Wrap Text
Reviewed condensed interim results for the six months ended 30 September 2014
Oasis Crescent Property Fund
A property fund created under the Oasis Crescent Property Trust Scheme
registered in terms of the Collective Investment Schemes Control Act
(Act 45 of 2002) having REIT status with the JSE
Share code: OAS
ISIN: ZAE000074332
(“Oasis” or “the Fund”)
Reviewed condensed interim results for the six months ended 30
September 2014
Condensed statement of comprehensive income
for the 6 months ended 30 September 2014
Reviewed Reviewed Audited
6 months 6 months 12 months
to 30 to 30 to 31
September September March
2014 2013 2014
R’000 R’000 R’000
Revenue 40 573 25 922 56 801
Rental and related income 31 604 26 556 54 042
Income from investments excluding non- 7 249 6 236 12 168
permissible income
Straight-lining of lease income 1 720 (6 870) (9 409)
Expenses 14 715 13 238 26 806
Property expenses 12 459 11 357 22 859
Service charges 1 711 1 443 2 970
Other operating expenses 545 438 977
Net income from rentals and investments 25 858 12 684 29 995
Fair value adjustment to investment
properties excluding straight-lining of
lease income (1 720) 5 709 24 585
Fair value adjustment to investment
properties - (1 161) 15 176
Straight-lining of lease income (1 720) 6 870 3 700
Reversal of straight lining lease - - 5 709
accrual
Operating profit for the period 24 138 18 393 54 580
Net non-permissible investment income 155 104 203
Non-permissible investment income 155 104 203
received
Interest paid - - -
Net profit for the period 24 293 18 497 54 783
Other comprehensive income
Items that may be classified 29 665 16 332 36 211
subsequently to profit and loss
Fair value gain on available-for-sale 30 684 16 332 36 211
financial assets
Realised gains and losses of financial (1 019) - -
assets
Total comprehensive income for the 53 958 34 829 90 994
period
Basic earnings per unit including non- 53.9 43.1 124.1
permissible income (cents)
Additional information:
Headline earnings and distribution
income reconciliation
Basic earnings 24 293 18 497 54 783
Adjusted for:
Realised gains on disposal of
available-for-sale investments (1 019) - -
Fair value change to investment
properties 1 720 (5 709) (24 585)
Headline earnings 24 994 12 788 30 198
Less: Fair value adjustments on
financial assets at fair value through
profit or loss (630) (742) (1 129)
Less: Straight-line lease accrual (1 720) 6 870 9 409
Distributable income including non-
permissible income 22 644 18 916 38 478
Non-permissible rental income (406) (323) (704)
Non-permissible investment income (155) (104) (203)
Distributable income excluding non-
permissible income 22 083 18 489 37 571
Basic earnings per unit including non-
permissible income (cents) 53.9 43.1 124.1
Headline earnings and diluted headline
earnings per unit including non-
permissible income (cents) 55.5 29.8 68.4
Distribution per unit including non-
permissible income (cents) 50.2 44.1 87.2
Distribution per unit excluding non- 49.0 43.1 85.1
permissible income (cents)
Weighted average units in issue 45 064 473 42 915 837 44 130 490
Units in issue at the end of the period 45 427 278 43 301 294 44 406 888
Additional information:
Reconciliation of Distributable Income
for the 6 months ended 30 September
2014
Rental income 23 274 20 183 40 809
Rental recoveries 8 497 6 373 14 143
Lease incentives (167) - (910)
Rental and related income 31 604 26 556 54 042
Less: Property expenses (12 459) (11 357) (22 859)
Property operating income 19 145 15 199 31 183
Investment income excluding non-
permissible investment income 5 600 5 409 10 769
Fair value adjustment on financial
assets at fair value through profit or
loss 630 742 1 129
Realised gain on disposal of financial
assets at fair value through profit or
loss - 85 270
Realised gain on disposal of available-
for-sale financial assets 1 019 - -
Income from investments excluding non-
permissible income 7 249 6 236 12 168
Non-permissible investment income
received 155 104 203
Total investment income 7 404 6 340 12 371
Net property and investment income 26 549 21 539 43 554
Less: Fair value adjustment on
financial assets at fair value through
profit or loss (630) (742) (1 129)
Less: Realised gain on disposal of
available-for-sale financial assets (1 019) - -
Service charges and other operating
expenses (2 256) (1 881) (3 947)
Distributable income including non-
permissible income 22 644 18 916 38 478
Non-permissible rental income (406) (323) (704)
Non-permissible investment income (155) (104) (203)
Distributable income excluding non-
permissible income 22 083 18 489 37 571
Condensed statement of financial position
as at 30 September 2014
Reviewed Reviewed Audited
30 30 31
September September March
2014 2013 2014
R’000 R’000 R’000
Assets
Non-current assets 769 635 667 270 720 209
Investment properties 431 020 394 061 427 201
Property, plant and equipment 475 134 331
Straight-line lease accrual 7 889 10 262 6 650
Available-for-sale financial assets 330 251 262 813 286 027
