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Summarised audited consolidated financial statements for the year ended 30 June 2014
ROCKCASTLE GLOBAL REAL ESTATE COMPANY LIMITED
Incorporated in the Republic of Mauritius
Reg no 108869 CI/GBL
ISIN MU0364N00003
Primary listing SEM
SEM code Rock.N0000
Secondary listing JSE
JSE code ROC
SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30
June 2014
DIRECTORS’ COMMENTARY
1 STRUCTURE AND LISTING
Rockcastle Global Real Estate Company Limited (“the company”) was
established on 30 March 2012 in Mauritius as a Category One Global
Business License Company. The company and its subsidiaries (“Rockcastle”
or “the group”) have the primary objective of investing globally in listed
real estate securities and direct property. Rockcastle has a primary
listing on the Stock Exchange of Mauritius (“SEM”) and a secondary listing
on the Alternative Exchange (“Altx”) of the Johannesburg Stock Exchange
(“JSE”). Rockcastle is in the process of migrating its listing on the Altx
to the main board of the JSE and will maintain two primary listings going
forward. During the year, Rockcastle successfully raised
USD475.4 million by the issue of 355.5 million shares through private
placings.
2 DISTRIBUTABLE EARNINGS
The board has declared a dividend of 4.18 USD cents per share for the six
months ended 30 June 2014. Accordingly, total dividends declared for 2014
are 8.25 USD cents per share, an increase of 4.4% over the annualised
dividends for the previous financial period. This is marginally ahead of
the guidance of approximately 4%.
3 COMMENTARY
Following the re-rating of the global listed property markets and most
listed property counters now trading at a premium to net asset value, the
group’s strategy is to migrate from listed property counters to direct
property assets. The board’s view is that direct property assets,
particularly in certain countries in Africa and central Europe offer
superior value and will achieve attractive growth for the foreseeable
future.
Listed security portfolio
With interest rates declining following the financial crisis, interest
rate-sensitive sectors such as Real Estate Investment Trusts (“REITs”)
outperformed equity markets. The board is of the opinion that the moderate
pace of global economic growth will underpin real estate stock valuations
in 2014/2015 countering rising interest rate trends.
As a result of weaker economic activity, new supply of real estate has
been limited to specific geographies and sectors. This demand and supply
imbalance should translate into stable or rising rents and thus increased
capital values. In this environment, expected increases in income and
therefore distributions will more than offset the impact of increasing
interest rates. In our view, this trend as well as effective stock
selection based on geographies, sectors and business models will support
the next stage of real estate value creation. Rockcastle maintained its
investments in the developed markets of the USA, UK, Canada, Europe,
Singapore, Hong Kong and Australia and continued to shift its focus from
higher yielding investments to those with greater growth prospects. The
net asset value per share increased from USD1.15 to USD1.39 for the 12
month period ended 30 June 2014. Rockcastle’s relative overweight
positions in Europe and the UK and successful stock selection contributed
to this performance. Rockcastle attributes its successful stock selection
to active interaction with management of the counters it invests in and
site inspections and evaluations of the underlying physical assets. In
excess of one hundred properties were visited in Western and Central
Europe, the UK, Canada, the USA and Hong Kong. Management has observed
that the distribution growth forecasts provided by counters in the
portfolio are well ahead of growth achieved in the past. This promising
trend together with a further shift in bias towards higher growth stocks
bodes well for Rockcastle’s growth in dividends for the 2015 financial
year.
Geographical profile by market value
USA 40,1%
Canada 13,3%
Europe 12,3%
UK 9,1%
Singapore 12,3%
Hong Kong 5,0%
Australia 7,9%
Sectoral profile by market value
Office 2,9%
Retail 55,3%
Industrial 5,4%
Healthcare 8,5%
Hotel 5,8%
Residential 6,4%
Mortgage 3,3%
Other/Diversified 12,4%
The following table indicates the group’s top 10 investment holdings by
market value as at 30 June 2014:
Market value
as at
Jun 2014
Company Sector Jurisdiction (USD Million)
Simon Property Retail USA 146.3
Unibail Rodamco Retail Europe 132.0
CapitaMall Trust Retail Singapore 107.5
Avalonbay Communities Residential USA 99.5
Ascendas REIT Industrial Singapore 84.7
The Link REIT Retail Hong Kong 78.0
Ventas Inc Healthcare USA 76.9
British Land Other/Diversified United Kingdom 71.9
Hammerson Retail United Kingdom 71.2
Hospitality Properties Hotel USA 66.9
Direct property
The 12,500m2 GLA Kafubu Mall in Ndola, Zambia opened on 24 April 2014. The
mall is anchored by Shoprite and includes Foschini, Mr Price, Truworths
and a number of other South African retailers. The mall is the dominant
shopping and leisure offering in the town and tenants report good trading
conditions. Kafubu Mall was developed at a yield of 9.5%.
