance (net of deferred taxation)
– Revaluation effect (net of deferred taxation)
Amortisation of debenture premium
Share of associate retained earnings

Company

R'000

2005
(restated)
R'000

R'000

2005
(restated)
R'000

107 386

25 652

75 039

15 830

69 259
12 465
1 776

68 443
12 100
1 191

58 058
–
1 776

58 018
–
1 191

2 490
(2 490)

4 202
(4 202)

2 404
(2 404)

3 566
(3 566)

190 886

107 386

134 873

75 039

5 926
156 728
220 744
(64 016)

5 016
88 379
124 477
(36 098)

5 926
125 280
176 450
(51 170)

5 016
68 132
95 960
(27 828)

10 806
(10 806)
3 667
24 565

8 316
(8 316)
1 891
12 100

9 082
(9 082)
3 667
–

6 890
(6 890)
1 891
–

190 886

107 386

134 873

75 039

335 669

312 866

335 669

312 866

2006

2006

The reserves arise from the revaluation or realisation of investment properties,
the adjustment to rental required for straight lining in terms of IAS 17, the
amortisation of debenture premium and the share of the associates retained
earnings. The unrealised capital reserve is not distributable.
13. DEBENTURES
186 482 837 (2005: 173 814 215) unsecured variable
rate debentures of 180 cents each
In terms of the Debenture Trust Deed, the interest entitlement of every
debenture linked to each ordinary share shall not be less than 90% of net
earnings of the Company before providing for debenture interest, depreciation,
amortisation and taxes and before taking into account any revaluation surpluses
or deficits and income which is to be transferred to any non-distributable
reserves but after provision for funding costs, whether interest or dividend
in nature. The interest is payable bi-annually. The debentures are redeemable
at the option of the holder after 25 years from the first allotment date (i.e.
2029).

30

13. DEBENTURES (continued)
Debenture premium
Premium arising on listing
Subsequent issues
Accumulated issue expenses
Amortisation of debenture premium
prior years
current year

14. INTEREST BEARING BORROWINGS
14.1 ABSA BANK LIMITED
Loan bearing interest at 11,93% per annum until 09/03/2007, and
prime less 1,5% thereafter
Loan bearing interest at 11,13% per annum until 09/03/2007, and
prime less 2,0% thereafter
Loan bearing interest at 11,02% per annum until 26/08/2008, and
prime less 1,5% thereafter
Loan bearing interest at 10,22% per annum until 26/08/2008, and
prime less 2,0% thereafter
Loan bearing interest at 10,65% per annum until 28/10/2007, and
prime less 1,5% thereafter
Loan bearing interest at 9,85% per annum until 28/10/2007, and
prime less 2,0% thereafter
Loan bearing interest at prime less 1,5% per annum
Loan bearing interest at prime less 2,0% per annum

14.2 NEDCOR BANK LIMITED
Loan bearing interest at 14,64% per annum until 25/01/2006, and
prime less 1,5% thereafter
Loan bearing interest at 13,18% per annum until 05/02/2006, and
prime less 1,5% thereafter
Loan bearing interest at 14,63% per annum until 05/02/2006, and
prime less 1,5% thereafter
Loan bearing interest at 14,58% per annum until 05/02/2006, and
prime less 1,5% thereafter
Loan bearing interest at 11,73% per annum until 28/02/2009, and
prime less 1,5% thereafter
Loan bearing interest at 10,87% per annum until 28/02/2009, and
prime less 2,0% thereafter
Loan bearing interest at 10,76% per annum until 06/09/2010, and
prime less 2,0% thereafter
Loan bearing interest at 8,92% per annum until 09/03/2009, and
prime less 2,0% thereafter
Loan bearing interest at 8,97% per annum until 16/12/2005, and
prime less 1,5% thereafter
Loan bearing interest at prime less 1,5% per annum
Loan bearing interest at prime less 2,0% per annum

31

Company

R'000

2005
(restated)
R'000

2006
R'000

2005
(restated)
R'000

28 361
28 955
(4 063)

28 361
8 687
(4 063)

28 361
28 955
(4 063)

28 361
8 687
(4 063)

(1 891)
(1 776)

(700)
(1 191)

(1 891)
(1 776)

(700)
(1 191)

49 586

31 094

49 586

31 094

–

27 265

–

27 265

27 246

–

27 246

–

–

25 226

–

25 226

25 210

–

25 210

–

–

25 218

–

25 218

25 202
–
80 132

–
58 701
–

25 202
–
80 132

–
58 701
–

157 790

136 410

157 790

136 410

–

1 340

–

1 340

–

18 788

–

18 788

–

5 771

–

5 771

–

4 696

–

4 696

–

1 362

–

1 362

1 362

–

1 362

–

30 221

–

30 221

–

75 366

–

75 366

–

–
–
50 841
157 790

35 102
63 290
–
130 349

–
–
50 841
157 790

35 102
63 290
–
130 349

Annual Report 2006

Group
2006

Notes To The Annual Financial Statements

(continued)

30 September 2006

Group

Company

R'000

2005
(restated)
R'000

R'000

2005
(restated)
R'000

380

440

380

440

315 960

267 199

315 960

267 199

598 429

475 366

390 000
(315 960)

294 129
(267 199)

74 040

26 930

36 433

10 239

28 175

6 044

27 922
(1 104)
1 104
144

25 761
(1 716)
1 716
433

23 347
(982)
982
144

21 560
(1 457)
1 457
571

64 499

36 433

51 666

28 175

2006

2006

14. INTEREST BEARING BORROWINGS (continued)
The loans detailed above in 14.1 and 14.2 are secured by first
mortgage bonds over the property portfolio, which has a fair value of
R824,6 million, and by a pledge of the Group’s investment in Oryx
which has a value of R110,9 million.
The Absa and Nedbank loans are repayable on 31/01/2014.
14.3 BP SOUTHERN AFRICA (PROPRIETARY) LIMITED
This loan does not bear interest and is repayable
in monthly installments of R5 000 until January 2012.
It is secured over Section 92 Nedbank Plaza,
Pietermaritzburg which has a fair value of R2,25 million.