Current assets 70 043 61 745 67 020
Trade receivables 5 403 2 942 5 376
Trade receivables from related parties 1 239 37 302
Other receivables 5 923 5 354 5 794
Straight-line lease accrual 2 179 727 1 699
Financial assets at fair value through
profit or loss 41 394 45 184 40 714
Other short-term financial assets 9 464 - -
Cash and cash equivalents 4 441 7 501 13 135
Total assets 839 678 729 015 787 229
Unitholders’ funds and liabilities
Unitholders’ funds 805 997 703 019 757 169
Capital of the Fund 521 819 487 012 504 663
Retained income 4 445 2 538 2 438
Non–distributable reserve 136 620 119 900 136 620
Available-for-sale reserve 143 113 93 569 113 448
Current liabilities 33 681 25 996 30 060
Trade payables 8 055 4 531 7 400
Accruals 208 746 784
Other payables 1 672 1 315 1 526
Trade payables to related parties 515 432 594
Unitholders for distribution 22 995 18 815 19 409
Non-permissible income available for
dispensation 236 157 347
Total unitholders’ funds and
liabilities 839 678 729 015 787 229
Supplemental information
NAV (in cents per unit) 1 774 1 624 1 706
Condensed statement of changes in unitholders’ funds
for the 6 months ended 30 September 2014
Capital Non- Available-
of the distributable for-sale Retained
Fund reserve reserve income Total
R’000 R’000 R’000 R’000 R’000
Balance at 1 April
2013 469 552 121 444 77 237 1 309 669 542
Net profit for the
period ended 30
September 2013 - - - 18 497 18 497
Other
Comprehensive
Income
Fair value gain on
available-for-sale
financial assets - - 16 332 - 16 332
Total
Comprehensive
income for the
periodended 30
September 2013 - - 16 332 18 497 34 829
Reinvestment of
distribution 17 791 - - - 17 791
Transaction costs
for issue of new
units (166) - - - (166)
Distribution
received in
advance (165) - - 165 -
Transfer from non-
distributable
reserve for fair
value adjustment - (1 161) - 1 161 -
Transfer from non-
distributable
reserve (383) - 383 -
Distribution to
unitholders - - - (18 654) (18 654)
Dispensation of
non-permissible
income - - - (323) (323)
Balance at 30
September 2013 487 012 119 900 93 569 2 538 703 019
Net profit for the
period ended 31
March 2014 - - - 36 286 36 286
Other
Comprehensive
Income
Fair value gain on
available-for-sale
financial assets - - 19 879 - 19 879
Total
Comprehensive
Income for the
period ended 31
March 2014 - - 19 879 36 286 56 165
Reinvestment of
distribution 17 924 - - - 17 924
Transaction costs
for issue of new
units (54) - - - (54)
Transfer from non-
distributable
reserve - 16 720 - (16 720) -
Distribution
received in
advance (219) - - 117 (102)
Distribution to
unitholders - - - (19 199) (19 199)
Dispensation of
non-permissible
income - - - (584) (584)
Balance at 31
March 2014 504 663 136 620 113 448 2 438 757 169
Net profit for the
period ended 30
September 2014 - - - 24 293 24 293
Other
Comprehensive
Income
Fair value gain on
available-for-sale
financial assets - - 30 684 - 30 684
Realised gain on
disposal of
available-for-sale
financial assets - - (1 019) - (1 019)
Total
Comprehensive
Income for the
period ended 30
September 2014 - - 29 665 24 293 53 958
Reinvestment of 17 403 - - - 17 403
distribution
Transaction costs
for issue of new
units (69) - - - (69)
Distribution
received in
advance (178) - - 178 -
Distribution to
unit holders - - - (22 261) (22 261)
Dispensation of
non-permissible
income - - - (203) (203)
Balance at 30
September 2014 521 819 136 620 143 113 4 445 805 997
Condensed statement of cash flows
for the 6 months ended 30 September 2014
Reviewed Reviewed Audited
6 months to 6 months to 12 months to
30 September 30 September 31 March
2014 2013 2014
R’000 R’000 R’000
Cash flows from operating
activities
Net profit for the period 24 293 18 497 54 783
Non-permissible investment (155) (104) (203)
income received
Interest paid - - -
Depreciation 50 15 35
Provision for receivables
impairment 3 49 (34)
Straight-line lease accrual (1 720) 6 870 3 700
Lease incentives 167 312 910
Realised gain on disposal of - (85) (270)
financial assets through
profit or loss
Realised gain on disposal of (1 019) - -
available-for-sale financial
assets
Reversal of straight-line - - 5 709
lease accrual
Fair value adjustment on
financial assets at fair
value through profit or loss (630) (742) (1 129)
Fair value adjustment to
investment property 1 720 (5 709) (24 585)
Net operating cash flow 22 709 19 103 38 916
before changes in working
capital
(Increase)/decrease in
current assets
Trade receivables (24) (1 015) (3 415)
Trade receivables from (937) (37) (302)
related parties
Other receivables (129) (1 917) (2 357)
Increase/(decrease) in
current liabilities
Trade payables 655 321 3 548
Accruals (576) (159) (121)
Other payables 146 (37) 174
Trade payables to related
parties (79) (24) 138
Cash generated from
operations 21 765 16 235 36 581
Non-permissible investment
income received 155 104 203
Unitholders for distribution (1 272) (487) (1 333)
Non-permissible income
dispensed (334) 49 (345)
