Wrap Text
Condensed unaudited financial results
for the six months ended 30 September 2013 and
declaration of dividend
ANNUITY PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2011/145994/06)
Share code:ANP ISIN:ZAE000165643
("Annuity" or "the Company")
Condensed unaudited financial results
for the six months ended 30 September 2013 and
declaration of dividend and interest distribution
1. Introduction
Annuity listed on the Real Estate Real Estate Holdings and Development sector of the Johannesburg Stock Exchange ("JSE") on 4 May 2012 and
transferred to the Real Estate Investment Trust sector of the JSE on 23 September 2013. The Company's property portfolio at 30 September 2013
consisted of 14 properties, diversified between the retail, commercial, special and light industrial sectors. The Company is a variable loan stock company
and distributes all its distributable earnings, as calculated in terms of its debenture trust deed, to its linked unitholders on a semi-annual basis.
2. Results
The following table reflects the financial results for the six months ended 30 September 2013 compared to the corresponding previous financial year
and the prior interim period.
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
30 September 30 September 31 March
2013 2012 2013
R R R
Revenue
Property portfolio 78 290 868 27 917 655 88 927 644
Contractual rental income 67 137 276 20 641 612 69 909 932
Straight-line rental income accrual 11 153 592 7 276 043 19 017 712
Recoveries and other property income 23 449 673 5 986 793 19 734 723
Total revenue 101 740 541 33 904 448 108 662 367
Property expenses (28 872 786) (6 359 588) (25 429 963)
Administration and corporate costs (5 514 550) (1 172 942) (5 882 092)
Net operating profit 67 353 205 26 371 918 77 350 312
Investment and other income 11 402 965 3 222 411 13 408 617
Gain on bargain purchase 3 300 000 20 371 000 31 623 832
Property acquisition costs (3 230 519) (6 846 289) (17 069 572)
Changes in fair values (8 732 678) (9 600 750) 32 053 060
Net profit before finance costs, interest on linked units and taxation 70 092 973 33 518 290 137 366 249
Finance costs (19 480 134) (6 298 105) (18 693 232)
Profit before interest on linked units and taxation 50 612 839 27 220 185 118 673 017
Interest on linked units (51 346 598) (17 836 436) (58 574 648)
(Loss)/profit before taxation (733 759) 9 383 749 60 098 369
Taxation 10 606 165 (616 375) (11 721 067)
Total comprehensive income for the period 9 872 406 8 767 374 48 377 302
RECONCILIATIONS OF EARNINGS, HEADLINE EARNINGS AND DISTRIBUTABLE EARNINGS
Unaudited Unaudited Audited
30 September 30 September 31 March
2013 2012 2013
R R R
Profit for the financial period attributable to equity holders 9 872 406 8 767 374 48 377 302
Adjusted for interest on linked units 51 346 598 17 836 436 58 574 648
Earnings 61 219 004 26 603 810 106 951 950
Deduct fair value adjustments and gains on bargain purchases 9 974 416 (13 880 139) (57 909 908)
Gains on bargain purchases (net of deferred taxation) (3 300 000) (19 799 345) (31 153 422)
Fair value adjustments (net of deferred taxation) 13 274 416 5 919 206 (26 756 486)
Deferred taxation reversal to account for REIT status (7 607 118)
Headline earnings attributable to linked unitholders 63 586 302 12 723 671 49 042 042
Fair value adjustments on derivative instruments (net of deferred taxation) (3 270 052) 1 673 789 611 296
Straight-line rental income accrual (net of deferred taxation) (11 153 592) (5 238 751) (13 692 752)
Amortisation of debt transaction costs 1 053 675 357 074 1 108 067
Interest on other borrowings IFRS adjustment 1 753 097 1 508 823 3 552 758
Deferred taxation resulting from accrued income, prepayments
and reversal of deferred tax previously raised on straight-line rental income accrual (4 270 733) 1 285 17 826
Share-based payments 536 303 983 222
Once-off property acquisition costs 3 230 519 6 846 289 17 069 572
Available for distribution to linked unitholders 51 465 519 17 872 180 58 692 031
Distribution declared:
Debenture interest 51 346 598 17 836 430 58 574 648
Ordinary dividend 102 899 35 750 117 383
Total distribution 51 449 497 17 872 180 58 692 031
Interim six months ended 30 September 51 449 497 17 872 180 17 872 180
Final six months ended 31 March 40 819 851
Basic earnings per linked unit (cents) 31.93 31.00 93.00