The Company’s Articles of Association limit the
Group’s borrowing capacity (excluding debentures)
to 60% of its consolidated total assets.
Borrowing capacity
Borrowing facility with Absa Bank Limited and Nedcor Bank Limited
Less: borrowings
Unutilised borrowing facility
Subsequent to the year-end, the borrowing facility was increased to
R700 million.
An overdraft facility of R5 million exists with Absa Bank Limited, of
which R0,8 million (2005:R0,9 million) has been utilised for municipal
guarantees. With the exception of the guarantees issued, the overdraft
bears interest at prime less 2% (2005:1,5%), with no security and is
repayable on demand.
15. DEFERRED TAXATION LIABILITY
Movements in deferred taxation:
Balance at beginning of the year
Charged to the income statement
Deferred taxation on revaluation of investment properties
Straight line adjustment- revaluation
Straight line adjustment– rental
Temporary differences charged to the income statement
Balance at end of the year

32

Group

Company

R'000

2005
(restated)
R'000

R'000

2005
(restated)
R'000

202
583
(102)
(143)
(61)
64 020

135
388
(112)
(38)
(38)
36 098

202
451
(102)
–
(61)
51 176

135
361
(112)
–
(38)
27 829

64 499

36 433

51 666

28 175

82 806
17 007

76 889
16 641

69 345
14 113

63 459
12 695

99 813

93 530

83 458

76 154

17. PROPERTY EXPENSES
Property expenses include the following major categories:
Body corporate levies
Cleaning
Collection commission
Electricity
Rates and taxes
Security
Water

2 115
1 264
2 630
5 182
5 734
1 727
980

1 992
1 239
2 639
4 361
5 716
1 465
1 004

2 115
1 240
2 179
4 520
4 428
1 555
891

1 992
1 221
2 148
3 750
4 399
1 465
812

18. INTEREST INCOME
Bank
Interest on net rentals
Prepaid debenture interest on units issued
Subsidiary company

186
80
1 774
–

281
63
2 029
–

170
81
1 774
12 546

272
63
2 029
13 452

2 040

2 373

14 571

15 816

2006

15. DEFERRED TAXATION LIABILITY (continued)
Temporary differences comprise of:
Building allowances
Tenant installation and letting commission costs
Provision for doubtful debts
Tax losses
Deposits received
Deferred taxation on revaluation of investment properties

2006

16. RENTAL REVENUE
Rental revenue before straight line adjustments
Recoveries

33

Annual Report 2006

Deferred taxation has been raised at the corporate tax rate
of 29%, even though the taxation payable would be at the
capital gains tax rate of 14,5% should the properties be
realised.

Notes To The Annual Financial Statements

(continued)

30 September 2006

Group

19. ADMINISTRATIVE EXPENSES
Announcements and annual reports
Asset management fees
JSE Securities Exchange fee
Professional fees
Travel
Valuations
Other

20. OTHER EXPENSES
Net provision for doubtful debts expense
Auditors’ remuneration – audit fee
Directors' emoluments:
Executive – salary, benefits and other emoluments
Non-executive – fees
Donations
Other

21. TAXATION EXPENSE
South African Normal Taxation
Current
Capital Gains Taxation
Deferred taxation
Current
Change in tax rate
Prior year

Reconciliation of effective tax rate:
Statutory rate
Share of associate company's profits
Non-taxable income
Capital Gains Taxation
Disallowable expenditure
Change in tax rate
Prior year adjustments

34

Company

R'000

2005
(restated)
R'000

R'000

2005
(restated)
R'000

313
3 903
131
83
153
210
473
5 266

355
2 750
130
58
160
270
761
4 484

313
3 903
131
78
153
198
474
5 250

355
2 518
130
58
160
270
761
4 252

208
270

154
219

208
270

196
219

1 061
411
50
26

920
415
–
–

1 061
411
50
26

920
415
–
–

2 026

1 708

2 026

1 750

59

308

59

308

28 066
–
–

26 281
(341)
261

23 491
–
–

22 079
(202)
261

28 125

26 509

23 550

22 446

%
29,0
(3,2)
(0,5)
(0,1)
–
–
–

%
29,0
(3,5)
(0,3)
(0,7)
0,1
(0,3)
0,2

%
29,0
–
(0,6)
(0,2)
–
–
–

%
29,0
–
(0,5)
(0,9)
0,1
(0,2)
0,3

25,2

24,5

28,2

27,8

2006

2006

2006
R'000

2005
(restated)
R'000

83 534
55 199
138 733
(1 776)
(79 015)
57 942
(55 199)

2006
Cents per
unit/share*

2005
(restated)
Cents per
unit/share*

81 807
47 799
129 606
(1 191)
(76 339)
52 076
(47 799)

46,48
30,72
77,20
(0,99)
(43,97)
32,24
(30,72)

49,18
28,73
77,91
(0,72)
(45,89)
31,30
(28,73)

2 743

4 277

1,52

2,57

55 199
(2 703)
55 239
(55 199)

