Wrap Text
Reviewed condensed consolidated financial results for the six months ended 31 December 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")
REVIEWED CONDENSED CONSOLIDATED FINANCIAL
RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
HIGHLIGHTS
-NAV per share growth year-on-year
of 19.9%
-Total assets grew to R15.1 billion
-Successful listing on JSE on
14 October 2013
-1.75 million m(2) Waterfall gaining
momentum
- 215 892 m(2) under construction
- 108 363 m(2) completed
-Broke ground on the largest single
phase super regional mall in South
Africa, the Mall of Africa
-Internalisation of the Asset and
Property Manager on the direct
property portfolio
-Increased shareholding in MAS Real
Estate Inc to 47.2%
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Unaudited Audited
31 December 31 December 30 June
2013 2012 2013
R'000 R'000 R'000
Assets
Non-current assets
Property, plant and equipment 8 714 2 204 5 666
Investment properties 11 275 771 8 765 198 9 495 681
Per valuation 11 469 897 8 850 154 9 663 652
Straight-line lease debtor income adjustments (194 126) (84 956) (167 971)
Straight-line lease debtor 194 126 84 956 167 971
Deferred initial lease expenditure 1 902 719 4 504
Intangible asset 294 469 – –
Goodwill 60 658 – –
Investment in associates 1 554 337 1 600 891 1 145 246
Other investments 410 453 138 076 58 379
Deferred tax assets 15 710 – 8 103
Total non-current assets 13 816 140 10 592 044 10 885 550
Current assets
Inventories 177 698 43 658 126 304
Taxation receivable 15 966 – 1 497
Trade and other receivables 131 713 97 469 155 497
Loans to associates 499 414 303 932 487 142
Other financial assets 69 088 48 298 47 368
Cash and cash equivalents 187 686 99 983 44 389
Total current assets 1 081 565 593 340 862 197
Non-current assets classified as held for sale 200 299 560 652 1 601 642
Total assets 15 098 004 11 746 036 13 349 389
Equity and liabilities
Stated capital/issued capital and share premium 4 205 186 2 196 596 2 196 594
Distributable reserves 3 268 435 2 632 262 3 170 832
Equity-settled employee benefit reserve 8 873 – 5 488
Foreign currency translation reserve 227 1 803 159
Change in ownership reserve (3 183) – –
Equity attributable to owners of the holding company 7 479 538 4 830 661 5 373 073
Non-controlling interests 157 991 356 626 355 831
Total equity 7 637 529 5 187 287 5 728 904
Non-current liabilities
Long-term borrowings 4 003 365 3 571 320 3 872 731
Deferred tax liabilities 808 396 650 719 775 434
Other financial liabilities 182 505 154 832 70 944
Provision for liabilities relating to associates 71 353 55 807 71 355
Finance lease liabilities 633 442 560 219 624 358
Total non-current liabilities 5 699 061 4 992 897 5 414 822
Current liabilities
Other financial liabilities 2 029 215 238 145 257
Finance lease liabilities 18 958 1 175 6 662
Tax payable 11 879 11 338 25 759
Trade and other payables 149 148 116 882 327 990
Provisions 7 205 2 805 5 709
Current portion of long-term borrowings 1 471 514 920 201 1 295 713
Total current liabilities 1 660 733 1 267 639 1 807 090
Non-current liabilities directly associated with assets classified as held for sale 100 681 298 213 398 573
Total liabilities 7 460 475 6 558 749 7 620 485
Total equity and liabilities 15 098 004 11 746 036 13 349 389
Cents Cents Cents
Net asset value per share 1 289 1 075 1 196
Net asset value per share excluding deferred tax 1 425 1 220 1 366
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Unaudited Audited
31 December 31 December 30 June
2013 2012 2013
R'000 R'000 R'000
Continuing operations
Gross rental income 368 696 314 076 628 532
Rental income 346 059 326 709 543 279
