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ORE
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ORE - Orion Real Estate Limited - Unaudited Interim Consolidated Results of the
Group for the six months ended 31 December 2010
Orion Real Estate Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/021085/06)
Share code: ORE ISIN: ZAE000075651
("Orion Real Estate" or "the company" or "the Group")
Unaudited Interim Consolidated Results of the Group for the six months ended 31
December 2010
Abridged Consolidated Statement of Financial Position
Restated
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 December 31 December 30 June
Figures in Rand 2010 2009 2010
ASSETS
Non-current assets 640 423 142 575 911 088 639 747 239
Investment properties 631 900 000 568 480 000 631 900 000
Property, plant and equipment 603 405 805 313 607 888
Other receivables 7 919 737 6 625 775 7 239 351
Current assets 25 068 455 19 974 304 20 603 642
Loans to related parties 88 487 471 909 88 487
Trade and other receivables 24 891 491 19 380 426 20 426 684
Cash and cash equivalents 88 477 121 969 88 471
Total assets 665 491 597 595 885 392 660 350 881
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 74 235 526 62 288 101 74 235 526
Debenture reserve 10 675 886 12 847 179 10 675 886
Retained earnings 224 344 904 174 513 477 222 420 419
Total equity attributable to
equity holders 309 256 316 249 648 757 307 331 831
Non-controlling interest (179 971) (171 356) (177 608)
Total equity 309 076 345 249 477 401 307 154 223
Non-current liabilities 324 510 471 292 602 445 314 337 256
Linked debentures 49 343 086 43 836 002 49 343 086
Borrowings 195 368 310 185 920 455 185 272 159
Deferred tax liabilities 79 799 075 62 845 988 79 722 011
Current liabilities 31 904 782 53 805 546 38 859 402
Current income tax liabilities 3 238 867 - 2 616 731
Loans from shareholders 599 013 12 500 000 1 359 768
Loans from directors 2 612 015 2 639 383 2 898 435
Loans from related parties 5 140 850 41 934 777 707
Trade and other payables 18 545 455 21 622 025 15 306 337
Borrowings 1 768 580 17 002 204 15 900 424
Total liabilities 356 415 253 346 407 991 353 196 658
Total equity and liabilities 665 491 597 595 885 392 660 350 881
Abridged Consolidated Statement of Comprehensive Income
Restated
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 December 31 December 30 June
Figures in Rand 2010 2009 2010
Revenue 40 465 888 38 609 896 75 079 731
Other income 261 976 - 353 991
Operating costs (23 637 819) (19 844 898) (38 916 215)
Administrative expenses (5 657 418) (5 314 047) (11 201 241)
Fair value adjustments on
investment properties - - 63 420 000
Operating profit 11 432 627 13 450 951 88 736 266
Finance income 1 269 880 1 133 730 2 558 957
Finance costs (9 967 452) (10 410 208) (27 291 056)
Profit before taxation 2 735 055 4 174 473 64 004 167
Taxation (812 934) (1 195 886) (11 339 880)
Profit for the period 1 922 121 2 978 587 52 664 287
Other comprehensive income - - -
Total comprehensive income for
the period 1 922 121 2 978 587 52 664 287
Profit and total comprehensive
income for the year
attributable to:
Equity holders of the company 1 924 484 2 978 587 52 670 710
Non-controlling interest (2 363) (171) (6 423)
1 922 121 2 978 416 52 664 287
Basic earnings per linked unit
(cents) 0.31 0.51 8.40
Diluted earnings per linked
unit (cents) 0.31 0.51 8.40
Headline earnings per linked
unit (cents) 0.31 0.51 0.03
Diluted headline earnings per
