Wrap Text
Audited summarised consolidated annual financial statements for the year ended 30 June 2013
Attacq Limited
(previously Atterbury Investment Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1997/000543/06)
JSE share code: ATT ISIN: ZAE000177218
("Attacq" or "the Company")
AUDITED SUMMARISED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED
30 JUNE 2013
Summarised Consolidated Statement of Financial Position
Audited Audited
30 June 30 June
2013 2012
R'000 R'000
Assets
Non-current assets
Property, plant and equipment 5 666 2 367
Investment properties 9 495 681 8 497 139
Per valuation 9 663 652 8 607 082
Straight-line lease debtor (167 971) (109 943)
Straight-line lease debtor 167 971 109 943
Deferred initial lease expenditure 4 504 4 351
Goodwill - 16 929
Investment in associates 1 145 246 1 156 943
Other investments 58 379 476 997
Deferred tax assets 8 103 4 194
Total non-current assets 10 885 550 10 268 863
Current assets
Inventories 126 304 41 644
Taxation receivable 1 497 711
Trade and other receivables 155 497 81 351
Loans to shareholders - 6 308
Loans to associates 487 142 621 652
Other financial assets 47 368 104 199
Cash and cash equivalents 44 389 200 501
Total current assets 862 197 1 056 366
Non-current assets classified as held for sale 1 601 642 262 122
Total assets 13 349 389 11 587 351
Equity and liabilities
Issued capital and share premium 2 196 594 2 196 596
Distributable reserves 3 170 832 2 442 040
Equity-settled employee benefit reserve 5 488 -
Foreign currency translation reserve 159 (668)
Equity attributable to owners of the holding company 5 373 073 4 637 968
Non-controlling interest 355 831 395 348
Total equity 5 728 904 5 033 316
Non-current liabilities
Long-term borrowings 3 872 731 3 640 378
Deferred tax liabilities 775 434 591 838
Other financial liabilities 70 944 127 331
Provision for liabilities relating to associates 71 355 58 202
Provision for liabilities relating to other investments - 9 049
Finance lease liabilities 624 358 440 148
Total non-current liabilities 5 414 822 4 866 946
Current liabilities
Loans from associates - 9 284
Other financial liabilities 145 257 213 177
Finance lease liabilities 6 662 114 018
Tax payable 25 759 7 198
Trade and other payables 327 990 150 231
Provisions 5 709 -
Current portion of long-term borrowings 1 295 713 1 062 004
Total current liabilities 1 807 090 1 555 912
Non-current liabilities directly associated with assets classified as held for sale 398 573 131 177
Total liabilities 7 620 485 6 554 035
Total equity and liabilities 13 349 389 11 587 351
Cents Cents
Net asset value per share 1 196 1 032
Net asset value per share excluding deferred tax 1 366 1 163
Summarised Consolidated Statement of Comprehensive Income
Audited Audited
30 June 30 June
2013 2012
R'000 R'000
Continuing operations
Gross rental income 628 532 639 856
Rental income 543 279 603 577
Straight-line lease income adjustments 85 253 36 279
Property expenses (212 362) (241 288)
Net rental income 416 170 398 568
Other income 126 348 93 371
Operating and other expenses (288 060) (2 999 593)
Operating profit / (loss) 254 458 (2 507 654)
Fair value adjustments 929 054 996 932
Investment properties 854 817 1 020 769
Other financial assets and liabilities 57 137 (83 138)
Other investments 17 100 59 301
Net income / (loss) from associates 94 430 (43 208)
Investment income 48 345 2 791 701
Finance costs (473 196) (492 349)
Profit before taxation 853 091 745 422
Taxation (202 601) (185 041)
Profit for the year from continuing operations 650 490 560 381
Discontinued operations
Profit from discontinued operations net of taxation 108 788 24 436
Total comprehensive income for the year 759 278 584 817
Attributable to:
Owners of the company 728 792 559 003
Non-controlling interests 30 486 25 814
Earnings per share