Diluted earnings per linked unit (cents) 31.83 31.00 92.57
Headline earnings per linked unit (cents) 33.16 14.83 42.65
Diluted headline earnings per linked unit (cents) 33.06 14.83 42.45
Distribution per linked unit (cents) 22.14 19.15 40.91
Interim six months ended 30 September 22.14 19.15 19.15
Final six months ended 31 March 21.76
CONDENSED STATEMENTS OF FINANCIAL POSITION
Unaudited
Unaudited Restated* Audited
30 September 30 September 31 March
2013 2012 2013
R R R
ASSETS
Non-current assets 1 618 714 667 586 471 000 1 415 100 000
Investment property 1 611 550 000 586 471 000 1 415 100 000
Fair value of property portfolio 1 581 264 910 579 081 171 1 395 968 502
Straight-line rental adjustment 30 285 090 7 389 829 19 131 498
Derivative instruments 3 692 717
Goodwill 3 471 950
Current assets 262 497 407 10 667 265 40 810 888
Trade and other receivables 19 682 122 9 259 568 17 481 192
Taxation 14 280 14 280
Cash and cash equivalents 242 801 005 1 407 697 23 315 416
Total assets 1 881 212 074 597 138 265 1 455 910 888
EQUITY AND LIABILITIES
Equity 67 292 691 15 028 592 56 552 672
Stated capital 2 246 767 902 914 1 833 850
Share-based payment reserve 1 519 525 983 222
Accumulated profit 63 526 399 14 125 678 53 735 600
Non-current liabilities 1 701 605 159 557 917 931 1 337 828 022
Debentures 1 141 616 887 446 678 549 930 956 392
Financial liabilities 557 851 682 107 290 509 393 279 853
Derivative instruments 2 324 707 849 022
Deferred taxation 2 136 590 1 624 166 12 742 755
Current liabilities 112 314 224 24 191 742 61 530 194
Trade and other payables 27 307 602 6 305 665 20 791 978
Current portion of secured financial liabilities 33 660 024
Taxation payable 13 897
Linked unitholders for distribution 51 346 598 17 872 180 40 738 216
Total equity and liabilities 1 881 212 074 597 138 265 1 455 910 888
Number of linked units in issue 232 382 553 93 340 341 189 132 917
Net asset value per linked unit (R) 5.20 4.95 5.22
* Restated for re-classification referred to in note 14 "Basis of preparation and accounting policies".
CONDENSED STATEMENTS OF CHANGES IN EQUITY
Share-based
Stated Accumulated payment
capital profit reserve Total
R R R R
Balance at 1 April 2012 10 5 394 048 5 394 058
Issue of linked units 902 904 902 904
Total comprehensive income for the period 8 767 374 8 767 374
Dividend distribution (35 744) (35 744)
Balance at 30 September 2012 902 914 14 125 678 15 028 592
Issue of linked units 930 936 930 936
Total comprehensive income for the period 39 609 922 39 609 922
Share-based payment 983 222 983 222
Balance at 31 March 2013 1 833 850 53 735 600 983 222 56 552 672
Issue of linked units 412 917 412 917
Total comprehensive income for the period 9 872 406 9 872 406
Share-based payment 536 303 536 303
Dividend distribution (81 607) (81 607)
Balance at 30 September 2013 2 246 767 63 526 399 1 519 525 67 292 691
CONDENSED STATEMENTS OF CASH FLOWS
Unaudited
Unaudited Restated* Audited
30 September 30 September 31 March
2013 2012 2013
R R R
Net cash generated from operating activities 9 705 473 7 873 996 23 910 018
Cash generated from operations 57 548 790 10 592 616 45 973 027
Interest received 9 649 867 1 713 588 9 855 858
Finance costs (16 673 361) (4 432 208) (14 032 407)
Taxation paid (14 280)
Distribution paid to linked unitholders (40 819 823) (17 872 180)
Net cash utilised in investing activities (184 608 270) (387 933 415) (1 135 883 446)
Acquisition of business combinations (net of cash acquired) (196 350 650) (342 133 415) (1 089 774 240)
Capital expenditure, tenant installations and lease commissions (2 120 825) (309 206)
Loans (advanced)/repayments 13 863 205 (45 800 000) (45 800 000)
Net cash generated from financing activities 394 388 386 381 466 758 1 135 288 486
Proceeds from issue of linked units 211 073 413 413 996 464 831 809 866
Increase in secured borrowings 197 178 178 18 737 141 303 975 492
Repayment of unsecured borrowings (13 863 205) (51 266 847) (496 872)
Net movement in cash and cash equivalents 219 485 589 1 407 339 23 315 058
Cash and cash equivalents at the beginning of the period 23 315 416 358 358
Cash and cash equivalents at the end of the period 242 801 005 1 407 697 23 315 416
* Restated for re-classification referred to in note 14 "Basis of preparation and accounting policies".
