Wrap Text
Summarised provisional consolidated financial results for the year ended 30 June 2014
Attacq Limited
(previously Atterbury Investment Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1997/000543/06)
JSE share code: ATT ISIN: ZAE000177218
("Attacq" or "the Company" or "the Group")
SUMMARISED PROVISIONAL CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2014
Summarised consolidated statement of financial position
Audited Restated
30 June 30 June
2014 2013
R'000 R'000
Assets
Non-current assets
Property, plant and equipment 11 061 5 666
Investment properties 12 829 337 8 921 552
Per valuation 13 138 938 9 089 523
Straight-line lease debtor (309 601) (167 971)
Straight-line lease debtor 309 601 167 971
Deferred initial lease expenditure 7 174 4 504
Intangible asset 284 826 -
Goodwill 62 847 -
Investment in associates 2 950 274 1 145 246
Other investments 523 750 58 379
Deferred tax assets 11 570 8 103
Total non-current assets 16 990 440 10 311 421
Current assets
Inventory - 126 304
Taxation receivable 896 1 497
Trade and other receivables 167 302 155 497
Loans to associates 771 936 487 142
Other financial assets 6 173 47 368
Cash and cash equivalents 389 293 44 389
Total current assets 1 335 600 862 197
Non-current assets held for sale 138 846 1 601 642
Total assets 18 464 886 12 775 260
Equity and liabilities
Stated capital/Issued share capital and share premium 5 798 843 2 196 594
Distributable reserves 3 836 930 3 150 726
Available-for-sale reserve 83 746 -
Share-based payment reserve 83 317 5 488
Foreign currency translation reserve 111 929 159
Acquisition of non-controlling interest reserve (2 574) -
Equity attributable to owners of the holding company 9 912 191 5 352 967
Non-controlling interests 214 567 352 283
Total equity 10 126 758 5 705 250
Non-current liabilities
Long-term borrowings 6 226 221 3 872 731
Deferred tax liabilities 900 811 799 088
Other financial liabilities 48 026 70 944
Provisions for liabilities relating to associates 8 844 71 355
Finance lease liabilities 56 009 56 891
Total non-current liabilities 7 239 911 4 871 009
Current liabilities
Other financial liabilities 5 851 145 257
Loans from associates 246 079 -
Taxation payable 11 158 25 759
Trade and other payables 375 960 327 990
Provisions 10 142 5 709
Current portion of long-term borrowings 449 027 1 295 713
Total current liabilities 1 098 217 1 800 428
Non-current liabilities directly associated with assets held for sale - 398 573
Total liabilities 8 338 128 7 070 010
Total equity and liabilities 18 464 886 12 775 260
Cents Cents
Net asset value per share 1 477 1 191
Net asset value per share excluding deferred tax 1 610 1 367
Summarised consolidated statement of comprehensive income
Audited Restated
30 June 30 June
2014 2013
R'000 R'000
Continuing operations
Gross rental income 876 850 628 532
Rental income 769 199 543 279
Straight-line lease income adjustments 107 651 85 253
Property expenses (230 300) (212 362)
Net rental income 646 550 416 170
Gross profit on sale of inventory 41 332 -
Sale of inventory 263 209 -
Cost of sales (221 877) -
Bargain purchase on acquisition of subsidiary 43 783 -
Other income 59 325 126 348
Operating and other expenses (283 743) (288 060)
Operating profit 507 247 254 458
Amortisation of intangible asset (14 634) -
Fair value adjustments 953 192 856 298
Investment properties 919 094 782 061
Other financial assets and liabilities 34 098 57 137
Other investments - 17 100
Net (loss) income from associates (58 069) 94 430
Investment income 424 796 48 345
Finance costs (582 122) (400 440)
Profit before taxation 1 230 410 853 091
Income tax expense (218 156) (209 405)
Profit for the year from continuing operations 1 012 254 643 686
Discontinued operations
Profit from discontinued operations net of taxation - 108 788
Profit for the year 1 012 254 752 474
Attributable to:
Owners of the company 946 147 723 009
Non-controlling interests 66 107 29 465
Other comprehensive income
Items that will be reclassified subsequently to profit or loss
Gain on available-for-sale financial assets 104 950 -
Taxation relating to components of other comprehensive income (21 204) -
Other comprehensive income for the year net of taxation 83 746 -
Total comprehensive income for the year 1 096 000 752 474
Attributable to:
Owners of the company 1 029 893 723 009
Non-controlling interests 66 107 29 465
Earnings per share
From continuing and discontinued operations
Basic (cents) 163.4 160.9