From continuing and discontinued operations
Basic (cents) 162.2 118.1
Diluted (cents) 162.0 118.0
From continuing operations
Basic (cents) 138.0 112.9
Diluted (cents) 137.8 112.9
Reconciliation between earnings, headline earnings and distributable earnings
Profit for the year 728 792 559 003
Headline earnings adjustments (net of tax and non-controlling interest) (776 393) (493 663)
Loss on disposal of associates - 16 879
Profit on disposal of other investment (40 080) (401)
Profit on sale of subsidiaries (10 240) -
Reversal of impairment of loans (17 610) (8 941)
Profit on disposal of investment property (9 587) -
Impairment of associates and other investments 69 190 -
Impairment of goodwill 16 929 147 366
Loans impaired 32 836 -
Fair value adjustments (728 914) (683 708)
Net (income) / loss from associates (88 917) 35 142
Headline (loss) / earnings (47 601) 65 340
Distributable (loss) / earnings adjustments (net of tax and non-controlling interest) (10 709) 31 207
Straight-line lease income adjustments (54 529) (26 108)
Finance lease interest 44 366 57 362
Actual lease payments (546) (47)
Distributable (loss) / earnings (58 310) 96 547
Number of shares in issue 449 406 150 449 406 150
Weighted average number of shares in issue 449 406 150 473 372 528
Weighted average number of shares in issue for purposes of diluted earnings 449 861 909 473 627 148
Headline (loss) / earnings per share
Basic and diluted (cents) (10.6) 13.8
Summarised Consolidated Statement of Changes in Equity
Equity- Attributable
Foreign settled to equity
currency employee holders Non-
Share Share translation benefit Distributable of the controlling
capital premium reserve reserve reserves company interest Total
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1 July 2011 47 2 424 859 - - 1 883 037 4 307 943 150 329 4 458 272
Total comprehensive income - - - - 559 003 559 003 25 814 584 817
Originating from business
combinations - - - - - - 219 205 219 205
Foreign currency translation - - (668) - - (668) - (668)
Treasury shares held (1) (236 310) - - - (236 311) - (236 311)
Issue of shares 1 8 000 - - - 8 001 - 8 001
Balance at 30 June 2012 47 2 196 549 (668) - 2 442 040 4 637 968 395 348 5 033 316
Total comprehensive income - - - - 728 792 728 792 30 486 759 278
Derecognition of FCTR and
non-controlling interests due
to sale of subsidiaries - - 321 - - 321 (65 003) (64 682)
Recognition of share-based
payments - - - 5 488 - 5 488 - 5 488
Dividends paid - - - - - - (5 000) (5 000)
Foreign currency translation - - 506 - - 506 - 506
Issue of shares - adjustment (2) - - - - (2) - (2)
Balance at 30 June 2013 45 2 196 549 159 5 488 3 170 832 5 373 073 355 831 5 728 904
Summarised Consolidated Statement of Cash Flows
Audited Audited
30 June 30 June
2013 2012
R'000 R'000
Cash flow utilised in operating activities (19 305) (147 422)
Cash generated from operating activities 475 335 437 979
Investment income 48 345 64 449
Interest paid (473 196) (492 349)
Taxation paid (29 039) (122 928)
Cash flow relating to non-current assets held for sale (40 750) (34 573)
Cash flow from investing activities (636 524) 1 795 770
Cash flow from financing activities 547 323 (1 530 705)
Total cash movement for the year (108 506) 117 643
Cash at the beginning of the year 200 501 36 141
Cash (disposed) / acquired with subsidiaries (47 606) 46 717
Total cash at the end of the year 44 389 200 501
Summarised Segmental Analysis
30 June 2013 30 June 2012
Net Investment Net asset Net Investment Net asset
Revenue profit(1) properties value Revenue profit(1) properties value
Business segment R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Atterbury House(2) 26 362 33 356 335 942 202 018 39 233 (367) 285 296 139 608
Great Westerford(2),(3) 48 567 55 385 258 871 159 261 73 192 47 270 486 000 276 403
