Wrap Text
Preliminary financial results for the year ended 31 March 2016
ACCELERATE PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration No 2005/015057/06)
JSE code: APF ISIN code: ZAE000185815
(REIT status approved)
("Accelerate" or "the company")
PRELIMINARY FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2016
HIGHLIGHTS
Year on year distribution per share growth of 9.1%
Property portfolio value of R8.4 Billion (24% year on year growth)
Total portfolio GLA of 520 226 m2
Net asset value growth of of 25.5% (year on year)
KEY INDICATORS
Indicator 2016 2015
Distribution per share 53.67 cents 49.21 cents
Yield * 8.61% 7.3%
Portfolio value R8.4 billion R6.77 billion
GLA 520 226 m2 467 208 m2
Number of properties 61 52
Net asset value R5.7 billion R4.6 billion
Cost to income ratio 13.40% 13.44%
Weighted average lease expiry 5.1 years 2.9 years
Lease escalations 8.04% 8.46%
Vacancies (net of structural vacancies) 7.13% 7.52%
Listed/Large National tenants 62.2% 60.1%
* This is based on a average share price of R6.23 for the year ended 31 March 2016 (2015: R5.70)
INTRODUCTION AND HISTORY
OPERATING ENVIRONMENT
The performance of the South African commercial sector 2016
The slowdown in the South African economy, higher inflationary forecasts and instability in financial markets have created a
new level of uncertainty in both commercial and residential real estate markets. While the 175 basis point rise in interest
rates since January 2014 does not seem to have had a material impact on the performance of the listed real estate sector in
early 2016, a deterioration in macroeconomic conditions is expected to have a negative impact on the demand for space. In
2015, economic growth weakened to 1.3% and estimates for 2016 forecast GDP growth to stay below 1%. In addition, the
depreciation of the rand, rising food prices, and utility costs have caused the inflation rate to broach the upper end of
the 3% - 6% target of the South African Reserve Bank.
The returns being recorded by the commercial property market seem to vary considerably between the retail, office and
industrial sectors.
Data produced by the IPD/MSCI suggests that in 2015, the retail sector outperformed the market with a return of 14.3%. This
was followed by the industrial sector (14.2%). The office sector underperformed the market with a return of 12.0%.
Sector Total returns (capital and yield) 2015
Retail 14.3%
Office 12.0%
Industrial 14.2%
Total 13.5%
source: IPD/MSCI 2016
In 2015, the retail sector adapted to lacklustre consumption expenditure, with retailers consolidating stores. Moreover, the
longer-term retail sector is adapting to changing retailing patterns, which includes online shopping and a stronger emphasis
by shoppers on convenience shopping. The announcement of new shopping centre developments in South Africa has declined and
should assist in ensuring that the market remains in equilibrium. Vacancies in the office sector were under pressure during
2015 and it is expected that this scenario will be repeated in 2016. The performance of the office sector also varies
considerably between geographic nodes. While premium office nodes in Cape Town and Johannesburg performed well in 2015, the
same cannot be said for secondary nodes with a strong presence of "B" grade properties. As a result, rental escalations remain
under pressure and the sector is placing a strong emphasis on controlling operating costs. The office sector is seeing low
levels of new building activity which should assist in bringing vacancy rates back to the South African natural vacancy rate
of approximately 8%.
The strong performance of the industrial sector weakened during the course of 2015 reflecting the subdued performance of the
manufacturing sector. Recent data produced by StatsSA suggests that manufacturing output decreased by approximately 2% in
March 2016 compared to a year ago.
While development activity in the entire commercial property market has slowed, this has also resulted in slower growth in
building costs. Recent forecasts suggest that building costs will remain below the inflation rate in 2016, at approximately
5%.
The medium-term performance of the South African property market will invariably be influenced by the performance of the
economy and, in particular, the direction of short and long-term interest rates. The South African Reserve Bank has indicated
that the economy is presently in the downward phase of the business cycle and significant pressure exists on monetary policy
to support economic growth while keeping the inflation rate under control. The re-rating of the South African economy remains
a considerable risk for the sector.
FINANCIAL PERFORMANCE
Accelerate remained focused on maximising rental income and tenant recoveries, reducing vacancies, effectively managing costs
and enhancing the quality of our property portfolio.
Accelerate earned a gross rental income (excluding straight line rental revenue adjustment) of R819 million for the period
(2015: R699 million).
The group's major expenses were largely recovered in terms of leases and consisted of: utility charges of R155.3 million
(2015: R140 million), security of R25.7 million (2015: R23.4 million), and cleaning costs of R10.2 million
(2015: R9.4 million).
The net property expenses of R47.6 million (2015: R34.7 million), in conjunction with R38.7 million in other operating costs
(2015: R36.3 million), resulted in Accelerate reporting a 13.40% cost-to-income ratio (2015: 13.44 %).
During the year, the group took out further interest rate swaps, resulting in 86.9% (2015: 87.7%) of Accelerates debt being
hedged.
