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Announcement on property valuations and withdrawal of cautionary announcement
Acsion Limited
(Registration number 2014/182931/06)
(Incorporated in the Republic of South Africa)
Share code: ACS ISIN: ZAE000198289
(“Acsion” or the “Company” or the “Group”)
ANNOUNCEMENT ON PROPERTY VALUATIONS AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the announcements released on SENS on 5 February 2021 and 26 February
2021 in respect of the preparation of valuations of the Company’s investment properties, including
developments under construction as at 31 August 2020 (the “Valuations”).
Acsion has now completed the preparation of the Valuations and is in a position to provide the following
details:
1. RESTATEMENTS TO 31 AUGUST 2020 INTERIM RESULTS (“RESTATEMENTS”)
In response to the announcement made on 26 February 2020, the Board has now determined, or
obtained, valuations of the investment properties as at 31 August 2020. The effect of the Valuations
provides greater clarity on the impact of COVID-19 on the 2020 Interim results.
When performing valuations, valuers were required to use judgement while faced with
unprecedented circumstances resulting from the COVID-19 pandemic. The impact of COVID-19 was
incorporated in the final valuations by adjusting the valuation amounts directly and not by adjusting
the forecasted cash flows. The valuations are based on inputs and assumptions reflecting the
economic circumstances resulting from the outbreak.
The impact of the Valuations on the previously published 2020 Interims on 26 November 2020 is as
follows:
Statement of financial position (R’000)
Item Previously Restated % Change
reported
Investment property 8 213 406 8 035 965 (2.2%)
Retained income 3 408 052 3 340 782 (2.0%)
Deferred tax liability 1 494 499 1 475 081 (1.3%)
Statement of Profit or Loss (R’000)
Item Previously Restated % Change
reported
Fair value adjustment - (86 688) (100.0%)
Profit before tax 135 408 48 720 (64.0%)
Taxation (40 462) (21 043) (48.0%)
Profit for the period 94 946 27 676 (70.8%)
The profit for the period ended 31 August 2020 is less by R67 million from the profit of R94 million
previously reported for the same period. This represents approximately 4% of the market
capitalisation at 26 November 2020.
Ratios
Headline earnings per share (“HEPS”) and basic earnings per share (“EPS”) were previously reported
at 23.8 cents. After the Restatements, the 2020 Interims reflect a HEPS and basic EPS of 6.7 cents
per share.
Net asset value per share decreased to 1 880.9 cents from the previously reported 1 898.1 cents, a
decrease of 0.9%.
The movement in the carrying value of investment properties for the 2020 Interims includes:
- net negative fair value adjustments of R87 million; and
- capital expenditure of R173 million incurred on developments under construction
The net negative fair value adjustments of R86 million in investment properties for the 2020
Interims represents a reduction in value in the region of 4.0% of market capitalisation at the end of
the reporting period.
The information relating to the Restatements has not been reviewed or reported on by Acsion’s
auditors.
2. DETAILS OF VALUATIONS AS AT 31 AUGUST 2020
2.1 Tenant concessions
Up until 31 August 2020, no rent concessions had been granted to any tenants as a result
of the impact of COVID-19. However, due to significant uncertainty over collectability of
rent during the COVID-19 lockdown, rental income for this period was recognised only to
the extent it was probable that it would be received. This resulted in R83 million of
unrecognised rental income for the 2020 Interims, which subsequently will be recognised
as revenue to the extent, and at the point in time, that collectability is considered probable.
An insurance claim in the region of R98 million in respect of non-payment of rental by
tenants during the lockdown periods was lodged with the Company’s insurer subsequent
to 31 August 2020. The outcome of this claim is uncertain at this stage and not recognised
in the results.
2.2 Methodology of the Valuations
The Group uses a discounted cash flow and income capitalisation methodology as a basis
when determining the fair value of investment properties. At least one third of the
properties are valued externally and the balance is valued by the directors of Acsion. A
property will be externally valued at least once every three years. The fair values of all
investment properties for the Group are classified as Level 3 within the fair value hierarchy
in IFRS 13 Fair value measurement. There were no transfers between Levels 1, 2 and 3
during the six months ended 31 August 2020.