Harlequins Office Park(2) 14 351 17 529 132 838 66 511 12 283 4 884 113 626 43 813
Lynnwood Bridge 119 917 108 217 976 356 364 509 145 866 77 260 796 694 265 133
Aurecon Building 90 314 32 036 644 158 129 941 16 887 116 928 625 299 115 249
Altech Building 5 143 3 805 37 793 3 304 - 6 723 35 500 13 383
Investec Building(2) - - - - 13 743 8 990 129 977 75 144
Building G(2) - - - - 7 598 8 862 83 867 40 139
Digistics Building(2) - - - - - (1 451) 47 247 9 360
Office and mixed use 304 654 250 328 2 385 958 925 544 308 802 269 099 2 603 506 978 232
De Ville Shopping Centre(2) 30 230 (6 669) 184 239 87 720 19 990 13 811 193 569 79 133
Glenfair Boulevard 43 264 33 189 316 909 246 169 33 746 47 201 289 275 195 544
Sanridge Square(2) 15 106 10 668 99 834 101 080 15 226 19 024 92 798 98 572
Garden Route Mall 119 998 56 299 1 023 185 507 329 100 259 (33 763) 957 423 436 638
Brooklyn Mall 57 655 52 880 575 000 191 497 54 390 55 255 508 368 148 920
Mooirivier Mall 112 408 148 532 915 178 398 840 89 733 23 207 793 631 308 697
Andringa Walk 15 835 (34 798) 146 293 (138 521) 183 (191 288) 141 559 (141 427)
Eikestad Mall 54 497 26 844 483 267 (2 624) 35 639 52 871 451 281 13 613
Mill Square 226 4 397 58 019 57 610 - - - -
Retail 449 219 291 342 3 801 924 1 449 100 349 166 (13 682) 3 427 904 1 139 690
Le Chateau - 1 483 17 000 9 927 - 1 449 15 000 5 839
Waterfall - Land - 199 769 2 236 380 1 589 109 - 272 792 2 213 999 1 539 780
Vacant land - 201 252 2 253 380 1 599 036 - 274 241 2 228 999 1 545 619
Newtown - 3 960 427 363 147 558 62 35 940 173 274 83 086
Majestic Offices - (5 572) 37 165 12 579 - 3 056 24 251 11 712
Waterfall - Infrastructure - (5 782) 554 037 208 570 - (73) 300 312 42 086
Waterfall - Group 5 - 24 341 230 437 47 942 - - - -
Waterfall - Maxwell Office
Park - 9 681 58 923 47 937 - - - -
Waterfall - Cell C - 82 020 514 578 98 219 - - - -
Developments - 108 648 1 822 503 562 805 62 38 923 497 837 136 884
Massbuild 17 412 24 489 243 634 16 600 - - - -
Light industrial 17 412 24 489 243 634 16 600 - - - -
Total 771 285 876 059 10 507 399 4 553 085 658 030 568 581 8 758 246 3 800 425
Head office / other (7 243) (116 781) - 1 175 819 4 960 16 236 - 1 232 891
Total 764 042 759 278 10 507 399 5 728 904 662 990 584 817 8 758 246 5 033 316
1. In 2012, taxation on all underlying buildings held directly by Attacq was calculated on a summarised basis and not assigned per
building. During 2013, the reporting method for segment purposes was changed and tax was calculated and assigned per building
directly owned by Attacq other than the Momentum buildings (Atterbury House and Great Westerford). For both years presented
taxation on the buildings held in Abacus Holdings (Pty) Ltd and Momentum buildings was calculated on a summarised basis and not
assigned and reported per building.
2. Held for Sale
3. 50% undivided share sold during 2013, remaining 50% undivided share held for sale as at 30 June 2013
COMMENTARY
Introduction
Attacq is a capital growth property company that is soon to be listed on the Johannesburg Stock Exchange
("JSE") and manages a diversified portfolio of property assets, comprising, as at 30 June 2013, 18 operational
properties, 10 properties under development, infrastructure and land rights and other investments with a total
asset value of R13.35 billion.
Net property income
Rental income and property expenses year on year movement is distorted due to discontinued operations being
excluded and reflected separately. The continuing operations on a like-for-like basis reflect a 15.5% increase in
rental income. General property expenses increased by 19.5%. The above CPI increase in expenses was
driven primarily by higher municipal costs and an increase in bad debt provisions. Direct property expenses
excluding municipal costs and bad debt provisions increased by less than 7%.
