Annual Report 2005 We are reaching new heights Pangbourne Properties Limited Annual Report Pangbourne Properties Limited 2005 Pangbourne Properties Limited Pangbourne currently has an industrial portfolio of 246 properties situated within Gauteng, Free State, KwaZulu-Natal and the Western Cape Cuzco 484 Kyalami Boulevard Kyalami Business Park Midrand Lanzerac Old Pretoria Road Halfway House Midrand Tillbury 16th Road Randjespark Midrand With the listing of the retail focused Siyathenga Property Fund, we have taken another step in our Strategy and continue to be innovative in our focus on Sustainable Growth Contents Company Profile ifc Five Year Financial Summary 01 Additional Information for Investors 02 Highlights 04 Year In Review 05 Chairman’s Report 06 Reaching New Heights Chief Executive’s Report 08 Moving Ahead With Our Strategy Directorate and Executive Committee 14 Corporate Governance 16 Portfolio of Properties 20 Annual Report 2005 Company Profile Pangbourne is a Property Loan Stock company listed on the JSE Limited “Financials – Real Estate” sector with a market capitalisation of R1,9 billion. Total assets are R2,9 billion. Pangbourne’s prime objective is to increase distributions at a rate in excess of CPIX on a sustainable basis. Pangbourne has differentiated itself from other property loan stock companies by undertaking own management of the properties in which it has an interest. Management owns 7,6% of the units in issue through the Pangbourne Unit Purchase Trust scheme, thereby aligning management objectives with those of unitholders. www.pangbourne.co.za Registration No: 1987/002352/06 Share code PAP ISIN ZAE 000005252 Continuous upgrading of properties for sustainable increase in distributions. Five Year Financial Summary 2005 2004 2003 2002 2001 R’000 R’000 R’000 R’000 R’000 Revenue 355 408 291 907 275 846 166 135 136 530 Distributable earnings (Page 2) 172 944 161 428 156 204 90 424 64 548 Investment properties 2 126 509 1 100 223 1 200 538 1 253 967 732 182 Investments and loans in associates 453 603 394 811 117 306 163 — Trading investments in listed units — 23 290 162 592 63 607 3 111 Total assets 2 901 748 1 781 628 1 628 087 1 360 046 798 813 Combined unitholders’ interest 1 390 338 1 049 346 957 569 890 221 466 034 Net borrowings 1 257 773 552 295 485 948 349 284 274 933 Weighted average units in issue 179 080 833 176 130 961 175 981 149 105 029 358 80 395 064 Earnings per combined unit (cents) Earnings 165,59 74,77 68,22 22,80 101,35 Distributable earnings 96,57 91,66 88,76 86,09 80,29 Total distribution per unit 96,00 91,50 89,00 88,00 88,00 Net debt: income earning assets 45,9% 33,9% 30,5% 25,3% 34,8% JSE LIMITED STATISTICS Highest unit price traded (cents) 1 035 800 720 700 710 Lowest unit price traded (cents) 717 660 506 480 550 Closing unit price (cents) 1 030 720 690 500 650 Volume of units traded 92 417 490 79 466 357 77 893 671 36 791 233 16 769 699 Units traded to average units in issue 51,6% 45,1% 44,3% 35,0% 20,9% Total market capitalisation 1 946 425 1 309 754 1 255 181 880 571 530 285 Total returns Opening unit price (cents) 720 690 500 650 600 Income return (cents) 96,0 91,5 89,0 88,0 88,0 Capital return (cents) 310 30 190 (150) 50 Total return (cents) 406,0 121,5 279,0 (62,0) 138,0 Return: opening unit price 56,4% 17,6% 55,8% (9,5%) 23,0% Page 1 Pangbourne Properties Limited Additional Information for Investors for the year ended 30 June 2005 Compliance with South African Statements of GAAP, which are in the process of being harmonised with IAS, and their application on the property loan stock structure, which is unique to South Africa, has made it difficult for users to interpret these financial statements. This investor information insertion is aimed at disclosing to the users the basis on which the distribution per weighted average number of combined units in issue, was calculated. A reconciliation has been included to show the accounting adjustments which were not taken into account in calculating the distribution. Group 2005 2004 Distributable earnings R’000 R’000 Revenue 355 408 291 907 Net building costs (43 869) (44 779) Administrative costs (58 365) (49 215) Net profit on disposal of investments held-for-trade 1 051 15 831 Non-cash portion of profit on disposal of loans — (2 200) Interest received 12 350 13 269 Finance costs (94 150) (64 321) Cash share of profit from associates 2 300 1 347 SA normal tax and STC (812) (411) Minority interest (969) — Distributable earnings 172 944 161 428 Investors’ distributable earnings per combined unit Weighted average number of combined units in issue 179 081 176 131 Distributable earnings per combined unit (cents) 96,57 91,66 Opening share price 7,20 6,90 Closing share