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Condensed Audited Consolidated Results for the year ended 30 June 2013
Ascension Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2006/026141/06)
JSE Share Code for A-linked units: AIA ISIN: ZAE000161881
JSE Share Code for B-linked units: AIB ISIN: ZAE000161899
(Approved as a REIT by the JSE)
(“Ascension” or “the company” or “the fund” or “the group”)
Condensed Audited Consolidated Results for the year ended 30
June 2013
Condensed Consolidated Statement of Financial Position
Audited
Audited Restated
30 June 30 June
R’000 Note 2013 2012
s
Assets
Non-current assets 2 550 927 598 530
Investment property 2 544 500 598 417
Property, plant & equipment 60 113
Interest rate derivative 2 6 367 -
Current assets 71 477 212 562
Trade and other receivables 5 44 762 10 227
Cash and cash equivalents 26 715 202 335
Investment property held for - 8 000
sale
Total assets 2 622 404 819 092
Equity and liabilities
Equity
Stated capital 304 381 106 451
Retained income 340 060 101 912
644 441 208 363
Non-current liabilities – 1 071 962 380 823
Debenture capital
Total linked unitholders’ 1 716 403 589 186
interest
Liabilities
Other non-current liabilities 794 288 212 871
Other financial liabilities 2 794 288 181 379
Deferred tax 7 - 31 492
Current liabilities 111 713 17 035
Trade and other payables 8 29 852 8 644
Other financial liabilities - 23
Linked unit holders for 81 861 8 368
distribution
Total liabilities 1 977 963 610 729
Total equity and liabilities 2 622 404 819 092
Number of A linked units in 225 872 353 66 500 000
issue
Number of B linked units in 376 359 014 265 387 231
issue
TNAV and NAV per A-linked unit 479.1 396.6
(cents)
TNAV and NAV per B-linked unit 190.3 125.3
(cents)
TNAV and NAV per A-linked unit 479.1 396.6
(excluding deferred tax)
(cents)
TNAV and NAV per B-linked unit 190.3 137.1
(excluding deferred tax)(cents)
Condensed Consolidated Statement of Cash Flows
Audited Audited
12 months Restated
ended 6 months
R’000 30 June ended
2013 30 June
2012
Cash generated from operations 130 489 15 932
Finance income 13 131 983
Finance costs (36 144) (10 236)
Net cash from operating 107 476 6 679
activities
Purchase of investment property (1 743 669) (154 296)
and improvements
Proceeds from disposal of 8 000 -
investment property held for
sale
Net cash from investing (1 735 669) (154 296)
activities
Proceeds on issue of linked 888 353 359 226
units
Proceeds / (repayment) of other 615 198 (35 347)
financial liabilities
Distributions paid (50 978) -
Net cash from financing 1 452 573 323 879
activities
Total cash movement for the (175 620) 176 262
period
Cash at the beginning of the 202 335 26 073
period
Total cash at the end of the 26 715 202 335
period
Condensed Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Audited
Audited Restated
12 months 6 months
ended ended
30 June 30 June
R’000 2013 2012
Revenue 194 058 33 368
Contractual rental income 176 839 28 052
Straight-line lease income 17 219 5 316
adjustment
Property operating expenses net of (23 329) (8 058)
recoveries
Net property rental and related 170 729 25 310
income
Other income 786 83
Operating expenses (3 263) (986)
Asset management fees (4 958) (1 619)
Operating profit 163 294 22 788
Finance income 13 131 983
Listing expenses - (11 395)
Fair value adjustments 191 563 51 053
Finance costs (36 861) (10 236)
Profit before debenture interest 331 127 53 193
and taxation
Debenture interest (124 471) (8 368)
Profit before taxation 206 656 44 825
Taxation 31 492 (14 424)
Profit for the period 238 148 30 401
Other comprehensive income - -
Total comprehensive income for the 238 148 30 401
period
Total comprehensive income 238 148 30 401
attributable to unitholders
Basic and fully diluted earnings 53.21 83.81
per share (cents)
Basic and fully diluted headline 4.95 (17.07)
earnings / (loss) per share (cents)
Basic and fully diluted earnings 99.56 102.84
per A-linked unit (cents)
Basic and fully diluted earnings 73.25 107.89
per B-linked unit (cents)
Headline and fully diluted earnings 51.31 1.96
per A-linked unit (cents)
Headline and fully diluted earnings 25.00 7.01
per B-linked unit (cents)
Reconciliation between earnings,
headline earnings and distributable
earnings
Profit for the period attributable 238 148 30 401
to shareholders
Amortisation of discount on 716 38
debentures
Fair value adjustment to investment (185 196) (51 053)
properties
Taxation (31 492) 14 424
Headline earnings/ (loss) 22 176 (6 190)
attributable to shareholders
Adjusted for:
Debenture interest 124 471 8 368
Headline earnings attributable to 146 647 2 178
linked unitholders
Adjusted for:
Listing expenses - 11 395
Straight-line lease income (17 219) (5 316)
adjustment
Fair value adjustment on interest (6 367) -
rate swap
Amortisation of bond raising fees 1 410 111
Distributable earnings attributable 124 471 8 368
to linked unitholders
Less: distributions declared
A-linked units (61 206) (1 383)
B-linked units (63 265) (6 985)
Earnings not distributed - -
Total distribution per linked unit
for the year
- A-linked unit (cents) 38.00 2.08
- B-linked unit (cents) 18.80 2.63
Number of A-linked units at 30 June 225 872 353 66 500 000
2013
Number of B-linked units at 30 June 376 359 014 265 387 231
2013
Weighted average number of A-linked 132 040 285 7 267 760
units in issue
Weighted average number of B-linked 315 562 571 29 004 069
units in issue
- The calculation of basic and fully diluted earnings per share is
based on earnings of R238,1 million (2012: R30,4 million) and a
weighted average number of 447 602 856 shares (2012: 36 271 829) in
issue throughout the financial period.
