Group’s Interim Results for the six months ended 31 December 2013 Orion Real Estate Limited (Incorporated in the Republic of South Africa) (Registration number 1997/021085/06) Share code: ORE ISIN: ZAE000075651 ("Orion Real Estate" or "the company" or "the Group") Group's Interim Results for the six months ended 31 December 2013 Abridged consolidated statement of financial position as at 31 December 2013 Unaudited Unaudited six months six months Audited ended ended year ended 31 December 31 December 30 June Figures in Rand 2013 2012 2013 ASSETS Non-current assets 748 361 519 729 816 085 748 712 118 Gross investment properties 730 936 034 714 195 798 733 823 518 Straight-line rental income adjustment (9 175 070) (9 337 896) (9 175 070) Net investment properties 721 760 964 704 857 902 724 648 448 Straight-line lease asset 9 175 070 9 337 896 9 175 070 Property, plant and equipment 1 178 646 466 618 564 705 Trade and other receivables 16 246 839 15 153 669 14 323 895 Current assets 36 576 795 22 280 452 31 332 290 Loans to related parties 13 292 066 6 898 832 5 740 324 Trade and other receivables 22 835 839 14 701 747 21 404 542 Cash and cash equivalents 448 890 679 873 4 187 424 Investment properties held for sale 27 537 484 – 24 650 000 Total assets 812 475 798 752 096 537 804 694 408 EQUITY AND LIABILITIES Capital and reserves Share capital and share premium 74 235 526 74 235 526 74 235 526 Debenture reserve 10 675 886 10 675 886 10 675 886 Retained earnings 337 750 149 303 917 870 334 192 893 Total equity attributable to owners of the parent 422 661 561 388 829 282 419 104 305 Non-controlling interest (274 617) (270 321) (271 212) Total equity 422 386 944 388 558 961 418 833 093 Non-current liabilities 307 834 233 259 189 983 297 834 463 Linked debentures 54 438 419 49 386 923 54 438 419 Borrowings 179 366 530 141 659 844 169 992 645 Deferred tax liabilities 74 029 284 68 143 216 73 403 399 Current liabilities 82 254 621 104 347 593 88 026 852 Current income tax liabilities 13 137 130 13 936 404 13 064 856 Loans from shareholders – 1 896 305 – Loans from directors 18 508 2 598 511 18 508 Loans from related parties 3 111 385 201 650 2 126 356 Tenant deposits 6 591 574 6 085 201 6 371 863 Trade and other payables 38 940 230 27 718 375 30 141 534 Borrowings 18 037 688 50 798 493 33 846 265 Bank overdraft 2 418 106 1 112 654 2 457 470 Total liabilities 390 088 854 363 537 576 385 861 315 Total equity and liabilities 812 475 798 752 096 537 804 694 408 Abridged consolidated statement of comprehensive income for the six months ended 31 December 2013 Unaudited Unaudited six months six months Audited ended ended year ended 31 December 31 December 30 June Figures in Rand 2013 2012 2013 Revenue 48 067 905 48 037 892 91 224 924 Gross property revenue 46 865 318 47 267 210 87 198 739 Property revenue 46 865 318 47 267 210 87 361 565 Straight-line of lease accrual – – (162 826) Other income 568 498 383 685 2 177 891 Other direct property operating costs (30 951 970) (30 157 047) (56 650 405) Administrative and management expenses (52 066) (5 273 319) (10 578 716) Repairs and maintenance (3 606 126) (2 707 907) (5 635 341) Fair value adjustment – – 40 763 417 Gross change in fair value of investment property – – 40 600 591 Straight-line lease adjustment – – 162 826 Operating profit before interest 12 823 654 9 512 622 57 275 585 Finance income 634 089 386 997 1 685 468 Linked debenture interest – – (5 051 496) Finance costs (8 523 998) (8 482 844) (16 865 413) Profit before taxation 4 933 745 1 416 775 37 044 144 Taxation (1 379 894) (1 226 858) (6 580 095) Profit for the period 3 553 851 189 917 30 464 049 Other comprehensive income – – – Total comprehensive income for the year 3 553 851 