The development of the 29,000m2 GLA Mukuba Mall in Kitwe, Zambia is
proceeding well and beneficial occupation of tenants is scheduled to take
place 3 months earlier than anticipated. As a result, the mall will open
ahead of the initial projected opening date of April 2015 at a yield of
9.5%. Rockcastle has agreed to acquire a 50% interest in the 26,000m2 GLA
Cosmopolitan Mall in Lusaka, Zambia at a yield of 9.5%. The mall will be
anchored by Game and Shoprite, and include Edcon, Foschini, Pepkor,
Toys“R”Us and Innscor as tenants. The site for the mall is situated to the
south of Lusaka on Kafue Road, the primary transport route between Zambia,
South Africa, Botswana and Zimbabwe.
Rockcastle has agreed to acquire an office building in Kingston-Upon-
Thames in the United Kingdom to house its European office. The building
has a GLA of 540m2, is currently fully tenanted and Rockcastle will occupy
an 85m2 section which will be available in early 2015. It is not
Rockcastle’s intention to invest in additional properties in the United
Kingdom.
Consistent with its strategy of migrating from indirect to direct property
investments, Rockcastle is in negotiations to acquire a number of retail
properties in Poland. Terms have been agreed pertaining to the acquisition
of a 30,000m2 GLA mall which dominates its catchment area and is tenanted
predominantly by national and international retailers. The acquisition is
subject inter alia to a due diligence which will be completed by mid
October 2014. The property is being acquired at a purchase price of
approximately EUR53 million and a yield of 8%. The acquisition will be
yield accretive.
4 CAPITAL STRUCTURE AND HEDGING
In addition to its direct holdings in shares, Rockcastle utilises equity
derivatives in its portfolio. Rockcastle also utilises interest rate swaps
and bond shorts to hedge its interest rate and capital risks. The
principal counter parties are Morgan Stanley and BoA Merrill Lynch. The
group has not hedged its currency positions but continues to fund the
purchase of counters in the currency in which that stock is denominated.
Rockcastle’s loan to value ratio was 38.3% as at 30 June 2014.
Hedging
Equivalent Average
amount swap
Interest rate swaps expiry (financial year) USD'000 rate
Jun 2021 34 130 2.08%
Jun 2022 - -
Jun 2023 - -
Jun 2024 120 956 2.69%
Jun 2025 40 478 2.35%
195 564 2.20%
Equivalent
amount Average
Bond short maturity profile (financial year) USD'000 rate
Jun 2018 11 841 0.51%
Jun 2019 - -
Jun 2020 - -
Jun 2021 - -
Jun 2022 9 900 1.94%
Jun 2023 287 674 2.23%
Jun 2024 30 642 2.60%
340 057 2.20%
5 SUMMARY OF FINANCIAL PERFORMANCE
Jun 2014 Dec 2013 Jun 2013 Dec 2012
Dividend/distri-
bution per
share 4.18USD cents 4.07USD cents 4.00USD cents 4.56USD cents*
Shares in issue 705 500 000 530 000 000 350 000 000 140 000 000
Net asset value
per share USD 1.39 USD 1.16 USD 1.15 USD 1.09
Loan to
value ratio** 38.3% 42.3% 42.4% 35.9%
* For the 7 month period to Dec 2012.
** The loan to value ratio is calculated by dividing net interest-bearing
borrowings by total assets.
6 OUTLOOK
Based on projections provided by the management of the counters in which
Rockcastle invests and Rockcastle’s projections for its direct property
investments, the board forecasts growth in dividends of approximately 5%
for the 2015 financial year.
The aforegoing forecast statement and the forecasts underlying such
statement are the responsibility of the board and have not been reviewed
or reported on by the group’s external auditors.