SEGMENTAL REPORT
Six months ended 30 September 2013 (Unaudited)
Light
Total Retail Office industrial Special Admin
R R R R R R
REVENUE
Property portfolio 78 290 868 32 947 288 40 133 945 3 644 883 1 564 752
Contractual rental income 67 137 276 29 785 074 33 405 961 3 000 241 946 000
Straight-line rental income
accrual 11 153 592 3 162 214 6 727 984 644 642 618 752
Recoveries and other income 23 449 673 13 253 299 9 242 851 569 530 383 993
Total revenue 101 740 541 46 200 587 49 376 796 4 214 413 1 948 745
Property expenses (28 872 786) (15 115 579) (12 379 026) (1 031 541) (346 640)
Administration and
corporate costs (5 514 550) (5 514 550)
Net operating profit 67 353 205 31 085 008 36 997 770 3 182 872 1 602 105 (5 514 550)
Investment and other income 11 402 965 11 402 965
Gain on bargain purchase 3 300 000 612 500 2 687 500
Property acquisition costs (3 230 519) (312 382) (168 877) (1 232 866) (1 370 657) (145 737)
Changes in fair values (8 732 678) (3 944 135) (8 197 352) (514 178) (618 752) 4 541 739
Net profit before finance costs,
interest on linked units and
taxation 70 092 973 27 440 991 28 631 541 1 435 828 2 300 196 10 284 417
Finance costs (19 480 134) (19 480 134)
Net profit before interest on linked
units and taxation 50 612 839 27 440 991 28 631 541 1 435 828 2 300 196 (9 195 717)
Interest on linked units (51 346 598) (51 346 598)
Segment (loss)/profit
before taxation (733 759) 27 440 991 28 631 541 1 435 828 2 300 196 (60 542 315)
Investment property 1 611 550 000 656 544 559 730 600 000 119 505 441 104 900 000
Other assets 269 662 074 14 488 422 3 563 141 3 320 986 129 419 248 160 106
Total assets 1 881 212 074 671 032 981 734 163 141 122 826 427 105 029 419 248 160 106
Total liabilities 1 813 919 383 159 571 920 223 949 091 108 550 707 119 063 647 1 202 784 018
SEGMENTAL REPORT
Six months ended 30 September 2012 (Unaudited)
Light
Total Retail Office industrial Special Admin
R R R R R R
REVENUE
Property portfolio 27 917 655 7 009 449 20 908 206
Contractual rental income 20 641 612 5 448 417 15 193 195
Straight-line rental income
accrual 7 276 043 1 561 032 5 715 011
Recoveries 5 986 793 2 960 733 3 026 060
Total revenue 33 904 448 9 970 182 23 934 266
Property expenses (6 359 588) (3 399 000) (2 960 588)
Administration and
corporate costs (1 172 942) (1 172 942)
Net operating profit 26 371 918 6 571 182 20 973 678 (1 172 942)
Investment and other income 3 222 411 3 222 411
Gain on bargain purchase 20 371 000 7 171 000 13 200 000
Property acquisition costs (6 846 289) (2 319 611) (4 526 678)
Changes in fair values (9 600 750) (1 561 032) (8 039 718)
Net profit before finance costs,
interest on linked units and taxation 33 518 290 9 861 539 21 607 282 2 049 469
Finance costs (6 298 105) (6 298 105)
Net profit before interest on linked
units and taxation 27 220 185 9 861 539 21 607 282 (4 248 636)
Interest on linked units (17 836 436) (17 836 436)
Segment profit before taxation 9 383 749 9 861 539 21 607 282 (22 085 072)
Investment property 586 471 000 139 171 000 447 300 000
Other assets 57 976 088 2 321 069 2 825 371 52 829 648
Total assets 644 447 088 141 492 069 450 125 371 52 829 648
Total liabilities 163 229 705 32 956 783 125 891 066 4 381 856
SEGMENTAL REPORT
Financial year ended 31 March 2013 (Audited)
Light
Total R etail Office industrial Special Admin
R R R R R R
REVENUE
Property portfolio 88 927 644 30 303 649 58 044 482 579 513
Contractual rental income 69 909 932 24 915 071 44 418 074 576 787
Straight-line rental income
accrual 19 017 712 5 388 578 13 626 408 2 726
