Abridged consolidated statement of financial position as at 31 December 2012 Orion Real Estate Limited (Incorporated in the Republic of South Africa) (Registration number 1997/021085/06) Share code: ORE ISIN: ZAE000075651 ("Orion Real Estate" or "the company" or "the Group") Unaudited Interim Consolidated Results of the Group for the six months ended 31 December 2012 Abridged consolidated statement of financial position as at 31 December 2012 Unaudited Unaudited Audited six months ended six months ended year ended Figures in Rand 31 December 2012 31 December 2011 30 June 2012 ASSETS Non-current assets 714 662 416 646 055 306 695 784 321 Investment properties 714 195 798 645 455 462 695 193 703 Property, plant and equipment 466 618 599 844 590 618 Current assets 37 434 121 25 568 538 33 993 706 Loans to related parties 6 898 832 2 700 135 Trade and other receivables 29 855 416 25 568 538 28 335 287 Cash and cash equivalents 679 873 2 958 284 Investment properties held for sale 16 264 535 Total assets 752 096 537 671 623 844 746 042 562 EQUITY AND LIABILITIES Capital and reserves Share capital and share premium 74 235 526 74 235 526 74 235 526 Debenture reserve 10 675 886 10 675 886 10 675 886 Retained earnings 303 917 870 255 745 661 303 725 058 Total equity attributable to owners of the parent 388 829 282 340 657 073 388 636 470 Non-controlling interest (270 321) (182 692) (267 426) Total equity 388 558 961 340 474 381 388 369 044 Non-current liabilities 259 189 983 239 399 011 169 806 707 Linked debentures 49 386 923 61 043 086 49 386 923 Borrowings 141 659 844 138 578 268 51 796 490 Deferred tax liabilities 68 143 216 39 777 657 68 623 294 Current liabilities 104 347 593 91 750 452 187 866 811 Current income tax liabilities 13 936 404 7 992 119 12 715 619 Loans from shareholders 1 896 305 700 121 1 998 792 Loans from directors 2 598 511 2 593 616 2 598 511 Loans from related parties 201 650 1 077 731 905 609 Tenant deposits 6 085 201 6 750 314 6 246 795 Trade and other payables 27 718 375 17 432 082 24 448 808 Borrowings 50 798 493 54 594 071 136 569 656 Bank overdraft 1 112 654 610 398 2 383 021 Total liabilities 363 537 576 331 149 463 357 673 518 Total equity and liabilities 752 096 537 671 623 844 746 042 562 Abridged consolidated statement of comprehensive income for the six months ended 31 December 2012 Unaudited Unaudited Audited six months ended six months ended year ended Figures in Rand 31 December 2012 31 December 2011 30 June 2012 Revenue 47 267 210 46 738 090 90 828 412 Other income 383 685 1 926 085 3 043 398 Other direct property operating costs (30 157 047) (27 655 400) (60 791 997) Administrative and management expenses (5 273 319) (5 980 922) (11 965 192) Repairs and maintenance (2 707 907) (1 678 508) (4 951 860) Fair value measurement of investment property 72 376 415 Operating profit 9 512 622 13 349 345 88 539 176 Finance income 386 997 1 366 462 2 274 522 Linked debenture interest 5 656 163 Finance costs (8 482 844) (14 841 807) (17 205 419) Profit/(Loss) before taxation 1 416 775 (126 000) 79 264 442 Taxation (1 226 858) 110 954 (31 384 825) Profit/(Loss) for the year 189 917 (15 046) 47 879 617 Other comprehensive income Total comprehensive income/(loss) for the year 189 917 (15 046) 47 879 617 Profit/(Loss) and total comprehensive income/(loss) for the year attributable to: Owners of the parent 192 812 (12 811) 47 966 586 Non-controlling interest (2 895) (2 235) (86 969) 189 917 (15 046) 47 879 617 Earnings per linked unit Basic earnings per linked unit (cents) 0.03 (0.00) 7.65 Diluted earnings per linked unit (cents) 0.03 (0.00) 7.65 Headline earnings per linked