price 10,30 7,20 Distribution 0,96 0,915 Total return 56% 18% Reconciliation to profit for the year Distributable earnings 172 944 161 428 Revaluation of investment properties 226 561 36 743 Unrealised revaluation of listed investments held-for-trade — 1 683 Goodwill – amortised — (8 998) – realised (1 235) (2 561) Negative goodwill – amortised — 17 616 – realised — 10 691 Net profit on disposal of investment properties 5 461 14 703 Non-cash portion of profit on disposal of loans — 2 200 Movements in fair value of interest rate derivatives (24 888) (949) Amortisation of intangible asset (4 878) (3 253) Non-cash portion of profit from associates 42 384 2 363 Profit on sale of portion of subsidiary 304 — Profit before taxation and distribution to unitholders (excluding normal tax, STC and equity earnings) 416 653 231 666 Debenture interest – debt portion (83 448) (81 860) Amortised debenture interest (2 700) (2 316) Profit before taxation (excluding normal tax, STC and equity earnings) 330 505 147 490 Taxation (9 685) 7 345 Notional taxation reversed in statements of changes in equity (25 247) (23 136) Minority interest 969 — Profit for the year 296 542 131 699 Net asset value per unit with iFour investment carried at market value (cents) 931 642 Page 2 Pangbourne Properties Limited Left to right Mr Noah Greenhill (Manager: Pangbourne 2005 Business Development at Five Year the JSE); Financial Summary 01 Mr André von Bülow (Managing Director: Siyathenga); and Additional Information Mr Tony Richards (Pangbourne for Investors 02 Executive Director, and Chairman Siyathenga), following Highlights 04 the successful listing of Year in Review 04 Siyathenga. Chairman’s Report 06 Chief Executive’s Report 08 Directorate and Executive Committee 14 Corporate Governance 16 Portfolio of Properties 20 Breaking new horizons by expanding investors’ choices Page 3 Highlights ● Occupancies increased from 93,8% to 96,0%. ● Distributions increased to 96,00 cents per combined unit. ● Strategy gains momentum with the listing of Siyathenga. Area – Expiry profile of leases Rand value – Expiry profile of leases PROPERTY GEOGRAPHICAL SPREAD BY RENTAL PROPERTY USAGE BY RENTAL % % 30 30 RETAIL 11% 25 25 OTHER 2% COMMERCIAL 20 20 16% GAUTENG 15 15 78% 10 10 INDUSTRIAL 5 5 73% 0 0 KWAZULU-NATAL 20% cant Va Monthly Monthly 07/05-06/06 07/06-06/07 07/07-06/08 07/08-06/09 07/09-06/10 07/05-06/06 07/06-06/07 07/07-06/08 07/08-06/09 07/09-06/10 AFM Corporate Park South, Midrand Page 4 Pangbourne Properties Limited April 2005 2005/2006 Year in review Announcement of corporate � February 2005 action which resulted in the Board declared and announced listing of Siyathenga. increased interim distribution of 44,5 cents per unit. June 2005 Board declared and May 2005 announced an increased October 2004 February 2005 Acquisition of final distribution of 2004 Culmination of iFour’s November 2004 Appointment to the Paramount portfolio 51,5 cents per unit. commercial mortgage Transfer of R425 million board of Mr B D Hopkins for R125 million. backed securitisation eThekwini portfolio. and Ms Y K N Molefi joint programme. as independent non- executive directors. Page 5 Annual Report 2005 Chairman’s Report We are reaching new heights... Vision Pangbourne’s vision is to provide a sustainable increase in distributions to combined unitholders at a rate exceeding inflation. Part of the strategy to achieve this, is through strategic investments in specialised funds from which income is received by way of distributions and fees for services rendered. These income streams are in addition to the rental incomes received from Pangbourne’s directly held industrial and commercial portfolios. The specialised funds approach has proved successful with investors in property sectors of established economies such as the United States of America and Australia. A significant advantage of Pangbourne’s strategy is to manage the properties as well as to act as the incubator for transactions to grow the specialised funds. This strategy was first implemented with iFour’s “A Grade portfolio” and continued with the listing of Siyathenga, a predominantly retail fund. Trading Environment The reduction and stability of interest rates have resulted in a highly competitive environment for the acquisition of properties. This coupled with the scarcity of stock in the market, has resulted in sellers demanding prices previously unheard of, especially in the retail sector. The increase in demand for industrial space has seen a firming of rentals. There is also a shortage of available land, in the industrial intensive nodes of KwaZulu-Natal and Gauteng with Riverhorse, Linbro Park, Longmeadow business estates and Aeroport Park being all but sold out.