Our distribution per share for the year of 53.67 cents (2015: 49.21 cents) shows a distribution growth of 9.1%. Refer to the
distribution analysis for more detail as well as comparatives.
Distributions per share is used as a performance measure for trading statement purposes.
FINANCIAL POSITION
Accelerate continues to create value through selective acquisitions, and careful debt management.
As at 31 March 2016, Accelerate's investment property portfolio had a value of R8.4 billion, excluding the effects of straight
lining. The increase in the portfolio is largely due to the acquisition of the KPMG portfolio of R850 million, the acquisition
of four industrial properties for R286 million, fair value adjustments of R382 million, as well as some capital expenditure.
Trade and other receivables amounted to R167 million (2015: R171 million) (this excludes prepaid deposits for properties in
process of transferring) at the end of the year, decreasing by 2% on the prior year.
The fund successfully re-financed maturing debt through the debt capital markets, resulting in a 42.8% increase on 2015 capital
market debt, to R1 billion and a decrease in bank debt.
Long-term debt allocation
2016 2015
R'000 % R'000 %
Debt capital markets 1 001 000 33.5% 701 000 29.3%
Bank funding 1 991 264 64.5% 1 693 050 70.7%
Total 2 992 264 100% 2 394 050 100%
Weighted average debt term (years) 2.7 2.9
Short-term portion of debt 422 356 14.1% 238 856 10%
Debt hedged 2 600 000 86.9% 2 000 000 83.5%
Weighted average swap term (years) 2.4 2.4
Blended interest rate 8.24% 7.35%
Interest cover ratio (x) 2.8x 2.6x
Loan-to-value 35.6% 35.2%
Consolidated Statement of financial position 31 March 2016 31 March 2015
(R'000) (R'000)
ASSETS
Non-current assets 8 496 381 6 874 824
Investment property 8 422 776 6 803 437
Derivative financial assets 2 73 086 71 153
Property plant and equipment 519 234
Current assets 278 605 229 476
Current tax receivable 9 269 15
Trade and other receivables 2 197 908 170 644
Cash and cash equivalents 2 71 428 58 817
Investment property held for sale 130 726 28 420
Non-current assets held for sale 130 726 28 420
Total assets 8 905 712 7 132 720
EQUITY AND LIABILITIES
Equity 5 771 966 4 604 143
Ordinary share capital 4 105 211 3 422 723
Other reserves 20 045 7 223
Retained income 1 646 710 1 174 197
Total equity 5 771 966 4 604 143
Non-current liabilities 2 597 181 2 201 394
Borrowings 2 2 569 905 2 155 158
Contingent compensation to vendor 1 27 276 46 236
Current liabilities 536 565 327 183
Trade and other payables 2 114 209 88 327
Borrowings 2 422 356 238 856
Total equity and liabilities 8 905 712 7 132 720
Consilidated Statement of comprehensive income 31 March 2016 31 March 2015
(R'000) (R'000)
Revenue, excluding straight-line rental revenue adjustment 818 700 699 696
Straight-line rental revenue adjustment 68 059 49 116
Revenue 886 759 748 812
Property expenses (225 114) (205 750)
Net property income 661 645 543 062
Operating expenses (38 694) (36 317)
Operating profit 622 951 506 745
Fair value adjustments 5 383 746 381 008
Other income/(expenses) (142) 465
Gain on non-current assets held for sale or disposal groups - 12 104
Finance income 14 247 12 743
Profit before long-term debt interest and taxation 1 020 802 913 065
Finance costs (215 770) (172 016)
Profit before taxation 805 032 741 049
Taxation -
Total comprehensive income attributable to equity holders 805 032 741 049
EARNINGS PER SHARE
Basic earnings per share (cents) 107.53 112.49
Diluted earnings per share (cents) 105.92 111.25
DISTRIBUTABLE EARNINGS
Profit after taxation attributable to equity holders 805 032 741 049
Less: straight-line rental revenue adjustment (68 059) (49 116)
Less: fair value adjustments (383 746) (381 008)
Add: distribution from reserves 25 758 4 200
Less: profit on sale of property - (12 104)
Distributable earnings 378 985 303 021
Consolidated Statement of changes in equity Other Reserves Share Capital Retained Income Total Equity
(R'000) (R'000) (R'000) (R'000)
Balance at 1 April 2014 - 3 117 914 654 047 3 771 961
Total Comprehensive income attributable to equity holders - - 741 049 741 049
Issue of shares - 304 809 - 304 809
Distribution paid - - (220 899) (220 899)
Conditional share plan reserve 3 023 - - 3 023
Antecedant distribution reserve* 4 200 - - 4 200
Total contributions by and distributions to owners of
company recognised directly in equity 7 223 304 809 (220 889) 91 133
Balance at 1 April 2015 7 223 3 422 723 1 174 197 4 604 143
Total Comprehensive income attributable to equity holders - - 805 032 805 032
Issue of shares - 682 488 - 682 488
Distribution paid (4 200) - (332 519) (336 719)
Conditional share plan reserve 3 098 - - 3 098
Antecedant distribution reserve* 13 924 - - 13 924
Total contributions by and distributions to owners of
company recognised directly in equity 12 822 682 488 (332 519) 365 262
Balance at 31 March 2016 20 045 4 105 211 1 646 710 5 771 966
* This reserve relates to the antecendent distribution portion of the capital raised.