By order of the Board
Intercontinental Trust Limited
Company Secretary
Mauritius - 12 August 2014
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
Jun 2014 Jun 2013
USD’000 USD’000
Non-current assets 1 587 451 693 644
Listed security investments 1 565 259 689 257
Rockcastle management incentive loans 17 000 4 387
Investment in associate company 5 192 -
Current assets 19 125 3 322
Investment income receivable 6 934 3 127
Cash and cash equivalents 486 195
Trade and other receivables 3 -
Loans to development partners 11 702 -
Total assets 1 606 576 696 966
EQUITY AND LIABILITIES
Total equity attributable to equity holders 983 184 401 361
Stated capital 871 154 409 771
Retained income/(loss) 131 714 (8 410)
Non-distributable reserves (19 684) -
Total liabilities 623 392 295 605
Non-current liabilities 340 057 66 970
Interest-bearing borrowings 340 057 66 970
Current liabilities 283 335 228 635
Trade and other payables 6 832 52
Interest-bearing borrowings 275 896 228 385
Income tax payable 607 198
Total equity and liabilities 1 606 576 696 966
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
for the for the
year ended 15 months
Jun 2014 ended Jun 2013
USD’000 USD’000
Dividends received from listed
security investments 54 088 17 736
Income from associate 35 -
Fair value gain/(loss) on listed security
investments 105 081 (11 056)
Foreign exchange gain/(loss) 6 915 (8 103)
Operating expenses (1 327) (553)
Listing expenses - (525)
Profit/(loss) before net finance income 164 792 (2 501)
Net finance (costs)/income (22 174) 673
Finance income 753 2 638
Interest on Rockcastle management
incentive loans 441 22
Unrealised fair value gain on bond shorts - 2 616
Interest on development partner loan 312 -
Finance costs (22 927) (1 965)
Interest on borrowings (9 667) (1 965)
Unrealised fair value loss on interest
rate derivatives (4 667) -
Unrealised fair value loss on bond shorts (8 593) -
Profit/(loss) before income tax expense 142 618 (1 828)
Income tax expense (607) (198)
Profit/(loss) for the year/period
attributable to equity holders 142 011 (2 026)
Total comprehensive income/(loss) for
the year/period 142 011 (2 026)
Weighted average number of shares in issue 478 682 693 113 956 558
Basic earnings/(loss)
per share from continuing
operations (USD cents)* 29,67 (1,78)
Headline earnings/(loss) per share from
continuing operations (USD cents)* 29,67 (1,78)
*Rockcastle has no dilutionary instruments in issue
There are no reconciling items between basic earnings/(loss) and headline
earnings/(loss)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Retained Non-distri-
Stated income butable
capital /(loss) reserves Total
Audited USD’000 USD’000 USD’000 USD’000
Balance at
30 March 2012 - - - -
Transactions with
equity holders 409 771 (6 384) - 403 387
- Issue of shares 409 771 409 771
- Dividend declared
(interim) (6 384) (6 384)
Total comprehensive
loss for the period (2 026) (2 026)
Balance at 30 June 2013 409 771 (8 410) - 401 361
Transactions with
equity holders 461 383 (21 571) - 439 812
- Issue of 90 million
shares on
15 October 2013 118 232 118 232
- Issue of 90 million
shares on
10 December 2013 116 975 116 975
- Issue of 175.5
million shares on
30 May 2014 240 176 240 176
- Reclasification of
stated capital (14 000) 14 000 -
- Distribution
declared (14 000) (14 000)
- Dividends declared (21 571) (21 571)
Total comprehensive
income for the year - 142 011 - 142 011
Total profit
for the year 142 011 142 011
Total other
comprehensive income
for the year - -
Transfer to
non-distributable
reserves 19 684 (19 684) -
Balance at 30 June 2014 871 154 131 714 (19 684) 983 184
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
for the for the
year 15 months
ended ended
Jun 2014 Jun 2013
USD’000 USD’000
Cash inflow from operating activities 41 952 11 641
Cash outflow from investing activities (793 478) (712 804)
Cash inflow from financing activities 751 817 701 358
Increase in cash and cash equivalents 291 195
Cash and cash equivalents at beginning
of year/period 195 -
Cash and cash equivalents at end of
year/period 486 195
Current accounts 486 195
RECONCILIATION OF PROFIT/(LOSS) FOR THE YEAR/PERIOD TO HEADLINE EARNINGS
AND DISTRIBUTABLE EARNINGS
Unaudited Unaudited
for the for the
year 15 months
ended ended
Jun 2014 Jun 2013
USD’000 USD’000
Profit/(loss) for the year/period
attributable to equity holders 142 011 (2 026)
Basic profit/(loss) for the year/period and
headline earnings/(loss) for the
year/period 142 011 (2 026)
Foreign exchange (gain)/loss (6 915) 8 103
Unrealised fair value loss/(gain) on bond shorts 8 593 (2 616)
Fair value (gain)/loss on listed
security investments (105 081) 11 056
Unrealised fair value loss on interest
rate derivatives 4 667 -
Dividends received from listed
security investments (54 088) (17 736)
Accrued income from listed securities
investments 50 399 15 452
Adjustment to taxation for accrued income 56 95
Shares issued cum dividend 11 419 8 996
Listing expenses - 525
Distributable earnings for the year/period 51 061 21 849
Less: (51 061) (20 384)
Interim dividend declared (21 571) (6 384)
Final dividend/distribution declared (29 490) (14 000)
Earnings not distributed - 1 465
Number of shares entitled to dividend 705 500 000 350 000 000
Distributable earnings per share
(USD cents) 8,25 8,98
Less (USD cents per share): (8,25) (8,56)
Interim dividend per share (USD cents) -
declared (4,07) (4,56)
Final dividend per share (USD cents) -
declared (4,18) (4,00)
Distributable earnings per share not
distributed (USD cents) - 0,42
NOTES
1 PREPARATION, ACCOUNTING POLICIES AND AUDIT OPINION
The summarised 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 (“IFRS”), the requirements of IAS 34: Interim Financial
Reporting, the JSE Listings Requirements, the SEM Listing Rules and the
requirements of the Mauritian Companies Act 2001.