Straight-line lease income adjustments 22 637 (12 633) 85 253
Property expenses (130 966) (133 377) (212 362)
Net rental income 237 730 180 699 416 170
Other income 7 669 34 450 126 348
Operating and other expenses (160 219) (68 908) (288 060)
Operating profit 85 180 146 241 254 458
Fair value adjustments 591 269 305 324 929 054
Investment properties 485 638 296 719 854 817
Other financial assets and liabilities 16 092 (26 751) 57 137
Other investments 89 539 35 356 17 100
Net income from associates 55 573 51 392 94 430
Investment income 61 187 35 073 48 345
Finance costs (354 272) (245 390) (473 196)
Profit before taxation 438 937 292 640 853 091
Taxation (76 071) (73 874) (202 601)
Profit for the year from continuing operations 362 866 218 766 650 490
Discontinued operations
Profit from discontinued operations net of taxation – – 108 788
Total comprehensive income for the period 362 866 218 766 759 278
Attributable to:
Owners of the company 357 546 190 222 728 792
Non-controlling interests 5 320 28 544 30 486
Earnings per share
From continuing and discontinued operations
Basic (cents) 68,1 42,3 162,2
Diluted (cents) 68,0 42,3 162,0
From continuing operations
Basic (cents) 68,1 42,3 138,0
Diluted (cents) 68,0 42,3 137,8
RECONCILIATION BETWEEN EARNINGS, HEADLINE LOSS AND
DISTRIBUTABLE EARNINGS
Profit for the period 357 546 190 222 728 792
Headline earnings adjustments (net of tax and non-controlling interests) (435 823) (282 684) (776 393)
Profit on disposal of associates (7 543) – –
Loss (profit) on disposal of other investments 65 153 (28 323) (49 279)
Profit on sale of subsidiaries – – (12 591)
Reversal of impairment of loans – – (21 651)
Profit on disposal of investment property (2 651) (17 197) (11 787)
Impairment of associates and other investments 4 954 – 85 070
Impairment of goodwill – 16 929 16 929
Loans impaired – – 40 372
Fair value adjustments (591 269) (305 324) (1 024 481)
Net income from associates (55 573) (51 392) (109 325)
Tax effect of adjustments 109 451 75 022 206 019
Non-controlling interests share 41 700 27 601 104 331
Headline loss (78 232) (92 462) (47 601)
Distributable earnings adjustments 84 209 30 744 (10 709)
Straight-line lease income adjustments (15 999) 9 096 (54 529)
Finance lease interest 12 009 21 936 44 366
Interest in respect of Attvest transaction 88 971 – –
Actual lease payments (772) (288) (546)
Distributable earnings (loss) 5 977 (61 718) (58 310)
Number of shares in issue* 580 416 250 449 406 150 449 406 150
Weighted average number of shares in issue 524 687 572 449 406 150 449 406 150
Diluted weighted average number of shares in issue 526 050 170 449 406 150 449 861 909
Headline loss per share
Basic (cents) (14,9) (20,6) (10,6)
Diluted (cents) (14,9) (20,6) (10,6)
* Net of treasury shares.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Attri-
capital Equity- butable
and share Foreign settled to equity Non-
premium/ currency employee Distri- Change in holders controll-
Stated translation benefit butable ownership of the ing
capital reserve reserve reserves reserve company interest Total
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Audited balance at
1 July 2012 2 196 596 (668) – 2 442 040 – 4 637 968 395 348 5 033 316
Total comprehensive income – – – 190 222 – 190 222 28 544 218 766
Derecognition of non-controlling
interest due to sale of
subsidiaries – – – – – – (67 266) (67 266)
Recognition of share-based
payments – – – – – – – –
Foreign currency translation – 2 471 – – – 2 471 – 2 471
Unaudited balance at
31 December 2012 2 196 596 1 803 – 2 632 262 – 4 830 661 356 626 5 187 287
Total comprehensive income – – – 538 570 – 538 570 1 942 540 512