Statement of cash flows 31 March 2016 31 March 2015
(R'000) (R'000)
Cash flows from operating activities
Cash generated from operations 547 313 395 970
Finance income 14 247 12 743
Distribution paid* (332 519) (220 899)
Tax received/(paid) - (15)
Net cash from operating activities 229 041 187 799
Cash flows from investing activities
Purchase of property, plant and equipment (385) (184)
Purchase of investment property (1 300 193) (244 080)
Contingent purchase (18 960) (163 548)
Proceeds from disposal of investment property 28 420 78 740
Net cash from investing activities (1 291 118) (329 072)
Cash flows from financing activities
Proceeds on share issue 682 488 304 809
Long-term borrowings raised 1 335 500 740 998
Long-term borrowings repaid (737 253) (735 544)
Finance cost (215 770) (172 016)
Antecedent distribution 9 723 4 200
Net cash from financing activities 1 074 688 142 447
Total Cash movement for the year 12 611 1 174
Cash at the beginning of the year 58 817 57 643
Total cash at end of the year 71 428 58 817
*In the current financial period distribution paid was reclassified from financing activities to operating activities. The
restatement was made in order to correctly reflect the nature of the business, where distributions are considered as part of
the operations of Accelerate Property Fund Limited.
Year ended 31 March 2016 Year ended 31 March 2015
Distribution analysis R'000 R'000
Distributable earnings 378 985 303 021
Less: Interim distribution from profits 175 255 141 555
Final distribution 203 730 161 466
Shares qualifying for distribution
Number of shares at year end 801 344 008 691 423 255
Less: Bulk ceded shares to Accelerate# (51 070 184) (51 070 184)
Less: Ceded shares with regard to Noor properties acquired* (13 290 135) -
Add: Shares issued after year end 16 100 000 -
Shares qualifying for distribution 753 083 689 640 353 071
Distribution per share
Final distribution per share (cents) 27.05277 25.21490
Interim distribution per share made (cents) 26.61692 23.99368
Total distribution per share for the year (cents) 53.66969 49.20858
# The cession on these shares relate to bulk in the Fourways area acquired by Accelerate at listing, these shares will only
be eligible for dividends at the earlier of the development of the bulk or December 2021.
* The vendor has ceded distrubtion on a portion of the shares issued with regard to Accelerate's acquisition of properties in
December 2015.
Year ended 31 March 2016 Year ended 31 March 2015
Earnings per share R'000 R'000
Basic earnings per share (EPS) amounts are calculated by dividing
profit for the year attributable to ordinary equity holders of
Accelerate by the weighted average number of ordinary shares
outstanding during the year.
Reconciliation of basic/diluted earnings to headline earnings
Total profit after tax 805 032 741 049
Fair value adjustment excluding straight-lining (383 746) (381 008)
Capital gains on sale of non-current assets held for sale# - (12 104)
Headline profit attributable to shareholders 421 286 347 937
Basic earnings per share (cents) 107.53 112.49
Diluted earnings per share (cents) 105.92 111.25
Headline earnings per share (cents) 56.27 52.81
Diluted headline earnings per share (cents) 55.43 52.24
Shares in issue at the end of the year 801 344 008 691 423 255
Weighted average number of shares 748 651 001 658 789 533
Shares subject to the deferred acquisition costs 4 538 397 6 849 747
Shares subject to the conditional share plan 6 851 733 447 872
Weighted average number of deferred shares 11 390 130 7 297 619
Total diluted weighted average number of shares in issue 760 041 131 666 087 152
#The gain on non-current assets held for sale for the year ended 31 March 2015 of R12 104 000 was not added back to determine
the headline profit in the audited financial statements for the year ended 31 March 2015. This has been corrected in the
31 March 2016 consolidated financial statements and has resulted in a 1.84 cents reduction in headline earnings per share and
a 1.81 cents per share reduction in diluted headline earnings per share for the year ended 31 March 2015 as reflected in the
comparative figures in the note above.
SEGMENTAL ANALYSIS
The individual properties are aggregated into segments with similar economic characteristics such as nature of the property
and the occupier market it serves. Management considers that this is best achieved by aggregating properties into office,
industrial and retail.
Consequently, the company is considered to have three reportable operating segments, as follows:
- Office segment: acquires, develops and leases offices;
- Industrial segment: acquires, develops and leases warehouses and factories;
- Retail segment: acquires, develops and leases shopping malls, community centres as well as retail centres.
Group administrative costs, profit/loss on disposal of investment property, finance revenue, finance costs, income taxes and
segment liabilities are not reported to the members of executive management on a segmented basis.
There are no sales between segments.