Diluted (cents) 163.1 160.7
From continuing operations
Basic (cents) 163.4 136.7
Diluted (cents) 163.1 136.5
Audited Restated
30 June 30 June
2014 2013
R'000 R'000
Reconciliation between earnings, headline earnings (loss) and
distributable earnings (loss)
Profit for the year 946 147 723 009
Headline earnings adjustments (640 350) (741 211)
Profit on disposal of associates (7 790) -
Loss (profit) on disposal of other investments 65 150 (49 279)
Profit on sale of subsidiaries - (12 591)
Reversal of impairment of loans - (21 651)
Profit on disposal of investment property (8 567) (11 787)
Impairment of associates and other investments 14 995 85 070
Impairment of goodwill - 16 929
Impairment of loans - 40 372
Fair value adjustments (953 192) (970 087)
Gain arising from bargain purchase (43 783) -
Net loss (income) from associates 58 069 (109 325)
Tax effect of adjustments 153 575 195 865
Non-controlling interests share 81 193 95 273
Headline earnings (loss) 305 797 (18 202)
Distributable earnings adjustments 28 780 (55 075)
Straight-line lease income adjustments (94 358) (54 529)
Interest in respect of Attvest transaction 123 571 -
Actual finance lease payments (433) (546)
Distributable earnings (loss) 334 577 (73 277)
Number of shares in issue* 670 965 594 449 406 150
Weighted average number of shares in issue* 578 976 838 449 406 150
Diluted weighted average number of shares in issue* 580 271 131 449 861 909
Headline earnings (loss) per share
Basic (cents) 52.8 (4.1)
Diluted (cents) 52.7 (4.0)
* Adjusted for 46 427 553 treasury shares (2013: 73 583 735)
Summarised consolidated statement of cash flows
Audited Restated
30 June 30 June
2014 2013
R'000 R'000
Cash flow generated from (utilised in) operating activities 276 516 (19 305)
Cash generated from operating activities 503 049 402 579
Investment income 424 797 48 345
Finance costs (582 122) (400 440)
Taxation paid (69 208) (29 039)
Cash flow relating to non-current assets held for sale - (40 750)
Cash flow utilised in investing activities (3 970 959) (636 524)
Cash flow from financing activities 3 751 402 547 323
Total cash movement for the year 56 959 (108 506)
Cash at the beginning of the year 44 389 200 501
Cash acquired (disposed) with subsidiaries 287 945 (47 606)
Total cash at the end of the year 389 293 44 389
Condensed consolidated statement of changes in equity Acquisition Equity
Share capital Foreign currency Share based Available of non-controlling attributable
and share premium/ translation payment for-sale Distributable interest to owners Non-controlling
stated capital reserve reserve reserve reserves reserve of the company interests Total
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance as reported at 1 July 2012 2 196 596 (668) - - 2 442 040 - 4 637 968 395 348 5 033 316
Restatement - - - - (14 323) - (14 323) (2 527) (16 850)
Balance at 1 July 2012 - restated 2 196 596 (668) - - 2 427 717 - 4 623 645 392 821 5 016 466
Total comprehensive income - - - - 723 009 - 723 009 29 465 752 474
Dividends paid - - - - - - - (5 000) (5 000)
Derecognition of FCTR and non-controlling interests - 321 - - - - 321 (65 003) (64 682)
Foreign currency translation reserve - 506 - - - - 506 - 506
Recognition of share-based payments - - 5 488 - - - 5 488 - 5 488
Issue of shares - adjustment (2) - - - - - (2) - (2)
Balance at 30 June 2013 - restated 2 196 594 159 5 488 - 3 150 726 - 5 352 967 352 283 5 705 250
Balance at 30 June 2013 - previously reported 2 196 594 159 5 488 - 3 170 832 - 5 373 073 355 831 5 728 904
Restatement - - - - (20 106) - (20 106) (3 548) (23 654)
Total comprehensive income - - - - 946 147 - 946 147 66 107 1 012 254
Derecognition of non-controlling interest - - - - - - - (203 823) (203 823)
Foreign currency translation reserve - 111 770 - - - - 111 770 - 111 770
Cancellation of shares (158 673) - - - (259 943) - (418 616) - (418 616)
Issue of shares 3 760 922 - - - - - 3 760 922 - 3 760 922
Recognition of change in ownership reserve - - - - - (2 574) (2 574) - (2 574)
Other comprehensive income - - - 83 746 - - 83 746 - 83 746
Recognition of share-based payments - - 77 829 - - - 77 829 - 77 829
Balance at 30 June 2014 5 798 843 111 929 83 317 83 746 3 836 930 (2 574) 9 912 191 214 567 10 126 758
Summarised segmental analysis
Audited 30 June 2014 Restated 30 June 2013
Net Investment Net asset Net Investment Net asset
Revenue profit properties value Revenue profit properties value
