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Reviewed Provisional Results for the financial period ended 30 JUNE 2012
ASCENSION PROPERTIES LIMITED
(formerly Grey Jade Trade and Invest 85 (Proprietary) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2006/026141/06)
A-linked units: JSE code: AIA ISIN: ZAE000161881
B-linked units: JSE code: AIB ISIN: ZAE000161899
("Ascension" or "the company")
Reviewed provisional results for the financial period ended 30 June 2012
- Exceeded accrued distribution - Total assets of R1.236 billion - Anticipated additional acquisitive growth to
forecast on listing (including assets yet to transfer) exceed R1 billion next 12 months
Reviewed provisional consolidated statement
of comprehensive income
for the six months ended 30 June 2012
Reviewed Unaudited Audited
30 June 30 June 31 December
2012 2011 2011
6 months 6 months 12 months
R000 R000 R000
Revenue 40 054 23 509 54 497
Contractual rentals and tenant recoveries 34 738 21 292 49 227
Straight-line of lease income adjustment 5 316 2 217 5 270
Property operating expenses (14 744) (8 670) (21 578)
Net property and related income 25 310 14 839 32 919
Sundry income 83 3
Asset management fees (1 619)
Overhead expenses (986) (3 414) (5 920)
Operating profit 22 788 11 425 27 002
Fair value adjustments 51 053 44 152
Fair value adjustment due to change in
straight-lining of lease provision (5 316) (5 270)
Fair value adjustment due to change in
amortisation of upfront lease costs (396)
Fair value adjustment due to change in
fair value of investment properties 56 765 49 422
Listing expenses (11 395)
Participation right (5 458) (10 917)
Finance income 983 256 453
Amortisation of debenture discount (38)
Finance costs (10 198) (25 083) (34 362)
Interest on loans and amortised
borrowing costs (12 042) (25 083) (35 432)
Capitalised interest on developments 1 844 1 070
Net profit/(loss) before debenture interest 53 193 (18 860) 26 328
Debenture interest (8 368)
Interest on A-debentures (1 383)
Interest on B-debentures (6 985)
Net profit/(loss) before tax for the period 44 825 (18 860) 26 328
Income tax expense (14 424) (5 538)
Deferred taxation (14 424) (5 538)
Net profit/(loss) after tax for the period 30 401 (18 860) 20 790
Other comprehensive income
Total comprehensive income/(loss) for
the period 30 401 (18 860) 20 790
Reconciliation between earnings, headline
earnings and distributable earnings
Net profit/(loss) for the period 30 401 (18 860) 20 790
Adjusted for:
Debenture interest 8 368
Earnings/(Loss) 38 769 (18 860) 20 790
Adjusted for:
Amortisation of discount on debentures 38
Fair value gain on revaluation of investment
properties (net of deferred taxation) (36 629) (43 884)
Headline earnings/(loss) 2 178 (18 860) (23 094)
Adjusted for:
Listing expenses (net of taxation) 11 395 -
Straight-line of lease income adjustment
(net of taxation) (5 316) (2 217) (5 270)
Amortisation of bond raising fees
(net of taxation) 111
Distributable earnings (linked units) 8 368 (21 077) (28 364)
Basic and fully diluted earnings per share
(cents) 83.81 Note 2 Note 1
Basic and fully diluted headline loss per
share (cents) (17.07) Note 2 Note 1
Basic and fully diluted earnings per
A-linked unit (cents) 102.84 N/A N/A
Basic and fully diluted earnings per
B-linked unit (cents) 107.89 N/A N/A
Headline and fully diluted headline
earnings per A-linked unit (cents) 1.96 N/A N/A
Headline and fully diluted headline
earnings per B-linked unit (cents) 7.01 N/A N/A
Distribution per A-and B-linked units
Forecast distribution per A-linked unit as per
pre-listing statement (30 days to 30 June
2012) (cents) 3.12 N/A N/A
Adjusted forecast distribution per A-linked
unit with listing date of 11 June (20 days to
30 June 2012) (cents) 2.08 N/A N/A
Actual accrued distribution per A-linked
unit (cents) 2.08 N/A N/A
Forecast distribution per B-linked unit as per
the pre-listing statement (cents) 0.48 N/A N/A
Actual accrued distribution per B-linked
unit (cents) 2.63 N/A N/A
Number of A-linked units as at
30 June 2012 66 500 000 N/A N/A
Number of B-linked units as at
30 June 2012 265 387 231 N/A N/A
Weighted average number of A-linked units
in issue 7 267 760 N/A N/A
Weighted average number of B-linked units
in issue 29 004 069 N/A N/A
Note 1: During the period to 31 December 2011 the company had 100 B shares in issue and there were no linked
units in issue. The basic and fully diluted earnings per share in the prior period was R207 789 and the
headline and fully diluted headline loss per share was R283 643.
Note 2: During the six months to 30 June 2011 the company had 100 B shares and no linked units in issue. The
basic and fully diluted loss per share and basic and fully diluted headline loss per share for the comparative
six months to 30 June 2011 was R188 600.