Net cash inflow from
operating activities 20 314 15 901 35 106
Cash flows from investing
activities
Acquisition of available-for-
sale financial assets (24 183) (5 525) (8 861)
Acquisition of financial
assets at fair value through
profit or loss (19 181) (5 347) (6 300)
Additions to investment
properties (5 704) (2 134) (10 119)
Proceeds from disposal of
financial assets at fair
value through profit or loss 19 130 5 523 11 472
Proceeds from disposal of
available-for-sale financial
assets 10 643 - -
Acquisition of other short
term financial assets (9 464) - -
Leasehold improvements - (6 300) -
Acquisition of property,
plant and equipment (180) - (217)
Lease incentives paid - - (13 173)
Net cash outflow from
investing activities (28 939) (13 783) (27 198)
Cash flows from financing
activities
Distribution received in
advance - - (102)
Transaction costs on issue of
new units (69) (166) (220)
Net cash outflow from
financing activities (69) (166) (322)
Net (decrease)/increase in
cash and cash equivalents (8 694) 1 952 7 586
Cash and cash equivalents
At beginning of period 13 135 5 549 5 549
At end of period 4 441 7 501 13 135
Segment information for the 6 months ended 30 September 2014
Indus- Invest- Corpo-
Retail Offices trial ments rate Total
R’000 R’000 R’000 R’000 R’000 R’000
Segment revenue
Property income
Rental income 13 979 2 899 6 229 - - 23 107
Recoveries 5 090 1 696 1 711 - - 8 497
Income from
investments
excluding non-
permissible
income
Dividend income
offshore - - - 4 273 - 4 273
Permissible
investment
income- domestic - - - 1 327 - 1 327
Fair value
adjustment to
financial assets
at fair value
through profit
or loss - - - 630 - 630
19 069 4 595 7 940 6 230 - 37 834
Segment expense
Property
expenses 7 532 1 899 3 028 - - 12 459
Service charges - - - - 1 711 1 711
Other operating
expenses - - - - 545 545
7 532 1 899 3 028 - 2 256 14 715
Realised gain on
disposal of
available-for-
sale financial
assets - - - 1 019 - 1 019
Segment result
Operating
profit/(loss) 11 537 2 696 4 912 7 249 (2 256) 24 138
Net finance
income
Interest
received - - - - 155 155
Interest paid - - - - - -
Net
profit/(loss)
before straight-
line lease
income and fair
value adjustment
to investment
properties 11 537 2 697 4 912 7 249 (2 101) 24 293
Straight-lining
of lease income 638 - 1 082 - - 1 720
Fair value
adjustment to
investment
properties (638) - (1 082) - - (1 720)
Net
profit/(loss)
after straight-
line lease
income and fair
value adjustment
to investment
properties 11 537 2 696 4 912 7 249 (2 101) 24 293
Segment assets
Investment
properties 174 940 95 699 160 381 - - 431 020
Property, plant 423 52 475
and equipment - - -
Straight-line
lease accrual
non-current 3 076 - 4 813 - - 7 889
Straight line
lease accrual
current 516 - 1 663 - - 2 179
Available-for-
sale financial
assets - - - 330 251 - 330 251
Other short term
financial assets - - - 9 464 - 9 464
Trade
receivables 1 644 404 3 355 - - 5 403
Trade
receivables from
related parties - - - - 1 239 1 239
Other
receivables 290 114 2 429 1 012 2 078 5 923
Financial assets
at fair value
through profit
or loss - - - 41 394 - 41395
Cash and cash
equivalents - - - 4 441 - 4 441
180 889 96 269 172 641 386 562 3 317 839 678
Segment
liabilities
Trade payables 3 365 662 4 038 - (10) 8 055
Accruals 7 2 12 - 187 208
Other payables 511 14 813 - 334 1 672
Trade payables
to related
parties 141 - 47 - 327 515
Unitholders for
distribution - - - - 22 995 22 995
Non-permissible
income available
for dispensation - - - - 236 236
4 024 678 4 910 - 24 069 33 681
Net segment
assets/
(liabilities) 176 865 95 591 167 731 386 562 (20 752) 805 997
Capital
expenditure 2 480 - 3 224 - - 5 704
Segment information for the 6 months ended 30 September 2013
Indus- Invest- Corpo-
Retail Offices trial ments rate Total
R’000 R’000 R’000 R’000 R’000 R’000
Segment revenue
Property income
Rental and
related income 13 130 5 431 7 995 - - 26 556
Income from
investments
excluding non-
permissible
income
Dividend income
offshore - - - 3 852 - 3 852
Permissible
investment
income –
domestic - - - 1 557 - 1 557
Fair value
adjustment to
financial assets
at fair value
through profit
or loss - - - 742 - 742
Realised gain on
disposal of
financial assets
at fair value
through profit
or loss - - - 85 - 85
13 130 5 431 7 995 6 236 - 32 792
Segment expense
Property
expenses 8 026 1 729 1 485 - 117 11 357
Service charges - - - - 1 443 1 443
Other operating
expenses - - - - 438 438
8 026 1 729 1 485 - 1 998 13 238
Segment result
Operating
profit/(loss) 5 104 3 702 6 510 6 236 (1 998) 19 554
Net finance
income
Interest
received - - - 104 - 104
Interest paid - - - - - -
Net
profit/(loss)
before straight-
line lease
income and fair
value adjustment
to investment 5 104 3 702 6 510 6 340 (1 998) 19 658
properties
Straight-lining
of lease income (5 835) (18) (1 017) - - (6 870)
Fair value
adjustment to
investment
properties 5 709 - - - - 5 709
Net
profit/(loss)
after straight-
line lease
income and fair
value adjustment
to investment