- The calculation of headline earnings and diluted headline
earnings per share is based on a headline earnings of R22,2 million
(2012: R6,2 million loss) and a weighted average number of 447 602
856 shares (2012: 36 271 829) in issue throughout the financial
period.
Condensed Consolidated Statement of Changes in Equity
Stated Retained Total
R’000 capital income equity
Balance at 1 January 2012 - 71 511 71 511
Total comprehensive - 30 401 30 401
income for the 6 months
ended 30 June 2012
Issue of linked units 106 451 - 106 451
Balance at 1 July 2012 - 106 451 101 912 208 363
Audited
Total comprehensive - 238 148 238 148
income for the year ended
30 June 2013
Issue of linked units 200 503 - 200 503
Transaction costs (2 573) - (2 573)
Balance at 30 June 2013 - 304 381 340 060 644 441
Audited
NOTES:
1. Basis of presentation, accounting policies and audit opinion
The condensed audited consolidated financial statements have been
prepared in accordance with the measurement and recognition
requirements of International Financial Reporting Standards and its
interpretations adopted by the Independent Accounting Standards
Board, the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee, the information contained in IAS
34: Interim Financial Reporting, the JSE Listings Requirements and
the requirements of the South African Companies Act, 2008. These
results have been prepared by the Financial Director, Henry Dednam
CA(SA).
The accounting policies adopted are consistent with those applied
in the prior year with the exception of the adoption of a revised
standard which became effective during the year (IAS 1:
Presentation of Financial Statements). The adoption of this
standard did not have a material effect on the financial statements
other than changes in disclosure.
Other than as disclosed in note 4 below, the directors are not
aware of any matters or circumstances arising subsequent to 30 June
2013 that require any additional disclosure or adjustment to the
financial statements.
Grant Thornton have issued their unmodified audit opinion on the
group financial statements for the year ended 30 June 2013, which
is available for inspection at the company’s registered office.
These condensed audited consolidated financial statements have been
derived from the group financial statements and are, in all
material respects, consistent with the group financial statements.
2. Debt facilities
Funder Facility at Utilised at Expiry Cost
30 June 30 June date of
2013 2013 funding
(R million) (R million)
Investec 492 216 31-Jul- 8.00%
Private 15
Bank
Standard 483 486* 14-Dec- 7.42%
Bank 15
(fully
hedged)1
Nedbank 50 50 28-Jun- 7.00%
16
Nedbank 45 45 23-Apr- 7.65%
18
Unamort- (3)
ised bond
raising
fees
Total 1 070 794
* - includes accrued interest.
1 – Fully hedged through a 3-month JIBAR interest rate swap for a
nominal amount of R483 million at 5.55% per annum. Interest is
payable quarterly, in arrears and expiry is on 01 December 2015.
The weighted average cost of debt at 30 June 2013 is 7.57%.
The board targets a loans-to-value (LTV) ratio of 35 – 40%. The LTV
ratio at year-end of 30.5% is artificially low as capital was
raised to fund post year end acquisitions that temporarily reduced
debt. After the completion of all the unconditional acquisitions
mentioned elsewhere in the results, the LTV ratio is expected to
increase to within the target range of 35 – 40%.
On 30 June 2013, 61% of utilised borrowings were fully hedged.