Disposals and assets held for sale
During the year under review, Attacq disposed of three properties as well as 50% of its 100% holding in Great
Westerford (2012: four properties) for a total of R458 million (2012: R671 million), realising a combined profit of
R12 million (2012: Rnil), with the disposals taking place at valuations approximating carrying value.
As at 30 June 2013, five properties valued at a combined R1.03 billion were classified as assets held for sale
(2012: three properties valued at R262 million). Subsequent to year end, Attacq disposed of three of these
properties.
Also included in assets held for sale as at 30 June 2013 is R534 million relating to Attacq's 50% equity holding
in and loan to an associate, Arctospark Proprietary Limited ("Arctospark") and R35 million relating to Attacq's
20% equity holding in and loan to an associate, Artisan Investment Projects 10 Limited ("Artisan").
Arctospark in turn holds investments in Karoo Investment Fund S.C.A. SICAV-SIF ("Karoo I") and Karoo
Investment Fund II S.C.A. SICAV-SIF ("Karoo II") and Stenham European Shopping Centre Fund Limited
("Stenham"). Subsequent to year end, Arctospark unbundled Attacq's share of the underlying investments to
Attacq prior to reacquiring Attacq's shares in itself, resulting in Attacq holding these investments directly. Artisan
is the owner of the Caltongate development in Edinburgh, Scotland.
Vacancies
30 June 2013 30 June 2012
Vacancy % based Vacancy % based on
Sector on total GLA* GLA m2* total GLA* GLA m 2*
Retail 1.5% 4 922 1.9% 5 797
Office 5.7% 18 410 5.5% 16 495
Industrial 0.0% - 0.0% -
Hotel 0.0% - 0.0% -
Portfolio vacancy 7.3% 23 332 7.4% 22 292
*13 662m(2) (2012: Nil) of the 23 332 m(2) (58.6%) (2012: 0%) of the vacant m(2) relates to properties held for sale
In general, good progress was made in managing vacancies across the portfolio particularly given the
challenging economic environment. Retail vacancies are below market norms at 1.5% in 2013 (2012: 1.9%).
Office vacancies continue to be problematic, particularly in the Western Cape office portfolio, however the
majority of these vacancies relate to properties held for sale. Office vacancy levels in 2013 for continuing
operations are less than 1.5% which is below industry norms.
Fair value adjustments
Fair value adjustments of investment properties and investment properties under development totalled
R854 million in 2013 (2012: R1.02 billion), excluding investment properties classified as held for sale at year
end. The fair value adjustment increase in the current year of R854 million is due to an overall increase in
contracted rentals as well as a decrease in the market capitalisation rates used in valuing the properties.
Attacq's investment property portfolio was independently valued by Old Mutual Investment Group (South Africa)
Proprietary Limited, Mills Fitchet KZN CC and Amanda de Wet Consultants and Investments CC.
Development property
During the 2013 financial year, two properties under development were brought into operation, being the 4
471m(2) Altech building and the 35 671m(2) Massbuild Distribution Centre, both situated in Attacq's flagship
Waterfall development.
Construction commenced on a number of projects during the 2013 financial year, the majority of which will
come into operation during the 2014 financial year and which include the following developments:
Anticipated
Property Sector completion date Total GLA % pre-let
Waterfall
Cell C Campus Office December 2013 44 200 100%
Group 5 Office January 2014 23 139 100%
Golder & Associates (Maxwell Office Park) Office February 2014 6 198 100%
Attacq Building (Maxwell Office Park) Office December 2013 5 154 80%
Speculative Building (Maxwell Office Park) Office June 2014 4 360 0%
Premier Foods (Maxwell Office Park) Office June 2014 4 343 100%
Waterfall Corner Retail April 2014 9 284 >85%
Waterfall Lifestyle Retail June 2014 7 277 >57%
Other
Lynnwood Bridge Phase III Office April 2014 15 000 50%
Newtown and Majestic Retail & Office October 2014 75 000 70%
Net asset value ("NAV")
The NAV per share at 30 June 2013 was R11.96, 15.9% higher than the prior year NAV of R10.32. NAV per
share excluding deferred tax amounted to R13.66 (2012: R11.63), representing a 17.5% increase compared
with 2012.