unit (cents) 0.16 (0.00) 0.07 Diluted headline earnings per linked unit (cents) 0.16 (0.00) 0.07 Reconciliation of basic earnings and headline earnings: Profit attributable to equity holders of the parent 192 812 (12 811) 47 966 586 Fair value adjustment to investment properties (58 867 502) Linked debenture interest (5 656 163) Change in capital gains tax rate 16 338 726 Loss on disposal of investment property 796 863 636 000 Headline earnings/(loss) 989 675 (12 811) 417 647 Abridged consolidated statement of cash flows for the six months ended 31 December 2012 Unaudited Unaudited Audited six months ended six months ended year ended Figures in Rand 31 December 2012 31 December 2011 30 June 2012 Cash flows from operating activities 2 969 192 4 106 008 4 333 814 Cash generated by operations 11 938 187 12 986 075 23 148 936 Interest paid (8 482 844) (8 841 807) (17 205 419) Taxation paid (486 151) (38 260) (1 609 703) Cash flows (to)/from investing activities (3 064 284) 208 038 8 317 458 Cash flows (to)/from financing activities (912 952) (3 676 420) (10 827 985) Net increase/(decrease) in cash and cash equivalents and bank overdrafts (1 008 044) 637 626 1 823 287 Cash and cash equivalents and bank overdrafts at the beginning of the period 575 263 (1 284 024) (1 248 024) Cash and cash equivalents and bank overdrafts at the end of the period (432 781) (646 398) 575 263 Statements of changes in equity for the six months ended 31 December 2012 Total share Non- Share Share capital and Debenture Retained controlling Total Figures in Rand capital premium premium reserve earnings Total interest equity Opening balance at 1 July 2011 6 270 098 67 965 428 74 235 526 10 675 886 255 758 472 340 669 884 (180 457) 340 489 427 Total comprehensive income for the six months (12 811) (12 811) (2 235) (15 046) Balance at 31 December 2011 6 270 098 67 965 428 74 235 526 10 675 886 255 745 661 340 657 073 (182 692) 340 474 381 Total comprehensive income for the six months 47 979 397 47 979 397 (84 734) 47 894 663 Balance at 30 June 2012 6 270 098 67 965 428 74 235 526 10 675 886 303 725 058 388 636 470 (267 426) 388 369 044 Total comprehensive income for the six months 192 812 192 812 (2 895) 189 917 Balance at 31 December 2012 6 270 098 67 965 428 74 235 526 10 675 886 303 917 870 388 829 282 (270 321) 388 558 961 Segment reporting for the period ending 30 December 2012 R % R % Revenue (excluding operating lease adjustment and recoveries) Commercial 15 202 791 42 Gauteng 24 271 871 67 Industrial 5 187 086 14 Western Cape 2 220 668 6 Retail 10 322 064 29 Mpumulanga 9 038 902 25 Hospitality 4 881 181 14 KwaZulu-Natal 530 240 1 Residential 468 560 1 36 061 682 100 36 061 682 100 R % R % Property values (including properties held-for-sale) Commercial 271 924 185 38 Gauteng 512 510 564 72 Industrial 96 809 264 14 Western Cape 62 450 847 9 Retail 178 368 889 25 Mpumulanga 128 426 314 18 Hospitality 74 719 819 10 KwaZulu-Natal 10 808 073 2 Residential 20 373 641 3 Land 72 000 000 10 714 195 798 100 714 195 798 100 R % R % Gross lettable area Commercial 53 331 43 Gauteng 93 495 75 Industrial 21 988 18 Western Cape 8 784 7 Retail 27 576 22 Mpumulanga 15 850 13 Hospitality 16 029 13 KwaZulu-Natal 6 000 5 Residential 5 205 4 124 129 100 124 129 100 R % R % Borrowings (excluding instalment sales and loans) Commercial 84 001 743 48 Gauteng 140 151 847 81 Industrial 28 383 786 16 Western Cape 12 344 371 7 Retail 41 125 771 24 Mpumulanga 15 701 647 9 Hospitality 10 221 813 6 KwaZulu-Natal 5 102 781 3 Residential 9 567 532 6 Land 0 173 300 646 100 173 300 646 100 R % R % Rating of tenants (rental income) Commercial A 1 250 443 