Recoveries 19 734 723 11 405 198 8 309 692 19 833
Total revenue 108 662 367 41 708 847 66 354 174 599 346
Property expenses (25 429 963) (13 056 902) (11 957 461) (223 994) (191 606)
Administration and
corporate costs (5 882 092) (5 882 092)
Net operating profit 77 350 312 28 651 945 54 396 713 375 352 (6 073 698)
Investment and other income 13 408 617 13 408 617
Gains on bargain purchases 31 623 832 11 075 876 18 452 832 2 095 124
Property acquisition costs (17 069 572) (8 424 965) (7 578 066) (586 479) (480 062)
Changes in fair values 32 053 060 12 037 741 28 195 757 (1 662) (8 178 776)
Net profit before finance costs,
interest on linked units and
taxation 137 366 249 43 340 597 93 467 236 1 882 335 (1 323 919)
Finance costs (18 693 232) (18 693 232)
Net profit before interest on linked
units and taxation 118 673 017 43 340 597 93 467 236 1 882 335 (20 017 151)
Interest on linked units (58 574 648) (58 574 648)
Segment profit before taxation 60 098 369 43 340 597 93 467 236 1 882 335 (78 591 799)
Investment property 1 415 100 000 644 649 964 727 500 000 42 950 036
Other assets 40 810 888 7 916 616 3 240 096 359 373 29 294 803
Total assets 1 455 910 888 652 566 580 730 740 096 43 309 409 29 294 803
Total liabilities 1 399 358 216 193 167 690 166 819 848 5 046 688 1 034 323 990
3. Acquisitions and commitments
The Company acquired a 100% interest in all the assets and some liabilities of four letting enterprises during the period under review. The letting
enterprises were acquired as going concerns and were funded through a combination of cash and linked units.
Details of the net assets acquired are as follows:
30 September 30 September 31 March
2013 2012 2013
R R R
Investment properties at acquisition price 196 621 950 433 577 591 1 198 724 759
Trade and other receivables 91 470
Trade and other payables (271 300) (586 585) (1 784 398)
Purchase consideration 196 350 650 432 991 006 1 197 031 831
Portion settled in linked units (33 580 000) (49 980 000)
Portion settled from vendor finance (57 277 591) (57 277 591)
Portion settled in cash 196 350 650 342 133 415 1 089 774 240
Annuity acquired the newly developed "Virgin Active Bryanston" letting enterprise ("the Virgin Active Building") on the intersection of William Nicol Drive
and Main Road, which consists of a Virgin Active gym and retail component, at a purchase price of R119 million on 19 August 2013. A light industrial
property with an office component ("the Aveng Building") was acquired on 8 August 2013 at an acquisition price of R63,6 million. The letting enterprise
is located in the Stormill industrial area and occupied by Alpret Control Specialists, a subsidiary of the JSE-listed Aveng Limited. Two further properties, a
warehouse in the Ormonde industrial area ("the Clarins Modulus Road Property") and a small office building in Gardens, Cape Town ("the Clarins Dunkley
House Property"), both tenanted by Clarins South Africa were acquired on 16 September 2013 and 27 September 2013 respectively. The acquisition
price for the two properties amounted to R14 million. A further property tenanted by Clarins South Africa being the Clarins Head Office, situated in Scott
Street, Waverley ("the Clarins Scott Street Property") has not yet transferred into Annuity's name as at 30 September 2013. The Virgin Active Building
and the Aveng Building were funded from Annuity's debt facilities whilst the Clarins Modulus Road Property and the Clarins Dunkley House Property
were funded through cash raised from an issue of linked units on 20 September 2013 in terms of a private placement.