Reviewed provisional consolidated statement of financial position
at 30 June 2012
Reviewed Audited
30 June 31 December
2012 2011
R000 R000
ASSETS
Non-current assets 598 530 388 248
Investment properties 518 277 339 988
Straight-line of lease income adjustment 18 827 13 512
Unamortised upfront lease costs 396
Fair value of investment properties 537 500 353 500
Properties under development 60 917 34 608
Property, plant and equipment 113 140
Current assets 213 451 36 511
Trade and other receivables 13 910 10 438
Cash and cash equivalents 199 541 26 073
Investment property held for sale 8 000 8 000
Total assets 819 981 432 759
EQUITY AND LIABILITIES
Shareholders interest 208 363 71 512
Stated capital 106 451
Retained income 101 912 71 512
Non-current liabilities Debentures 380 823
Linked unitholders' interest 589 186 71 512
Other non-current liabilities 213 760 17 068
Interest bearing liabilities 182 268
Deferred taxation 31 492 17 068
Current liabilities 17 035 344 179
Loans from shareholders 117 010
Interest-bearing liabilities 217 615
Other financial liabilities 23 23
Trade and other payables 8 644 9 531
Linked unitholders accrued interest 8 368
Total equity and liabilities 819 981 432 759
TNAV and NAV per A-linked unit 396.6 N/A
TNAV and NAV per B-linked unit 125.3 N/A
TNAV and NAV per A-linked unit (excluding deferred taxation) 396.6 N/A
TNAV and NAV per B-linked unit (excluding deferred taxation) 137.1 N/A
Reviewed provisional consolidated statement of changes
in equity
for the six months ended 30 June 2012
Stated Retained Total
capital income equity
R000 R000 R000
Balance at 31 December 2010 50 721 50 721
Total comprehensive income for the year 20 790 20 790
Balance at 31 December 2011 (audited) 71 511 71 511
Issue of linked units 106 451 106 451
Total comprehensive income for the period 30 401 30 401
Balance at 30 June 2012 (reviewed) 106 451 101 912 208 363
Reviewed provisional consolidated statement of cash flows
for the six months ended 30 June 2012
Reviewed Audited
30 June 31 December
2012 2011
6 months 12 months
R000 R000
Cash flow from operating activities
Cash generated from operations 13 138 11 077
Finance income 983 453
Finance costs (10 236) (34 362)
Net cash inflow/(outflow) from operating activities 3 885 (22 832)
Cash flow from investing activities
Purchase of investment properties and cost of improvements (154 296) (53 146)
Purchase of property, plant and equipment (60)
Net cash outflow from investing activities (154 296) (53 206)
Cash flow from financing activities
Proceeds on issue of linked units 359 226
Net (repayment of)/proceed from interest-bearing loans (35 347) 27 200
Proceeds from shareholder loans 68 305
Net cash inflow from financing activities 323 879 95 505
Net increase in cash and cash equivalents for the period 173 468 19 467
Cash and cash equivalents at the beginning of the period 26 073 6 606
Cash and cash equivalents at the end of the period 199 541 26 073
Notes:
1. Basis of preparation, accounting policies and review opinion
The reviewed consolidated provisional results of Ascension have been prepared in accordance with International
Financial Reporting Standards ("IFRS") including IAS 34: Interim Financial Reporting, the AC 500 standards as
issued by the Accounting Practices Board or its successor, the South African Companies Act, 2008 and in
compliance with the Listings Requirements of the JSE Limited.
This report has been compiled under the supervision of Henry Dednam CA(SA), the Financial Director of
Ascension.
The accounting policies are consistent with those applied in the prior period.
Grant Thornton has reviewed the financial information set out in this report. Their unmodified review report is
available for inspection at the registered offices of Ascension.
2. Property portfolio as at 30 June 2012 (excluding properties under development, investment property
held for sale and properties not yet transferred)
2.1 Property valuation
Valuation
GLA (m2) (R000) R/m2
Gauteng 25 606 275 800 10 771
Western Cape 36 138 261 700 7 242
Total 61 744 537 500 8 705
2.2 Lease expiry profile (GLA)
OFFICE RETAIL OTHER TOTAL
Vacant 5.70% 16.90% 0.00% 6.60%
Expired leases rolled over 6.90% 0.00% 0.00% 6.30%
June 2013 23.80% 47.80% 0.00% 25.70%
June 2014 17.50% 19.30% 0.00% 17.60%
June 2015 6.30% 9.20% 0.00% 6.50%
June 2016 2.10% 6.80% 0.00% 2.50%
June 2017 2.10% 0.00% 0.00% 1.90%
After June 2017 35.60% 0.00% 100.00% 32.90%
100.00% 100.00% 100.00% 100.00%
2.3 Property profile by sector
OFFICE RETAIL OTHER TOTAL
Total GLA (m2) 91.4% 8.3% 0.3% 100.0%
Total gross rentals (based on June 2012) 88.2% 10.6% 1.2% 100.0%
2.4 Tenant profile
A B C TOTAL
Total GLA (m2) 72.1% 0.4% 27.5% 100.0%
3. Capital commitments
At 30 June 2012 the company had the following contracted capital commitments: R000
Unconditional acquisitions transferred since year-end 217 000
Conditional acquisitions and acquisitions still to be transferred 341 500
Contracted building expenses on development properties 33 700
592 200
These capital commitments will be funded out of existing cash resources and debt financing facilities.