For the year ended 31 March 2015
R'000 Office Industrial Retail Total
Statement of comprehensive income 2015
Revenue, excluding straight-line rental revenue adjustment 109,308 19,962 570,426 699,696
Straight-line rental adjustment 7,864 586 40,666 49,116
Property expenses (37,380) (4,128) (164,242) (205,750)
Segment operating profit 79,792 16,420 446,850 543,062
Fair value adjustments on investment property 64,698 20,889 355,978 441,565
Segment profit 144,490 37,309 802,828 984,627
Other operating expenses (36,316)
Other income 12,569
Fair value gain on financial instruments (60,557)
Finance income 12,742
Long-term debt interest (172,016)
Profit before tax 741,049
For the year ended 31 March 2016
R'000 Office Industrial Retail Total
Statement of comprehensive income 2016
Revenue, excluding straight-line rental revenue adjustment 173,262 36,108 609,330 818,700
Straight-line rental adjustment 35,655 2,217 30,187 68,059
Property expenses (49,426) (4,743) (170,945) (225,114)
Segment operating profit 159,491 33,582 468,572 661,645
Fair value adjustments on investment property 71,155 45,591 265,066 381,812
Segment profit 230,646 79,173 733,638 1,043,457
Other operating expenses (38,694)
Other income (142)
Fair value gain on financial instruments 1,934
Finance income 14,247
Long-term debt interest (215,770)
Profit before tax 805,032
For the year ended 31 March 2015
R'000 Office Industrial Retail Total
Statement of financial position extracts at 31 March 2015
Assets
Investment property balance 1 April 2014 798,291 112,011 5,253,354 6,163,656
Acquisitions - 149,388 - 149,388
Capitalised costs 50,475 - 44,217 94,692
Disposals/classified as held for sale (28,420) - (66,560) (94,980)
Investment property held for sale 28,420 - - 28,420
Straight-line rental revenue adjustment 7,864 586 40,666 49,116
Fair value adjustments 64,698 20,889 355,978 441,565
Segment assets at 31 March 2015 921,328 282,874 5,627,655 6,831,857
Other assets not managed on a segmental basis
Derivative financial instruments 71,153
Equipment 234
Current Assets 229,476
Total Assets 7,132,720
For the year ended 31 March 2016
R'000 Office Industrial Retail Total
Statement of financial position extracts at 31 March 2016
Assets
Investment property balance 1 April 2015 921,328 282,874 5,627,655 6,831,857
Acquisitions 850,000 295,221 - 1,145,221
Capitalised costs 92,559 12,093 50,321 154,973
Disposals/classified as held for sale (28,420) - (130,726) (159,146)
Investment property held for sale - - 130,726 130,726
Straight-line rental revenue adjustment 35,655 2,217 30,187 68,059
Fair value adjustments 71,155 45,591 265,066 381,812
Segment assets at 31 March 2016 1,942,277 637,996 5,973,229 8,553,502
Other assets not managed on a segmental basis
Derivative financial instruments 73,086
Equipment 519
Current Assets 278 605
Total Assets 8,905,712
For the year ended 31 March 2015
R'000 Gauteng Western Cape KwaZulu-Natal Limpopo Eastern Cape Mpumalanga Total
Statement of comprehensive income 2015
Revenue, excluding straight-line rental revenue adjustment 599,320 83,863 7,599 8,914 - - 699,696
Straight-line rental adjustment 42,339 5,241 359 1,177 - - 49,116
Property expenses (180,686) (22,434) (1,559) (1,071) - - (205,750)
Segment operating profit 460,973 66,670 6,399 9,020 - - 543,062
Fair value adjustments on investment property 391,100 45,393 6,547 (1,475) - - 441,565
Segment profit 852,073 112,063 12,946 7,545 - - 984,627
Other operating expenses (36,316)
Other income 12,569
Fair value gain on financial instruments (60,557)
Finance income 12,742
Long-term debt interest (172,016)
Profit before tax 741,049
For the year ended 31 March 2016
R'000 Gauteng Western Cape KwaZulu-Natal Limpopo Eastern Cape Mpumalanga Total
Statement of comprehensive income 2016
Revenue, excluding straight-line rental revenue adjustment 693,565 98,556 8,981 13,866 2,550 1,181 818,700
Straight-line rental adjustment 53,951 5,752 3 6,435 1,126 792 68,059
Property expenses (193,067) (25,880) (2,210) (3,957) - - (225,114)
Segment operating profit 554,450 78,428 6,774 16,344 3,676 1,973 661,645
Fair value adjustments on investment property 327,363 48,297 3,622 2,530 - - 381,812
Segment profit 881,813 126,725 10,396 18,874 3,676 1,973 1,043,457
Other operating expenses (38,694)
Other income (142)
Fair value gain on financial instruments 1,934
Finance income 14,247
Long-term debt interest (215,770)
Profit before tax 805,032
For the year ended 31 March 2015
R'000 Gauteng Western Cape KwaZulu-Natal Limpopo Eastern Cape Mpumalanga Total
Statement of financial position extracts at 31 March 2015
Investment property balance 1 April 2014 5,499,394 609,856 53,586 820 - - 6,163,656
Acquisitions - 149,388 - - - - 149,388
Capitalised costs 5,251 45,224 - 44,218 - - 94,693
Disposals/classified as held for sale (66,560) (28,420) - - - - (94,980)
Investment property held for sale - 28,420 - - - - 28,420
Straight-line rental revenue adjustment 42,339 5,241 359 1,176 - - 49,115
Fair value adjustments 391,100 45,393 6,547 (1,475) - - 441,565
Investment property at 31 March 2015 5,871,524 855,102 60,492 44,739 6,831,857
