Octodec interim results February 2018
Revenue for the interim period grew to R930.9 million (R897.2 million) whilst operating profit improved by 2.3% to R467.9 million (R457.4 million). Profit for the period took a 25.4% knock to R330.0 million (R442.4 million). In addition, headline earnings per share jumped to 104.4 cents per share (87.6 cents per share).
Declaration of cash dividend
The board of directors of Octodec declared an interim cash dividend of 101.7 cents per share, for the six months ended 28 February 2018, out of the company's distributable income.
After a challenging environment characterised by political and economic uncertainty, the local operating environment has started to show some signs of improvement, which should provide the stimulus for Octodec to continue to unlock value and provide shareholders with a growing and sustainable distribution.
Octodec and its experienced management team combined with its diversified portfolio, large number of tenants, sound operating fundamentals and prudent capital management, bears out Octodec's resilience during these challenging times.
Octodec responded to the increased competition and changing trends in the residential sector by adjusting the tenant offering without compromising on recoverability of rentals or other standards. This has already contributed to the improved occupation levels in the residential sector with vacancies having decreased from 7.2% at 31 August 2017 to 5.4% at 28 February 2018.
This, together with prudent cost management across the group, should sustain the performance of the group for the remainder of the financial year.
The disposal of non-core or under-performing properties will remain a key focus area for the foreseeable future.
The forecast distribution for the second six-month period ending 31 August 2018 is expected to be similar to the distribution for the six-month period ended 28 February 2018. Therefore no growth in distribution per share for the full financial year is anticipated.
This guidance is based on the following:
* forecasted investment property income is calculated using contractual rentals and assumed market-related renewals
* allowance for vacancies has been established using assumptions and historical experience
* no major corporate and tenant failures are assumed
* no further deterioration in the economic and social environments
* the phased take-up of rental space in greenfield developments is based on historical experience adjusted for the current economic environment.