properties 4 978 3 684 5 493 6 340 (1 998) 18 497
Segment assets
Investment
properties 159 298 91 580 143 183 - - 394 061
Property, plant
and equipment 64 70 - - - 134
Straight-line
lease accrual 7 509 109 3 371 - - 10 989
Available-for-
sale financial
assets - - - 262 813 - 262 813
Trade
receivables 1 813 367 762 - - 2 942
Other
receivables 284 63 1 857 1 077 2 073 5 354
Trade
receivables from
related parties - - - - 37 37
Financial assets
at fair value
through profit
or loss - - - 45 184 - 45 184
Cash and cash
equivalents 2 349 - 143 5 009 - 7 501
171 317 92 189 149 316 314 083 2 110 729 015
Segment
liabilities
Trade payables 3 170 173 896 - 292 4 531
Accruals - - - - 746 746
Other payables 461 83 515 - 256 1 315
Trade payables
to related
parties 107 11 33 - 281 432
Unitholders for
distribution - - - - 18 815 18 815
Non-permissible
income available
for dispensation - - - - 157 157
3 738 267 1 444 - 20 547 25 996
Net segment
assets/ 167 579 91 922 147 872 314 083 (18 437) 703 019
(liabilities)
Capital
expenditure 230 697 1 207 - - 2 134
Segment information for the year ended 31 March 2014
Indus- Invest- Corpo-
Retail Offices trial ments rate Total
R’000 R’000 R’000 R’000 R’000 R’000
Segment revenue
Property income
Rental and
related income 26 718 11 761 15 563 - - 54 042
Income from
investments
excluding non-
permissible
income
Dividend income
offshore - - - 7 426 - 7 426
Permissible
investment
income -
domestic - - - 3 343 - 3 343
Fair value
adjustment to
financial
assets at fair
value through
profit or loss - - - 1 129 - 1 129
26 718 11 761 15 563 11 898 - 65 940
Segment expense
Property
expenses 15 756 3 881 4 062 - (840) 22 859
Service charges - - - - 2 970 2 970
Other operating
expenses - - - - 977 977
15 756 3 881 4 062 - 3 107 26 806
Realised gain on
disposal of
available-for-
sale financial
assets - - - 270 - 270
Segment result
Operating
profit/(loss) 10 962 7 880 11 501 12 168 (3 107) 39 404
Net finance
income
Interest received - - - 203 - 203
Interest paid - - - - - -
Reversal of
straight-line
accrual (5 709) - - - - (5 709)
Net profit/(loss)
before
straight-line
lease income
and fair value
change to
investment
properties 5 253 7 880 11 501 12 168 (2 904) 33 898
Straight-lining
of lease
income (4 794) 89 1 005 - - (3 700)
Fair value
adjustment to
investment
properties 12 628 3 709 8 248 - - 24 585
Net profit/(loss)
after
straight-line
lease income
and fair
value change
to investment
properties 13 087 11 678 20 754 12 168 (2 904) 54 783
Segment assets
Investment
properties 173 703 95 341 158 157 - - 427 201
Property, plant
and equipment 270 61 - - - 331
Straight-line
lease accrual
non-current 2 409 - 4 241 - - 6 650
Straight-line
lease accrual
current 546 - 1 153 - - 1 699
Available-for-
sale financial
assets - - - 286 027 - 286 027
Trade receivables 1 600 551 3 225 - - 5 376
Trade receivables
from related
parties - - - - 302 302
Other receivables 290 111 1 958 1 412 2 023 5 794
Financial assets
at fair value
through profit
or loss - - - 40 714 - 40 714
Cash and cash
equivalents - - - 13 135 - 13 135
178 818 96 064 168 734 341 288 2 325 787 229
Segment
liabilities
Trade payables 3 180 565 3 655 - - 7 400
Accruals 8 - 547 - 229 784
Other payables 648 2 226 - 650 1 526
Trade payables
to related
parties 193 11 84 - 306 594
Unitholders for
distribution - - - - 19 409 19 409
Non-permissible
income
available for
dispensation - - - - 347 347
4 029 578 4 512 - 20 941 30 060
Net segment
Assets/
(liabilities) 174 789 95 486 164 222 341 288 (18 616) 757 169
Capital
expenditure 1 361 823 7 935 - - 10 119
Basis of preparation and accounting policies
The condensed interim financial statements of Oasis Crescent Property Fund
(“the Fund” or “OCPF”) has been prepared in accordance with International
Financial Reporting Standards (IFRS), JSE Listings Requirements, the
requirements of the Collective Investment Schemes Control Act of 2002, the
SAICA Financial Reporting Guides, as issued by the Accounting Practices
Committee, and the Financial Reporting Pronouncements, as issued by the
Financial Reporting Standards Council. The financial statements are
prepared on the historical cost basis as modified by the revaluation of
investment properties, financial assets at fair value through profit or
loss and available-for-sale financial assets. The accounting policies and
methods of computation applied in this interim report are consistent with
the policies as set out in the most recent annual financial statements,
which should be read in conjunction with this report, except as set out
below. The condensed interim financial statements have been prepared under
the revised disclosure requirements of IAS 34. The Fund’s external
auditor, PricewaterhouseCoopers Inc., has reviewed the financial
information set out in this report. Their unqualified review report is
available for inspection at the Fund’s registered office. The operational
results of the Fund are not affected by seasonal or cyclical fluctuations.