47 799
(4 202)
47 874
(47 799)

30,72
(1,50)
30,74
(30,72)

28,73
(2,53)
28,77
(28,73)

40

75

0,02

0,04

59 867
55 199
115 066
(1 776)
(55 648)
57 642
(55 199)

58 413
47 799
106 212
(1 191)
(53 718)
51 303
(47 799)

33,31
30,72
64,03
(0,99)
(30,97)
32,07
(30,72)

35,11
28,73
63,84
(0,72)
(32,29)
30,83
(28,73)

2 443

3 504

1,35

2,10

29,60

27,50

22. HEADLINE EARNINGS AND EARNINGS PER LINKED
UNIT/ SHARE (WEIGHTED)
GROUP
Net profit (earnings) – shares
Debenture interest
Net profit (earnings) – linked units
Amortisation of debenture premium
Capital surpluses (net of deferred taxation)
Headline earnings – linked units
Debenture interest
Headline earnings – shares
Reconciliation to undistributed income:
Debenture interest
Rental straight lining net of deferred taxation
Distributable earnings
Debenture interest
Undistributed income
COMPANY
Net profit (earnings) – shares
Debenture interest
Net profit (earnings) – linked units
Amortisation of debenture premium
Capital surpluses (net of deferred taxation)
Headline earnings – linked units
Debenture interest
Headline earnings – shares

Distribution per linked unit in issue
Based on 186 482 837 (2005: 173 814 215) units in issue
at 30 September 2006.

35

Annual Report 2006

* Based on a weighted average number of 179 707 418 (2005: 166 351 253)
units in issue for the year.

Notes To The Annual Financial Statements

(continued)

30 September 2006

Group

23. CASH GENERATED BY OPERATING ACTIVITIES
Profit before taxation
Adjusted for:
Straight-line adjustment
Amortisation of debenture premium
Share of income from associate
Fair value adjustment for investment properties
Profit on disposal of investment properties
Interest received
Debenture interest
Finance costs
Cash generated from operations before working capital changes
Decrease/ (increase) in trade and other receivables
(Decrease)/ increase in trade and other payables

24. DISTRIBUTIONS PAID TO LINKED UNITHOLDERS
Debenture interest paid is reconciled as follows:
Amounts unpaid at beginning of the year
Amounts charged to the income statement
Amounts unpaid at end of the year

25. COMMITMENTS
Investment property contracted for

26. LEASES
The future minimum lease commitments receivable
under non-cancellable operating leases are as follows:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
Ambit enters into lease contracts with tenants in exchange for their use
of the property.

36

Company

R'000

2005
(restated)
R'000

R'000

2005
(restated)
R'000

111 659

108 316

83 417

80 859

(3 807)
(1 776)
(12 465)
(93 450)
(72)
(11 908)
55 199
23 902
67 282
3 628
(805)
70 105

(5 918)
(1 191)
(12 972)
(87 495)
(711)
(10 711)
47 799
25 992
63 109
(4 019)
4 360
63 450

(3 386)
(1 776)
–
(78 095)
(72)
(24 439)
55 199
23 902
54 750
4 620
(517)
58 853

(5 023)
(1 191)
–
(73 905)
(711)
(24 154)
47 799
25 992
49 666
(4 065)
3 157
48 758

(25 033)
(55 199)
29 098

(26 520)
(47 799)
25 033

(25 033)
(55 199)
29 098

(26 520)
(47 799)
25 033

(51 134)

(49 286)

(51 134)

(49 286)

–

22 500

–

22 500

92 118
217 510
18 927

73 435
154 204
24 630

76 706
183 668
18 927

62 284
124 358
24 630

2006

2006

Retail
R'000

Office
R'000

Industrial
R'000

Corporate
R'000

Total
R'000

55 556
41 257
58 270
(29)

25 818
18 011
18 861
77

18 439
15 306
20 126
24

–
–
–
–

99 813
74 574
97 257
72

487 950
2 912

190 200
1 331

146 400
1 094

–
439

824 550
5 776

Liabilities
Deferred taxation liability
Trade and other payables

40 472
5 500

10 780
1 677

12 751
1 250

496
660

64 499
9 087

2005
GROUP
Income statement
Rental
Net property income
Fair value adjustments to investment properties
Profit on disposal of investment properties

49 383
36 083
65 700
–

28 766
20 343
9 209
703

15 381
12 875
18 504
8

–
–
–
–

93 530
69 301
93 413
711

381 900
3 292

155 800
1 184

133 300
426

–
4 502

671 000
9 404

23 987
6 430

5 257
2 178

6 843
1 029

346
253

36 433
9 890

27. SEGMENT INFORMATION
– all items are stated before straight line adjustments

2006
GROUP
Income statement
Rental
Net property income
Fair value adjustments to investment properties
Profit on disposal of investment properties
Balance sheet
Assets
Investment properties
Trade and other receivables

Balance sheet
Assets
Investment properties
Trade and other receivables
Liabilities
Deferred taxation liability
Trade and other payables

37

Annual Report 2006

BUSINESS SECTORS

Notes To The Annual Financial Statements

(continued)

30 September 2006

Gauteng
R'000

Durban
R'000

Pietermartizburg
R'000

Other
R'000

Total
R'000

65 227
49 392

12 028
8 196

14 065
9 979

8 493
7 007

99 813
74 574

80 114

10 303

2 154

4 686

97 257

558 300

97 550

80 900

87 800

824 550

59 044

12 061

14 613

7 812

93 530

475 900

72 800

77 800

44 500

671 000

27. SEGMENT INFORMATION (continued)
– all items are stated before straight line adjustments
GEOGRAPHICAL
2006
GROUP
Income statement
Rental
Net property income
Fair value adjustments
to investment properties
Balance sheet
Investment properties
2005
GROUP
Income statement
Rental
Balance sheet
Investment properties

28. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
The Group's financial instruments consist primarily of cash deposits with banks, investments, trade and other receivables, payables and interest bearing
borrowings. All these financial instruments are carried at cost or amortised cost.
In the normal course of its operations, the Group is inter alia exposed to credit, interest rate and liquidity risk. In order to manage these risks, the
Group may enter into transactions which make use of derivatives. The Group does not speculate in or engage in the trading of derivative instruments.
Credit risk
The Group's financial assets that are potentially subject to credit risk include cash deposits with banks and trade and other receivables. The credit risk
attached to the Group's cash deposits is minimised by its cash deposits only being placed with reputable financial institutions. Credit risk with respect
to trade and other receivables is limited due to the large and diverse tenant base. In addition tenant creditworthiness is thoroughly assessed before
leases are signed.
Interest rate risk
The Group is exposed to interest rate price risk on its fixed rate loan liabilities and accounts receivable and payable, which can impact on the fair value
of the instruments. The Group is exposed to interest rate cash flow risk in respect of its variable rate loans and short-term cash investments, which
can impact on the cash flows of these instruments. The exposure to interest rate risk is managed through monitoring cashflows and investing surplus
cash at negotiated rates which enables the Group to maximise returns while minimising risks.
Liquidity risk
The Group proactively manages its liquidity risk by regularly assessing cash requirements and monitoring cashflows, whilst ensuring surplus cash is
invested in a manner to achieve maximum returns.

38

GROUP
2006
R'000

2005
R'000

707
2 573
3 903
12 574

386
2 176
2 750
12 861

54

344

953
9 868
–
12 465
33

2 029
8 215
123
12 972
20

–
68

52
61

157 790

136 410

34 197

21 860

29. RELATED PARTY TRANSACTIONS
PARTY CONCERNED
Amounts expensed to the income statement:
Marriott Property Services (Proprietary) Limited
Ambit Management Services (Proprietary) Limited
Absa Bank Limited
Amounts credited to the income statement:
Absa Bank Limited

Oryx Properties Limited

TRANSACTION TYPE

– Leasing commissions
– Collection commissions
– Asset management fees*
– Interest paid on loans

– Bank interest received
– Interest received
(prepaid distribution on issue of units)
– Interest received
– Dividends received
– Share of after tax profits
– Fees for directorship

Property acquisitions and listing expenses:
Motseng Marriott Property Services (Proprietary) Limited
Exchange Sponsors (Proprietary) Limited

– Valuation fees
– Sponsors fees

Amounts owing to related parties:
Absa Bank Limited

– Long-term loans

Amounts owing from related parties:
Absa Bank Limited

– Cash

The Group is managed by Ambit Management Services (Proprietary) Limited (AMS). This company, which is considered to be a related party, is owned
by Absa Bank Limited (Absa). Marriott Property Services (Proprietary) Limited (Marriott) sold the rights to its 50% share in AMS to Absa in August
2006. Absa and Marriott, together with their related group companies, are consequently also regarded as related parties for the purpose of the
disclosures above. All transactions are concluded on an arms length basis with market related terms and conditions.
Key personnel are the executive and non-executive directors, whose remuneration is disclosed in Note 20.
In April 2006, Ambit acquired 50% of Akals Properties (Proprietary) Limited in conjunction with Pinespring Properties (Proprietary) Limited, a wholly
owned subsidiary of Highpine Properties (Proprietary) Limited, a company in which Mr J H Beare has an interest.

39

Annual Report 2006

* AMS sub-contracts certain of these services to Absa and Marriott and remunerates them out of the fees received from Ambit Properties Limited.

Property Portfolio
30 September 2006

Address

Location

Site
area m2

Rentable
area m2

% Vacancy
by rentable
area

Major leases

Date of
acquisition

Year-end
valuation

% of
fund
by value

RETAIL
Park Meadows
Kensington

Gauteng

75 873

24 402

0

Pick 'n Pay
Ackermans
Furniture City
Hi Fi Corporation
Dischem
Baby City
Mr Price Weekend
Mr Price Home
Sportsmans Warehouse
Home Etc
and others

29/01/2004

327 500 000

39,7

Scottsville Mall
Durban Road

Pietermaritzburg

19 326

14 501

4,6

Shoprite Checkers
Ster Kinekor
El Sombrero Spur
Miladys
Absa Bank
Nedbank
and others

26/01/2004

72 500 000

8,8

Lowveld Lifestyle
Centre

Nelspruit

24 566

11 420

0

Wetherleys
Beds 4 Africa
Jumbo Cash & Carry

11/04/2006

43 700 000

5,3

cnr Oxford &
Terminus Street

East London

2 007

1 932

0

Mr Price
Total Sports
Discom
and others

11/02/2004

15 400 000

1,9

Old Main Road
Pinetown (50%)