4 Gauteng A 1 520 995 5 B 5 403 611 18 B 8 615 962 29 C 8 928 965 30 C 11 243 401 38 Industrial A 0 Western Cape A 71 610 0.2 B 2 475 806 8 B 1 533 464 5 C 1 916 218 6 C 602 183 2 Retail A 1 376 216 5 Mpumulanga A 1 034 054 3 B 1 560 773 5 B 425 276 1 C 4 515 203 15 C 3 983 362 13 Hospitality A 0 KwaZulu-Natal A 0 B 1 664 752 6 B 530 240 2 C 0 C 0 Residential A 0 B 0 C 468 560 2 29 560 547 100 29 560 547 100 A: Represents major listed companies. B: Represents smaller listed companies and big unlisted companies. C: Represents smaller unlisted companies and private businesses. Commentary on the December 2012 interim financial statements 1. Operating performance The Group managed to grow revenue from R46.7 million in December 2011 to R47.3 million in December 2012. The increase of 1.13% is an indication of tight trading conditions. Other direct property operating costs increased from R27.7 million to R30.2 million for the same period. This represents an increase of 9.05%. Administrative and management expenses decreased by 11.83% but repairs and maintenance increased significantly by 61.32%. The increase in maintenance costs reflects the drive to improve the general condition of all buildings. The operating profit decreased with 28.74% from R13.3 million to R9.5 million. The total comprehensive income for the year improved from a loss of R15 046 to a profit of R189 917. Finance cost decreased from R14.8 million to R8.5 million. 2. Basis of preparation The condensed unaudited consolidated results have been prepared in accordance with the Framework concepts and the measurement and recognition requirements of the International Financial Reporting Standards, containing information required by the IAS 34: Interim Financial Reporting, the AC 500 standards as issued by the Accounting Practices Board and in the manner required by the Companies Act and the JSE Listings Requirements. These results were prepared by Sandarie le Roux CA(SA). 3. Contingent liabilities The company has signed surety for the obligations of its subsidiaries in respect of mortgage bond finance and has guaranteed the debts of a wholly owned subsidiary company until that company's assets, fairly valued, exceeds its liabilities, and whilst it remains a wholly owned subsidiary. 4. Investment property acquired and disposed 4.1 Acquired No properties were acquired during the reporting period. 4.2 Disposed The following properties were sold during the reporting period: Marlboro 78 and Marlboro 84. 5. Subsequent events The directors are not aware of any matter or circumstance arising since 30 June 2012, which would affect the results or operations of the Group significantly. 6. Dividends No dividends were paid or declared during the financial period under review. 7. Change to the Board of Directors Dr A Parker has resigned from the Board of Directors from 1 January 2013. 8. Future prospects The trading conditions remained tight during the reporting period, but a special initiative to reduce the vacancies has started to bear fruit and this should have a positive influence on the results in the remaining period. Johannesburg 20 March 2013 Directors R S Wilkinson (Independent Non-executive Chairman), F M Viruly (Independent Non-executive), A C Gmeiner (Non-executive), F Gmeiner (Managing Director), C B Nolte (Financial Director) Company secretary and registered office Corporate Governance Facilitators CC Transfer office Computershare Investor Services (Pty) Limited Sponsor Arcay Moela Sponsors (Pty) Limited Date: 20/03/2013 03:59:00 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. 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