The group is required to publish financial results for the year ended 30
June 2014 in terms of the Listing Rule 12.14 of the SEM. This report was
compiled under the supervision of Nick Matulovich CA(SA), the chief
financial officer.
This communiqué is issued pursuant to SEM Listing Rule 12.14 and section
88 of the Mauritian Securities Act 2005. The board accepts full
responsibility for the accuracy of the information contained in these
summarised audited consolidated financial statements. The directors are
not aware of any matters or circumstances arising subsequent to the year
ended 30 June 2014 that require any additional disclosure or adjustment to
the financial statements. These summarised audited consolidated financial
statements were approved by the board on 12 August 2014.
BDO & Co have issued their unmodified audit opinion on the group’s
financial statements for the year ended 30 June 2014. These summarised
audited consolidated financial statements have been derived from the group
financial statements and are, in all material respects, consistent with
the group financial statements. A copy of their audit report is available
for inspection at Rockcastle’s registered address.
Copies of the summarised audited consolidated financial statements and the
statement of direct and indirect interests of each officer of the company,
pursuant to rule 8(2)(m) of the Securities (Disclosure Obligations of
Reporting Issuers) Rules 2007, are available free of charge, upon request
at Rockcastle’s registered address.
Contact person: Mr Kesaven Moothoosamy
2 SEGMENTAL ANALYSIS
Audited Audited
Jun 2014 Jun 2013
Total assets USD’000 USD’000
Australia 125 174 52 824
Canada 209 459 90 125
Europe 193 275 135 869
United Kingdom 143 045 58 107
Hong Kong 79 592 33 866
Singapore 192 218 72 900
United States of America 629 916 248 888
Zambia 5 192 -
Corporate 28 705 4 387
Total 1 606 576 696 966
Audited Audited
for the for the
year 15 months
ended Jun 2014 ended Jun 2013
Profit/(loss) before income tax expense USD’000 USD’000
Australia 8 845 3 992
Canada 11 588 (3 609)
Europe 30 319 2 215
United Kingdom 21 544 1 217
Hong Kong 9 031 328
Singapore 6 371 (856)
United States of America 48 544 4 044
Zambia 35 -
Corporate 6 341 (9 159)
Total 142 618 (1 828)
3 PAYMENT OF FINAL DIVIDEND
The board has approved and notice is hereby given that a final cash
dividend of 4,18 USD cents per share, being number 4 for Rockcastle, has
been declared in respect of the six months ended 30 June 2014. The salient
dates for the dividend are set out below:
Finalisation date
(last day to announce exchange rate): Friday, 22 August 2014
Last day to trade cum dividend (JSE): Friday, 29 August 2014
Securities trade ex dividend (JSE): Monday, 1 September 2014
Last day to trade cum dividend (SEM): Tuesday, 2 September 2014
Securities trade ex dividend (SEM): Wednesday, 3 September 2014
Record date (JSE and SEM): Friday, 5 September 2014
Payment date: Monday, 8 September 2014
No dematerialisation or rematerialisation of share certificates, nor
transfer of shares between sub-registers in Mauritius and South Africa
will take place between Monday, 1 September 2014 and Friday, 5 September
2014. Shareholders on the South African sub-register will receive
dividends in South African Rand, based on the exchange rate to be obtained
by the group on or before Friday, 22 August 2014. A further announcement
in this regard will be made on or before Friday, 22 August 2014.
Directors
Mark Olivier (chairman); Spiro Noussis*; Nick Matulovich*; Andries de
Lange; Rory Kirk; Andre van der Veer; Yan Ng; Paul Pretorius* (*executive
director)
Changes to the board of directors
Stephen Delport*, Craig Hallowes* and Alexandru Morar resigned from the
board with effect from 14 May 2014. Andre van der Veer, Nick Matulovich*
and Spiro Noussis* were appointed to the board with effect from 14 May
2014 (*executive director)
Company secretary
Intercontinental Trust Limited
Registered address
Level 3, Alexander House, 35 Cybercity, Ebene, 72201, Mauritius
Transfer secretary in South Africa
Link Market Services South Africa Proprietary Limited
JSE sponsor
Java Capital
SEM sponsor
Capital Markets Brokers Limited
www.rockcastleglobalre.mu
Date: 12/08/2014 02:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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