| Fri 30 Nov 2018, 7:05 | | ADRENNA PROPERTY GROUP LIMITED - Consolidated Unaudited Interim Results For The Six Months Ended 31 August 2018 |
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ANA 201811300002A
Consolidated Unaudited Interim Results For The Six Months Ended 31 August 2018
ADRENNA PROPERTY GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 1998/012245/06)
Share Code: ANA ISIN: ZAE000163580
(?Adrenna? or ?the Company?)
CONSOLIDATED UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2018
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Six months ended Twelve months
31 August 2018 31 August 2017 ended
R?000 R?000 28 February 2018
R?000
(unaudited) (unaudited) (audited)
Revenue 14 303 13 076 27 549
Operating income before interest 4 207 9 312 16 886
and revaluations
Fair value adjustments on
investment properties - 448 13 736
Investment income 672 432 838
Finance costs (3 396) (3 032) (9 814)
Share of Profit/(Loss) from Associate (143)
Net income before taxation 1 340 7 160 21 646
Taxation (607) (2 542) (5 978)
Income after taxation for the period 733 4 618 15 668
Non-controlling interest - - --
Income attributable to ordinary
shareholders 733 4 618 15 668
Total net profit 733 4 618 15 668
Other comprehensive income - - -
Total comprehensive income
attributable to:
- Ordinary shareholders 733 4 618 15 668
- Non-controlling interests - - -
733 4 618 15 668
CONDENSED STATEMENT OF FINANCIAL POSITION
31 August 2018 31 August 2017 28 February 2018
R?000 R?000 R?000
(unaudited) (unaudited) (audited)
ASSETS
Non-current assets
Investment properties 243 538 231 562 243 309
Property, plant and equipment 898 18 898
Investment in associate 235 - -
Loans owing by third parties 26 714 4 912 3 324
Operating lease assets 6 502 6 913 6 502
Other Financial assets 800 - 800
Deferred taxation - 254 -
278 687 243 659 254 833
Current assets
Loans owing by third parties 3 761 2 190 2 061
Inventory 1 430 1 430 1 430
Accounts receivable 1 932 2 854 5 191
Operating lease assets 3 730 2 871 3 730
Current taxation receivable 123 146 123
Cash and cash equivalents 3 375 6 554 6 395
14 351 16 045 18 930
Non-current assets held for sale - 6 000 -
Total assets 293 038 265 704 273 763
EQUITY AND LIABILITIES
Equity
Stated capital and reserves 162 922 151 139 162 189
Non-current liabilities
Borrowings 84 922 59 913 64 814
Deferred tax 40 932 39 060 40 932
125 854 98 973 105 746
Current liabilities
Current portion of borrowings - 11 030 -
Loans with third parties 88 - -
Accounts payable 3 997 1 654 2 530
Taxation payable 177 1 262 514
Bank overdraft - 1 646 2 784
4 262 15 592 5 828
Total equity and liabilities 293 038 265 704 273 763
CONDENSED STATEMENT OF CASH FLOWS
Six months ended Six months ended Twelve months
31 August 2018 31 August 2017 ended
R?000 R?000 28 February 2018
R?000
(unaudited) (unaudited) (audited)
Cash generated by operations 9 338 8 190 15 636
Finance costs (3 396) (3 032) (9 814)
Investment income ? interest 264 432 838
Taxation refunded - 130 136
Taxation paid (941) (1 170) (3 280)
5 265 4 550 3 516
Cash flows (used in)/from investing
activities
Proceeds from sale of investment
property - 5 500 11 500
Acquisition of investment property (229) (10 959) (11 119)
Acquisition of equipment - (18) (910)
Acquisition of other financial assets - - (800)
Acquisition of associate (378) - -
Net movement in loans owing by third
parties (25 002) 219 1 935
(25 609) (5 258) 606
Cash flows from financing activities
Repayment of borrowings - (3 290) (64 231)
Raising of bond finance 20 108 10 000 64 814
20 108 6 710 583
Movements in cash and cash
equivalents (236) 6 002 4 705
Cash and cash equivalents at the
beginning of the period 3 611 (1 094) (1 094)
Cash and cash equivalents at the end of
the period 3 375 4 908 3 611
CONDENSED STATEMENT OF CHANGES IN EQUITY
31 August 2018 31 August 2017 28 February 2018
R?000 R?000 R?000
(unaudited) (unaudited) (audited)
STATED CAPITAL
Ordinary stated capital 567 567 567
RESERVES
Retained earnings
Balance at beginning of period 161 622 145 954 145 954
Comprehensive income attributable to
ordinary shareholders 733 4 618 15 668
Balance at the end of the period 162 355 150 572 161 622
Total reserves attributable to:
Ordinary shareholders 162 355 150 572 161 622
Non-controlling interests - - -
Total reserves 162 355 150 572 161 622
Total equity and reserves 162 922 151 139 162 189
SUPPLEMENTARY INFORMATION
31 August 2018 31 August 2017 28 February 2018
(unaudited) (unaudited) (audited)
Number of ordinary shares in issue at the
