| Fri 29 Aug 2014, 17:37 | | ASCENSION PROPERTIES LIMITED - Condensed audited consolidated results for the year ended 30 June 2014 |
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AIA AIB 201408290087A
Condensed audited consolidated results for the year ended 30 June 2014
Ascension Properties
(Incorporated in the Republic of South Africa)
(Registration number: 2006/026141/06)
JSE share code for A-linked units: AIA ISIN: ZAE000161881
JSE share code for B-linked units: AIB ISIN: ZAE000161899
(Approved as a REIT by the JSE)
(“Ascension” or “the company” or “the fund” or “the group”)
Condensed audited consolidated results for the year ended 30 June 2014
Directors’ Commentary
Introduction
Ascension is a REIT focusing on centrally located commercial office
buildings in South Africa with a strong focus towards government and
other empowerment sensitive tenants.
The company achieved distributable earnings of R202,7 million for the
year ended 30 June 2014 in line with expectations. The company will
pay a final distribution for the six months to 30 June 2014 of 19.95
cents per A-linked unit and 12.23 per B-linked unit. This brings the
total distribution for the year under review to 39.90 cents per A-linked
unit and 22.59 cents per B-linked unit.
Property portfolio
At 30 June 2014 the portfolio (including investment properties and
properties under development) consisted of 29 properties valued at
R3,706 billion, with a total gross lettable area (“GLA”) of 315 670m².
This translates to an average building value of R127,8 million.
The growth in the value of the portfolio of R1,16 billion is in
excess of our targeted growth of R1 billion per annum. This has
required a concerted effort to ensure that these acquisitions are
properly bedded down and that the properties are intensely and
effectively managed from day one of the fund’s ownership. The
management team have built sufficient capacity to handle this growth
and we are satisfied that we can continue to meet the growth
objectives of the fund.
The sectoral profile of the portfolio is 80.8% offices, 11.3% retail
and 7.9% other. The fund does not own any retail focused properties
and the retail components are typically ground floor areas of office
buildings. The total portfolio is 62.5% tenanted by government in
line with our strategic focus on this market. Total vacancies of 7.4%
are in line with our expectations and present an opportunity for
future distribution growth. The weighted average rental escalation
remains healthy at 8.5%.
During the year Ascension acquired the following investment property
at a total cost of R146 million:
• Surrey House
The following investment properties were unconditionally acquired at
a cost of R650,5 million during 2013 and transferred during the
current financial year:
• Atterbury House
• Riverpark
• Riverview
• Island Centre
• Game Building
Borrowings
The company’s borrowings at 30 June 2014 amounted to R1,379 billion
at a blended average rate of 7.86% per annum. R483 million of
borrowings has been fixed at an all-in rate of 7.42% until December
2015. R500 million of borrowings is subject to a three month JIBAR
interest rate cap at 6.72%. The interest rate cap expires on 13
January 2017.
Changes to the board
On 1 July 2014 Ashraf Mohamed, CEO of the fund resigned. The board
appointed Shaun Rai as acting CEO until such time as a suitable
candidate has been appointed.
Prospects
Despite the challenging business environment and the rising interest
rates cycle we believe that Ascension has a defensive portfolio and
that the quality of its assets, together with healthy lease and
escalation profiles, should ensure that the fund continues to deliver
acceptable returns to its unitholders.