Derecognition of FCTR and
non-controlling interest due
to sale of subsidiaries – 321 – – – 321 2 263 2 584
Dividends paid – – – – – – (5 000) (5 000)
Recognition of share-based
payments – – 5 488 – – 5 488 – 5 488
Foreign currency translation – (1 965) – – – (1 965) – (1 965)
Issue of shares – adjustment (2) – – – – (2) – (2)
Audited balance at
30 June 2013 2 196 594 159 5 488 3 170 832 – 5 373 073 355 831 5 728 904
Total comprehensive income – – – 357 546 – 357 546 5 320 362 866
Derecognition of non-controlling
interest due to sale of
subsidiaries – – – – – – (203 160) (203 160)
Foreign currency translation – 68 – – – 68 – 68
Cancellation of shares – – – (259 943) – (259 943) – (259 943)
Issue of shares 2 008 592 – – – – 2 008 592 – 2 008 592
Recognition of change in
ownership reserve – – – – (3 183) (3 183) – (3 183)
Recognition of share-based
payments – – 3 385 – – 3 385 – 3 385
Reviewed balance at
31 December 2013 4 205 186 227 8 873 3 268 435 (3 183) 7 479 538 157 991 7 637 529
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Unaudited Audited
31 December 31 December 30 June
2013 2012 2013
R'000 R'000 R'000
Cash flow utlised in operating activities (287 017) (48 749) (19 305)
Cash (utilised in)/generated from operations (64 731) 54 153 475 335
Investment income 61 187 35 073 48 345
Interest paid (204 409) (132 027) (473 196)
Taxation paid (79 064) (5 948) (29 039)
Cash flow relating to non-current assets held for sale – – (40 750)
Cash utilised in investing activities (1 127 497) (284 892) (636 524)
Cash flow from financing activities 1 598 894 233 123 547 323
Total cash movement for the period 184 380 (100 518) (108 506)
Cash at the beginning of the period 44 389 200 501 200 501
Cash disposed with subsidiaries (41 083) – (47 606)
Total cash at the end of the period 187 686 99 983 44 389
SUMMARISED SEGMENTAL ANALYSIS
Reviewed Unaudited Audited
31 December 2013 31 December 2012 30 June 2013
Net Investment Net asset Net Investment Net asset Net Investment Net asset
Revenue profit properties value Revenue profit properties value Revenue profit properties value
Business segment R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Atterbury House 1, 2 4 367 (1 571) – – 15 040 41 262 331 373 152 803 26 362 33 356 335 942 202 018
Great Westerford 1, 3 16 691 914 264 757 156 290 25 499 37 538 544 612 211 954 48 567 55 385 258 871 159 261
Harlequins Office Park 2 2 692 (769) – – 5 080 4 744 117 772 47 794 14 351 17 529 132 838 66 511
Lynnwood Bridge 60 800 45 017 835 312 385 968 45 538 10 265 858 633 259 257 119 917 60 414 810 379 316 706
Aurecon Building 37 967 7 577 649 061 142 019 31 407 17 470 644 893 132 865 90 314 32 036 644 158 129 941
Altech Building 536 7 949 44 208 11 512 846 1 912 36 780 1 912 5 143 3 805 37 793 3 304
Cell C 9 207 61 151 750 130 60 997 – – – – – – – –
Maxwell Office Park – Phase I 134 17 103 124 228 32 221 – – – – – – – –
Office and mixed use 132 394 137 371 2 667 696 789 007 123 410 113 191 2 534 063 806 585 304 654 202 525 2 219 981 877 741
De Ville Shopping Centre 4 13 586 8 130 200 299 101 651 10 599 2 821 204 932 90 311 30 230 (6 669) 184 239 87 720
Glenfair Boulevard Shopping Centre 21 675 15 342 328 202 259 843 19 383 21 601 307 790 211 337 43 264 33 189 316 909 246 169
Sanridge Square 1 2 944 2 125 – – 7 531 6 858 96 638 45 215 15 106 10 668 99 834 101 080
Garden Route Mall 58 711 31 532 1 056 042 653 650 54 175 18 046 982 712 466 058 119 998 56 299 1 023 185 507 329
Brooklyn Mall 1 34 148 22 383 604 193 244 056 27 825 9 734 542 093 173 903 57 655 52 880 575 000 191 497