Borrowings
The consolidated gearing ratio, calculated as total external interest-bearing debt to total assets (including assets
held for sale) remained unchanged at 41.7% in 2013. Being a capital growth fund, Attacq's gearing is generally
expected to be higher than that of its listed income-focused property peers.
Atterbury Africa Limited ("Atterbury Africa")
Atterbury Africa invests in existing and to be developed retail centres across Sub-Saharan Africa. Attacq has an
effective 32.5% shareholding in the Mauritius-based Atterbury Africa via its wholly-owned subsidiary, Atterbury
Investment Holdings International Limited.
Attacq has committed to invest R250 million over the next few years in this venture with its investment partner,
Hyprop Investments Limited, committed to investing an amount of R750 million. At year end, R112 million of Attacq's initial
R250 million commitment had been invested.
Change in directors
Pierre Tredoux was appointed as chairman of the Company with effect from 1 July 2012, replacing
Francois van Niekerk who retired as chairman with effect from 30 June 2012 but retains a seat on the board as
a non-executive director. Stewart Shaw-Taylor was appointed from 29 November 2012 and Gideon Oosthuizen
resigned from the board with effect from 20 June 2013. After year end, Melt Hamman was appointed as
financial director on 8 July 2013 and Thys du Toit and Hellen El Haimer were appointed as non-executive
directors with effect from 2 August 2013.
Subsequent events
Rights Offer
During July 2013, Attacq issued 50.4 million new shares to existing shareholders at R11.50 per share in terms
of a non-renounceable rights offer to raise R580 million. The rights offer, which closed on 24 July 2013, was
44% oversubscribed.
Listing on the JSE
Attacq will be listing on the JSE in the "Real Estate Real Estate Holdings and Development" sector on
14 October 2013, marking a new phase in the Company's history. Attacq's focus on long-term sustainable
capital growth differentiates it from other JSE-listed property entities that focus on the generation and regular
distribution to shareholders of income derived from rental. Consequently, Attacq will not seek to adopt REIT
status due to the REIT regulatory regime being intended for property entities primarily focused on income
distribution.
Prior to the listing, Attacq will be conducting a private placement to raise up to R800 million by way of an offer
for subscription in Attacq shares to invited investors.
Unbundling of Arctospark and disposal of Karoo I and Karoo II
As mentioned above, subsequent to year end, Attacq restructured its holdings in Arctospark, resulting in it
holding investments in Karoo I, Karoo II and Stenham directly. Thereafter, Attacq reached agreement with MAS
Real Estate Inc. ("MAS") to sell its investments in Karoo I and Karoo II to MAS for a consideration of 34 million,
to be settled by the issue of MAS shares at 1.07 per MAS share. The transaction is suspensive on a number of
conditions. On implementation of the transaction, Attacq will hold approximately 47% of the issued share
capital of MAS.
Acquisition of Atterbury Asset Managers Proprietary Limited ("AAM")
Subsequent to year end, in order to internalise the asset management function Attacq agreed to acquire the
entire issued share capital of AAM from Atterbury Property Holdings Proprietary Limited (an associate of Attacq)
and Attventure Proprietary Limited, effective 1 July 2013. The objectives of the internalisation are to conform
to market practice, to create synergies between Attacq and the asset manager and remove any conflicts of interest that
may exist between Attacq and the asset manager. The purchase consideration was R271 million settled by way
of a cash payment of R135.5 million and by the issue of 11.3 million new Attacq shares issued at R11.96 per
share, being the net asset value per share of Attacq as at 30 June 2013.