The investment properties were recognised on acquisition at their fair values of R196,4 million resulting in a gain on bargain purchase of R3,3 million and
goodwill of R3,5 million. The net operating income (excluding the straight-lining of income accrual) earned by the Company from these letting enterprises
during the six months under review were R2,1 million. Based on the net operating income which the Company earned during the period, it would have
earned R8,6 million had the Company owned all four of these letting enterprises for the entire six-month period.
The Company earned gross rental income (excluding the straight-lining of income accrual) of R2,2 million from these letting enterprises during the period
under review. Based on the gross rental income which the Company earned during the period, it would have earned gross rental income of R9,2 million
had it owned all four of these letting enterprises for the entire six-month period.
As at 30 September 2013 the Company was committed to acquire a further five letting enterprises, namely the Clarins Scott Street Property, the
McCarthy/Unitrans portfolio and the Coricraft Distribution Centre, from various vendors for a total purchase consideration of R293,5 million. Details of
the transactions are set out in the SENS announcement dated 29 July 2013.
4. Related party transactions
The Company paid transaction fees of R2,0 million and asset management fees of R3,2 million to Annuity Asset Managers Proprietary Limited and
property management fees and letting commission of R2,6 million to Annuity Property Managers Proprietary Limited, which two entities are considered
to be related parties to Annuity, during the six-month period under review.
At the time of acquiring the Sasfin Head Office in May 2012, the Company granted an option to Sasfin Financial Services Proprietary Limited (who has
subsequently been superceded by Sasfin Private Equity Fund Managers Proprietary Limited ("Sasfin Private Equity")), which is a 25% shareholder in
Annuity Asset Managers Proprietary Limited, to sell to the Company, its shareholding in, and claims against Annuity Asset Managers Proprietary Limited
at a price to be determined which is 0.875% of the Company's enterprise value, being the market capitalisation plus debt, less trade creditors and cash.
The shares and claims so acquired, in the event that Sasfin Private Equity should exercise the option, shall subsequently be purchased and cancelled by
Annuity Asset Managers Proprietary Limited in consideration for a reduction in the annual asset management fee charged to the Company, which has
the effect of making the transaction non-dilutionary to earnings during the term of the asset management contract. Based on the Company's enterprise
value as at 30 September 2013 the price at which Sasfin Private Equity could sell the shares to the Company at this date would be R13,7 million.