Mooirivier Mall 1 56 690 57 714 974 683 381 053 49 914 19 196 814 544 307 298 112 408 148 532 915 178 398 840
Andringa Walk 1 11 386 2 435 155 834 (116 948) 5 760 (6 087) 167 550 (148 911) 15 835 (34 798) 146 293 (138 521)
Eikestad Mall 1 29 136 16 942 504 575 66 453 20 963 (28 613) 445 824 3 653 54 497 26 844 483 267 (2 624)
Mill Square 1 1 491 (4 808) 58 573 98 251 – – 35 810 – 226 4 397 58 019 57 610
Retail 229 767 151 795 3 882 401 1 688 009 196 150 43 556 3 597 893 1 148 864 449 219 291 342 3 801 924 1 449 100
Massbuild 6 535 8 310 251 554 99 272 – 578 165 961 578 17 412 24 489 243 634 16 600
Light industrial 6 535 8 310 251 554 99 272 – 578 165 961 578 17 412 24 489 243 634 16 600
Le Chateau – (52) 17 000 14 751 – 1 15 000 7 014 – 1 483 17 000 9 927
Waterfall – Land – (18 333) 2 014 197 1 742 181 – 89 293 2 283 918 898 379 – 199 769 2 236 380 1 589 109
Waterfall – Infrastructure and Services – – 408 243 260 869 – – 299 368 133 356 – (5 782) 554 037 208 570
Vacant land – (18 385) 2 439 440 2 017 801 – 89 294 2 598 286 1 038 749 – 195 470 2 807 417 1 807 606
Lynnwood Bridge – Phase III – (12 573) 206 208 35 229 – – – – – 47 803 165 977 47 803
Newtown – (26 994) 577 670 147 905 – 451 250 881 159 068 – 3 960 427 363 147 558
Majestic Offices – 8 082 81 575 22 519 – (90) 24 810 13 307 – (5 572) 37 165 12 579
Waterfall – Angel Shack 1 – – 4 813 558 – – – – – – – –
Waterfall – Cell C 1 – – – – – – 119 386 – – 82 020 514 578 98 219
Waterfall – City Lodge 1 – 2 614 24 548 13 305 – – – – – – – –
Waterfall – Dräger 1 – 396 14 713 2 701 – – – – – – – –
Waterfall – Group 5 1 – 108 912 517 596 108 912 – – 32 481 – – 24 341 230 437 47 942
Waterfall – Mall of Africa 1 – 44 686 581 407 307 482 – – – – – – – –
Waterfall – Maxwell Office Park – Phase I 1 – – – – – – 1 684 – – 9 681 58 923 47 937
Waterfall – Maxwell Office Park – Phase II 1 – 2 823 35 318 32 709 – – – – – – – –
Waterfall Corner 1 – 33 899 134 119 49 343 – – – – – – – –
Waterfall Lifestyle 1 – – 33 669 16 182 – – – – – – – –
Waterfall – Westcon 1 – – 23 343 6 918 – – – – – – – –
Developments – 161 845 2 234 979 743 763 – 361 429 242 172 375 – 162 233 1 434 443 402 038
Head office/other – (78 070) – 2 299 677 (5 484) (28 214) 405 2 020 136 (7 243) (116 781) – 1 175 819
Total 368 696 362 866 11 476 070 7 637 529 314 076 218 766 9 325 850 5 187 287 764 042 759 278 10 507 399 5 728 904
Notes
1.Tax calculated at legal entity level and not assigned per building.
2.Held for sale as at 30 June 2013, sold in the six months to 31 December 2013.
3.50% undivided share sold in six months to 30 June 2013, 50% undivided share held for sale as at 30 June 2013, no longer held for sale as
at 31 December 2013.
4.Held for sale as at 30 June 2013 and 31 December 2013.
COMMENTARY
Introduction
Attacq is a leading South African capital growth property company listed on the JSE. Attacq's business has two focus
areas: Investments and Developments. Investments comprise completed buildings held directly and indirectly.
Developments comprise land, greenfields development of land and brownfield developments by refurbishments to
existing buildings. Investments provide stable income and balance sheet strength to responsibly secure and fund high-
growth opportunities within Developments. Attacq has a total asset value in excess of R15 billion, including landmark
commercial and retail property assets and developments. Its portfolio of properties is geographically diverse across South
Africa and includes a growing representation of international investments in sub-Saharan Africa and exposure to property
investment in Germany, Switzerland and the United Kingdom via a strategic stake in MAS Real Estate Inc. ("MAS").