beginning of the period (?000) 55 915 55 915 55 915
Number of ordinary shares in issue at the
end of the period (?000) 55 915 55 915 55 915
Weighted average number of shares in
issue during the period (?000) 55 915 55 915 55 915
Basic earnings:
Net profit per condensed statement of
comprehensive income (R?000) 733 4 618 15 668
Basic earnings per share (cents) 1.3 8.3 28.0
Headline earnings
Net profit per condensed statement of
comprehensive income (R?000) 733 4 618 15 668
Profit on sale of investment property
(R?000) - (1 700) -
Revaluation of investment property (net
of taxation) (R?000) - (331) (11 630)
Headline earnings (R?000) 733 2 587 4 038
Headline earnings per share (cents) 1.3 4.6 7.2
Dividends per share (cents) - - -
Net asset value per share (cents) 291.4 270.3 290.0
Net tangible asset value per share (cents) 291.4 270.3 290.0
BASIS OF PREPARATION
The condensed consolidated financial statements have been prepared in accordance with IAS 34: Interim
Financial Reporting, the requirements of the Companies Act of South Africa and the Listing Requirements of
the Johannesburg Stock Exchange Limited (?JSE?). These unaudited condensed consolidated results have been
prepared on the going concern basis as directors are of the view that the group has adequate resources in
place to continue in operation for the foreseeable future. The accounting policies applied are in accordance
with International Financial Reporting Standards and the SAICA Financial Reporting Guides (formerly the AC
500 Standards) as issued by the Accounting Practices Committee and its successor and are consistent with
those applied in the most recent annual financial statements. These results have been prepared by the
Financial Director Mrs M Beukes. These interim results have not been reviewed or audited.
CONDENSED SEGMENT RESULTS
Six months ended Six months ended Twelve months
31 August 2018 31 August 2017 ended
28 February 2018
(unaudited) (unaudited) (audited)
Revenue
Investment Property Holding 13 832 12 852 27 549
Property-related Services - - -
Property Held for Resale - - -
Head Office Administration 471 224 -
Non-current Assets Held For Sale - - -
14 303 13 076 27 549
Income/(Loss) before taxation
Investment Property Holding 3 804 9 797 22 976
Property-related Services - - -
Property Held for Resale - - -
Head Office Administration (2 464) (2 637) (1 330)
Investment in Associate - - -
Non-current Assets Held For Sale - - -
1 340 7 160 21 646
Total assets
Investment Property Holding 259 435 240 669 265 250
Property-related Services - - -
Property Held for Resale 1 430 1 430 1 430
Head Office Administration 32 172 17 605 7 083
Non-current Assets Held For Sale - 6 000 -
293 038 265 704 273 763
Total liabilities
Investment Property Holding 130 116 112 894 108 790
Property-related Services - - -
Property Held for Resale - - -
Head Office Administration - 1 671 2 784
Non-current Assets Held For Sale - - -
130 116 114 565 111 574
GENERAL REVIEW, PROSPECTS AND FINANCIAL RESULTS
During the interim reporting period, the directors embarked on a policy to diversify the Company?s
portfolio so as to mitigate potential current and future economic risks.
In this regard the directors identified possibilities in the Healthcare industry and investigated
opportunities in this field. The CEO introduced the directors to the operations of the East Sydney Day
Hospital (ESDH) in Australia (in which he has a personal investment). It was ascertained that the
Australian Healthcare system (which was historically very similar to that of South Africa) had recently
implemented a number of initiatives which have allowed the private sector to become more
involved in the development of modern healthcare services.
It was felt that the ability of Adrenna to introduce these systems into South Africa would be greatly
enhanced by ?hands-on? knowledge. With this in mind the directors negotiated with the
shareholders of ESDH and, subject to shareholder approval, secured an effective 15% shareholding
in ESDH and the right to appoint 2 directors. This shareholding was secured by the provision of an
initial loan of A$2 Million (R20 Million) which will firstly convert into redeemable convertible
preference shares and into ordinary equity at a later stage. The use of preference shares as an
intermediate step was used in order to secure the company?s investment as the preference shares
rank in priority to ordinary shareholders and other creditors of the ESDH (other than the finance
leases).