5. Property portfolio (not audited)
Western KwaZulu-
Gauteng Cape Natal Total
Geographical profile R R R R
By revenue 36 527 074 25 547 729 5 062 473 67 137 276
By rentable area (m2) 57 121 42 462 12 489 112 072
Light
Retail Offices industrial Special Total
Sectoral profile R R R R R
By revenue 29 785 074 33 405 961 3 000 241 946 000 67 137 276
By rentable area (m2) 49 999 44 888 12 885 4 300 112 072
Portfolio valuation (R) 656 544 559 730 600 000 119 505 441 104 900 000 1 611 550 000
Gross lettable area (m2) 49 999 44 888 12 885 4 300 112 072
Value per (m2) 13 131 16 276 9 275 24 395 14 380
Vacancy % by gross lettable area 1.04 0.00 2.17 0.00 0.72
Average monthly gross rental per m2 (Rand) 104.13 125.79 79.51 167.82 112.29
Weighted average rental escalation (%) 6.89 7.24 8.46 7.50 7.22
Annualised property yield (%) 8.41 8.61 8.74 7.70 8.48
Tenant analysis
A Large national tenants, listed tenants, government and major franchises
Percentage of GLA 77%
Number of tenants 39 tenants
B Other national tenants, other listed tenants, franchisees and medium to large professions
Percentage of GLA 10%
Number of tenants 54 tenants
C Other
Percentage of GLA 13%
Number of tenants 103 tenants
Lease expiry profile
Light
By rentable area Retail Office industrial Special Total
Expiring within one year 8.7% 6.9% 4.4% 0.0% 7.1%
Expiring between one and two years 20.8% 20.6% 2.2% 0.0% 17.8%
Expiring between two and three years 42.9% 4.4% 13.3% 0.0% 22.4%
Expiring between three and four years 1.4% 0.8% 32.8% 0.0% 4.6%
Expiring between four and five years 5.1% 4.2% 0.0% 0.0% 4.0%
Expiring between five and six years 0.5% 0.0% 47.3% 0.0% 5.6%
Expiring between six and seven years 9.3% 24.5% 0.0% 0.0% 14.0%
Expiring between seven and eight years 2.2% 38.6% 0.0% 0.0% 16.6%
Expiring between eight and nine years 0.4% 0.0% 0.0% 0.0% 0.2%
Expiring after nine years 8.7% 0.0% 0.0% 100.0% 7.7%
Light
By revenue Retail Office industrial Special Total
Expiring within one year 13.3% 5.0% 4.6% 0.0% 8.0%
Expiring between one and two years 20.3% 27.0% 2.2% 0.0% 20.9%
Expiring between two and three years 43.7% 3.8% 12.5% 0.0% 20.4%
Expiring between three and four years 1.4% 0.7% 30.8% 0.0% 3.3%
Expiring between four and five years 7.6% 5.3% 0.0% 0.0% 5.5%
Expiring between five and six years 0.9% 0.1% 49.9% 0.0% 4.3%
Expiring between six and seven years 5.7% 18.8% 0.0% 0.0% 11.1%
Expiring between seven and eight years 1.3% 39.2% 0.0% 0.0% 18.8%
Expiring between eight and nine years 0.4% 0.1% 0.0% 0.0% 0.2%
Expiring after nine years 5.4% 0.0% 0.0% 100.0% 7.5%
6. Development and capital projects
The Company was not engaged in any major developments or capital projects during the six-month period under review except for R0,6 million spent
on refurbishing the Ethos Building. The Company is committed to spend a further R1,7 million on refurbishments at the Ethos Building.
7. Borrowings
The Company's borrowings at 30 September 2013 consisted of two secured loans from Rand Merchant Bank (a division of FirstRand Bank Limited)
amounting to R502,8 million and a secured loan from Standard Bank of R92,5 million. The Rand Merchant Bank loans consist of a bridge loan of
R33,6 million expiring at the end of February 2014 and the remainder are three-year facilities of which R72,5 million expires on 23 March 2015. The
balance expires on 18 December 2015. Interest rates are fixed, either through interest rate swap agreements or as part of the facility at an average
interest rate of 7,97% for R363,7 million thereof whilst the balance of R139,1 million are at an average floating rate of 7.17% at 30 September 2013.
Surplus cash is invested into the floating facilities to ensure effective cash management. The Standard Bank loan has a three-year facility for which the
interest rates have been fixed for the term of the facility with interest rate swap agreements at an average rate of 8.32%. The Company is also party to
vendor loans with a nominal value of R43,4 million arising from the acquisition of the Oakfields Shopping Centre and the Cell C building. The accounting
value of these loans of R37,2 million has been netted off against loans receivable to give effect to what is considered a net settled arrangement.
At 30 September 2013, Annuity's loan to value ratio was 38.8% based on investment properties valued at R1,6 billion. The Company had debt facilities
available of R213 million at 30 September 2013.
8. Share and debenture capital
The Company issued 43 249 636 linked units on 20 September 2013 at 530.52 cents per linked unit in terms of a private placement. The issue
price comprised of 510 cents per linked unit capital and 20.52 cents pro rata antecedent divestiture portion of the distribution for the period ending
30 September 2013.
9. REIT legislation
Annuity received REIT status from the JSE Limited on 15 July 2013, effective from the financial year commencing on 1 April 2013. As a result of its REIT
status Annuity will not be taxable on its future capital gains. The deferred tax liability raised previously on fair value adjustments to Investment Properties
has therefore been reduced to nil. Deferred tax is no longer calculated on the staight line rental income accrual as future rental income will form part of
the Company's distributions, which are tax deductable in terms of the REIT tax legislation.