This set of interim results marks Attacq's maiden set of interim results since listing on the JSE in the "Real Estate – Real
Estate Holdings and Development" sector on 14 October 2013.
Net asset value per share ("NAVPS")
NAVPS of R12,89 at 31 December 2013 was 19.9% higher than the R10,75 for the comparative period of 31 December 2012
and 7.8% higher than the NAVPS per share of R11,96 at 30 June 2013.
Growth in NAVPS was impacted by the 29.2% increase in the number of issued shares.
Attacq applies the equity accounting method to its 47.2% shareholding in MAS. Applying a look-through approach on
the investment by employing the issue price of R15,75 per MAS share from MAS' recent successful capital raising results
in a further 11 cents per share increase to Attacq's NAVPS, after taking into account capital gains tax.
Adoption of NAVPS for trading statement purposes
Given the nature of Attacq's business as a capital growth fund, the Company has decided to adopt the NAVPS measure
for future trading statement purposes as it is considered a more relevant performance measure than earnings per share
and headline earnings per share.
Capital raised
During the period under review, Attacq raised a total of R1,38 billion, prior to expenses, from shareholders.
Prior to listing, Attacq issued 50,4 million 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.
R800 million was raised as part of the listing process by way of the private placement of 55,2 million shares at
R14,50 per share.
Acquisitions
Non-controlling interests
During the period under review, Attacq acquired the non-controlling interests in Attacq Retail Fund (Pty) Ltd (previously
Abacus Holdings (Pty) Ltd) by issuing 12,2 million Attacq shares at R11,64 per share. During December 2013, Attacq also
exercised its call option to acquire the 20% shareholding of Hyprop Investments Ltd ("Hyprop") in Mantrablox (Pty) Ltd,
the owner of Garden Route Mall, by acquiring Hyprop's 20% shareholding for an amount of R21,4 million and settling the
related shareholder loan of R117,6 million.
Investment in African Land Investments Ltd ("ALI")
Attacq acquired a 12.4% stake in ALI effective 5 December 2013 for an amount of R110 million at a forward yield of
8.1%. Hyprop acquired 87% of ALI as part of the same transaction. ALI owns the 43 400m2 Manda Hill Shopping Centre
in Lusaka, Zambia. The mall was the first regional shopping centre in Zambia and is currently fully let with a strong
retail offering. The intention is for Attacq and Hyprop to restructure the investment with the aim of Atterbury Africa Ltd
("Atterbury Africa") holding 50% of ALI and Hyprop owning the other 50% directly.
Internalisation of asset management function
In order to internalise the asset management function, Attacq acquired the entire issued share capital of Attacq
Management Services (Pty) Ltd ("AMS") (previously, Atterbury Asset Managers (Pty) Ltd) from Atterbury Property
Holdings (Pty) Ltd (an associate of Attacq) and Attventure (Pty) Ltd. The objectives of the internalisation are to conform
to market practice, to create synergies between Attacq and the asset manager and to remove any potential conflicts of
interest between Attacq and the asset manager. The purchase consideration of R271,1 million was 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 on
14 October 2013, being the NAVPS of Attacq as at 30 June 2013.
Attacq has measured AMS' identifiable assets and liabilities at their acquisition-date fair value. The consolidated fair
values are presented below:
Assets and liabilities acquired and intangible asset recognised R'000
Assets acquired 294 388
Liabilities acquired (299 568)
Total identifiable net assets at fair value (5 180)
Purchase consideration 271 089
Intangible asset recognised 276 269
Allocated to:
Contracts 299 460
Goodwill 60 658
Deferred tax (83 849)
An intangible asset representing the right to the asset management of certain Attacq properties has been recognised
and is amortised over a period of 15 years. Recognition of this asset and the related deferred taxation of R83,8 million
resulted in goodwill of R60,7 million being recognised.