linked unit (cents) 0.31 0.51 0.03
Net asset value per linked unit
at end of period (cents) 57.19 56.83 56.89
Number of linked units at end
of period 627 009 822 579 490 167 627 009 822
Weighted number of linked units 627 009 822 579 490 167 627 009 822
Diluted number of linked units 627 009 822 579 490 167 627 009 822
Reconciliation between net
earnings and headline earnings
Profit attributable to equity
holders 1 924 484 2 978 587 52 670 710
Less: Fair value adjustment to
investment properties - - (63 420 000)
Plus: Loss on disposal of
subsidiary - 705 -
Deferred tax raised on fair
value adjustment to investment
properties - - 10 908 451
Headline earnings 1 924 484 2 979 292 159 161
Abridged Consolidated Statement of Cash Flows
Restated
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 December 31 December 30 June
Figures in Rand 2010 2009 2010
Cash flows from operating
activities (550 151) 21 382 621 1 045 175
Cash generated from operations 9 531 035 30 659 099 24 610 068
Finance costs (9 967 452) 1 133 730 (22 820 343)
Taxation paid (113 734) (10 410 208) (744 550)
Cash flows from/(to) investing
activities 4 585 848 (2 705 772) 4 612 139
Cash flows from financing
activities (4 035 693) (18 650 562) (5 664 525)
Net increase/(decrease) in cash
and cash equivalents 5 26 287 (7 211)
Cash and cash equivalents at the
beginning of the period 88 471 95 682 95 682
Cash and cash equivalents at the
end of the period 88 476 121 969 88 471
Abridged Consolidated Statement of Changes in Equity
Total
share
Share Share capital and Debenture
Figures in Rand capital premium premium reserve
Balance at
1 July 2008 2 179 164 3 516 635 5 695 799 -
Total comprehensive
income for the
six months - - - -
Balance at
31 December 2008 2 179 164 3 516 635 5 695 799 -
Issue of linked units 3 578 849 53 013 453 56 592 302 -
Minority interest - - - -
Prior period
adjustment - - - 12 847 179
Total comprehensive
income for the
six months - - - -
Restated balance at
30 June 2009 5 758 013 56 530 088 62 288 101 12 847 179
Prior period
adjustment - - - -
Total comprehensive
income for the
six months - - - -
Restated balance at
31 December 2009 5 758 013 56 530 088 62 288 101 12 847 179
Issue of linked units 512 085 11 435 340 11 947 425 -
Prior period
adjustments
and restatements - - - 2 171 293
Issue of linked
debentures - - - (4 342 586)
Issue of linked
debentures
amortisation - - - (6 031 369)
Deferred taxation on
linked debenture
amortisation - - - 1 688 783
Total comprehensive
income for the
six months - - - -
Balance at
30 June 2010 6 270 098 67 965 428 74 235 526 10 675 886
Total comprehensive
income for the
six months - - - -
Balance at
31 December 2010 6 270 098 67 965 428 74 235 526 10 675 886
Non-
Retained controlling Total
Figures in Rand earnings Total interest equity
Balance at
1 July 2008 45 731 106 51 426 905 - 51 426 905
Total
comprehensive
income for the
six months 47 056 163 47 056 163 (56 386) 46 999 777
Balance at
31 December 2008 92 787 269 98 483 068 (56 386) 98 426 682
Issue of linked
units - 56 592 302 - 56 592 302
Minority
interest 60 522 60 522 - 60 522
Prior period
adjustment (597 042) 12 250 137 - 12 250 137
Total
comprehensive
income for the
six months 105 898 173 105 898 173 (114 799) 105 783 374
Restated
balance at
30 June 2009 198 148 922 273 284 202 (171 185) 273 113 017
Prior period
adjustment (26 613 498) (26 613 498) - (26 613 498)
Total
comprehensive
income for the
six months 2 978 053 2 978 053 (171) 2 977 882
Restated