189 917 30 464 049 Profit/(Loss) and total comprehensive income/ (loss) for the period attributable to: Owners of the parent 3 557 256 192 812 30 467 835 Non-controlling interest (3 405) (2 895) (3 786) 3 553 851 189 917 30 464 049 Earnings per linked unit Basic earnings per linked unit (cents) 0.57 0.03 4.86 Diluted earnings per linked unit (cents) 0.57 0.03 4.86 Headline earnings per linked unit (cents) 0.57 0.16 0.30 Diluted headline earnings per linked unit (cents) 0.57 0.16 0.30 Reconciliation of basic earnings and headline earnings: Profit attributable to equity holders of the parent 3 557 256 192 812 30 467 835 Fair value adjustment to investment properties – – (33 022 572) Linked debenture interest – – 3 637 077 Loss on disposal of investment property – 796 863 792 564 Headline earnings 3 557 256 989 675 1 874 904 Weighted average linked units in issue 67 009 822 67 009 822 67 009 822 Abridged consolidated statement of cash flows for the six months ended 31 December 2013 Unaudited Unaudited six months six months Audited ended ended year ended 31 December 31 December 30 June Figures in Rand 2013 2012 2013 Cash flows from/(to) operating activities 11 238 265 2 969 192 (1 563 847) Cash generated by operations 18 641 191 11 938 187 15 094 811 Interest paid (6 721 190) (8 482 844) (15 207 905) Taxation paid (681 735) (486 151) (1 450 753) Cash flows to investing activities (7 684 964) (3 064 284) (8 486 194) Cash flows (to)/from financing activities (7 252 471) (912 952) 11 204 732 Net (decrease)/increase in cash, cash equivalents and bank overdrafts (3 699 170) (1 008 044) 1 154 691 Cash, cash equivalents and bank overdrafts at the beginning of the period 1 729 954 575 263 575 263 Cash, cash equivalents and bank overdrafts at the end of the period (1 969 216) (432 781) 1 729 954 Statements of changes in equity for the six months ended 31 December 2013 Total share Non- Share Share capital and Debenture Retained controlling Total Figures in Rand capital premium premium reserve earnings Total interest equity Balance at 30 June 2012 6 270 098 67 965 428 74 235 526 10 675 886 303 725 058 388 636 470 (267 426) 388 369 044 Total comprehensive income for the period – profit – – – – 192 812 192 812 (2 895) 189 917 Balance at 31 December 2012 6 270 098 67 965 428 74 235 526 10 675 886 303 917 870 388 829 282 (270 321) 388 558 961 Total comprehensive income for the period – profit – – – – 30 275 023 30 275 023 (891) 30 274 132 Balance at 30 June 2013 6 270 098 67 965 428 74 235 526 10 675 886 334 192 893 419 104 305 (271 212) 418 833 093 Total comprehensive income for the period – profit – – – – 3 557 256 3 557 256 (3 405) 3 553 851 Balance at 31 December 2013 6 270 098 67 965 428 74 235 526 10 675 886 337 750 149 422 661 561 (274 617) 422 386 944 Segment reporting for the period ending 31 December 2013 R % R % Revenue (excluding recoveries) Commercial 15 703 552 44 Gauteng 25 467 366 71 Industrial 5 027 673 14 Western Cape 2 834 204 8 Retail 10 075 014 28 Mpumalanga 7 005 725 20 Hospitality 4 466 192 12 KwaZulu-Natal 530 240 1 Residential 565 103 2 35 837 535 100 35 837 535 100 Property values (including properties held for sale) Commercial 299 379 165 39 Gauteng 562 217 518 74 Industrial 96 732 074 13 Western Cape 41 235 454 5 Retail 184 985 965 24 Mpumalanga 146 047 295 20 Hospitality 79 881 715 11 KwaZulu-Natal 8 973 251 1 Residential 44 094 599 6 Land 53 400 000 7 758 473 518 100 758 473 518 100 Gross lettable area Commercial 53 331 43 Gauteng 93 495 75 Industrial 21 988 18 Western Cape 8 784 7 Retail 27 576 22 Mpumalanga 15 850 13 Hospitality 16 029 13 KwaZulu-Natal 6 000 5 Residential 5 205 4 124 129 100 124 129 100 Borrowings (excluding instalment sales and loans) Commercial 