Other assets not managed on a segmental basis
Derivative financial instruments 71,153
Equipment 234
Current Assets 229,476
Total Assets 7,132,720
For the year ended 31 March 2016
R'000 Gauteng Western Cape KwaZulu-Natal Limpopo Eastern Cape Mpumalanga Total
Statement of financial position extracts at 31 March 2016
Investment property balance 1 April 2014 5,871,524 855,102 60,492 44,739 - - 6,831,857
Acquisitions 1,003,221 - - 70,000 64,500 7,500 1,145,221
Capitalised costs 100,157 25,492 2,549 24,649 1,225 901 154,973
Disposals/classified as held for sale (130,726) (28,420) - - - - (159,146)
Investment property held for sale 130,726 - - - - - 130,726
Straight-line rental revenue adjustment 53,951 5,752 3 6,435 1,126 792 68,059
Fair value adjustments 327,363 48,297 3,622 2,530 - - 381,812
Investment property at 31 March 2015 7,356,216 906,223 66,666 148,353 66,851 9,193 8,553,502
Other assets not managed on a segmental basis
Derivative financial instruments 73,086
Equipment 519
Current Assets 278 605
Total Assets 8,905,712
NOTES TO THE FINANCIAL STATEMENTS
CORPORATE INFORMATION
The condensed financial statements of Accelerate for the year ended 31 March 2016 were authorised for issue in accordance
with a resolution of the directors passed on 23 June 2016. Accelerate is a public company incorporated and domiciled in South
Africa whose shares are publicly traded on the JSE. The registered office is located at Cedar Square Shopping Centre, corner
Cedar Road and Willow Avenue. The principal activities of Accelerate are acquisition, development and leasing of properties.
The functional and presentation currency of Accelerate is South African rand thousands. All figures are rounded off to R'000
except where otherwise stated.
BASIS OF PREPARATION
These condensed financial statements for the year ended 31 March 2016 are prepared in accordance with the framework concepts
and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), contains the minimum
information required by IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee, the Financial Reporting Pronouncements as issued by Financial Reporting Standards Council, the
requirements of the Companies Act, 71 of 2008, as amended and the JSE Listings Requirements.
The accounting policies applied in the preparation of these condensed financial statements are in terms of IFRS and are
consistent with those applied in the previous financial period, except for the new and amended IFRSs that became effective
during the 31 March 2016 reporting period. None of which had any material impact on Accelerate's financial result.
These condensed financial statements have been prepared under the historical cost convention except for investment properties
which are measured at fair value.
The fair value of investment properties is determined by directors with reference to market-related information while other
financial liabilities are valued with reference to market-related information and valuations as appropriate. All investment
properties are valued by independent external valuers on a 3 year rolling cycle.
These condensed financial statements were prepared under the supervision of Mr Dimitri Kyriakides (CA)SA in his capacity as
Chief Financial Officer.
1. CONTINGENT COMPENSATION TO VENDOR
As part of the sale and purchase agreement for properties acquired by Accelerate at listing, an amount of contingent purchase
consideration has been agreed with the vendor in accordance with the conditional deferred payment agreement. In accordance
with this agreement, accelerate will provide the vendor with additional purchase consideration for any lettable vacant space
excluded from the purchase consideration which is let within the first three years. This payment will be settled by
Accelerate through the issue of additional shares in Accelerate in future when certain conditions have been met. As at the
acquisition date, the fair value of the contingent purchase consideration was estimated at R209 784 554. During the year
ended 31 March 2015 a portion of the vacant lettable space has been let in compliance with the conditions laid down in the
agreement. As a result of this an amount of R163 548 205 in shares was issued in terms of the contingent purchase consideration.
The remaining contingent purchase consideration at 31 March 2016 was R27 275 766 due to additional vacanct space to the value
of R 18 960 029 being let during the year ended 31 March 2016. This was settled to the vendor by reducing the amounts payable
to Accelerate by the vendor by R18 960 029.
A reconciliation of the movement of the contingent purchase consideration liability is provided below:
Year ended 31 March 2016 Year ended 31 March 2015
Contingent purchase consideration R'000 R'000
Opening balance 46 236 209 784
Reduction due to vacancies filled (18 960) (163 548)
27 276 46 236
The contingent purchase consideration is a mechanism used to shift the risk of vacant space from purchaser (Accelerate) to
the vendor. The manner in which additional shares are issued to the vendor is unlikely to have a dilutive effect on yield.
2. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
31 MARCH 2016
Carried at fair value Amortised cost# Total
Financial assets R'000 R'000 R'000
Derivative financial assets* 73 086 - 73 086
Trade and other receivables - 197 908 197 208
Cash and cash equivalents - 71 428 71 428
Total financial assets 73 086 269 336 342 422
Financial liabilities
Long-term interest-bearing borrowings - (2 569 905) (2 569 905)
Trade and other payables - (114 209) (114 209)
Current portion of long-term debt - (422 356) (422 356)
Total liabilities (3 106 470) (3 106 470)
31 MARCH 2015
Carried at fair value Amortised cost# Total
Financial assets R'000 R'000 R'000
Derivative financial assets* 71 153 - 71 153
Trade and other receivables - 170 644 170 659
Cash and cash equivalents - 58 817 58 817
Total financial assets 71 153 229 461 300 614
Financial liabilities
Long-term interest-bearing borrowings - (2 155 158) (2 155 158)
Trade and other payables - (88 327) (88 327)
Current portion of long-term debt - (238 856) (238 856)
Total liabilities - (2 482 341) (2 482 341)
* The values of the derivative financial asset shown at fair value are based on inputs other than quoted prices that are
observable in the market for the assets and liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from
prices) - level 2. The value of the swaps is determined as the discounted value of the future cash flows to be received from
the swap assets. For the valuation current JIBAR was used as an indication of future JIBAR.
# The carrying value of financial assets and liabilities carried at amortised cost is considered to approximate the fair
value of those financial assets and liabilities. There have been no significant changes in valuation techniques or transfers
between fair value hierarchy levels.
3. DIRECTORS REMUNERATION
Year ended 31 March 2016 Year ended 31 March 2015
R'000 R'000
Total guaranteed package
M Georgiou Nil Nil
A Costa 2 901 2 333
D Kyriakides 1 957 1 866
JRJ Paterson 2 100 1 833
Short-term incentive payment
M Georgiou Nil Nil
A Costa 1 698 780
D Kyriakides 1 158 469
JRJ Paterson 1 415 650
Non-executive directors fees
TT Mboweni 1 633 1 580
GC Cruywagen 536 520
TJ Fearnhead 379 364
JRP Doidge 329 316
K Madikizela 329 312
F Viruly 329 312
4. RELATED-PARTY TRANSACTION
Relationships
M Georgiou and A Costa are directors of both Accelerate Property Fund Ltd and Accelerate Property Management Company (Pty) Ltd.
Both directors' full remuneration is paid by Accelerate Property Fund. M Georgiou owns 100% of Fourways Precinct (Pty) Ltd through
The Michael Family Trust and also owns 100% of Accelerate Property Management Company.
Year ended 31 March 2016 Year ended 31 March 2015
Related-party transactions and balances R'000 R'000
Related-party balances
Vendor loans#
Fourways Precinct (Pty) Ltd 51 216
The Michael Family Trust 50 040
Contingent purchase
Fourways Precinct (Pty) Ltd (27 276) (46 236)
Related-party transactions
Vacancy guarantee
Fourways Precinct (Pty) Ltd - 11 549
The Michael Family trust 11 563
Development guarantee
The Michael Family trust 6 887 -
Interest charged
Interest charged on outstanding amounts:
Fourways Precinct (Pty) Ltd - 1 967
The Michael Family trust 2 711
Accelerate Property Management costs
Fourways Precinct (Pty) Ltd (3 647) (3 885)
Accelerate Property Management Company (Pty) Ltd (2 766) (2 648)
# In the current financial period it was identified that the Fourways Precinct balance was not disclosed in the related parties
note in the prior year. This was however, correctly included in the Trade and other receivables balance in the Statement of
Financial Position in 2015. The related-party disclosure has been corrected in the current year financial statements.
5. FAIR VALUE ADJUSTMENTS
Year ended 31 March 2016 Year ended 31 March 2015
Fair value adjustments R'000 R'000
Investment property (Fair value model) 381 812 441 565
Mark to market movement on swap 1 934 (60 557)
383 746 381 008
6. CAPITAL COMMITMENTS
In terms of Accelerate's budgeting process, R65 million was allocated to Accelerate's planned capital expenditure. As such,
Accelerate views this amount as authorised and not contracted.
7. SUBSEQUENT EVENTS
Non Adjusting events after year end
On 16 May 2016 Rietfontein Pavilion, a non-core retail property, situated in Guateng, was sold for R28 million. The sale of
this property is in line with Accelerate's strategy to sell non-core properties and reinvest in the core portfolio.
On 14 June 2016 the Portside transaction as announced on SENS 24 August 2015 was concluded by the transfer of floors 9 to 18
of the iconic Portside office building in the Cape Town CBD to Accelerate. The property with a GLA of 25 127 was acquired
from Old Mutual Life Assurance Company at a cost of R755 million and an initial yield of 7.5%. This acquisition was fully
debt funded by Rand Merchant Bank.
On 8 June 2016 Rock Cottage, a non core retail property, situated in Gauteng, was sold for R65 million. The sale of this
property is in line with Accelerate's strategy to sell non core properties and reinvest in the core portfolio.