10. Events subsequent to reporting date
The Company took transfer of the Coricraft Distribution Centre on 7 October 2013. The acquisition was funded from linked units issued on
20 September 2013.
11. Strategy and prospects
Annuity's strategy is to build a diversified portfolio of income producing properties in the retail, commercial and industrial sectors. Its growth and
investment philosophy is focused on delivering sustainable real income distribution and capital appreciation over the long term through active portfolio
management and the implementation of value enhancing acquisitions. Since listing in May 2012, Annuity has added properties with a value of
R1,4 billion, which have been fully implemented or are in the process of being transferred into Annuity's name.
Annuity has focused on the strategy communicated to the market at the time of its listing, which has included the acquisition of high quality properties,
generally located in sought-after, well established and defensive nodes in the major metropolitan areas or commercial precincts, underpinned by national
tenants with strong covenants and above average lease expiry profiles.
The economic outlook remains fragile and consumer confidence is at a 10-year low. Upward pressure on administered costs, such as electricity, water
and refuse, is outpacing the rate of income growth and coupled with higher debt levels and higher fuel costs is placing upward pressure on consumer
disposable income and, consequently, on tenants.
Despite the tough and highly competitive operating environment, Annuity is well placed to continue delivering sustainable real distribution growth to
unitholders for the 12 months ahead and remains committed to the implementation of sought-after, value enhancing acquisitions.
The financial information on which the above forecast is based has not been reviewed and reported on by the Company's external auditors.
12. Directorate
There were no changes to the Board of directors during the six months under review.
13. Payments of dividend and interest distribution number 3 with an election to re-invest the distribution in return for Annuity linked units
Notice is hereby given of the declaration of the Company's interim cash dividend and interest distribution ("Cash Distribution") of 22.14 cents per linked
unit for the period 1 April 2013 to 30 September 2013 consisting of a gross cash dividend of 0.04428 cents (0.03764 cents net of dividend tax) and
interest of 22.09572 cents.
Linked unitholders will be entitled to elect to re-invest the Cash Distribution of 22.14 cents per linked unit, after deduction of the applicable dividend
tax, in return for linked units ("Linked Unit Alternative"), failing which they will receive the net Cash Distribution in respect of all their linked unitholdings.
Linked unitholders who have dematerialised their linked units are required to notify their duly appointed Central Securities Depository Participant
("CSDP") or broker of their election in the manner and time stipulated in the custody agreement governing the relationship between the linked unitholder
and their CSDP or broker.
Other information:
The dividend portion has been declared from income reserves and no secondary tax on companies' credit has been used.
A dividend withholding tax of 15% will be applicable on the dividend portion to all linked unitholders who are not exempt.
The issued share capital at the declaration date is 232 382 553 linked units.
The salient dates relating to the Cash Distribution and the Linked Unit Alternative are set out in the timetable below:
2013
Circular and form of election posted to linked unitholders Wednesday, 20 November
Announcement of Linked Unit Alternative issue price and finalisation information Friday, 29 November
Last day to trade cum distribution Friday, 6 December
Linked units trade ex distribution Monday, 9 December
Listing of maximum possible number of linked units commences on the JSE Tuesday, 10 December
Last day to elect to receive the linked unit alternative (no late forms of election will be accepted)
at 12:00 (South African time) Friday, 13 December
Record date Friday, 13 December
Announcement of results of Cash Distribution and Linked Unit Alternative on SENS Tuesday, 17 December
Cash distributions posted to certificated linked unitholders and accounts credited by CSDP or broker to
dematerialised linked unitholders electing the cash alternative on or about Tuesday, 17 December
Linked unit certificates posted to certificated linked unitholders and accounts credited by CSDP or broker to
dematerialised linked unitholders electing the linked unit alternative on or about Wednesday, 18 December
Announcement of results of Cash Distribution and Linked Unit Alternative in the press Wednesday, 18 December
Adjustment to linked units listed on or about Wednesday, 18 December
Notes:
1. Linked unitholders electing the Linked Unit Alternative are alerted to the fact that the new units will be listed on LDT+2 and that these new linked units can only be traded on LDT+2
due to the fact that settlement of the linked units will be two days after record date, which differs from the conventional one day after record date settlement process.