Durban

8 112

9 190

0

Midas
Engen
Wesbank

12/07/2006

14 150 000

1,7

Royal Palm Avenue
Umgeni

Durban

4 461

927

0

Engen
Steers
and others

27/01/2004

10 200 000

1,2

Truworths Corner
Mitchells’ Plain

Cape Town

512

512

0

First National Bank

08/03/2004

4 500 000

0,5

487 950 000

59,1

Total Retail
OFFICES
43 Bekker Road
Vorna Valley
Midrand

1,2
Gauteng

14 503

8 312

14,4

Wyeth South Africa
Syngenta South Africa

03/02/2004

52 500 000

6,4

79 Hyde Park Lane
Hyde Park

Gauteng

10 106

4 379

14,5

Marriott
Universal Database
Marketing

03/02/2004

26 500 000

3,2

Horizon Park
Roodepoort

Gauteng

4 158

2 427

0

Absa Bank Limited

11/01/2006

26 000 000

3,1

40

OFFICES (continued)
cnr Reserve Road & Biccard
Street
Braamfontein

Location

Site
area m2

Rentable
area m2

% Vacancy
by rentable
area

Major leases

Date of
acquisition

Year-end
valuation

% of
fund
by value

Gauteng

991

5 984

1,2

Firstrand Bank
The Gauteng Provincial
Government

28/01/2004

18 600 000

2,3

Accord Education Trust
Toplink

27/01/2004

18 200 000

2,2

Engen
Coimbra
Splashes

26/01/2004

17 300 000

2,1

Department of Health

29/01/2004

10 700 000

1,3

2-4 Golf Course Drive
Mount Edgecombe

Durban

3 014

3 042

25,4

36 Newport Avenue
Glenashley

Durban

3 716

2 766

5,9

7 Derby Place
Westville

Durban

4 826

2 158

18,9

3 Sookhai Place
Westville

Durban

3 596

1 848

1,1

Thebe Risk Services
Volker Wattrus & De Witt

29/01/2004

10 000 000

1,2

1 Derby Place
Westville

Durban

2 017

960

30,7

Ensign Shipping & Logistics
Imperial Fleet Services

26/01/2004

4 900 000

0,6

2 George McFarlane Lane

Pietermaritzburg

596

572

36,6

10 Derby Place
Westville

Durban

516

554

0

Total Offices
INDUSTRIAL
8 Jansen Road
Jet Park

Wesbank

26/01/2004

3 200 000

0,4

The KZN Provincial
Administration

26/01/2004

2 300 000

0,3

190 200 000

23,1

11,4
Gauteng

48 946

22 774

0

12 Piet Rautenbach Street,
Rosslyn

Gauteng

135 001

22 310

3,7

12 Nourse Avenue
Epping

Cape Town

17 277

10 581

4 062

233 Hendrik Verwoerd Drive, Gauteng
Randburg
9 Montague Drive Montague

Cape Town

2 Cardiff Road

Pietermaritzburg

110 Intersite Avenue
Springfield

Picpack Grindrod

03/02/2004

59 200 000

7,2

Dept of Public Works
and others

15/07/2005

37 500 000

4,5

0

Rare Woods
First Garment

04/01/2005

16 200 000

2,0

2 958

0

McCarthy Retail

27/02/2004

10 500 000

1,3

5 028

2 669

2,0

Progress Lighting and Fire

19/03/2004

8 000 000

1,0

10 480

3 114

0

Central African Seed
Services

26/01/2004

5 200 000

0,6

Durban

2 101

1 376

0

MacPhersons Office
Plan

28/01/2004

4 500 000

0,6

94 Moore Road

Durban

1 095

1 197

0

Transworld Tyres Africa

29/01/2004

3 400 000

0,4

32 Intersite Avenue
Springfield

Durban

1 157

600

0

Tactic Merchant
Services

28/01/2004

1 900 000

0,2

Total Industrial

1,3

146 400 000

17,8

Total Portfolio

3,5 *

824 550 000

100,0

* Old Main Road Pinetown excluded as held for development.

41

Annual Report 2006

Address

Notice Of Annual General Meeting
AMBIT PROPERTIES LIMITED Reg. No. 2001/007003/06
JSE Code: ABT ISIN Code: ZAE000051645
PLEASE TAKE NOTICE that the Annual General Meeting of the Company will be held at the Quatermain Premier Boutique Hotel, 137 West Road South,
Morningside, Johannesburg, on Wednesday 21st day of February 2007 at 10am.
AGENDA
1. Notice convening the Meeting.
2. Apologies.
3. Confirmation of the minutes of the Annual General Meeting held on the 7th day of February 2006.
4. Report of the Chairman.
5. To receive the audited Annual Financial Statements of the Company including the reports of the auditors and directors for the year ended
30 September 2006.
6. To approve the remuneration of the non-executive directors for the financial year ended 30 September 2006 and to approve a 10% increase in the
remuneration of the non-executive directors for the year ahead as follows:
• Non-executive director

R55 000 p.a.

• Chairman of the Board, an additional

R38 500 p.a.

• Chairman of the Risk, Audit and Compliance Committee (RA&CC), an additional

R33 000 p.a.

• Member of the Risk, Audit and Compliance Committee (RA&CC), an additional

R16 500 p.a.

• Member of the Investment Committee, an additional

R11 000 p.a.

7. To consider and, if deemed fit, to pass, with or without modification, the following resolutions:
7.1 Ordinary Resolution number 1:
“Resolved that the unissued linked units of the Company be placed under the control of the directors, and that they are hereby authorised, subject
to section 221 and 222 of the Companies Act of 1973, as amended, and to the Listings Requirements of the JSE Limited, to allot and/or issue
linked units to such person or persons on such terms and conditions as they may determine, subject to the following limitations:
a) The authority will expire at the next Annual General Meeting of the Company.
b) The authority may be varied or revoked by any general meeting of the Company prior to such annual general meeting.
c) The authority shall not authorize the allotment or issue of any such shares or debentures to any director of the Company or his nominee, or
to any body corporate which is or the directors of which are accustomed to act in accordance with the directions or instructions of such
director or nominee, or at a general meeting of which such director or his nominee is entitled to exercise or control the exercise of one-fifth
or more of the voting power, or to any subsidiary of such body corporate unlessi)

the particular allotment or issue has prior to the allotment or issue been specifically approved by the Company in general meeting; or

ii)

such shares or debentures are allotted or issued under a contract underwriting such shares or debentures; or

iii)

such shares or debentures are allotted or issued in proportion to existing holdings, on the same terms and conditions as have been
offered to all the members or debenture-holders of the company or to all the holders of the shares or such debentures of the class or
classes being allotted or issued; or

iv)

such shares or debentures are allotted or issued on the same terms and conditions as have been offered to members of the public.”