3. Lease expiry profile
LEASE EXPIRY PROFILE at 30 June 2013 (GLA)
Total Office Retail
Vacant 8.5% 9.1% 1.9%
Monthly 13.6% 11.0% 37.7%
30-Jun-14 9.3% 5.9% 42.1%
30-Jun-15 11.9% 12.3% 8.0%
30-Jun-16 21.9% 23.5% 7.2%
30-Jun-17 0.8% 0.9% 0.3%
30-Jun-18 9.8% 10.7% 1.1%
After 30-Jun-18 24.2% 26.6% 1.7%
100.0% 100.0% 100.0%
4. Events after the reporting date
On 30 June 2013, Ascension was awaiting transfer of the following
unconditional acquisitions, acquired at a total cost of R650,5
million:
• Atterbury House
• Riverpark
• Riverview
• Island Centre – transferred since year-end
• Game Building – transferred since year-end
An additional 60 million A-linked units were issued on 12 August
2013 at an issue price of R4.50 per unit.
5. Trade and other receivables
Audited Audited
R’000 30 June Restated
2013 30 June
2012
Trade receivables (net of impairment 14 411 3 795
provision)
Debtors accruals (including 10 443
consumption charges not yet
invoiced)
Deposits 978 555
Acquisition and development costs 17 026 3 770
paid in advance
Acquisition adjustment accounts 1 381
Prepayments, sundry debtors and VAT 523 2 107
Balance at end of period 44 762 10 227
Net trade receivables increased to R14,4 million from R3,8 million
in the prior period, partly due to the substantial increase in the
property portfolio, but more specifically two new government
tenants that were installed in the last quarter of the financial
year that were in arrears at year-end.
Outstanding net trade receivables from government tenants at year
end amounted to R11,4 million which was collected after year-end.
The total provision for unrecoverable receivables increased to R3,4
million from R2,0 million in the prior period. The provision
consists of specific provisions, where there are clear indications
that arrears will probably not be recovered as well as a general
provision based on a percentage of all receivables more than 60
days in arrears. Management is satisfied that the provision is
adequate.
6. Payment of final distribution
The board has approved and notice is hereby given of final cash
interest distributions (distribution number 3) of 19.00 cents per
A-linked unit and 10.35 cents per B-linked unit for the six months
ended 30 June 2013.
Total distributions for the year amount to 38.00 cents per A-linked
unit and 18.80 cents per B-linked unit.
These interest distributions are not subject to dividend
withholding tax.
The payment of the distributions will be in accordance with the
abbreviated timetable set out below:
Date
Last date to trade cum Friday, 6 September 2013
distribution
Linked units trade ex Monday, 9 September 2013
distribution
Record date Friday, 13 September 2013
Payment date Monday, 16 September 2013
Linked unit certificates may not be dematerialised or rematerialised
between Monday, 9 September 2013 and Friday, 13 September 2013, both days inclusive.
7. Deferred tax
On 26 June 2013 the company obtained approval from the JSE for its
conversion to a Real Estate Investment Trust (REIT) with effect
from 1 July 2013. One of the consequences of converting to a REIT
is that the company will not be liable for capital gains tax on the
disposal of any investment properties, as long as it complies with
the REIT requirements. As a result the full deferred tax liability
has been reversed through the income statement at year end.
8. Trade and other payables
Audited Audited
R’000 30 June Restated
2013 30 June
2012
Trade payables 3 955 3 320
Tenant rentals received in 3 505 151
advance
Tenant deposits 5 597 1 731
VAT, accrued interest and other 1 668 55
provisions
Accrued expenses (including 15 127 3 387
consumption charges not yet
invoiced)
Balance at end of period 29 852 8 644
9. Comparative figures
Certain comparative figures have been reclassified:
- Agents trust account balances of R 2,8 million in 2012 have been
reclassified from trade and other receivables to cash and cash
equivalents in 2013 as the nature of the balance is such that it
meets the definition of a cash equivalent.
- Tenant recoveries of R 6,7 million in 2012 have been removed from
the revenue line item on the face of the statement of
comprehensive income and netted off against property operating
expenses in 2013 in order to more accurately reflect the nature
of tenant recoveries and to improve the comparability of the
financial information with other similar entities.
- Unamortised bond raising fees of R0,9 million in 2012 have been
reclassified from trade and other receivables to other financial
liabilities as the nature of the item is that of a unamortised
finance cost and not a receivable.
The above reclassifications had no impact on net asset value,
earnings, headline earnings or distributions during the current or
the previous period.
10. Operating segments
The group classifies segments based on the type of property i.e.