These condensed reviewed results were compiled by Michael Swingler CA(SA).
Lease incentives
The Fund recognises the aggregate cost of incentives as a reduction of
rental income over the lease term, on a straight-line basis unless another
systematic basis is more representative of the time pattern over which the
benefit of the lease asset is diminished.
Fair value estimation of investments
Financial instruments and other assets carried at fair value are valued in
terms of IFRS 13.
The fair value of financial instruments traded in active markets (such as
available-for-sale securities) is based on quoted market prices at the end
of the reporting period.
Specific valuation techniques used to determine fair value include:
-Level 1: Quoted prices (unadjusted) in active markets for identical
assets or liabilities
-Level 2: Inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (as prices) or
indirectly (derived prices)
-Level 3: Inputs for the asset or liability that are not based on
observable market data (unobservable inputs)
The Fund transfers assets between levels in the fair value hierarchy on
the date that there is a change in the circumstances that give rise to the
transfer.
The information below analyses financial assets and financial liabilities,
which are carried at fair value, by level of hierarchy as required by IFRS
7 and IFRS 13.
The following table presents the Fund’s financial assets that are measured
at fair value at 30 September 2014:
Assets Level 1 Level 2 Level 3 Total
R ’000 R ’000 R ’000 R ’000
Available-for-sale financial
assets
Investment in Oasis Crescent
Global Property Equity Fund - 298 655 - 298 655
Investment in listed
property funds 29 851 - - 29 851
Investment in Oasis Crescent
International Property Equity
Feeder Fund - 1 745 - 1 745
Financial assets at fair value through profit or loss
Investment in Oasis Crescent
Income Fund - 41 394 - 41 395
Other short-term financial
assets excluding money market
funds - 4 964 - 4 964
Investment property
Investment property - - 431 020 431 020
The following table presents the Fund’s assets that are measured at fair
value at 30 September 2013:
Assets Level 1 Level 2 Level 3 Total
R ’000 R ’000 R ’000 R ’000
Available-for-sale financial
assets
Investment in Oasis Crescent
Global Property Equity Fund - 241 545 - 241 545
Investment in listed
property funds 19 169 - - 19 169
Investment in Oasis Crescent
International Property Equity
Feeder Fund - 2 099 - 2 099
Financial assets at fair value through profit or loss
Investment in Oasis Crescent
Income Fund - 45 184 - 45 184
Investment property
Investment property - - 394 061 394 061
The following table presents the Fund’s financial assets that are measured
at fair value at 31 March 2014:
Assets Level 1 Level 2 Level 3 Total
R'000 R'000 R'000 R'000
Available-for-sale financial
assets
Investment in Oasis Crescent
Global Property Equity Fund - 265 102 - 265 102
Investment in listed property
funds 18 681 - - 18 681
Investment in Oasis Crescent
International Property Equity
Feeder Fund - 2 244 - 2 244
Financial assets at fair value
through profit or loss
Investment in Oasis Crescent
Income Fund - 40 714 - 40 714
Investment property
Investment property
- - 427 201 427 201
The fair value of financial liabilities approximates their fair value due
to the short term nature of the instruments.
The fair value of financial instruments traded in active markets is based
on quoted market prices at the statements of financial position date. A
market is regarded as active if quoted prices are readily and regularly
available from an exchange, dealer, broker, industry group, pricing
service, or regulatory agency, and those prices represent actual and
regularly occurring market transactions on an arm's length basis. These
instruments are included in level 1.
The instruments included in level 2 comprises of Irish stock exchange
property equity investments classified as available-for-sale and
investments in shari'ah compliant instruments classified as financial
assets at fair value through profit or loss. The fair value of financial
instruments that are not traded in an active market is determined by using
valuation techniques. These valuation techniques maximise the use of
observable market data where it is available and rely as little as
possible on entity specific estimates. If all significant inputs required
to fair value an instrument are observable, the instrument is included in
level 2. If one or more of the significant inputs is not based on
observable market data, the instrument is included in level 3.