7.2 Ordinary Resolution number 2:
“Resolved to authorise the directors to re-appoint Deloitte & Touche as the auditors of the company and to determine the remuneration of the
auditors for the past period.”

42

7.3 Ordinary Resolution number 3:
“To re-elect retiring and confirm the appointment of any new directors in accordance with the Articles of Association. Such elections will be moved
in a single motion, if a resolution that it be so moved is first agreed, without any vote being cast against it. Otherwise motions for re-election will
be moved individually.”
“In terms of the Company's Articles of Association, one third of the directors are required to retire annually on a rotation basis, but are eligible
for re-election. Accordingly, Mr F Uys and Mr R R Emslie retire by rotation but being eligible, offer themselves for re-election.”
“To ratify the resignation of Mr J Zidel (full director) who resigned from the board of directors on 3 May 2006.”
“To ratify the resignation of Mr C J Ewin (full director) who resigned from the board of directors on 16 August 2006.”
7.4. Ordinary Resolution number 4:
“To confirm the appointment of new directors nominated in accordance with the Articles of Association.”
7.5 Ordinary Resolution number 5:
“Resolved that, subject to no less than 75% of linked unitholders, present in person or by proxy and entitled to vote at the Annual General
Meeting at which this ordinary resolution is to be considered, voting in favour thereof, the directors of the Company be and are hereby authorised,
by way of general authority, valid until the next Annual General Meeting of the Company, or for 15 months from the date of this Annual General
Meeting, whichever is first, to issue all or any of the authorised but unissued linked units in the capital of the Company for cash as they in their
discretion deem fit, subject to the following limitations:
•

The securities must be of a class already in issue;

•

The securities must be issued to public unitholders and not to related parties;

•

The general issue of linked units for cash in the aggregate in any one financial year may not exceed 15% of the Company's issued linked unit
capital of that class;

•

The maximum discount at which the securities may be issued is 10% of the weighted average traded price of those securities over the 30
business days prior to the date that the price of the issue is determined or agreed by the directors of the Company; and

•

That a press announcement giving full details, including the impact on net asset value and earnings per linked unit, will be published at the
time of any issue representing, on a cumulative basis within one year, 5% or more of the number of linked units of that class in issue prior
to the issues.”

8. To transact any other business which under the Articles of Association, may be transacted at an Annual General Meeting.
9. General

43

Annual Report 2006

AMBIT MANAGEMENT SERVICES (PROPRIETARY) LIMITED
COMPANY SECRETARY

Notice Of Annual General Meeting

(continued)

AMBIT PROPERTIES LIMITED Reg. No. 2001/007003/06
JSE Code: ABT ISIN Code: ZAE000051645
NOTE:
1. A linked unitholder (certificated or own name dematerialised unitholder) entitled to attend and vote is entitled to appoint a proxy to attend, speak,
vote, and on a poll, vote in his stead, and such proxy need not also be a linked unitholder of the Company.
2. The Proxy Form must be deposited at the Company Secretary's Office or with the Transfer Secretaries not less than 48 (FORTY-EIGHT) hours before
the time of holding the meeting. Linked unitholders (other than own name dematerialised unitholders) who have dematerialised their units should
instruct their broker or CSDP as to how they want to vote on the resolutions at the meeting. Alternatively should they wish to attend the meeting,
they must arrange with the CSDP or broker concerned to provide them with the necessary authorisation to attend the Annual General Meeting and
vote thereat. This must be done in terms of the agreement entered into between the linked unitholder and the CSDP or broker concerned.
3. Should you wish to nominate a director in terms of the company's Articles of Association, a directors nomination form, to be completed by the
nominator and person(s) nominated as director, can be collected from Mrs M Peters at the Company Secretary's Office. The directors' nomination
form together with the nominated director's curriculum vitae is to be lodged at the Company Secretary's Office by no later than 16:00 on 14 February
2006.
Dated at FOURWAYS on this 23rd day of November 2006.
Company Secretary's Office
First Floor, 4 Fricker Road
Illovo
2196

P O Box 618
Melrose Arch
2076

Tel. 011 268 5062
Fax. 011 252 7293

Registered Office
First Floor, 4 Fricker Road
Illovo
2196

P O Box 618
Melrose Arch
2076

Tel. 011 268 5062
Fax. 011 252 7293

P O Box 61051
Marshalltown
2107

Tel. 011 370 5000
Fax. 011 688 5217

Transfer Secretaries
Computershare Investor Services 2004
(Proprietary) Limited
70 Marshall Street
Johannesburg, 2001

8 Jansen Road, Jet Park, Gauteng

44

Proxy Form
AMBIT PROPERTIES LIMITED (AMBIT)
JSE Code: ABT ISIN Code: ZAE000051645
To be used by certificated or dematerialised linked unitholders with own name registration.
I/We
(Name/s in block letters)
of address
being the holder/s of

linked units in AMBIT, as at 10am on Monday, the 19th February 2007,

hereby appoint

of

or failing him

of

or failing him THE CHAIRMAN OF THE MEETING
as my/our Proxy to act on my/our behalf at the Annual General Meeting of AMBIT to be held at the Quatermain, 137 West Road South, Morningside on
Wednesday, the 21st February 2007 at 10am and at any adjournment thereof and to vote for or against the resolutions or to abstain from voting in respect
of the units registered in my/our name/s, in accordance with the following instructions:

1

Resolution to receive and adopt the audited annual financial statements of the Company
and the reports of the auditors and the directors for the year ended 30 September 2006.