2. Linked unitholders may not dematerialise or rematerialise their linked units between Monday, 9 December 2013 and Friday, 13 December 2013, both days included.
3. The above dates and times are subject to change. Any changes will be released on SENS and published in the press.
4. The Cash Distribution or Linked Unit Alternative may have tax implications for residents and non-resident linked unitholders. Linked unitholders are therefore encouraged to consult
their professional advisors should they be in any doubt as to the appropriate action to take.
14. Basis of preparation and accounting policies
The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), including the presentation and disclosure
requirements of IAS 34, SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the requirements of the Companies
Act of South Africa, 2008, as amended.
The financial results above include disclosure of earnings and headline earnings per linked unit, which is obligatory in terms of IAS 33, earnings per
share and the JSE Listings Requirements. The directors are of the view that this disclosure is not meaningful to investors as the shares are traded as
part of a linked unit and practically all the distributable earnings are distributed in the form of debenture interest with a small dividend portion in the ratio
of 500 to 1. In addition, headline earnings include fair value adjustments for financial liabilities, accounting adjustments to account for lease income on
a straight-line basis, once off property acquisition costs, as well as other non-cash accounting adjustments which do not affect distributable earnings.
The calculation of distributable earnings per linked unit as disclosed above is therefore more meaningful to investors.
These interim financial statements have not been reviewed or audited by the Company's independent external auditors.
The accounting policies are consistent with those applied in the most recent audited financial statements for the year ended 31 March 2013, other than
the adoption of the amendments to the following standards that are relevant to the Company's financial information:
- IFRS 7 1 January 2013
- IAS 1 1 January 2013
- IAS 27 1 January 2013
- IAS 28 1 January 2013
- IAS 32 1 January 2013
- IAS 34 1 January 2013
And adoption of the following new standards and interpretations that are relevant to the Company's financial information:
- IFRS 10 1 January 2013
- IFRS 11 1 January 2013
- IFRS 12 1 January 2013
- IFRS 13 1 January 2013
There is no impact on the results from the adoption of these new and amended standards.
The September 2012 comparative figures in the Condensed Statement of Financial Position have been restated to take into account the subsequent
re-classification of Other Financial Assets of R47,3 million and Other Liabilities of R47,3 million, which were disclosed separately in the September 2012
condensed results and subsequently in the March 2013 and September 2013 Condensed Statement of Financial Position netted off in terms of IFRS
in what is considered a net settled arrangement.
The September 2012 comparative figures in the Condensed Statement of Cash Flow have been restated to take into account the subsequent re-
classification of trade and other payables of R0,6 million and vendor finance of R57,3 million to be part of Acquisition of Business Combinations as was
subsequently done in the March 2013 and September 2013 Condensed Statement of Cash Flow. These were classified under Cash Generated From
Operations and Unsecured Borrowings in the September 2012 Condensed Statement of Cash Flow.
The financial results have been prepared by Mr S Strydom CA(SA), the Chief Financial Officer of the Company.
By order of the Board
PJ Moleketi (Chairman) P Theocharides (Joint Chief Executive Officer)
14 November 2013
Directors
PJ Moleketi*; P Theocharides; D Greenberg+; S Strydom;
DE Rubenstein; M Ettin#; EC Loubser*; AM Chait*; DT Soondarjee#;
SJ Williams*; NN Eppel (alternate director)#
*Independent non-executive director
#Non-executive director
+Non-resident
Registered office
Boundary Place Office Park, 18 Rivonia Road
Illovo, Sandton
Tel: 010 595 3000 Fax: 086 718 3622
Email: info@annuityproperties.co.za
Income taxation reference number 9050/047/19/1
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
www.annuityproperties.co.za
Date: 14/11/2013 05:35:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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