Specific valuation techniques used to value financial instruments include:
Available-for-sale financial assets
Oasis Crescent Global Property Equity Fund:
The fair value of investments in the Oasis Crescent Global Property Equity
Fund is determined using the closing Net Asset Value (NAV) price published
by Oasis Global Management Company (Ireland), the management company of
the fund, and listed on the Irish Stock Exchange. The shares are not
actively traded on the Irish Stock Exchange and are therefore not included
in Level 1.
Investment in listed property funds
The fair value of these investments is determined using the closing price
as at statement of financial position date. These shares are listed and
traded on the JSE Stock Exchange and are therefore classified as Level 1.
Oasis Crescent International Property Equity Feeder Fund
The fair value of investments in Oasis Crescent International Property
Equity Feeder Fund is determined using the closing Net Asset Value (NAV)
price published by Oasis Crescent Management Company Ltd., the management
company of the fund. These investments are not actively traded on an
exchange and are therefore not classified as Level 1.
Financial assets at fair value through profit or loss
Oasis Crescent Income Fund
The fair value of investments in Oasis Crescent Income Fund is determined
using the closing Net Asset Value (NAV) price published by Oasis Crescent
Management Company Ltd., the management company of the fund. These
investments are not actively traded on an exchange and are therefore not
classified as Level 1.
Investment property
Reviewed Reviewed Audited
6 months 6 months 31
to 30 to 30 March
September September 2014
2014 2013
R’000 R’000 R’000
Balance as at beginning of the
period 427 201 380 592 394 061
Fair value adjustment on
investment properties excluding
straight-lining of lease income (1 720) 5 709 18 876
Movement in lease incentives (165) 5 626 6 279
Additions to investment
properties 5 704 2 134 7 985
Balance at the end of the period 431 020 394 061 427 201
The fair value of investment properties is determined using observable
market inputs. The valuation methodologies include discounted cash flow
and net income capitalisation, using contracted rental income and other
observable cash flows. Capitalisation rates used in the valuations are the
most recent rates published by the South African Property Owners
Association (SAPOA). The principal assumptions underlying estimation of
fair value are those related to the receipt of contractual rentals,
expected future market rentals, void periods ranging from 0% to 5%,
maintenance requirements and appropriate discount rates. These valuations
are regularly compared to actual market yield data, actual transactions by
the Fund and those reported by the market. Valuations were carried out as
at 31 March 2014 by Mills Fitchet Magnus Penny, an independent,
professional valuer.
The Fund generally values its properties using the capitalisation of net
income approach which requires the valuer to establish the current net
income of the existing leases to which a market derived capitalisation
rate is applied. The market capitalisation rates used were in the range of
8.3% to 13.0% (2013: between 9.0% and 13.0%).
The valuation of investment properties requires judgement in the
determination of future cash flows and an appropriate capitalisation rate
which varies between 8.3% and 13.0% (2013: 9.0% and 13.0%). Changes in the
capitalisation rate attributable to changes in market conditions can have
a significant impact on property valuations.
There have been no significant transfers between level 1, 2 or 3 during
the period under review, nor were there any significant changes to the
valuation techniques and inputs used to determine fair values.
Other short-term financial assets
Reviewed Reviewed Audited
6 months 6 months 31
to 30 to 30 March
September September 2014
2014 2013
R’000 R’000 R’000
Tenant deposits 4 964 - -
Oasis Money Market Fund 4 500 - -
Other short-term financial
assets 9 464 - -
Related party transactions and balances
Identity of the related parties with whom material transactions have
occurred
Oasis Crescent Property Fund Managers Ltd. (“the Manager”) is the
management company of the Fund in terms of the Collective Investment
Schemes Control Act.
Oasis Group Holdings (Pty) Ltd. is a tenant at the Ridge@Shallcross and
the parent of the Manager
As disclosed in the prospectus of Oasis Crescent Global Property Equity
Fund, a management fee is charged for investing in the Oasis Crescent
Global Property Equity Fund by Oasis Global Management Company (Ireland)
Ltd., the manager of the fund.
As disclosed in the prospectus of the Oasis Crescent Income Fund, a
management fee is charged for investing in the Oasis Crescent Income Fund
by Oasis Crescent Management Company Ltd., the manager of the fund.
There are common directors to the Manager, Oasis Group Holdings (Pty)
Ltd., Oasis Global Management Company (Ireland) Ltd. and Oasis Crescent
Management Company Ltd. Transactions with related parties are executed on
terms no less favourable than those arranged with third parties.
Type of related party transactions
The Fund pays a service charge and a property management fee on a monthly
basis to the Manager.
The Fund pays a consulting fee to Abli Property Developers (Pty) Ltd. for
consulting services rendered in respect of capital development projects.