75 042 502 42 Gauteng 133 943 410 76 Industrial 27 579 824 16 Western Cape 25 500 289 15 Retail 52 631 051 30 Mpumalanga 12 683 030 7 Hospitality 12 348 726 7 KwaZulu-Natal 4 328 360 2 Residential 8 852 986 5 Land – – 176 455 089 100 176 455 089 100 Rating of tenants (rental income) Commercial A 968 937 3 Gauteng A 2 037 274 7 B 4 172 502 14 B 8 264 660 28 C 3 242 495 11 C 10 307 857 36 Industrial A – – Western Cape A 55 242 – B 4 068 875 14 B 2 307 279 8 C 123 335 – C 490 276 2 Retail A 1 672 299 6 Mpumalanga A 997 322 3 B 2 218 554 8 B 1 015 829 4 C 6 323 335 22 C 2 775 403 10 Hospitality A 448 602 2 KwaZulu-Natal A – – B 1 658 077 6 B 530 240 2 C 3 317 366 12 C – – Residential A – – B – – C 567 005 2 28 781 382 100 28 781 382 100 A: Represents major listed companies. B: Represents smaller listed companies and big unlisted companies. C: Represents smaller unlisted companies and private businesses. Commentary on the December 2013 Interim Financial Statements 1. Operating performance The Group revenue decreased from R47.3 million in December 2012 to R46.9 million in December 2013. The decrease of 0.85% is an indication of tight trading conditions. Other direct property operating costs increased from R30.2 million to R31.0 million for the same period. This represents an increase of 2.64%. Administrative and management expenses decreased significantly by 99.01% due to a group restructuring whereby certain major property services are no longer outsourced. Repairs and maintenance increased by 33.17% and this increase reflects the drive to improve the general condition of all buildings. The operating profit increased with 34.08% from R9.5 million to R12.8 million. The total comprehensive income for the year improved from a profit of R189 917 to a profit of R3 553 851. 2. Basis of preparation The condensed unaudited consolidated results have been prepared in accordance with the Framework concepts and the measurement and recognition requirements of the International Financial Reporting Standards, containing information required by IAS 34: Interim Financial Reporting, the AC 500 standards as issued by the Accounting Practices Board and in the manner required by the Companies Act and the JSE Listings Requirements. These results were prepared by Sandarie le Roux CA(SA). 3. Contingent liabilities The company has signed surety for the obligations of its subsidiaries in respect of mortgage bond finance and has guaranteed the debts of a wholly owned subsidiary company until that company's assets, fairly valued, exceeds its liabilities, and whilst it remains a wholly owned subsidiary. 4. Investment property acquired and disposed 4.1 Acquired No properties were acquired during the reporting period. 4.2 Disposed No properties were disposed during the reporting period. 5. Subsequent events The directors are not aware of any matter or circumstance arising since 31 December 2013, which would affect the results or operations of the Group significantly. 6. Dividends No dividends were paid or declared during the financial period under review. 7. Future prospects The trading conditions remained tight during the reporting period, but the cost savings resulting from the restructuring has started to bear fruit and this should have a positive influence on the results in the remaining period. Johannesburg 31 March 2014 Directors R S Wilkinson*, F M Viruly*, M D K Mthembu*, A C Gmeiner**, F Gmeiner (MD)#, C B Nolte (FD)# *Independent non-executive **Non-executive #Executive Company secretary Sponsor Corporate Governance Arcay Moela Facilitators CC Sponsors (Pty) Limited Transfer office Computershare Investor Services (Pty) Limited Date: 28/03/2014 05:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.