Shareholding increase in Atterbury Waterfall Investment Company (Pty) Ltd ("AWIC")
Attacq acquired an additional effective interest of 1.2% in AWIC during the period under review from Trinsam Trust, a
discretionary family trust of which MC Wilken is a beneficiary. The acquisition price was partly settled by the issue of
new Attacq shares at an issue price of R11,96 (being the NAVPS as at 30 June 2013) totalling R13,5 million. An agterskot
amount of R11,6 million (escalating at the prime interest rate) is payable on the occurrence of events relating to a change
in control occurring in Attacq or MC Wilken ceasing to be a director of Attacq. Should MC Wilken still be a director of
Attacq in 2020, the agterskot amount is calculated in terms of a formula.
Disposals and assets held for sale
During the period under review, Attacq concluded the disposal of the following assets:
- Atterbury House, to Ascension Properties Ltd for an amount of R341 million on 6 September 2013;
- 100% of the issued share capital of Atterbury Parkdev Consortium (Pty) Ltd, owner of Harlequins Office Park, to Delta
Property Fund Ltd ("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; and
- Its 50% undivided share in Sanridge Square to Rapfund Holdings (Pty) Ltd for an amount of R102 million on
20 August 2013;
- Its 26.3% shareholding in the issued share capital and loan notes of Artisan Investment Projects 10 Ltd, the owner
of the Caltongate development in Edinburgh, in return for 3,1 million shares in MAS, effective 19 August 2013 and
increasing Attacq's shareholding in MAS to 23.9% at the time; and
- The merged Karoo I and II investments to MAS in return for 32 million MAS shares, effective 20 December 2013,
increasing Attacq's shareholding in MAS to 47.2%.
Attacq's 50% undivided share in the Great Westerford property was reflected under assets held for sale as at 30 June
2013. Attacq and its co-owners have decided to refurbish the property and accordingly it is no longer classified as held
for sale at 31 December 2013. The only remaining asset held for sale at period end is the De Ville Shopping Centre in
Durbanville.
Profit before taxation
Net rental income
Net rental income increased by 31.6% compared with the corresponding period in 2012. This was driven by a 17.4%
increase in rental income and a decrease of 1.8% in property expenses. Excluding the new AWIC properties that came on
stream during 2013, on a like-for-like basis revenue increased by 7% and the decrease in expenses was primarily driven
by savings from the internalisation of the asset and property manager. On a net basis, the property cost to rental income
ratio improved to 19.6% (December 2012: 22%).
Vacancies
Overall portfolio vacancies have decreased by 14 334m² since June 2013 primarily as a result of the sale of Atterbury
House and Sanridge Square during the period. Office vacancies have deteriorated slightly as a percentage of the total
office portfolio due to the vacancies in existence on completion of construction on one of the office buildings in Maxwell
Office Park during December 2013 and the completion of the Mill Square offices during the period. The slight increase in
retail vacancies was driven by non-renewals of tenants in the regional retail portfolio.
31 December 2013 30 June 2013
Vacancy Vacancy
% based on Vacant % based on Vacant
Sector total GLA* GLA(m2)* total GLA* GLAm2*
Retail 1.7 3 215 1.5 4 922
Office 4.6 5 783 5.7 18 410
Industrial – – 0.0 –
Hotel – – 0.0 –
Portfolio vacancy 2.5 8 998 7.3 23 332
* 1 751m2 (June 2013: 13 662m2) of the vacant m2 (19.5%) (June 2013: 58.6%) relates to properties held for sale. Great
Westerford, held for sale as at June 2013, is no longer held for sale at December 2013.
Fair value adjustments
Fair value adjustments of investment properties and investment properties under development totalled R485.6 million
(December 2012: R296,7 million) for the period under review.
R257,2 million and R15,2 million of the fair value adjustment in the current period arose from fair valuing investment
properties under development and vacant land, respectively. The balance of R213,3 million relates to operational
investment properties and is mainly due to an overall increase in contracted rentals, as the market capitalisation rates
applied in valuing these properties were largely unchanged from 30 June 2013.
Property valuations as at 31 December 2013 are based on directors' valuations using the same principles and
methodologies as applied in the external valuations performed for the year ended 30 June 2013. In support of the
directors' valuations, an external desktop review was performed by either Old Mutual Investment Group (South Africa)
(Pty) Ltd Valuations or Mills Fitchet KZN CC on the majority of investment properties.