Condensed Consolidated Statement of Profit or Loss and
other Comprehensive Income for the year ended 30 June 2014
Audited Audited
12 months 12 months
30 June 30 June
R’000 2014 2013
Revenue 353 101 194 058
Contractual rental income 335 110 176 839
Straight-line lease income adjustment 17 991 17 219
Property operating expenses
(net of recoveries) (42 570) (23 329)
Net property and related income 310 531 170 729
Sundry income 567 786
Asset management fees (15 857) (4 958)
Operating expenses (3 704) (3 263)
Operating profit 291 537 163 294
Fair value adjustments 194 535 191 563
Fair value adjustment -
investment property 197 902 185 196
Fair value adjustment -
interest rate derivative (3 367) 6 367
Finance income 1 765 13 131
Interest received 1 765 2 553
Interest on linked units issued
cum distribution - 10 578
Finance cost (75 035) (36 861)
Interest on non-current
borrowings & other interest (72 581) (34 734)
Amortisation of debenture discount (728) (717)
Amortisation of bond raising fees (1 726) (1 410)
Net profit before debenture interest 412 802 331 127
Debenture interest (202 730) (124 471)
Interest on A-debentures (117 711) (61 206)
Interest on B-debentures (85 019) (63 265)
Net profit before tax for the year 210 072 206 656
Income tax expense - 31 492
Deferred taxation - 31 492
Net profit after tax for the year 210 072 238 148
Other comprehensive income - -
Total comprehensive income for the year 210 072 238 148
Reconciliation between earnings, headline earnings and distributable
earnings
Audited Audited
12 months 12 months
30 June 30 June
R’000 2014 2013
Profit for the period attributable
to shareholders 210 072 238 148
Adjusted for:
Amortisation of discount on debentures 728 716
Net fair value gain on revaluation of
investment property net of deferred tax (197 902) (185 196)
Taxation - (31 492)
Headline earnings attributable
to shareholders 12 898 22 176
Adjusted for:
Debenture interest 202 730 124 471
Headline earnings attributable
to linked unitholders 215 628 146 647
Adjusted for:
Straight-line lease
income adjustment (net of taxation) (17 991) (17 219)
Fair value adjustment -
interest rate derivative 3 367 (6 367)
Amortisation of bond raising
fees (net of taxation) 1 726 1 410
Distributable earnings attributable
to linked unitholders 202 730 124 471
Less: distribution declared (202 730) (124 471)
Interest on A-debentures (117 711) (61 206)
Interest on B-debentures (85 019) (63 265)
Earnings not distributed - -
Basic and fully diluted earnings
per share (cents) 31.31 53.21
Basic and fully diluted headline
earnings per share (cents) 1.92 4.95
Basic and fully diluted earnings
per A-linked unit (cents) 71.25 99.56
Basic and fully diluted earnings
per B-linked unit (cents) 53.90 73.25
Headline- and fully diluted headline
earnings per A-linked unit (cents) 41.87 51.31
Headline- and fully diluted headline
earnings per B-linked unit (cents) 24.51 25.00
Distribution per A- and B- linked unit
Distribution per A-linked unit (cents) 39.90 38.00
Distribution per B-linked unit (cents) 22.59 18.80
Number of A-linked units in issue
on 30 June 2014 308 860 859 225 872 353
Number of B-linked units in issue
on 30 June 2014 376 359 014 376 359 014
Weighted average number of A-linked
units in issue 294 675 376 132 040 285
Weighted average number of B-linked
units in issue 376 359 014 315 562 571
- The calculation of basic and fully diluted earnings per share is
based on earnings of R210,1 million (30 June 2013: R238,1 million)
and a weighted average number of 671 034 390 shares (30 June 2013:
447 602 856) in issue throughout the financial period.
- The calculation of headline earnings and diluted headline earnings
per share is based on a headline earnings of R12,9 million (30 June
2013: R22,2 million) and a weighted average number of 671 034 390
shares (30 June 2013: 447 602 856) in issue throughout the financial
period.