During the last financial year the existing shareholders in the ESDH wrote down their equity
investment substantially as well as reduced and/or wrote off their claims on interest in respect of
promissory notes. The bank overdraft was also eliminated. This resulted in the ESDH, at the time of
the investment by the company, having no third party loans and showing a significant reduction of
accumulated losses.
The investment by the Company (together with that of other new investors) will be utilised to
expand the operating capacity of the hospital by the introduction of additional beds. The ESDH is
also improving the ?mix? of procedures being offered due to new extensions to the wards and the
acquisition of additional theatre equipment thereby substantially increasing the operational capacity
of the ESDH.
As a result of the foregoing and the fact that the ESDH has overcome its ?teething? problems the
directors of the ESDH are confident of achieving a positive EBITA in a short space of time thereby
substantially increasing shareholder value. The investment in the ESDH will not impact on the cash
flows of the Company in that interest is currently being received from the ESDH at the rate of 12%
which is the 1% above the cost to the company.
Revenue for the period ended 31 August 2018 reflects an increase of 9.4% on the comparable results
for 2017. The escalations effected on certain large tenants near the end of 2017 has resulted in this
positive revenue growth.
Operating profits before interest and revaluations for the period ended 31 August 2018 reflect a
decrease of 54.8% on the comparable period for 2017. The main reason for this was the need to
expend significant sums on repairs and maintenance at Consani Industrial Park in the Western Cape
as a result the recent floods in the area which cost the company in excess of R2.5 million. In addition,
there were a number of extraneous expenses - bad debts of R335 000, legal and settlement costs
regarding a spurious claim against the company which totalled R230 000 (it was resolved to settle
this claim for an amount which can be considered nominal in comparison to the time and costs of
litigation) The foregoing, together with a number of once-off costs reduced the net income for the
period by at least R3.5 million.
In addition, the Company, through its wholly-owned subsidiary, Somerset Mall Developments has
expended funds approximating R1 million on finalising plans and obtaining rights in respect of a
further development comprising 16 luxury apartments on property which it owns in Hout Bay in the
Western Cape. Subject to obtaining pre-sales of 70%, this project, which is expected to contribute
positive earnings, will commence in April 2019.
The group continued to trade in a positive cash position despite the significant expenses incurred.
Finance costs reflect an increase on the comparable results for 2017, due to the increase in funding
from the Fed Bond facility raised during the period.
Loans receivable increased due to the loan advanced to ESDH as mentioned above. Activities within
the period ended 31 August 2018 have produced an improvement in Net Asset Value per share of
1.4 cents since the financial year ending 28 February 2018. The group has experienced a decrease in
Headline Earnings per Share of 3.3 cents in comparison with the previous period ended 31 August
2017.
RELATED PARTY INFORMATION
Related party information for the six months ended 31 August 2018 is set out below:
R
Rental charged ? RMS Property and Facilities Management Pty Ltd 120 000
Rental charged ? RMS Corporate Solutions Pty Ltd 150 000
Asset management fees paid ? RMS Corporate Solutions Pty Ltd (1 223 693)
Director emoluments (326 975)
Professional and consulting fees paid to companies associated with directors (1 102 184)
ACQUISITIONS, DISPOSALS AND SHARE CAPITAL
There were no acquisitions, disposals, share issues or share repurchases during the period under
review.
DIVIDENDS
Taking into account the expenses referred to above the directors have resolved not to recommend a
dividend in respect of the six months ended August 2018. The directors, however, are of the firm
opinion that, based on their expectations for the second half of the financial year, they will be in the
position to recommend a dividend in respect of the year ending February 2019.
Johannesburg
30 November 2018
DIRECTORS: R P Fertig (Chief Executive Officer), W P Alcock (Chairman), M Beukes CA(SA) (Financial
Director), SP Mothelesi*, M Moela*, R Watson* (*Independent non-executive)
COMPANY SECRETARY: B W Kaiser
TRANSFER SECRETARIES: Computershare Investor Services (Pty) Limited, Rosebank Towers 15
Bierman Avenue Rosebank Johannesburg, 2196
REGISTERED OFFICE: Unit 32 Waterford Office Park, Waterford Drive, Douglasdale Johannesburg
2021
SPONSOR: Arbor Capital Sponsors (Pty) Limited, 20 Stirrup Lane, Woodmead Office Park, Corner
Woodmead Drive & Van Reenens Avenue, Woodmead, 2191
REGISTERED AUDITORS: RSM South Africa Incorporated, Executive City Cross Street and Charmaine
Avenue President Ridge, Randburg, 2194
Date: 30/11/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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