Related party transactions
6 months to 6 months to 12 months
30 September 30 September to 31 March
2014 2013 2014
Related party transactions R’000 R’000 R’000
Service charge paid to Oasis
Crescent Property Fund Managers
Ltd. 1 711 1 443 2 970
Property management fees paid to
Oasis Crescent Property Fund 545 472 921
Managers Ltd.
Other service fees paid to Oasis
Crescent Property Fund Managers
Ltd. - - 32
Consulting fees paid to Abli
Property Developers(Pty)Ltd. for
consulting services on capital
projects 127 - 356
Rental and related income paid by
Oasis Group Holdings (Pty) Ltd. at
the Ridge@Shallcross 216 202 415
Related party balances
6 months to 6 months to As at
30 September 30 September 31 March
2014 2013 2014
Related party balance R’000 R’000 R’000
Trade receivables from Oasis Group
Holding (Pty) Ltd. 1 239 - 302
Trade (payables to)/receivables
from Oasis Crescent Property Fund
Managers Ltd. (455) (357) (413)
Trade Payables to Abli Property
Developers(Pty) Ltd. (21) - (39)
Trade (payables to)/receivables
from Oasis Group Holding (Pty) Ltd. (39) (38) (142)
Directors’ commentary
INTRODUCTION
The Fund is well positioned in the current economic cycle with no debt and
substantial reserves. The objective of the Manager is to protect and grow
the real wealth of investors by providing sustainable growth in net asset
value and delivering a consistent income stream that has potential to grow.
This is achieved through a strategy focused on quality investments and
diversification by property sector, tenant mix, geography and currency. The
Fund is invested in direct property and listed REITS in South Africa, high
quality global listed REITS and income instruments.
Our focused approach has delivered significant real wealth for investors
with an annualised total unitholder return of 12.8% relative to annualised
inflation of 6.2% since inception, outperforming inflation by an average of
6.6% per annum. The annualised total intrinsic value return is 13.8% per
annum since inception.
Figures in %
Cumulative returns FY2011 FY2012 FY2013 FY2014 1H2015 Since
Inception
Unitholder return 89.3 104.2 125.9 165.3 191.6 191.6
Intrinsic value 101.5 124.1 161.0 194.6 214.8 214.8
return
Inflation 39.0 47.3 56.0 65.2 70.9 70.9
Annual Returns FY2011 FY2012 FY2013 FY2014 YTD SEP Since
2015 Inception
Unitholder return 12.5 7.8 10.7 17.4 9.9 12.8
Intrinsic value 11.3 11.2 16.4 12.9 6.9 13.8
return
Inflation 4.1 6.0 5.9 5.9 3.4 6.2
NAV 1 376 1 439 1 587 1 706 1 774
Market Price 1 290 1 300 1 350 1 500 1 600
MARKET OVERVIEW
The demand fundamentals continue to improve in the major global property
markets and in the regions with supply constraints we are seeing improving
occupancies and a return to positive rental reversion. As bond yields
normalize over the medium term, REITS with stronger rental growth, enhancing
development opportunities and superior balance sheets are well positioned to
outperform. In South Africa we have seen an increase in new shopping centres
in Johannesburg and Pretoria, but the demand from national food and fashion
tenants for good retail locations remains robust. In the industrial market,
the demand for logistics space remains solid and rentals are stable and
vacancies low. Demand in the office market is closely linked with business
confidence and the employment outlook which is going to take time to
recover. SA REITS are currently delivering a yield of 6.3% relative to the
SA 10yr bond yield of 8.2% and higher bond yields are a risk, but SA REITS
are expected to deliver 7-8% income growth per annum over the medium term.
PORTFOLIO OVERVIEW
1H2015 1H2014 FY2014
R'mil % R'mil % R'mil %
Direct Property 441 52 405 56 436 55
Cash, SA
Investments and
other 100 12 82 11 86 11
Global Investments 299 36 242 33 265 34
Total Assets 840 100 729 100 787 100
The Fund has focused on building a portfolio with a combination of high
quality direct property investments and global listed REITS with properties
located in the major global cities, which adds geographic and currency
diversification. The direct property includes exposure to the retail,
industrial and office sectors and it has a high exposure to the Western
Cape. In order to attract world class tenants, there is continuous
investment in and maintenance of the direct properties. The global listed
property exposure is via the Oasis Crescent Global Property Equity Fund
which is well positioned with a focus on REITS with high quality assets and
balance sheets. It has an average cash flow yield of 5.7% and dividend yield
of 4.7% which continues to offer value relative to the average global bond
yield and inflation of 2.6% and 1.9% respectively. The Cash and other SA
investments provide flexibility for the Fund to pursue growth opportunities.