Condensed Consolidated Statement of Financial Position at 30 June
2014
Audited Audited
12 months 12 months
30 June 30 June
R’000 2014 2013
Assets
Non-current assets 3 722 897 2 550 927
Investment properties and properties
under development 3 706 699 2 544 500
Property, plant and equipment 24 60
Interest rate derivative 16 174 6 367
Current assets 100 955 71 477
Trade and other receivables 61 793 44 762
Cash and cash equivalents 39 162 26 715
Total assets 3 823 852 2 622 404
Equity and liabilities
Equity 872 735 644 441
Stated capital 322 603 304 381
Retained income 550 132 340 060
Non-current liabilities - Debentures 1 403 815 1 071 962
Total linked unitholders’ interest 2 276 550 1 716 403
Liabilities
Other non-current liabilities 1 377 259 794 288
Interest bearing liabilities 1 377 259 794 288
Current liabilities 170 043 111 713
Trade and other payables 62 329 29 852
Linked unitholders accrued interest 107 714 81 861
Total liabilities 2 951 117 1 977 963
Total equity and liabilities 3 823 852 2 622 404
TNAV and NAV per A-linked unit (cents) 477.4 479.1
TNAV and NAV per B-linked unit (cents) 241.7 190.3
Condensed Consolidated Statement of Cash Flows for the year ended 30June 2014
Audited Audited
12 months 12 months
30 June 30 June
R’000 2014 2013
Cash flow from operating activities
Cash generated from operations 289 028 132 644
Finance income 1 765 13 131
Finance costs (72 581) (36 144)
Net cash inflow from operating activities 218 212 109 631
Cash flow from investing activities
Purchase of investment properties and
cost of improvements (946 306) (1 743 669)
Proceeds from disposal of investment
property held for sale - 8 000
Net proceeds from/ (purchase of)
other financial assets (13 174) -
Net cash outflow from
investing activities (959 480) (1 735 669)
Cash generated from financing
activities
Proceeds from the issue
of linked units 360 747 888 352
Net proceeds from interest
bearing loans 581 245 613 044
Distributions paid (188 277) (50 978)
Net cash inflow from financing
activities 753 715 1 450 418
Net increase in cash and cash
equivalents for the year 12 447 (175 619)
Cash and cash equivalents at
the beginning of the year 26 716 202 335
Cash and cash equivalents
at the end of the year 39 163 26 716
Condensed Consolidated Statement of
Changes in Equity for the year ended 30 June 2014
Stated Retained
R’000 capital income
Balance at 1 July 2012 - Audited 106 451 101 912
Issue of linked units net of
transaction costs 197 930 -
Total comprehensive income
for the year - 238 148
Balance at 1 July 2013 - Audited 304 381 340 060
Issue of linked units net
of transaction costs 18 222 -
Total comprehensive income for the year - 210 072
Balance at 30 June 2014 - Audited 322 603 550 132
Notes:
1. Basis of preparation and accounting policies
The condensed audited consolidated financial statements for the year
ended 30 June 2014 have been prepared in accordance with the
measurement and recognition requirements of International Financial
Reporting Standards, the requirements contained in IAS34 – interim
financial reporting, the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee, the JSE Listings Requirements
and the requirements of the South African Companies Act, 2008. These
results have been prepared under the supervision of the financial
director, Henry Dednam CA(SA).
The accounting policies adopted are consistent with those applied in
the prior year.
The directors are not aware of any matters or circumstances arising
subsequent to 30 June 2014 that require any additional disclosure or
adjustment to the financial statements, other than as disclosed in
this announcement.
Grant Thornton, the company’s external auditor, have issued their
unmodified audit opinion on the group financial statements for the
year ended 30 June 2014, which is available for inspection at the
company’s registered office. These condensed audited consolidated
financial statements have been derived from the group financial
statements and are, in all material respects, consistent with the
group financial statements.
2. Debt facilities
Facility Utilised
at 30 June at 30 June
Cost of 2014 2014 Expiry
Funder funding (R Million) (R Million) date
Investec
Private Bank 8.50% 493 440 31-Jul-15
Standard Bank ¹ 7.42% 483 486 14-Dec-15
Nedbank - Loan 1 7.50% 50 50 28-Jun-16
Nedbank - Loan 2 8.15% 45 45 23-Apr-18
Nedbank - Loan 3 7.50% 26 26 18-Jul-16
Nedbank - Loan 4 7.67% 34 34 30-Aug-16
Nedbank - Loan 5 7.67% 26 26 30-Aug-16
Nedbank - Loan 6 7.60% 150 150 12-Sept-16
Nedbank - Loan 7 7.60% 122 122 7-Mar-19
Unamortised bond
raising fees (2)
Total borrowings 1 429 1 377
¹Fully hedged through 3-month JIBAR interest rate swap for a
nominal amount of R483 million at 5.55% per annum. Interest is
payable quarterly, in arrears and the swap expires on 1 December
2015.