Acquisition of 75% of the issued share capital of Brooklyn Bridge Office Park Proprietary Limited ("Brooklyn
Bridge")
Currently, Attacq holds a 25% interest in the issued share capital of Brooklyn Bridge. Subsequent to year end,
Attacq agreed to purchase the remaining 75% of the shares it does not already own as well as the related
shareholder loans for a purchase consideration of approximately R156 million, priced effective 1 April 2013. A part of
the purchase price will be payable in Attacq shares to be issued at the 31 March 2013 net asset value per share
of R11.53. The transaction is suspensive on a number of conditions.
Sale of Atterbury House
The Atterbury House property was sold to Ascension Properties Limited for an amount of R341 million on
6 September 2013.
Sale of Atterbury Parkdev Consortium Proprietary Limited ("APC")
Attacq disposed of 100% of the issued share capital of APC, owner of Harlequins Office Park, to Delta Property
Fund Limited ("Delta") for a total consideration of R136 million settled by the payment of R95.2 million in cash
and 4.9 million Delta units totalling R40.8 million.
Sale of 50% undivided share in Sanridge Square
Attacq reached an agreement with Rapfund Holdings Proprietary Limited ("Rapfund") to dispose of its 50%
undivided share in the Sanridge Square property to Rapfund for an amount of R102 million. Transfer took place
on 20 August 2013.
Prospects
Attacq will continue to focus on developing and managing its portfolio of retail, office, mixed use and light
industrial properties with an objective of delivering above average total returns to its shareholders. Particular
focus will be on the Waterfall pipeline in Midrand, South Africa as well as the geographical diversification
strategy of investing in high quality shopping centres and developments in Africa.
Basis of preparation
The summarised consolidated financial statements, which were extracted from the audited consolidated annual
financial statements for the year ended 30 June 2013, are prepared in accordance with the requirements of the
JSE Listings Requirements for preliminary reports, and the requirements of the Companies Act of South Africa
applicable to summarised financial statements. The JSE Listings Requirements require preliminary reports to be
prepared in accordance with the framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards ("IFRS"), the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting
Standards Council, and to also, as a minimum, contain the information required by IAS 34: Interim Financial
Reporting. The accounting policies applied in the preparation of the annual consolidated financial statements,
from which the summarised consolidated financial statements were derived from, are in terms of IFRS and are
consistent with the accounting policies applied in the preparation of the previous annual consolidated financial
statements. This summarised consolidated financial information has been prepared under the historical cost
convention except for investment properties, investment in associates, other investments, other financial assets
and other financial liabilities which are measured at fair value. The fair value of investment properties are
determined with reference to annual external valuations while investment in associates, other investments,
other financial assets and other financial liabilities are valued with reference to market-related information and
valuations as appropriate.
Deloitte & Touche has audited the consolidated annual financial statements. Their unqualified audit opinion on
those consolidated annual financial statements is available for inspection at the Company's registered office.
Deloitte & Touche has also audited this summarised consolidated financial information and their unqualified
audit opinion on this summarised consolidated financial information is available for inspection at the Company's
registered office. The auditor's reports do not necessarily cover all the information in this preliminary results
announcement. Shareholders are therefore advised that in order to obtain a full understanding of the nature of
the auditor's engagements they should obtain a copy of those reports together with the accompanying financial
information from the issuer's registered office.
Preparation of the financial information was supervised by Melt Hamman CA (SA), Financial Director of Attacq.
A copy of the annual financial statements that have been summarised in this report can be obtained from the
Company's registered office.
On behalf of the board
P Tredoux MC Wilken
Chairman CEO
4 October 2013
Directors
P Tredoux #* (Chairman)
MC Wilken (CEO)
M Hamman (FD)
LLS van der Watt
BF van Niekerk*
PH Faure*
LM Ndala*
JHP van der Merwe*
S Shaw-Taylor #*
HR El Haimer #*
MM du Toit #*
WL Masekela #*
# Independent
* Non-executive
Company Secretary
Talana Smith
Registered Office
The Parkdev Building
2nd Floor, Brooklyn Bridge
570 Fehrsen Street
Brooklyn, 0181
Postal Address
Postnet suite 205
Private Bag X20009
Garsfontein, 0042
Transfer Secretaries
Computershare Investor Services Proprietary Limited
Ground Floor, 70 Marshall Street
Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Sponsor
Java Capital
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