4. Events after the balance sheet date
Subsequent to year-end the transfers of 14 Long Street, PROROM and VWL building to the company was
completed.
Commentary on results
Introduction
Ascension Properties Limited is a black managed and substantially black owned property loan
stock company that listed on the JSE on 11 June 2012. The company is a property income fund
focusing on centrally located commercial office buildings in South Africa with a strong focus towards
government and other empowerment sensitive tenants.
Results
The reviewed provisional results for financial year ended 30 June 2012 cover the six month period
from 1 January 2012 to 30 June 2012 as a result of the company changing its year-end to 30 June.
These results include the impact of the restructuring of the company, its portfolio and capital structure
in anticipation of and the subsequent listing on the JSE on 11 June 2012. A direct comparison to the
previous reporting periods, being the unaudited 6 months to 30 June 2011 and the audited results
for the twelve months to 31 December 2011, is therefore perhaps not as meaningful as a comparison
to the forecast results contained in the pre-listing statement dated 31 May 2012.
The results for the six months to June 2011 reflects the strategy of the company at the time, to
acquire distressed buildings with high vacancies on high gearing levels in order to renovate and let
the properties at enhanced yields. This strategy has clearly been successful as can be seen by the
improved performance over the subsequent reporting periods. The portfolio of the company has
changed significantly between 30 June 2011 and 30 June 2012, both in terms of quality and vacancy
levels and the company has managed to reduce its gearing levels significantly to existing levels and
as set out in its pre-listing statement.
The company achieved distributable earnings for the period of R8,368 million (forecast: R8,223 million).
The accrued distribution per A-linked unit of 2.08 cents for the 20 days since listing on 11 June 2012
is in line with the forecast (3.12 cents for 30 days having assumed a listing date of 1 June 2012). The
accrued distribution per B-linked unit of 2.63 cents significantly exceeds the forecast distribution of
0.48 cents per unit largely as a result of a decision by the board to also accrue distributable earnings
of the period prior to listing of 2.10 cents per unit.
The accrued distributions will be declared and paid with the distribution in respect of the six month
period ending 31 December 2012 as set out in the pre-listing statement.
Activity since listing
Following the successful listing and the raising of R374 million by way of a pre-listing private
placement the following portfolio movements since listing are highlighted below:
proceeded with all acquisitions as set out in the prelisting statement except for River Park 1 and
2 and Riverview 1 and 2 in Nelspruit;
acquired 14 Long Street, Cape Town for R67 million; and
acquired 373 Pretorius Street, Pretoria for R155 million.
After the acquisitions above are transferred, the portfolio can be summarised as follows:
Valuation
GLA (m2) Rmillion
Investment properties as at 30 June 2012 61 744 537.5
Properties under development as at 30 June 2012 8 832 60.9
Fair value gain on development properties on completion 48.9
Properties acquired and transferred since 30 June 2012 32 945 228.3
Conditional acquisitions and properties not yet transferred 31 671 360.9
Total assets (including assets yet to transfer) 135 192 1 236.5
Funding
At the end of June 2012 we restructured our debt facilities with Investec Bank Limited for a
period of three years at prime less 0.5% on an interest-only basis. We are confident that the debt
funding requirements of the targeted acquisitive growth can be adequately funded by new banking
facilities from South African banks at attractive rates. The benign short to medium term interest
rate environment supports yield enhancing acquisitions and will enable the company to conclude
favourable interest rate hedges to support our targeted hedging strategy of 50% fixed rates.
Prospects
As announced on 29 June 2012 we currently forecast a distribution per B-linked unit for the year
ending 30 June 2013 of 18.71 cents per unit and 21.29 cents for the year ending 30 June 2014.
These forecasts are the responsibility of the board of Ascension and have not been reviewed or
reported on by the independent reporting accountants.
Ascension is well on track to exceed its acquisitive growth target of R1 billion per annum. Linked
unitholders are referred to the cautionary announcement published on SENS on 24 August 2012 in
this regard. The board expects that the transaction referred to therein will, if concluded, significantly
increase the asset portfolio as well as the liquidity of the linked units trading on the JSE.
By order of the board
AM Mohamed SL Rai Cape Town
(Chief Executive Officer) (Executive Director) 7 September 2012
Directors: AC Nissen (Chairman), AM Mohamed* (CEO), HB Dednam* (FD), SL Rai*, FW Arendse*,
B Bayvel, M Burton, H Takolia, J de Villiers (alternate to S Rai) *Executive
Registered office: 5th Floor, 14 Long Street, Cape Town, 8001 (PO Box 6886, Roggebaai, 8012)
Transfer secretaries: Computershare Investor Services (Proprietary) Limited
Sponsor: Java Capital
Company secretary: Jeremy de Villiers
Date: 07/09/2012 03:25:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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