The Standard Bank facility was restructured after year end into a
R160 million prime -1.50% loan and a R393 million 3-month JIBAR
+1.80% loan. These facilities expire on 31 August 2017.
3. Interest rate derivatives
Average
Facility all-in swap
Interest rate swap expiry (R million) rate
1 December 2015 483 7.42%
Average
Facility JIBAR cap
Interest rate cap expiry (R million) rate
13 January 2017 500 6.72%
4. Trade and other receivables
Audited Audited
12 months 12 months
30 June 30 June
R’000 2014 2013
Trade receivables (net of
impairment provisions) 11 950 14 411
Debtor accruals (including consumption
charges not yet invoiced) 20 786 10 443
Amounts due on acquisition
adjustment accounts 7 483 1 381
Deposits 1 366 978
Acquisition and development
costs paid in advance - 17 026
Sundry debtors, prepayments and VAT 20 208 523
61 793 44 762
5. Lease expiry profile (Based on GLA)
Total Office Retail
Vacant 7.4% 7.4% 8.0%
June 2015 21.0% 15.4% 44.6%
June 2016 25.0% 28.6% 10.9%
June 2017 4.6% 2.5% 1.3%
June 2018 11.0% 12.8% 6.6%
June 2019 12.4% 14.3% 1.1%
> June 2019 18.6% 19.0% 27.5%
Total 100.0% 100.0% 100.0%
6. Tenants: Government vs. non-government
Based on
monthly
Based on contracted
GLA revenue
Government 62.5% 63.4%
Non-Government 37.5% 36.6%
Total 100.0% 100.0%
7. Operating segments
The group classifies segments based on the type of property i.e.
Commercial, Retail, Industrial and Other. Properties can be mixed use
properties. In this instance the property will be classified
according to its principle use. Accordingly, the group only has one
reporting segment, namely Commercial property as the principle use of
all properties in the portfolio is for commercial office space. Most
of the buildings do have a small retail component (normally at street
level), but seldom exceeds 10% of the total GLA per building.
8. Payment of final distribution
The board has approved and hereby gives notice of final cash distributions
(distributions number 5) of 19.95 cents per A-linked
unit and 12.23 cents per B-linked unit in respect of the six months
ended 30 June 2014.
Date
The last date to trade cum distribution Friday, 12 September 2014
Linked units trade ex distribution Monday, 15 September 2014
Record date Friday, 19 September 2014
Payment date Monday, 22 September 2014
Linked unit certificates may not be dematerialised or rematerialised
between Monday, 15 September 2014 and Friday, 19 September 2014, both
days inclusive.
In respect of dematerialised linked unitholders, the distribution
will be transferred to the CSDP/broker accounts on Monday, 22
September 2014. Certificated linked unitholders’ distribution
payments will be posted on or about Monday, 22 September 2014.
An announcement informing unitholders of the tax treatment of the
income distributions will be released separately on SENS.
Cape Town
29 August 2014
Directors
AC Nissen (chairman) / SL Rai * / FW Arendse * / HB Dednam *
J de Villiers (alternate to SL Rai) * / M Burton / B Bayvel /
H Takolia
* (executive director)
Company secretary
J de Villiers
Business address
25th Floor, 9 Riebeeck Street, Cape Town, 8001
Transfer secretaries
Computershare Investor Services Proprietary Limited, 70 Marshall
Street, Johannesburg, 2001
Sponsor
Java Capital, 2 Arnold Road, Rosebank, 2196
Date: 29/08/2014 05:37:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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