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ORE
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Orion - Unaudited interim results of the group for the six months ended 31
December 2005
ORION REAL ESTATE LIMITED
(Formerly Alpina Investments Limited)
(Incorporated in the Republic of South Africa)
Registration number 1997/021085/06
Share code: ORE & ISIN ZAE000075651
("Orion")
UNAUDITED INTERIM RESULTS OF THE GROUP FOR THE SIX MONTHS ENDED 31 DECEMBER 2005
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
six six Year
months months ended
ended ended 30 Jun 2005
31 Dec 2005 31 Dec 2004
Revenue 10 252 459 15 237 656 28 220 583
Operating costs (6 865 421) (7 969 063) (15 892 897)
Operating profit 3 387 038 6 933 110 12 327 686
Investment Income 2 216 48 051 115 476
Impairments & Write-offs - - (3 469 873)
Reversal of unsubstantiated - - 4 379 807
liability
Revaluation of properties - - 9 071 822
Profit on sale of investment - 1 700 000 5 277 880
property
Finance charges (4 935 907) (8 340 669) (15 752 313)
Profit/(Loss) before taxation (1 546 653) 675 975 11 950 485
Taxation 359 077 (1 762 290) (5 707 979)
Profit/(Loss) for period (1 187 576) (1 086 315) 6 242 506
Profit/(Loss) per linked unit (5.62) (6.01) 54.25
(cents)
Headline loss per linked unit (5.62) (15.41) (70.45)
(cents)
Fully diluted earnings/(loss) (5.62) (5.99) 34.41
per linked unit (cents)
Fully diluted headline loss (5.62) (15.36) (44.69)
per linked unit (cents)
Weighted number of linked 21 139 125 18 075 625 11 507 890
units
Diluted number of linked units 21 139 125 18 139 125 18 139 125
Reconciliation between net earnings and headline earnings:
Net (loss)/profit per Income (1 187 576) (1 086 315) 6 242 506
Statement
Amortization of goodwill - - -
Impairment of goodwill - - -
Profit on sale of investment - (1 700 000) (5 277 880)
property
Fair value adjustment to - - (9 071 822)
investment property
Headline loss (1 187 575) (2 786 315) (8 107 196)
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
31 Dec 2005 31 Dec 2004 30 Jun 2005
Net cash flow from operating (2 758 133) (3 642 989) (6 292 411)
activities
Cash generated from operations 2 452 079 4 666 238 9 304 517
Interest received 2 216 115 476
48 051
Interest paid (4 935 907) (8 340 669) (15 752 313)
Taxation paid (276 520) 39 909
(16 609)
Net cash inflow from investing 4 225 820 8 826 025 12 768 040
activities
Net cash inflow from financing (2 020 116) (6 042 144) (5 711 528)
activities
Net movement in cash and cash (552 429) (859 764 101
equivalents 108)
Cash and cash equivalents at 776 210 12 109 12 109
beginning of period
Cash and cash equivalents at 223 781 (846 999) 776 210
end of period
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
31 Dec 2005 31 Dec 2004 30 Jun 2005
Investment properties 90 700 001 120 882 000 90 700 001
Tangible assets 106 903 276 734 136 317
Intangible assets - - -
Loans receivable (Including 3 954 421 2 197 508 7 378 016
rental smoothing)
Deferred taxation 1 522 440 4 959 891 1 138 291
Current assets 1 451 662 14 916 462 1 747 812
Total assets 97 735 427 143 232 595 101 100 437
Shareholders" equity (5 063 931) (11 094 777) (3 906 355)
Subordinated debentures 18 615 345 14 143 991 18 045 345
Long-term borrowings 71 779 670 120 713 378 74 799 770
Deferred taxation 4 055 495 979 160 4 030 423
Current liabilities 8 348 848 18 490 843 8 131 254
Total equity and liabilities 97 735 427 143 232 595 101 100 437
Net (and net tangible) asset 64.1 16.8 78.0
value per linked unit (cents)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Shares Distribut- Total
capital premium to able
issue reserve /
(Accumulated
(loss)
Balance at 1 July 3 752 4 736 589 - 2 068 390 6 808 731
2002
Outside (356 840) (356 840)
shareholders"
interest
Attributable loss - - 0 (1 208 006) (1 208 006)
for 6 months
Balance at 31 3 752 4 736 589 - 503 544 5 243 885
December 2002
Restructering cost (516 680)
(516 680)
Attributable loss - - - (2 040 043) (2 040 043)
for 6 months
Balance at 91 169 4 041 322 - (3 507 461) 625 030
31 December
2003
Issue of 70 617 - - - 70 617
linked units
Restruct- - (524 687) - - (524 687)
uring cost
Shares to - - 3 158 964 - 3 158 964
issue
Attribut- - - - (14 131 957) (14 131 957)
able loss
for
6 months
Balance 161 786 3 516 635 3 158 964 (17 639 418) (10 802 033)
at 30
June 2004
Straight - - - 578 813 578 813
line operating
lease
adjustment
- 2004
Straight - - - 2 480 568 2 480 568
line operating
lease
adjustment
- prior
Issue of linked 19 605 3 881 750 (3 158 964) - 742 391
units
Straight line - - - 238 193 238 193
operating lease
adjustment
Attribut- - - - (1 324 508) (1 324 508)
able loss
for 6
months
Balance at 181 391 7 398 385 - (15 666 352) (8 086 576)
31 December 2004
Issue of - (3 881 750) - - (3 881 750)
debentures
incorrect-
ly classified
Attribut- - - - 8 061 971 8 061 971
able profit
for 6
months
Balance at 181 391 3 516 635 - (7 604 381) (3 906 355)
30 June
2005
Issue of 30 000 - - - 30 000
linked
units
Attribut- - - - (1 187 576) (1 187 576)
able loss for
6 months
Balance at 211 391 3 516 635 - (8 791 957) (5 063 931)
31 December
2005
Commentary on the December 2005 Interim Financial Report
Basis of Preparation
The unaudited condensed consolidated interim financial statements have been
prepared in accordance with International Financial Reporting Standards
("IFRS"). The company adopted IFRS for the first time on 1 July 2005 and these
are the group"s first interim IFRS condensed financial statements. IFRS First
Time Adoption of IFRS has been applied. IAS34-Interim Financial Reporting and
the requirements of the South African Companies Act of 1973 and the disclosure
requirements of the JSE Limited have been adopted. This report has been prepared
on the fair value and going concern basis.