AUDITOR'S REVIEW
Ernst & Young Inc, Accelerate's independent auditors, have reviewed these condensed financial statements and have expressed
an unmodified review conclusion on these condensed financial statements, which are available for inspection at the company's
registered office.
The review report does not necessarily report on all of the information contained in these condensed financial statements.
Shareholders are therefore advised that, in order to obtain a full understanding of the nature of the auditor's engagement,
they should obtain a copy of the auditor's report together with the accompanying financial information from the company's
registered office.
DIRECTORS' RESPONSIBILITY STATEMENT
The directors of Accelerate assume full responsibility for the preparation of the condensed financial statements, and has
been correctly extracted from the underlying annual financial statements.
FINAL DISTRIBUTION WITH AN ELECTION TO REINVEST CASH DISTRIBUTION FOR SHARES
The board of Accelerate has declared a final cash distribution (number 5) ("Cash Distribution") of 27.05277 cents per ordinary
share (2015: 25,21490 cents per ordinary share) for the year ended 31 March 2016.
Shareholders will be entitled to elect to reinvest the Cash Distribution of 27.05277 cents per share after the deduction of
the applicable dividend tax, in return for shares ("Share Re-investment Alternative"), failing which they will receive the
net Cash Distribution in respect of all or part of their shareholding.
Shareholders who have dematerialised their shares are required to notify their duly appointed Central Securities Depository
Participant ("CSDP") or broker of their election in the manner and time stipulated in the custody agreement governing the
relationship between the shareholder and their CSDP or broker.
The source of the distribution comprises net income from property rentals earned from the company's property investments as
well as interest earned on excess cash on deposit. Please refer to the condensed statement of comprehensive income for
further details.
A dividend withholding tax of 15% will be applicable on the dividend portion to all shareholders who are not exempt.
The issued share capital at the declaration date is 817 444 008 ordinary shares. The company's income tax reference number
is: 9868626145.
Tax implications for South African resident shareholders
Accelerate was granted REIT status by the JSE with effect from 12 December 2013 in line with the REIT structure as provided
for in the Income Tax Act, No. 58 of 1962, as amended (the Income Tax Act) and section 13 of the JSE Listings Requirements.
The REIT structure is a tax regime that allows a REIT to deduct qualifying distributions paid to investors in determining its
taxable income.
The Cash Distribution of 27.05277 cents per ordinary share meets the requirements of a "qualifying distribution" for the
purposes of section 25BB of the Income Tax Act (a qualifying distribution). Accordingly, qualifying distributions received by
local tax resident shareholders must be included in the gross income of such shareholders (as a non-exempt dividend in terms
of section 10(1)(k)(aa) of the Income Tax Act), with the effect that the qualifying distribution is taxable as income in the
hands of the Accelerate shareholder. These qualifying distributions are, however, exempt from dividend withholding tax in the
hands of South African tax resident shareholders, provided that the South African resident shareholders have provided the
following forms to their CSDP or broker, as the case may be, in respect of uncertificated ordinary shares, or the transfer
secretaries, in respect of certificated ordinary shares:
- a declaration that the distribution is exempt from dividends tax; and
- a written undertaking to inform the CSDP, broker or transfer secretaries, as the case may be, should the circumstances
affecting the exemption change or the beneficial owner ceases to be the beneficial owner, both in the form prescribed by the
Commissioner for the South African Revenue Service. Shareholders are advised to contact their CSDP, broker or the transfer
secretaries, as the case may be, to arrange for the abovementioned documents to be submitted prior to payment of the
distribution, if such documents have not already been submitted.
Tax implications for non-resident shareholders
Qualifying distributions received by non-resident shareholders will not be taxable as income and instead will be treated as
ordinary dividends, but which are exempt in terms of the usual dividend exemptions per section 10(1)(k) of the Income Tax
Act. It should be noted that until 31 December 2013, qualifying distributions received by non-residents were not subject to
dividend withholding tax. From 1 January 2014, any qualifying distribution received by a non-resident from a REIT will be
subject to dividend withholding tax at 15%, unless the rate is reduced in terms of any applicable agreement for the avoidance
of double taxation (DTA) between South Africa and the country of residence of the shareholder. Assuming dividend withholding
tax will be withheld at a rate of 15%, the net amount due to non-resident shareholders will be 22.99485 cents per ordinary
share. A reduced dividend withholding tax rate in terms of the applicable DTA, may only be relied on if the non-resident
shareholders have provided the following forms to their CSDP or broker, as the case may be, in respect of the uncertificated
ordinary shares, or the transfer secretaries, in respect of certificated ordinary shares:
- a declaration that the dividend is subject to a reduced rate as a result of the application of a DTA; and
- a written undertaking to inform their CSDP, broker or the transfer secretaries, as the case may be, should the circumstances
affecting the reduced rate change or the beneficial owner ceases to be the beneficial owner, both in the form prescribed by
the Commissioner for the South African Revenue Service. Non-resident shareholders are advised to contact their CSDP, broker
or the transfer secretaries, as the case may be, to arrange for the abovementioned documents to be submitted prior to payment
of the distribution if such documents have not already been submitted, if applicable.