Business segment Notes R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Atterbury House 1 4 462 (9 282) - - 26 362 33 356 335 942 202 018
Brooklyn Bridge Office Park 2 19 222 41 472 608 275 203 377 - - - -
Great Westerford 3 34 529 (21 787) 235 609 181 563 48 567 55 385 258 871 159 261
Harlequins Office Park 1 2 694 2 094 - - 14 351 17 529 132 838 66 511
Lynnwood Bridge 118 079 48 852 829 661 300 755 119 917 60 414 810 379 316 706
Aurecon Building 101 230 19 093 637 953 152 692 90 314 32 036 644 158 129 941
Waterfall - Altech Building 3 803 4 634 41 004 15 920 5 143 3 805 34 068 7 029
Waterfall - Cell C Campus 64 343 106 358 761 329 882 766 - - - -
Waterfall - Group 5 32 048 82 213 504 420 214 285 - - - -
Waterfall - Maxwell Office Park - Phase I 6 495 14 474 130 494 96 504 - - - -
Office and mixed use 386 905 288 121 3 748 745 2 047 862 304 654 202 525 2 216 256 881 466
De Ville Shopping Centre 1 20 204 31 074 - - 30 230 (6 669) 184 239 87 720
Glenfair Boulevard Shopping Centre 44 197 35 901 349 646 281 698 43 264 33 189 316 909 246 169
Sanridge Square 1 511 2 016 - (388) 15 106 10 668 99 834 101 080
Garden Route Mall 114 759 110 978 1 111 741 362 632 119 998 56 299 1 023 185 507 329
Brooklyn Mall 67 350 75 134 637 515 239 287 57 655 52 880 575 000 191 497
Mooirivier Mall 115 524 84 173 992 265 440 212 112 408 148 532 915 178 398 840
Andringa Walk 23 444 3 163 160 512 (110 516) 15 835 (34 798) 146 293 (138 521)
Eikestad Mall 60 121 17 461 503 449 97 335 54 497 26 844 483 267 (2 624)
Mill Square 4 214 260 73 196 9 365 226 4 397 58 019 57 610
Waterfall Corner 6 723 32 438 169 592 43 666 - - - -
Retail 457 047 392 598 3 997 916 1 363 291 449 219 291 342 3 801 924 1 449 100
Waterfall - Massbuild Distribution Centre 31 701 1 471 224 962 49 612 17 412 24 489 231 820 28 414
Light industrial 31 701 1 471 224 962 49 612 17 412 24 489 231 820 28 414
Le Chateau - (70) 17 000 14 753 - 1 483 17 000 9 927
Waterfall - Infrastructure and Services - (31 149) 446 046 316 217 - (5 782) 554 042 208 570
Waterfall - Land - 24 154 1 503 549 1 503 471 - 199 769 1 743 027 1 589 110
Vacant land - (7 065) 1 966 595 1 834 441 - 195 470 2 314 069 1 807 607
Waterfall - Angel Shack - 1 134 21 031 18 705 - - - -
Waterfall - City Lodge - 5 156 63 086 60 755 - - - -
Waterfall - Covidien - 2 903 39 236 35 513 - - - -
Waterfall - Cummins - 1 118 24 312 15 216 - - - -
Waterfall - Drager - 2 968 30 535 29 378 - - - -
Waterfall - Mall of Africa - 141 149 994 714 732 865 - - - -
Waterfall - Maxwell Office Park - Phase II - 8 281 83 671 72 491 - - - -
Waterfall - Novartis - 5 146 54 168 49 292 - - - -
Waterfall Lifestyle - (1 516) 87 299 84 867 - - - -
Waterfall - Cell C Campus - - - - - 82 020 478 236 134 561
Waterfall - Group 5 - - - - - 24 341 206 345 72 034
Waterfall - Maxwell Office Park - Phase I - - - - - 9 681 54 120 52 740
Waterfall - Westcon - 489 52 348 46 436 - - - -
Lynnwood Bridge - Phase III - 8 149 308 639 115 081 - 47 803 165 977 47 803
Newtown - 6 035 987 919 187 323 - 3 960 427 363 147 558
Majestic Offices - 19 194 144 161 24 190 - (5 572) 37 165 12 579
Developments - 200 206 2 891 119 1 472 112 - 162 233 1 369 206 467 275
Head office/other 1 197 220 669 - 3 359 440 (7 243) (123 585) - 1 071 389
Total 876 850 1 096 000 12 829 337 10 126 758 764 042 752 474 9 933 275 5 705 250
Notes:
1. Held for sale as at 30 June 2013, sold prior to 30 June 2014
2. Acquired 11 March 2014
3. Held for sale as at 30 June 2013, not sold and no longer held for sale as at 30 June 2014
Commentary
Introduction
Attacq is a leading South African capital growth property company listed on the JSE. Attacq's business has two focus areas: Investments
and Developments. Investments comprise completed buildings held directly and indirectly. Developments comprise land, greenfields
development of land or brownfields development by refurbishment of existing buildings. Investments provide stable income and balance
sheet strength to responsibly secure and fund high-growth opportunities within Developments. Attacq has a total asset value in excess of
R18 billion, including landmark commercial and retail property assets and developments. Its portfolio of properties is geographically
diverse across South Africa and includes a growing representation of international investments in sub-Saharan Africa and exposure
to property investments in Germany, Switzerland and the United Kingdom via a strategic stake in MAS Real Estate Inc. ("MAS").