Significant changes to the Group"s accounting policies as a result of the
adoption of IFRS
The principal accounting policies are consistent with those applied in the
previous year:
Investment Properties
Items of property have consistently been stated on an annual basis at valuation
and accordingly no adjustments in this regard were necessary.
Tangible Assets
The company"s property, plant and equipment are stated at cost less accumulated
depreciation and impairment losses. As the company"s property, plant and
equipment have all been recently acquired and impaired in its June 2005 results,
no adjustments in terms of IFRS were required.
Smoothing of Operating Rentals Received
The operating rentals have been smoothed for the year ended 30 June 2005 in
accordance with AC105 - GAAP requirements. The previous year was restated as
required by AC105. The smoothing of the operating lease rentals received is also
an IFRS requirement and the interim results for 31 December 2004 have been
adjusted to conform therewith.
Impact of the Transition to IFRS
The requirements for the First Time Adoption of IFRS as required by IFRS1 are
clearly reflected in the company"s statement of changes in equity.
In comparing its comparative information for the six months ended 31 December
2004, the group has adjusted the amounts previously reported in the financial
statements prepared in accordance with previous GAAP. The net effect of the
transition to IFRS is not material; the restatement of the comparative
information is an increase in retained earnings of R238 193 for the six months
ended 31 December 2004.
Review of Operations
Orion, which traded as Alpina Investments Limited for the financial period under
review, reflected a loss of R1,5 million. The reduced operating loss was the
result of having disposed of loss-making properties in the previous twelve
months. Certain transaction costs were also brought to account. The headline
loss amounts to R1,18 million, resulting in a HEPS loss of 5,62 cents per linked
unit.
Status of Corporate Actions
The acquisition of the company owning the Orion Centre in Edenvale has been
concluded and 130 647 058 linked units have been issued to the Franz Gmeiner
group ("FGA"). The property transfers in respect of the balance of the
properties acquired and those being disposed of are proceeding following
Competition Commission approval. The specific issue of 35 300 000 linked units
to FGA at 17 cents per linked unit has raised R6 001 000 in cash.
Company Objectives
The company"s short-term investment strategy is to create a property portfolio
of significant critical mass through the acquisition of quality, high-yielding
properties.
In the short-term it is planned to acquire further properties that will boost
the portfolio to in excess of R400 million.
Recapitalisation of the Company
As part of the restructuring process, the board is examining opportunities to
raise additional capital.
BEE Initiative
Orion is in discussion with various parties and intends adopting black economic
empowerment (BEE) and transformation in ownership, control, skills development,
employment equity, procurement and development of untapped areas.
Post Balance Sheet Activity
At the general meeting held on 15 February 2006, unit holders approved the
disposal of various properties, the acquisition of the Orion property portfolio,
the restructure of "a-class" and "b-class" units into one consolidated linked
unit, the repurchase of units held by Bonatla Property Holdings Ltd ("Bonatla"),
the change of the company"s name to "Orion Real Estate Limited" ("Orion"), and
the issue of units for cash under varying conditions.
Following the acquisition of the company owning the Orion Centre in Edenvale,
187 180 910 linked units are now in issue. A further 9 022 199 linked units are
subject to a specific repurchase once the properties being disposed of to
Bonatla, have been transferred. As and when the property transfers are completed
for the balance of the properties being acquired from FGA (as referred to
above), a further 377 647 058 linked units will be issued to FGA bringing the
total number of linked units in issue to 564 827 968.
Dividend
No distributions have been made for the six months under review.
For and on behalf of the board:
Directors:
RS Wilkinson* (Chairman),
BA Smith (Chief Executive),
PD Alexander*,
AC Gmeiner*,
F Gmeiner# (Managing Director),
AJ Parker*
*Non-executive; # Austrian
Sponsor
Imara Corporate Finance South Africa (Pty) Ltd
Company Secretary
Corporate Governance Facilitators CC
Auditor
Horwath Leveton Boner
Transfer secretaries
Computershare Investor Services 2004 (Pty) Limited
Registered Office
16th Floor, Devonshire House, 49 Jorissen Street, Braamfontein
Date: 03/04/2006 01:55:23 PM Produced by the JSE SENS Department
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