balance at
31 December 2009 174 513 477 249 648 757 (171 356) 249 477 401
Issue of linked
units - 11 947 425 - 11 947 425
Prior period
adjustments
and restatements (1 785 714) 385 579 - 385 579
Issue of linked
debentures - (4 342 586) - (4 342 586)
Issue of linked
debentures
amortisation - (6 031 369) - (6 031 369)
Deferred
taxation on
linked debenture
amortisation - 1 688 783 - 1 688 783
Total
comprehensive
income for the
six months 49 692 657 49 692 657 (6 252) 49 686 405
Balance at
30 June 2010 222 420 420 307 331 832 (177 608) 307 154 224
Total
comprehensive
income for the
six months 1 924 484 1 924 484 (2 363) 1 922 121
Balance at
31 December 2010 224 344 904 309 256 316 (179 971) 309 076 345
Segment Reporting for the period ended 31 December 2010
By gross revenue R % R %
Commercial 15 847 796 48 Gauteng 23 955 455 73
Industrial 4 907 538 15 Western Cape 2 577 629 8
Retail 8 242 310 25 Mpumulanga 5 809 365 18
Hospitality 3 580 318 11 KwaZulu-Natal 471 912 1
Residential 236 400 1
32 814 361 100 32 814 361 100
Property value R % R %
Commercial 253 028 923 40 Gauteng 500 200 000 79
Industrial 80 200 000 13 Western Cape 37 900 000 6
Retail 141 145 039 22 Mpumulanga 85 500 000 14
Hospitality 53 615 167 8 KwaZulu-Natal 8 300 000 1
Residential 43 910 872 7
Land 60 000 000 9
631 900 000 100 631 900 000 100
Gross lettable
area Sqm % Sqm %
Commercial 53 331 43 Gauteng 93 495 75
Industrial 21 988 18 Western Cape 8 784 7
Retail 27 576 22 Mpumulanga 15 850 13
Hospitality 16 029 13 KwaZulu-Natal 6 000 5
Residential 5 205 4
124 129 100 124 129 100
Liability R % R %
Commercial 87 145 861 44 Gauteng 151 599 052 77
Industrial 35 772 326 18 Western Cape 17 099 289 9
Retail 56 747 348 29 Mpumulanga 22 195 757 11
Hospitality 17 471 354 9 KwaZulu-Natal 6 242 792 3
Residential - -
Land - -
197 136 890 100 197 136 890 100
Tenant category
(rental income) R % R %
Commercial A 2 479 260 9 Gauteng A 2 740 547 10
B 3 788 032 14 B 4 543 745 17
C 6 410 742 24 C 11 856 211 45
Industrial A - - Western Cape A 30 862 <0.1
B 509 950 2 B 2 264 971 9
C 3 658 347 14 C 265 554 1
Retail A 1 069 263 4 Mpumulanga A 777 115 3
B 1 832 497 7 B 549 668 2
C 3 728 906 14 C 3 029 586 11
Hospitality A - - KwaZulu-Natal A - -
B 1 699 818 6 B 471 912 2
C 1 116 955 4 C - -
Residential A - -
B - -
C 236 400 1
26 530 171 100 26 530 171 100
A: Represents major listed companies.
B: Represents smaller listed companies and big unlisted companies.
C: Represents smaller unlisted companies and private businesses.
Commentary on the December 2010 Interim Financial Statements
1. Operating performance
The Group experienced very tight trading conditions and revenue improved by
4.80%. Expenditure increased by 16.44%, which included an increase in the cost
of electricity of 42.00%. The recovery of utilities has fallen short and is
therefore contributing to the low increase in revenue. The operating profit
decreased from R13.45 million to R11.43 million.
2. Restatement of Unaudited Abridged Consolidated Financial Statements for the
six months ended 31 December 2009
In line with the prior period restatements of the Annual Financial Statements
for the year ended 30 June 2010, the Interim Results for the period ended 31
December 2009 were also adjusted accordingly. The effect of these restatements
is summarised below:
2.1 Deferred taxation
The calculation of deferred tax is based on the manner in which the entity
expects to recover carrying amounts of its assets and liabilities.