2.1

Resolution to approve the remuneration of the non-executive directors for the financial
year ended 30 September 2006; and

2.2

to approve the remuneration of the non-executive directors for the year ahead, as per
item 6 of the Notice of the Meeting.

3

Ordinary Resolution number 1:
Resolution to place the unissued linked units under the control of the directors.

4

Ordinary Resolution number 2:
Resolution to authorise the directors to re-appoint the auditors for the ensuing year and
approve their remuneration for the past year.

5

Ordinary Resolution number 3:

5.1

To re-elect Mr F Uys as director;

5.2

To re-elect Mr R R Emslie as director;

5.3

To ratify the resignation of Mr J Zidel (full director);

5.4

To ratify the resignation of Mr C J Ewin (full director); and

6

Ordinary Resolution number 4:
To consider the nominations (if any) and, if deemed fit, appoint any new directors
nominated in terms of the Company’s Articles of Association

7

Ordinary Resolution number 5:
Resolution to authorise the directors by way of general authority to issue the
unissued linked units in the Company for cash.

45

AGAINST

ABSTAIN

Annual Report 2006

FOR

Proxy Form
Each linked unitholder is entitled to appoint one or more proxies (who need not be a linked unitholder of AMBIT) to attend, speak, and on a poll, vote in
place of the linked unitholder at the Annual General Meeting.

Signed at

on this

Signature(s)

Capacity

day of

Company Secretary’s Office
First Floor, 4 Fricker Road
Illovo
2196

P O Box 618
Melrose Arch
2076

Tel. 011 268 5062
Fax. 011 252 7293

Transfer Secretaries
Computershare Investor Services 2004 (Proprietary) Limited
70 Marshall Street
Johannesburg, 2001

P O Box 61051
Marshalltown
2107

Tel. 011 370 5000
Fax. 011 688 5217

200

.

INSTRUCTIONS ON SIGNING AND LODGING OF THE PROXY FORM
1.

The Proxy Form must be deposited at the Company Secretary’s Office or with the Transfer Secretaries not less than 48 (FORTY-EIGHT) hours
before the time of holding the meeting.

2.

A deletion of any printed matter and the completion of any blank space(s) need not be signed or initialed. Any alteration must be signed in full.

3.

The Chairman of the meeting shall be entitled to decline to accept the authority of the signatory:
(a) under a power of attorney; or,
(b) on behalf of a company or any other entity, unless the power of attorney or authority is deposited at the registered office of the company not
less than 48 (FORTY-EIGHT) hours before the time scheduled for the meeting.

4.

The authority of a person signing a Proxy in a representative capacity must be attached to the Proxy Form unless the authority has already been
recorded by the Secretaries.

5.

The signatory may insert the name of any person(s) whom the signatory wishes to appoint as his Proxy in the blank space(s) provided for that
purpose.

6.

When there are joint holders of units and if more than one such joint holder be present or represented, then the person whose name stands first
in the register in respect of such units or his Proxy, as the case may be, shall alone be entitled to vote in respect thereof.

7.

The completion and lodging of this Proxy Form will not preclude a signatory from attending the meeting and speaking and voting in person thereat,
to the exclusion of any Proxy appointed in terms hereof should such signatory wish to do so.

8.

The Chairman of the meeting may reject or accept any Proxy Form which is completed and/or submitted other than in accordance with these
instructions, provided that he is satisfied as to the manner in which a member wishes to vote.

9.

If the unitholding is not indicated on the Proxy Form, the Proxy will be deemed to be authorised to vote the total unitholding.

10.

If unitholders have dematerialised their units with a CSDP or broker, other than own name dematerialised unitholders, they must arrange with
the CSDP or broker concerned to provide them with the necessary authorisation to attend the Annual General Meeting and vote thereat or the
unitholder concerned must instruct their CSDP or broker as to how they wish to vote in this regard. This must be done in terms of the agreement
entered into between the unitholder and the CSDP or broker concerned.

46

Directors’ Traditional Income Statement
& Balance Sheet
for the year ended 30 September 2006

Due to the number of accounting adjustments that have resulted from changes to accounting standards over the last three years, the directors of Ambit
Properties Limited (“Ambit”) have taken the decision to present a traditional income statement and balance sheet. This is for the benefit of users who wish
to analyse the Ambit financials in a more user-friendly format.
The following balance sheet and income statement are therefore unaudited and are provided as additional information, in a format better suited to user
analysis. They are identical to the audited financials with the following exceptions:
1)

Removal of the effects of straight lining of rentals
IFRS requires rentals to be recognised on a straight-line basis over the period of the lease. This means that all escalations are taken into account
upfront and smoothed over the period of the lease. In the audited financials this results in an increase to rentals in the first half of the lease and
a decrease in the second half. The increase is recognised in the income statement as rental and in the balance sheet as a non-current receivable.
There is a corresponding decrease in the revaluation of the investment properties. In the IFRS financials, the effects of straight lining of rentals
are then moved to non-distributable reserves.
All straight lining adjustments have been removed in the traditional balance sheet and income statement as presented herein.