Attacq listed on the JSE in the "Real Estate - Real Estate Holdings and Development" sector on 14 October 2013.
Restatement
It is the Group's policy to account for investment properties at fair value under IAS 40: Investment Properties. Via its subsidiary,
Attacq Waterfall Investment Company (Pty) Ltd ("AWIC"), Attacq accounted for the rental obligations arising as a result of its leasehold
rights in respect of Waterfall as a finance lease under IAS 17: Leases, taking estimates of all expected lease payments into account.
During the current year, following detailed advice received, it was concluded that the rental obligations taken into account in the
determination of the finance lease liability were contingent in nature and that the finance lease liability previously raised should be
de-recognised. However, in applying the requirements of IFRS 13: Fair Value Measurement, investment properties should be carried at the
fair value determined with reference to an orderly transaction between market participants at the measurement date under current market
conditions. The investment properties should be carried at their net values after taking into account AWIC's future rental obligations
arising from its leasehold rights in respect of Waterfall.
Despite the cumulative impact of the restatement on the 2013 net asset value ("NAV") being only R20.1 million lower (4.5 cents per
share), a restatement was required in terms of IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors because there are
material adjustments to individual line items of the statement of financial position. The net impact of the restatement was a decrease in
investment properties of R574.1 million in 2013 (2012: R501.4 million) with a corresponding decrease in the finance lease liability.
Deferred tax liabilities increased by R23.7 million in 2013 (2012: R16.9 million) with a corresponding decrease in distributable reserves.
Net asset value per share ("NAVPS")
NAVPS at 30 June 2014 was R14.77, 24.0% higher than the prior year NAVPS of R11.91 (restated).
Capital raised
Attacq raised a total of R2.9 billion in cash from shareholders during the current financial year in order to fund developments, make
investments and reduce debt:
- R580 million by way of a non-renounceable rights offer prior to listing at R11.50 per share which closed 24 July 2013;
- R800 million by way of a private placement at listing at R14.50 per share;
- R512 million by way of a general issue of shares for cash on 5 February 2014 at R17.65 per share; and
- R1 billion in terms of a vendor placement undertaken on 25 February 2014 at R17.65 per share, in order to fund Attacq's R1.3 billion
investment in the MAS private placement which closed on 11 March 2014.
Acquisitions
Non-controlling interests
During the year, Attacq acquired the non-controlling interest in Attacq Retail Fund (Pty) Ltd ("ARF") (previously Abacus Holdings (Pty)
Ltd) by issuing 12.1 million Attacq shares at R11.63 per share. The transaction was entered into prior to listing and the shares issued
subsequent to listing when the market price of an Attacq share was R16.50 per share. This resulted in an IFRS 2: Share-based Payment
charge of R59.2 million being recognised in operating and other expenses in the current year.
During December 2013, Attacq became the sole shareholder of Mantrablox (Pty) Ltd, the owner of Garden Route Mall, by exercising its call
option to acquire the 20% shareholding owned by Hyprop Investments Limited ("Hyprop") for an amount of R21.4 million and settling the
related shareholder loan of R117.6 million.
Shareholding increase in AWIC
Attacq acquired an additional interest of 1.2% in AWIC from Trinsam Trust, a discretionary family trust of which MC Wilken is a
beneficiary. The acquisition price was partly settled by the issue of new Attacq shares at an issue price of R11.96 (being the NAVPS as
at 30 June 2013 prior to restatement), totalling R13.5 million. An agterskot amount of R11.6 million, escalating at the prime interest
rate, is payable on the occurrence of certain events relating to a change in control occurring in Attacq or MC Wilken ceasing to be a
director of Attacq. Should MC Wilken still be a director of Attacq in 2020, the agterskot amount will be calculated in terms of a
formula.
Internalisation of asset management function
Attacq internalised its asset management function as part of its listing by acquiring the entire issued share capital of Attacq
Management Services (Pty) Ltd ("AMS") (previously Atterbury Asset Managers (Pty) Ltd) from Atterbury Property Holdings (Pty) Ltd (an
associate of Attacq) and Attventure (Pty) Ltd. The objectives of the internalisation are to conform to market practice, to create
synergies between Attacq and the asset manager and to remove any potential conflicts of interest between Attacq and the asset manager.