Operating and other expenses
Included in operating and other expenses is a loss of R68 million realised on the disposal of Attacq's investment in the
merged Karoo I and Karoo II funds in return for a further 23.4% stake in MAS. The transaction created the opportunity for
Attacq to exchange a holding in an illiquid asset for an increased shareholding in a strategic investment with a quality
portfolio and development pipeline well positioned to benefit from any recovery in the European property markets.
Attacq will share in any potential upside on the Karoo assets directly by way of an agterskot mechanism and indirectly
via its increased shareholding in MAS.
Finance costs
Attacq's finance costs increased by 44.4% on the prior comparative period due to an interest reversal of
R123,6 million arising from the transaction concluded between Attacq, Atterbury Investment Managers (Pty) Ltd and
Razorbill Properties 91 (Pty) Ltd (a wholly owned subsidiary of Attacq) as more fully detailed in Attacq's listing prospectus
and as approved by shareholders at the general meeting held on 27 August 2013.
Development property
During the period under review the Cell C Campus as well as two of the proposed seven office buildings in Maxwell
Office Park were completed, adding a total of 55 552m2 of GLA to Waterfall's completed buildings. These new buildings
are 98% occupied.
Attacq's development pipeline remains robust, with the following projects underway as at 31 December 2013:
Completion Total
date GLA
Property Sector (anticipated*) (m2) % pre-let
Waterfall
Group 5 Office January 2014 23 139 100
Speculative Building (Maxwell Office Park) Office July 2014* 4 360
Premier Foods (Maxwell Office Park) Office June 2014* 4 343 100
Waterfall Corner Retail April 2014* 9 126 >95
Waterfall Lifestyle Retail June 2014* 6 917 >57
Angel Shack Office and Industrial July 2014* 4 558 100
City Lodge Hotel November 2014* 6 180 100
Dräger Office and Industrial December 2014* 4 674 100
Westcon Office and Industrial September 2014* 7 500 100
Mall of Africa Retail April 2016* 117 875 >60
Other
Lynnwood Bridge Phase III Office October 2014* 15 000 57
Newtown and Majestic Retail and Office November 2014* 75 000 >70
Borrowings
The gearing ratio, calculated as total net external interest-bearing debt (including debt on non-current assets held
for sale) less cash on hand to total assets, improved from 41.4% as at 30 June 2013 to 35.7% as at 31 December 2013.
69.6% of total external interest-bearing debt was fixed as at 31 December 2013.
Being a capital growth fund, Attacq's gearing is generally expected to be higher than that of its listed income-focused
property peers. The current portion of long-term borrowings includes funding provided by financial institutions for
both completed buildings and development loans. Funding provided in respect of developments and servicing of land
amounts to R807,3 million of the R1 471,5 million current portion of long term borrowings. Funding utilised for the
construction of individual buildings will be settled with term loans at completion of the specific property and therefore
does not pose a refinancing or liquidity risk.
Atterbury Africa
During the period under review, Attacq increased its commitment to Atterbury Africa from R250 million to R333 million.
Its investment partner, Hyprop, increased its commitment from R750 million to R1 billion. As at 31 December 2013,
Attacq's investment in Atterbury Africa totalled R193,5 million.
The Atterbury Africa portfolio comprised the following as at 31 December 2013:
Atterbury Attributable
Africa's property
GLA (m )2 % value
Property Location (proposed*) ownership (USD '000) Status
Accra Mall Accra, Ghana 19 000 47 38 328 Income producing, fully let
Under development, expected
West Hills Mall Accra, Ghana 27 500 45 42 087 completion date October 2014
Land acquired and design finalised
Achimota Accra, Ghana 14 500* 75 4 630 Pre-letting in progress
Kumasi Kumasi, Ghana 27 800* 75 4 851 Land acquired
Land acquired for retail and hotel
Waterfalls Lusaka, Zambia 27 500* 25 1 374 development
Subsequent events
Brooklyn Bridge
Attacq increased its stake in the Brooklyn Bridge Office Park property from 25% to 100% on 11 March 2014.