2)

Reduction of the provision for deferred taxation on revaluations
IFRS requires deferred taxation to be raised on revaluations at the company tax rate of 29%. However, the buildings are valued using after
tax rental streams, and the only tax payable would be the capital gains taxation on disposal of the buildings. The deferred taxation on revaluations
has therefore been reduced to the capital gains tax rate of 14,5% in the financials below.
Removal of the effects of reclassifying and amortising debenture premium
IFRS requires that amounts that were classified as share premium are now allocated to debenture premium and reflected as a long-term liability.
This amount is required to be amortised over the minimum contractual period of the debentures, being the remaining period of 25 years from
February 2004. As the amount is not a liability, and is legally classified as share premium, the traditional financials have classified these amounts
back to share premium and have removed the amortization thereof.
A reconciliation back to the audited IFRS financials is presented below both the income statement and balance sheet.

43 Bekker Road, Vorna Valley, Midrand, Gauteng

47

Annual Report 2006

3)

Directors’ Traditional Group Balance Sheet
as at 30 September 2006

Group

ASSETS
Non-current assets
Investment properties
Investment in associate company
Current assets
Trade and other receivables
Cash and cash equivalents

Notes*

2006
R'000

2005
R'000

7
9

824 550
110 927
935 477

671 000
82 944
753 944

5 776
56 128
61 904

9 404
28 929
38 333

997 381

792 277

1 865
53 255
219 224
190 886
32 005
(3 667)
364
274 708

1 738
32 986
123 543
107 386
18 048
(1 891)
330
158 597

335 669
315 960
32 492
684 121

312 866
267 199
18 384
598 449

9 087
367
29 098
38 552

9 890
308
25 033
35 231

997 381

792 277

274 708

158 597

(32 005)
(53 255)

(18 048)
(32 986)

3 667
193 115

1 891
109 454

343

285

10

TOTAL ASSETS
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Share premium
Non-distributable reserves
Per IFRS
Additional deferred taxation on revaluations
Accumulated amortisation on debenture premium
Distributable reserves

11

12

Non-current liabilities
Debentures
Long-term borrowings
Deferred taxation

13
14

Current liabilities
Trade and other payables
Taxation payable
Linked unitholders for distribution

TOTAL EQUITY AND LIABILITIES
Reconciliation of equity:
Equity per traditional balance sheet above
Less:
Additional deferred tax on revaluations
Reclassification of share premium to debenture premium
Add back:
Amortisation of debenture premium
EQUITY PER AUDITED IFRS BALANCE SHEET
Net asset value per linked unit (before payment of distribution)

48

Directors’ Traditional Group Income Statement
for the year ended 30 September 2006

REVENUE
Rental
Property expenses
NET RENTAL INCOME
Investment income
Debenture interest income from associate company
Other expenses
OPERATING PROFIT BEFORE FINANCE COSTS
Less: Finance costs
NET PROFIT BEFORE TAXATION
Taxation
DISTRIBUTABLE EARNINGS
Debenture interest
UNDISTRIBUTED INCOME
Share of associate company’s after tax profits
Capital profits
Profit on sale of investment properties
Capital gains taxation on disposals
Changes in fair value of investment properties
Deferred tax on revaluations at 14.5%

2006
R'000

2005
R'000

16
17

99 813
(25 239)
74 574
2 040
9 868
(7 292)
79 190
(23 902)
55 288
(49)
55 239
(55 199)
40
12 465
83 211
72
(160)
97 257
(13 958)

93 530
(24 229)
69 301
2 373
8 338
(6 192)
73 820
(25 992)
47 828
46
47 874
(47 799)
75
12 972
80 450
711
(793)
93 413
(12 881)

95 716

93 497

29,60

27,50

95 716

93 497

3 807
1 776

5 918
1 191

(3 807)
(13 958)
83 534

(5 918)
(12 881)
81 807

18
9
19,20

6,9

NET PROFIT FOR THE YEAR
Distribution per linked unit
Reconciliation to IFRS income statement:
Net profit per traditional income statement above
Add back:
Rental straight lining
Amortisation of debenture premium
Less:
Revaluation straight lining adjustment
Additional deferred taxation on revaluations
NET PROFIT PER AUDITED IFRS INCOME STATEMENT

Notes*: Users are referred to the notes as included in the audited financials.

Design: Design Insight, Printing: Fishwicks

49

Annual Report 2006

Group
Notes*

www.ambitprops.co.za
Tel: +27 11 268 5062 Fax: +27 11 252 7293



---

Source Exif Data:

File Type                       : PDF
File Type Extension             : pdf
MIME Type                       : application/pdf
PDF Version                     : 1.5
Linearized                      : Yes
Page Count                      : 52
XMP Toolkit                     : XMP toolkit 2.9.1-13, framework 1.6
About                           : uuid:765b10d7-adaa-4fb2-a117-f4a4d650fc2e
Producer                        : Acrobat Distiller 7.0 for Macintosh
Modify Date                     : 2007:01:16 09:33:32+02:00
Create Date                     : 2006:12:11 16:09:51+02:00
Metadata Date                   : 2007:01:16 09:33:32+02:00
Document ID                     : uuid:07f4e86b-8923-11db-bef4-000393ba4474
Instance ID                     : uuid:07f4f5b1-8923-11db-bef4-000393ba4474
Format                          : application/pdf
Title                           : untitled

EXIF Metadata provided by EXIF.tools