2.3 Independent valuer
The Group has employed the services of Mrs A de Wet of Amanda De Wet Consultants and
Investors, a professional valuer registered in accordance with section 20(2)(a) of the
Property Valuers Professional Act 47 of 2000 (Registration number 5542) for external
valuations for the six months ended 31 August 2020. Mrs de Wet is not connected to the
Group and has recent experience in location and category of the investment properties
valued. She holds BProc and LLB qualifications and has completed a National Diploma in
real estate.
2.4 Completed developments
Completed developments were valued using the discounted cash flow of future income
streams method by internal valuation. External valuers have the discretion to use their own
valuation method.
Mrs A de Wet has used the income capitalisation method based on future cash flows, being
her preferred method of valuation.
2.5 Developments under construction
The Group measures investment properties under construction at cost until either its fair
value becomes reliably determinable or construction is completed. For the six months
ended 31 August 2020, Mall@Larnaca has been valued by Mrs A de Wet using the income
capitalisation method, being her preferred method of valuation. Acsiopolis has been valued
by Mrs A de Wet using a residual valuation technique, resulting in the highest and best use
appraisal for this property.
3. PROPERTY PORTFOLIO INFORMATION
3.1 Developed investment properties
The developed investment properties as at 31 August 2020 consisted of the following ten
properties:
Property name Directors GLA Value/m2 Percentage
independent (m2) (excluding bulk, of total
valuation where portfolio
31 August 2020 applicable) by value
(Rm) (%)
Mall@Reds* 1 411 54 740 25 667 2.5
Mall@Emba 580 24 605 23 572 9.2
Mall@Moutsiya 228 14 703 15 507 3.6
Mall@Carnival* 2 595 90 615 28 031 41.3
Mall@Lebo 566 23 534 24 050 9.0
Mall@Mfula 353 17 930 19 688 5.6
Mall@55* 318 15 969 18 681 5.1
Moreleta
Square 130 8 579 15 153 2.1
Simarlo
Rainbow 49 6 891 7 111 0.8
Hyde Park
Terrace 53 - - 0.8
6 283 257 566 177 460 100.0
3.2 Developments under construction
Developments under construction as at 31 August 2020 consisted of the following
properties classified as investment properties:
Independent GLA Value/m2 Anticipated
valuation (m2) (excluding opening
31 August 2020 bulk, where
(Rm) applicable)
Acsiopolis* 919 37 437 22 851 During 2021
calendar year
Larnaca* 1 062 39 000 27 242 July 2021
Trade @ 55* 40 10 000 4 000 Negotiating
2 021 86 437 54 093
*Independently valued
No investment properties were acquired during the six months ended 31 August 2020,
however additional capital expenditure was incurred during this period.
3.3 Reconciliation of investment properties carrying values and property valuation values as
at 31 August 2020
R’000
Investment properties at fair value 8 035 965
Investment properties leased assets and equipment 112 979
Operating lease asset 155 749
Property valuation values 8 304 693
3.4 Reconciliation of investment properties carrying values for the six months ended 31
August 2020
R’000
Opening balance at 1 March 2020 7 854 029
Capital expenditure 172 672
Disposal (1 434)
Foreign currency translation 97 386
Fair value adjustment (86 688)
Closing balance at 31 August 2020 8 035 965
3.5 Sensitivity analysis
The estimated impact of a change in the significant unobservable inputs would result in a
change in the investment properties fair value estimation:
Properties excluding mixed use development
R’000
An increase of 50 basis points in the discount rate: (27 921)
A decrease of 50 basis points in the discount rate: 28 505
An increase of 50 basis points in the capitalisation rate: (384 689)
A decrease of 50 basis points in the capitalisation rate: 432 731
Mixed use development
R’000
An increase of 50 basis point in the exit cap rate (296 561)
A decrease of 50 basis points in the exit cap rate 336 102
An increase of 50 basis points in the discount rate (6 000)
A decrease of 50 basis points in the discount rate 6 000
An increase of 1% in selling price per sqm 9 000
A decrease of 1% in selling price per sqm (9 000)
4. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Following the completion of the Valuations, Acsion shareholders are advised that caution is no
longer required to be exercised when dealing in the Company’s securities.
Full details of the Valuations, together with supporting documentation, are available on the Company’s
website at https://www.acsionsa.co.za/results.htm.
Johannesburg
5 March 2021
Sponsor
Nedbank Corporate and Investment Banking
Date: 05-03-2021 01:00:00
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