The purchase consideration of R271.1 million was settled by way of a cash payment of R135.5 million and by the issue of 11.3 million new
Attacq shares issued on 4 October 2013 at the
30 June 2013 NAVPS prior to restatement.
Investment in African Land Investments Limited ("ALI")
Attacq acquired a 12.4% stake in ALI on 5 December 2013 for an amount of R110 million. Hyprop acquired 87% of ALI as part of the same
transaction. ALI owns the 43 400m2 Manda Hill Mall in Lusaka, Zambia. The mall is currently fully let with a strong retail offering. An
expansion of 10 000m2 is planned in the future.
Brooklyn Bridge Office Park
Attacq increased its shareholding in Brooklyn Bridge Office Park (Pty) Ltd ("Brooklyn Bridge") from 25% to 100% on 11 March 2014,
following the receipt of the competition authorities' approval to implement the transaction. The transaction was entered into prior to
listing and the purchase consideration was settled by way of R60.3 million in cash and the balance of R56.3 million by the issue of 4.9
million Attacq shares issued at an issue price of R11.53 per share, being the NAVPS as at 31 March 2013 when the commercial terms of the
transaction were agreed. The related shareholder loan of R29.6 million was settled simultaneously.
Additional investment in MAS
Attacq invested R1.3 billion in the MAS private placement which closed on 11 March 2014, enabling it to maintain its stake of 47.2% in
the enlarged issued share capital of MAS. MAS will utilise the cash in order to fast track its development pipeline as well as to
acquire additional income producing assets. MAS' intention is to have 90% of its portfolio invested in income producing assets by the
end of 2016 and the remaining 10% in developments. MAS has a pipeline under exclusivity into which it will invest its capital raising
proceeds. However, it will experience some cash drag on its performance until all the proceeds are fully deployed.
Restructure of Retail Africa Consortium Holdings (Pty) Ltd ("Reach")
Prior to year end, the underlying investments of Reach were unbundled to its shareholders, resulting in Attacq holding direct stakes in
Retail Africa Wingspan Investments (Pty) Ltd ("Wingspan") and Rapfund Holdings (Pty) Ltd ("Rapfund") of 34.4% and 26.6%, respectively.
The Rapfund stake was disposed of subsequent to year end and is reflected as a non-current asset held for sale as at 30 June 2014.
Business combinations
An intangible asset representing the right to the asset management of Attacq's properties has been recognised in respect of the AMS
acquisition and is amortised over a period of 15 years.
A gain on bargain purchase was recognised on the acquisition of Brooklyn Bridge. Attacq has measured identifiable assets and liabilities
of AMS and Brooklyn Bridge at fair value at their respective acquisition dates as follows:
AMS Brooklyn
Bridge
R'000 R'000
Purchase consideration 271 089 76 132
Fair value of previously held equity interest - 63 515
Total identifiable net assets acquired at fair value (208 242) (183 430)
Assets acquired, including intangible assets (593 328) (634 966)
Liabilities acquired, including deferred tax recognised 385 086 453 466
Goodwill/(gain on bargain purchase recognised
in profit and loss) 62 847 (43 783)
Disposals
Attacq concluded the following disposals during the current financial year:
- 100% of the issued share capital of Atterbury Parkdev Consortium (Pty) Ltd, owner of Harlequins Office Park, to Delta Property Fund
Limited ("Delta") for a total consideration of R136 million settled by the payment of R95.2 million in cash and 4.9 million Delta units
totalling R40.8 million, which units were subsequently sold for a total of R44 million;
- A 50% undivided share in Sanridge Square to Rapfund for an amount of R102 million on 20 August 2013;
- A 26.3% shareholding in the issued share capital and loan notes of Artisan Investment Projects 10 Limited, the owner of the New Waverley
(previously Caltongate) development in Edinburgh, in return for 3.1 million shares in MAS, effective on 19 August 2013 and increasing
Attacq's shareholding in MAS to 23.9% at the time;
- Atterbury House, sold to Ascension Properties Limited for an amount of R341 million on 6 September 2013;
- The merged Karoo I and II investments to MAS in return for 32 million MAS shares, effective on 20 December 2013, increasing Attacq's
shareholding in MAS to 47.2%; and
- 100% of the issued share capital of De Ville Shopping Centre (Pty) Ltd, owner of the De Ville shopping centre in Durbanville, Cape Town,
to Tower Property Fund Limited. The shopping centre was valued at R226 million on the disposal date.