Summary of the salient dates relating to the Cash Distribution and Share Re-investment Alternative are as follows:
2016
Circular and form of election posted to shareholders Tuesday, 5 July
Announcement of Share re-investment Alternative issue price and finalisation information Tuesday, 12 July
Last day to trade ("LDT") cum dividend Tuesday, 19 July
Shares to trade ex-dividend Wednesday, 20 July
Listing of maximum possible number of Share Re-investment Alternative shares commences on the JSE Friday, 22 July
Last day to elect to receive the Share Re-investment Alternative (no late forms of
election will be accepted) by 12:00 (South African time) Friday, 22 July
Record date Friday, 22 July
Announcement of results of Cash Distribution and Share Re-investment Alternative on SENS Monday, 25 July
Cheques posted to certificated shareholders and accounts credited by CSDP or broker to
dematerialised shareholders electing the Cash Distribution on or about Monday, 25 July
Announcement of results of Cash on SENS Monday, 25 July
Share certificates posted to certificated shareholders and accounts credited by CSDP or
broker to dematerialised shareholders electing the Share Re-investment Alternative on or about Wednesday, 27 July
Adjustment to shares listed on or about Thursday, 28 July
Notes:
1. Shareholders electing the Share Re-investment Alternative are alerted to the fact that the new shares will be listed on
LDT + 3 and that these new shares can only be traded on LDT + 3, due to the fact that settlement of the shares will be three
days after record date, which differs from the conventional one day after record date settlement process.
2. Share certificates may not be dematerialised or rematerialised between Wednesday, 20 July 2016 and Friday, 22 July 2016, both
days inclusive.
3. The above dates and times are subject to change. Any changes will be released on SENS and published in the press.
The Cash Dividend or Share Re-investment Alternative may have tax implications for resident and non-resident shareholders.
Shareholders are therefore encouraged to consult their professional advisors should they be in any doubt as to the appropriate
action to take.
ANNUAL GENERAL MEETING
The company's annual general meeting ("AGM") will be held at Accelerate's registered office, in the main boardroom, Cedar Square
Shopping Centre, Management Office, 1st Floor, Cnr Willow Avenue and Cedar Road, Fourways, Johannesburg on Tuesday, 28 July 2016
at 10h00 (time). Further details on the company's AGM will be included in Accelerate's integrated annual report to be posted to
shareholders on or before 28 June 2016. A PDF of the integrated annual report and notice of AGM will be available to download
at www.acceleratepf.co.za on the same day of distribution.
On behalf of the board
Mr TT Mboweni
(Non-executive chairman)
Mr M Georgiou
(Chief executive officer)
Mr D Kyriakides
(Chief financial officer)
27 June 2016
Corporate information
DIRECTORS
Mr TT Mboweni (non-executive chairman)
Mr A Costa (chief operating officer)
Dr GC Cruywagen (lead independent, non-executive director)
Mr JRP Doidge (independent non-executive director)
Mr TJ Fearnhead (independent non-executive director)
Mr M Georgiou (chief executive officer)
Mr D Kyriakides (financial director)
Ms K Madikizela (independent non-executive director)
Mr JRJ Paterson (executive director)
Prof F Viruly (independent non-executive director)
Registered office and business address
Cedar Square Shopping Centre, Management Office, 1st Floor, Cnr Willow Ave and Cedar Rd,
Fourways, Johannesburg, 2055
Tel: 010 001 0790
Web: www.acceleratepf.co.za
Investor relations
Instinctif Partners: Lizelle du Toit/Morne Reinders
Tel: 011 447 3030
Email: lizelle.dutoit@instinctif.com/morne.reinders@instinctif.com
Company secretary
Joanne Matisonn
iThemba Governance and Statutory Solutions Proprietary Limited
Monument Office Park, Block 5, Suite 102, 79 Steenbok Avenue, Monument Park
Tel: 086 111 1010
Email: joanne@ithembaonline.co.za
Transfer secretaries
Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107, South Africa
Tel: 011 370 5000
Email: proxy@computershare.co.za
Fax: 011 688 2238
Sponsor
The Standard Bank of South Africa Limited
(Registration number 1962/000738/06)
Baker Street, Rosebank, 2196
PO Box, 61344, Marshalltown, 2107
Auditors
Ernst & Young Incorporated
102 Rivonia Road, Sandton, Johannesburg, 2149
Tel: 011 772 3000
Internal Auditors
LateganMashego Auditors (Pty)Ltd
Registration number 2001/107847/07
Registered address: 11 Boca Walk, Highveld, Centurion, 0157
Email: lindie@lateganmashego.co.za
Tel: 0828987644/0836091159
Attorneys
Glyn Marais Inc.
(Registration number 1990/000849/21)
2nd Floor, The Place, 1 Sandton Drive, Sandton, 2196
(PO Box 652361, Benmore, 2010)
Date: 27/06/2016 07:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