The purchase consideration was settled by way of R90 million in cash and the balance of R56,3 million by the issue of
4 883 621 Attacq shares issued at an issue price of R11,53 per share, being the NAVPS as at 31 March 2013. As at period
end, this was the only outstanding transaction disclosed in the pro forma statement of financial position contained in
Attacq's listing prospectus.
General issue of shares for cash
Attacq issued 29 million shares to raise a total of R512 million before expenses by way of a general issue of shares for cash
on 5 February 2014. The shares were issued at R17,65, being a 1.6% discount to the prior day's 30 day volume weighted
average price ("VWAP").
The capital raising was undertaken in order to fund further development of Waterfall and to fund Attacq's participation in
MAS' initial €100 million capital raising announced on 10 February 2014.
Vendor placement to fund additional subscription for MAS shares
Due to positive investor demand, MAS decided to increase the quantum of its private placement from the previously
announced €100 million to €183 million. In order to raise the funds required to exercise its full pre-emptive rights in the
enlarged MAS capital raising, Attacq raised a further R1 billion on 25 February 2014 by way of a vendor consideration
placement of 56.6 million Attacq shares issued at R17,65 (being a 1.7% discount to the prior day's 30-day VWAP).
Attacq invested a total of R1,3 billion in the MAS private placement which closed on 11 March 2014 in order to maintain
its stake of 47.2% in the enlarged issued share capital of MAS. The additional capital raised by MAS will allow MAS to act
on further income generating investment opportunities as well as to fast track its development pipeline.
Prospects
Attacq's focus remains on the ongoing roll out of Waterfall, the successful completion of its existing development
pipeline and the implementation of its diversification strategy into African and international markets.
Basis of preparation
These reviewed condensed consolidated interim financial statements for the six months ended 31 December 2013 have
been prepared in accordance with IAS 34: Interim Financial Reporting, the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee and Financial Reporting Guides as issued by the Financial Reporting Standards
Council, the JSE Listings Requirements and the Companies Act of South Africa (Act 71 of 2008), as amended. The JSE
Listings Requirements require interim reports to be prepared in accordance with the framework concepts and the
measurement and recognition requirements of International Financial Reporting Standards ("IFRS").
The accounting policies applied in the preparation of these interim results are in terms of IFRS and are consistent with the
accounting policies applied in the preparation of the previous financial year. Accounting policies have been amended for
changes accounting in standards, but these changes have not resulted in any material changes to the results reported on
in this document. These interim results have been prepared under the historical cost convention except for investment
properties which are measured at fair value and certain financial instruments which are measured at either fair value or
amortised cost. 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.
The financial information has been reviewed by the Company's auditors, Deloitte & Touche, in terms of ISRE 2410: Review
of Interim Financial Information Performed by the Independent Auditor of the Entity. ISRE 2410 requires the auditor to
conclude whether anything has come to their attention that causes them to believe that the interim financial statements
are not prepared in all material respects in accordance with the applicable financial reporting framework. The auditor's
unmodified review conclusion is available for inspection at the Company's registered office. The auditor's report does not
necessarily report on all of the information contained in this announcement/financial results. Shareholders are therefore
advised that in order to obtain a full understanding of the nature of the auditor's engagement they should obtain a copy
of that report together with the accompanying financial information from the issuer's registered office.
The preparation of these condensed consolidated interim financial statements was supervised by Melt Hamman CA (SA),
Financial Director of Attacq.
On behalf of the board
P Tredoux MC Wilken
Chairman CEO
18 March 2014
Directors
P Tredoux†* (Chairman)
MC Wilken (CEO)
M Hamman (FD)
LLS van der Watt
LM Ndala*
JHP van der Merwe*
S Shaw-Taylor†*
HR El Haimer†*
BF van Niekerk*
PH Faure*
MM du Toit†*
WL Masekela†*
†Independent
* Non-executive
There were no changes to the board of directors during the period.
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 (Pty) Ltd
Ground Floor, 70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Sponsor
Java Capital
www.attacq.co.za
19 March 2014
Date: 19/03/2014 08:23:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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