Profit before taxation
Net rental income
Net rental income increased by 55.4% year-on-year due to a 39.5% increase in revenue (including straight-line lease adjustments) with
the increase in property expenses being lower at 8.4%. A like-for-like comparison of net rental income is of limited use due to the
internalisation of the asset management function as well as a result of changes in the property portfolio during the year. Four
properties were disposed of, one property was acquired and a further five properties under development were completed.
Vacancies
Overall portfolio vacancies have decreased by 10 626m2 primarily as a result of the sale of Atterbury House, Sanridge Square and De
Ville shopping centre during the year. Office vacancies have improved as a percentage of the total office portfolio due to these
disposals as well as due to the completion of Group 5, Cell C Campus and two of the office developments in Maxwell Office Park,
resulting in a net increase in the size of the office portfolio gross lettable area ("GLA").
30 June 2014 30 June 2013
Vacant GLA Vacancy Vacant GLA Vacancy Vacant GLA
m2* %* m2* %* m2*
Retail 0.9 3 317 1.5 4 922
Office 2.4 9 389 5.7 18 410
Industrial - - - -
Hotel - - - -
Portfolio vacancy 3.3 12 706 7.3 23 332
* Based on primary GLA. 13 662m2 of the 23 332m2 (58.6%) of the vacant m2 related to properties held for sale. Great Westerford, which was
held for sale at June 2013, was not sold and is no longer held for sale at June 2014 with a refurbishment currently underway.
Operating and other expenses
Operating expenses include a loss of R68.1 million realised on the disposal of Attacq's investment in the merged Karoo I and Karoo II
funds in return for a further 23.4% stake in MAS. Attacq will share in any realised upside on the Karoo assets directly by way of an
agterskot mechanism and indirectly via its increased shareholding in MAS. Operating expenses in the current year include impairments of
loans of R46.8 million and IFRS 2: Share-based Payment charges of R66.2 million. R59.2 million of this relates to the acquisition of a
non-controlling interest in ARF and the balance of R7.0 million in respect of senior executive management's share options.
Fair value adjustments
Fair value adjustments on investment properties increased by 17.5% to R919.1 million, made up of R325.4 million (2013: R419.2 million)
in respect of completed properties, R560.1 million (2013: R108.0 million) in respect of properties under development and R33.6 million
(2013: R254.9 million) on vacant land.
Fair value increases in respect of completed properties relate mainly to the increase in contracted rentals, with market capitalisation
rates remaining largely unchanged from the prior year.
Property valuations as at 30 June 2014 are based on external valuations performed by Jones Lang LaSalle (Pty) Ltd, Old Mutual Investment
Group (South Africa) (Pty) Ltd, Mills Fitchet KZN CC and Broll Valuation & Advisory Services (Pty) Ltd.
The valuation in respect of Waterfall's vacant land is based on an external valuation performed on a freehold basis. This valuation is
then adjusted by management in order to value the land on a leasehold basis by taking into account the future rental obligations
attached to the land.
Investment income
Investment income in 2014 includes dividends of R356.2 million and interest income of R68.6 million. R325.8 million of the dividends are
of a once-off nature resulting from the unbundling of the underlying investments held by Attacq via certain of its investments in
associates. The impairments recognised on these associate investments from the unbundlings resulted in a net loss being reflected in
respect of associates.
Finance costs
Finance costs increased by 45.4% year-on-year. This includes a non-cash non-recurring amount of R123.6 million arising from the
transaction concluded between Attacq, Atterbury Investment Managers (Pty) Ltd and Razorbill Properties 91 (Pty) Ltd (a wholly owned
subsidiary of Attacq) as more fully detailed in Attacq's listing prospectus and as approved by shareholders at the general meeting held
on 27 August 2013. Excluding this amount, the increase is 14.5% and is driven largely by the completion of development properties during
the year, resulting in the related finance costs being expensed and no longer capitalised to the property under development.
Development property
In the current financial year, a number of properties under development were completed, adding a total of 87 991m2 GLA to Waterfall's
completed buildings.