In prior periods, a blanket tax rate of 14% was used to account for deferred tax
on the revaluation of investment properties. This is the Capital Gains Tax rate
and is applicable to the land portion of investment properties, and any
buildings where the carrying amount will be recovered primarily through sale.
However, since management intends to recover the majority of their investment
properties through use, a rate of 28%, being the income tax rate, more
appropriately reflects the expected manner of recovery of buildings.
The effect of the restatement on the financial statements is:
Statement of financial position
Increase in deferred taxation R27 768 590
Decrease in retained earnings R27 768 590
2.2 Debentures
The Group previously classified its linked units as equity instruments at cost.
Each linked unit comprises an ordinary share and a debenture. However, the
debenture is redeemable requiring the proceeds received on issue of linked units
to be separated into an equity component and a liability component. The
liability component is subsequently measured at amortised cost whereas the
equity component continues to be measured at the value allocated on date of
issue.
The effect of the restatement on the financial statements is:
Statement of financial position
Adjustment against opening debenture reserve R12 847 179
Decrease in linked debentures (liability) R11 238 865
Adjustment against opening retained earnings R1 608 314
2.3 The consolidation of the Group was reperformed during the current period,
which result in the restatement of certain balances and transactions
The effect of the restatement on the financial statements is:
Statement of financial position
Decrease in loans to related parties (R4 178 618)
Adjustment against opening retained earnings R8 094 597
Increase in loans from related parties (R41 934)
Decrease in loans from shareholders R593 604
Increase in loans from directors (R2 639 383)
Increase in trade and other payables (R1 828 266)
2.4 Reclassification
The effect of the reclassification on the financial statements is summarised
below:
Loan accounts under non-current
Loans bearing no interest and with no fixed terms of repayment were previously
classified as non-current, but have been reclassified as current.
Provisions
Provision for leave pay was previously classified under provisions but has now
been included under trade and other payables.
Revenue and other income
The Group is deemed a principal when invoicing recoveries to tenants which means
recoveries invoiced to tenants should be classified under revenue. Recoveries
were previously classified under other income, but have been reclassified to
revenue.
3. Basis of preparation
The interim financial report was prepared in accordance with the requirements of
IAS 34: Interim Financial Reporting. The accounting policies followed the
preparation thereof are in compliance with International Financial Reporting
Standards ("IFRS") and are consistent with those used to prepare the most recent
annual financial statements.
4. Contingent liabilities
The company has signed surety for the obligations of its subsidiaries in respect
of mortgage bond finance and has guaranteed the debts of a wholly-owned
subsidiary company until that company`s assets, fairly valued, exceeds its
liabilities, and whilst it remains a wholly-owned subsidiary.
5. Investment property acquired and disposed
5.1 Acquired
No properties were acquired during the reporting period.
5.2 Disposed
No properties were disposed of during the reporting period.
6. Subsequent events
The company acquired various sections and real rights in the sectional title
scheme known as Selborne Park, situated at Pennington Township, Municipality of
Umdoni. The transfer of the property has not yet been finalised.
7. Dividends
No dividends were paid or declared during the financial period under review.
8. Change to the board of directors
There has been no change to the board of directors during the period under
review.
9. Future prospects
The trading conditions were tight during the reporting period, but it is
expected that measures to improve recoveries and manage cost will yield positive
results in the remaining period. Special attention is also being given to reduce
vacancies and improve revenue.
Johannesburg
29 March 2011
Directors: R S Wilkinson, F M Viruly, A Boessenkool, A C Gmeiner, F Gmeiner,
C B Nolte
Company secretary: Corporate Governance Facilitators CC
Sponsor: Arcay Moela Sponsors (Pty) Limited
Transfer office: Computershare Investor Services (Pty) Limited
Date: 29/03/2011 09:00:01 Produced by the JSE SENS Department.
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