Commercial, Retail, Industrial and other. Properties can be mixed
use properties. In this instance, the property will be classified
according to its principle use.
Accordingly, the group has one reporting segment, namely Commercial
property as the principle use of all properties at year-end is for
commercial office space. Most buildings do have a small retail
component (normally at street level), but seldom exceeds 10% of the
total GLA of a building.
COMMENTARY:
Introduction
Ascension is a black managed and substantially black owned Real
Estate Investment Trust (REIT) listed on the JSE. The company has a
high growth strategy and aims to be a landlord of choice for BEE
sensitive government and parastatal tenants. The portfolio focus is
on larger, centrally located commercial office buildings mainly in
Pretoria, Johannesburg and Cape Town and Nelspruit.
Ascension’s maiden year as a listed property income fund has been a
successful one. Total portfolio growth of R1,95 billion (R2,65
billion including unconditional acquisitions awaiting transfer at
year-end) would not have been possible without the strong support
received from the investment community, allowing the company to raise
R1,16 billion of capital since the start of the financial year. This
growth, together with a strong focus on cost management has enabled
Ascension to meet its distributions forecast.
Portfolio overview
At 30 June 2013 the portfolio (including investment properties and
properties under development) consisted of 23 properties valued at
R2,544 billion, with a total GLA of 222 322 m² and a vacancy factor
of 8.5%. Taking transfers and unconditional acquisitions not yet
transferred since year-end into account this will increase to 28
properties, valued at R3,24 billion, with a total GLA of 301 432 m²
and a vacancy factor of 8,3%. This translates to an average building
value of R115 million.
The growth in the portfolio of R1.95 billion is well in excess of our
targeted growth of R1 billion per annum. This has required a
concerted effort to ensure that these acquisitions are properly
bedded down and that the properties are intensely and effectively
managed from day one of the fund’s ownership. The management team
have built sufficient capacity to handle this growth and we are
satisfied that we can continue to meet the growth objectives of the
fund.
The sectorial profile of the portfolio is 90,5% offices and 9.5%
retail. The fund does not own any retail focused properties and the
retail component is typically ground floor areas of commercial office
buildings. The portfolio is 68% tenanted by government in line with
our strategic focus on this market. Similarly, our geographical
profile is in line with our strategy of focusing on centrally located
buildings in Pretoria, Johannesburg, Cape Town and Nelspruit. Total
vacancies of 8.5% are in line with our expectations and present an
opportunity for future distribution growth. The weighted average
rental escalation remains healthy at 8.7%.
At 30 June 2013 the loans-to-value ratio was artificially low at
30,5% but this will increase to within target at 40% upon the
implementation of the outstanding property transfers. Our debt
expiry profile remains healthy and at year-end 61% of our borrowings
were fixed.
We have introduced a second property manager to the portfolio with
JHI focusing on Cape Town assets and Broll on Gauteng and Nelspruit
assets.
Business Environment
The global and local economic conditions remain challenging. Global
growth rates remain delicate if not in negative territory, in
particular for many of South Africa’s main trading partners. The
recent volatility and weakness in the Rand, bond markets and in
particular the corrections experienced in the pricing of the main
counters in the listed property market will have a dampening effect
on the property sector in South Africa. Continued above-inflation
increases in both consumption and non-consumption property expenses
will no doubt put pressure on the distribution growth of listed funds
in general. Effective and aggressive cost management strategies will
be essential.
Prospects
Despite the challenging business environment we are confident of
continuing to achieve our forecast distributions, which for the year
to 30 June 2014 amount to 39,9 cents per A-linked unit and 22,5 cents
per B-linked unit as announced on SENS on 10 June 2013. This
represents annual growth in distributions of 5% on A-linked units (in
line with its defensive nature) and 20% on the B-linked units. All
assumptions, notes, explanatory statements and guidance are as stated
in the pre-listing statement issued on 31 May 2012 and as updated by
various acquisition announcements since listing, and remain
unchanged. These forecasts have not been reported on by the auditors.
By order of the board
23 August 2013
Directors
AC Nissen (chairman) # / AM Mohamed (CEO) * / SL Rai * / FW Arendse *
/ HB Dednam (FD) * / J de Villiers (alternate to SL Rai) * / M Burton
# / B Bayvel # / H Takolia #
* executive director # independent non-executive
Company secretary
J de Villiers
Business address
5th Floor, 14 Long Street, Cape Town, 8001
Transfer secretaries
Computershare Investor Services Proprietary Limited, 70 Marshall
Street, Johannesburg, 2001
Sponsor
Java Capital, 2 Arnold Road, Rosebank, 2196
Date: 23/08/2013 03:48:00 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.
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