Property Sector Completion date Total GLA Vacancy %
(m2)
Waterfall
Cell C Campus Office & Industrial December 2013 44 200 -
Group 5 Office January 2014 23 139 -
Golder & Associates
(Maxwell Office Park) Office December 2013 6 198 -
Att House
(Maxwell Office Park) Office December 2013 5 154 19.7
Waterfall Corner Retail April 2014 9 300 4.7
The following properties were either under development at 30 June 2014 or development commenced subsequently:
Sector Completion date Total GLA Pre-let %
Under development Waterfall
Premier Foods
(Maxwell Office Park)^ Office July 2014 4 232 100
Waterfall Lifestyle Retail July 2014 7 540 >60
Angel Shack Office & Industrial August 2014 4 558 100
Honda Building
(Maxwell Office Park)^ Office November 2014# 4 069 >65
Westcon Office & Industrial September 2014# 8 074 100
City Lodge Hotel November 2014# 6 180 100
Drager Office & Industrial November 2014# 4 674 100
Covidien Office & Industrial December 2014# 11 050 100
Novartis Office April 2015# 7 055 100
Cummins Industrial June 2015# 20 833 100
Mall of Africa Retail April 2016# 130 188 >75
Other
Newtown and Majestic Retail & Office September 2014 72 725 >70
Lynnwood Bridge Phase III Office October 2014# 15 315 >65
Commenced post year end
Waterfall
Colgate Building
(Maxwell Office Park)^ Office August 2015# 4 241 100
Speculative Building
(Maxwell Office Park)^ Office August 2015# 6 280 -
Servest Industrial August 2015# 6 650 100
# Anticipated completion date
* Estimated GLA, subject to change upon final re-measurement post completion
^ 50% joint venture with Moolman Group. 100% of the GLA reflected above
~ 50% joint venture with Zenprop. 100% of the GLA reflected above
Borrowings
Total net interest-bearing borrowings increased by 13.8% from 2013 with additional debt being incurred to fund Attacq's growing property
portfolio in accordance with its capital growth model.
Gearing, calculated as total net external interest-bearing debt (including debt on non-current assets held for sale) less cash on hand
to total assets, improved from 43.2% as at 30 June 2013 (restated) to 34.0% as at 30 June 2014. Given the interest rate cycle the
economy is entering, hedges are in place and 58.3% of total external interest-bearing debt was fixed as at 30 June 2014 (2013: 52.1%).
This excludes forward hedges of R2.7 billion in respect of unutilised committed facilities. The weighted average cost of funding as at
30 June 2014 was 9.5% (2013: 9.1%).
Atterbury Africa
Attacq's investment in Atterbury Africa Limited ("Atterbury Africa") increased from R112.3 million to R248.2 million during the year in
order to fund its share of Atterbury Africa's underlying development pipeline. At 30 June 2014, Atterbury Africa's underlying assets
were as follows:
Property and Atterbury Attributable Attacq
location Africa value effective
GLA (m2) ownership (USD'000) interest
(proposed*) % % Status
Accra Mall 19 000 47 38 780 14.7 Income producing, fully let. Future expansion planned
Accra, Ghana
West Hills Mall 27 500 45 29 850 14.1 Phase I 99% let. Opening October 2014
Accra, Ghana
Achimota Mall 13 400* 75 5 567 23.4 Under construction. Anchored by Shoprite, Mr Price and Jet. Completion October 2015
Accra, Ghana
Kumasi City Mall 27 000* 75 7 380 23.4 Bulk earthworks commenced June 2014. Completion date end 2016
Kumasi, Ghana
Waterfalls 27 500* 25 1 215 7.8 Land acquired for retail and hotel development
Lusaka, Zambia
Change in directors
Wilhelm Nauta, previously an alternate director, was appointed to the board from 30 April 2014, following the resignation of Lucas Ndala
effective the same date. Francois van Niekerk, one of the founders of the business that led to the creation of Attacq, retired from the
board with effect from 27 June 2014.
Subsequent events
Restructure of ALI
Subsequent to year end, Attacq and Hyprop restructured 50% of Manda Hill Mall under Atterbury Africa, with the remaining 50% being held
directly by Hyprop. The management teams of ALI and Atterbury Africa were merged and Atterbury Africa was rebranded as Att Africa.
Disposal of Rapfund
In July 2014, Attacq sold its shareholding in Rapfund to a consortium of existing and new Rapfund shareholders for an amount of R139
million.
Potential major new Waterfall tenant
Post year end, in principle approval was received by Attacq to develop new office premises for PricewaterhouseCoopers. The proposed 40
000m2 building in Waterfall City will accommodate some 3 500 employees. The conclusion of a formal lease remains subject to conditions
precedent.
Prospects
In South Africa, Attacq's main focus remains on the delivery of Waterfall and the efficient management of its operational portfolio. At
year end, Waterfall's secured pipeline of projects planned or underway totalled 296 493m2 and 79% of the total developable bulk of 1.75
million m2 remains untapped. In Africa, Att Africa will soon be invested in three operational malls, being Accra Mall, Manda Hill Mall
and West Hills Mall with two further developments underway. In Europe, Attacq increased its investment in MAS by R1.3 billion, which
capital MAS will deploy into a secured and unsecured pipeline as well as to advance its development projects, with construction on New
Waverley to commence post year end.
Basis of presentation of summarised provisional consolidated financial statements
These summarised provisional consolidated financial statements for the year ended 30 June 2014 have been prepared in accordance with the
framework concepts and the measurement and recognition requirements of IFRS and the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Reporting Pronouncements as issued by Financial Reporting Standards Council, and include
disclosure as required by IAS 34: Interim Financial Reporting, the JSE Listings Requirements and the Companies Act of South Africa. They
do not include all the information required for a complete set of International Financial Reporting Standards financial statements.
However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the
changes in the Group's financial position and performance since the last consolidated financial statements as at and for the year ended
30 June 2014. In preparing these summarised provisional consolidated financial statements, management makes judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses.
Actual results may differ from these estimates.
The areas that include significant judgements made by management in applying the Group's accounting policies and key sources of
estimation uncertainty were the same as those that were identified in the consolidated financial statements as at and for the year ended
30 June 2013.
Significant accounting policies
Except as described below, the accounting policies applied in these summarised provisional consolidated financial statements are the
same as those applied in the Group's consolidated financial statements as at and for the year ended 30 June 2013.
Changes in accounting policies
The Group has adopted the following new standards and amendments to standards, including any consequential amendments to other
standards, with a date of initial application of 1 July 2013:
IFRS 10: Consolidated Financial Statements
IFRS 11: Joint Arrangements
IFRS 12: Disclosure of Interests in Other Entities
IFRS 13: Fair Value Measurement
IAS 19: Employee Benefits
IFRS 10: Consolidated Financial Statements
IFRS 10 addresses the divergence arising from the control-based principles in IAS 27 and the risks and rewards based approach in SIC 12,
and in addition, provides greater guidance on de facto control. Management has reassessed the control conclusion for each of its
investees at 1 July 2013. No changes were identified and the adoption of this new standard has thus had no impact on the financial
results.
IFRS 11: Joint Arrangements
IFRS 11 identifies two types of joint arrangements, namely joint operations and joint ventures, and prohibits the use of proportionate
consolidation for joint ventures. Management has re-evaluated the Group's involvement in the various joint arrangements and no changes
in the accounting treatments were identified.
IFRS 12: Disclosure of Interest in Other Entities
IFRS 12 requires additional disclosure about the investees in which the entity has an investment. The disclosure in the financial
statements was updated for these additional requirements.
IFRS 13: Fair Value Measurement
IFRS 13 is a single cohesive standard consolidating the principles of fair value measurement and disclosures for financial reporting.
Fair value measurements of a non-financial asset will take into account a market participant's ability to generate economic benefits by
using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and
best use. In accordance with the transitional provisions of IFRS 13, the Group has applied the new fair value measurement guidance
prospectively. Notwithstanding the above, the change had no significant impact on the measurements of the Group's assets and
liabilities.
IAS 19: Employee Benefits
The revised IAS 19 changes the accounting for defined benefit plans and termination benefits. The most significant change relates to the
accounting for changes in defined benefit obligations and plan assets. The adoption of the changes to this statement has had no impact
on the results of the Group as previously reported.
The accounting policies of the Group were updated for the impact of the above standards.
Audit report
The auditors, Deloitte & Touche, have issued their opinion on the Group's consolidated financial statements for the year ended 30 June
2014. The audit was conducted in accordance with International Standards on Auditing. They have issued an unmodified opinion. A copy of
the auditor's report together with a copy of the audited consolidated financial statements is available at the company's registered
office.
These summarised provisional consolidated financial statements have been derived from the Group's consolidated financial statements and
are consistent in all material respects with the Group's consolidated financial statements for the year ended 30 June 2014, but is not
itself audited. The directors take full responsibility for the preparation of these summarised provisional consolidated financial
results and confirm that the financial information has been correctly extracted from the underlying audited consolidated financial
statements. Any reference to future financial information included in this announcement has not been reviewed or reported on by the
auditors. Shareholders are advised that, in order to obtain a full understanding of the nature of the auditor's engagement, they should
obtain a copy of that report together with the audited consolidated financial statements as at 30 June 2014 from the Company's
registered office.
The preparation of the financial information was supervised by Melt Hamman CA (SA), Financial Director of Attacq.
On behalf of the board
P Tredoux MC Wilken
Chairman CEO
30 September 2014
Company information
Directors
P Tredoux#* (Chairman)
MC Wilken (CEO)
M Hamman (FD)
LLS van der Watt
AW Nauta*
JHP van der Merwe*
S Shaw-Taylor#*
HR El Haimer#*
PH Faure*
MM du Toit#*
WL Masekela#*
# Independent
* Non-executive
Company secretary
Talana Smith
Registered office
Att House, 2nd Floor
Maxwell Office Park
Magwa Crescent West
Waterfall City
2090
Postal address
PostNet suite 205
Private Bag X20009
Garsfontein
0042
Transfer secretaries
Computershare Investor Services (Pty) Ltd
Ground Floor, 70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Sponsor
Java Capital
Date: 30/09/2014 09:01:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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