REVIEW OF RESULTS AND OPERATIONS
Highlights
- Distribution per unit increased by 13.8% to 50.2 cents per unit (Sep
2013: 44.1 cents)
- Net asset value per unit increased by 9.2% to 1774 cents per unit (Sep
2013: 1624)
- Significant year on year decline in direct property vacancy due to
successful refurbishments
- Intrinsic value return of 13.8% per annum since inception compared to
inflation of 6.2% per annum
1H2015 1H2014 FY2014
Distribution per unit including non-
permissible income (cents) 50.2 44.1 87.2
Non-permissible rental income per
unit (cents) (0.9) (0.8) (1.6)
Non-permissible investment income per
unit (cents) (0.3) (0.2) (0.5)
Distribution per unit excluding non-
permissible income (cents) 49.0 43.1 85.1
Property portfolio valuation (R’mil) 441 405 436
Investments portfolio valuation
(R’mil) 381 307 327
Cash and cash equivalents (R’mil) 4 8 13
Net asset value per unit (cents) 1774 1624 1706
Listed market price at year end
(cents) 1600 1360 1500
Results Overview
During this period, the Fund benefitted from the reduction in direct
property vacancies following successful refurbishments and this resulted in
solid growth in rentals and property expense recoveries. The continued focus
on controlling the growth in property expenses also contributed to the
strong increase in net property income from the direct property portfolio.
The investment income earned from the global investments benefited from the
weaker Rand while the investment income from the SA listed investments was
lower due to the timing of dividend income as a result of the normal asset
management process. The higher service charge expense is due to the increase
in the market capitalisation of the Fund and the weighted average units in
issue increased by 5% year on year due to a high proportion of unitholders
electing to reinvest their dividends in additional units.
The increase in the average rental per square meter in the Segmental Profile
below is due to annual escalation and the positive impact from the
successful leasing in the industrial and retail portfolios over the past
year. The Fund continues with implementation of its leasing strategy which
includes lease expiries for 2015 and 2016 and further improvements in the
quality of the tenant mix.
Direct Property Portfolio Characteristics
Geographical Profile
Rentable Revenue Revenue Revenue
Area 1H2015 1H2014 FY2014
Area
(m²) % (R'mil) % (R'mil) % (R'mil) %
Western Cape 74 718 82 19.4 61 15.3 58 31.0 56
KwaZulu-Natal 15 874 18 12.4 39 11.2 42 24.0 44
Total - Direct
Property (excl
straight-lining) 90 592 100 31.8 100 26.6 100 55.0 100
Revenue includes property rental and recoveries
Segmental Profile
1H2015 1H2014 FY2014
Average Average Average
Rentable Average rental Average rental Average rental
area rental escalation rental escalation rental escalation
Segment (m²) per m² per m² (%) per m² per m² (%) per m² per m² (%)
Retail 18 595 119 8 95 9 104 8
Office 6 608 110 9 100 9 110 10
Industrial 65 389 29 8 22 8 25 8
TOTAL 90 592
Vacancy Profile
% of total
rentable area 1H2015 1H2014 FY2014
Retail 2.4 1.9 1.8
Office 0 0 0
Industrial 0 14.4 0
2.4 16.3 1.8
Lease expiry profile
1H2015 1H2014 FY2014
Rental Revenue Rental Revenue Rental Revenue
Area % % Area % % Area % %
- Within 1 year 4 11 1 2 5 13
- Within 2 year 40 45 4 12 34 44
- Within 3 year 20 14 47 54 25 9
- Within 4 year 3 2 6 7 3 2
- Within 5 year
or more years 33 28 42 25 33 32
100 100 100 100 100 100
Tenant Profile
1H2015 1H2014 FY2014
(%) (%) (%)
A - Large nationals, large listed, large
franchisees, multi-nationals and
government 71 76 71
B - Nationals, listed, franchisees and
medium to large professional firms 18 15 18
C - Other 11 9 11
TOTAL 100 100 100
Tenants are classified as large or major (“A” grade) or medium to large (“B”
grade) based on their financial soundness, profile and global or national
footprint.
OUTLOOK
The Fund will continue to increase the income earning potential of the
existing properties in the direct property portfolio and increase its focus
on evaluating acquisitions and developments that meet the required quality
criteria. The accumulated cash and liquid reserves provide the flexibility
to take advantage of these investment and development opportunities. The
global investments will continue to provide diversification benefits to
investors and will remain a unique characteristic of the Fund. Management
remain confident in the strategy of the Fund and the positive impact from
the year-on-year decrease in vacancy experienced during this reporting
period is expected to continue for the remainder of the financial year.
ADDITIONAL INFORMATION
Property management
Property management is outsourced to The Manager and external service
providers. The amount paid to the Manager was R543,858 (September 2013:
R472,090)
Service charge
The service charge is equal to 0.5% per annum of the Fund’s market
capitalisation and borrowing facilities based on the average daily closing
prices of the units. The amount paid to the Manager was R1.711 million
(September 2013: R1.443 million)
Units in issue
As at 30 September 2014 the number of units in issue was 45,427,278
(September 2013: 43,301,294)
Shareholding in The Manager
OCPFM is 100% owned by Oasis Group Holdings (Pty) Ltd.
Changes to the Board
There were no changes to the board of directors during the 6 month period
ended 30 September 2014.
Distribution declaration and important dates
Notice is hereby given that a distribution after non-permissible income
in respect of the six months ended 30 September 2014 of 4,900.34 cents
for every 100 units held, has been declared payable to unit holders
recorded in the register of the Fund at close of business on Friday, 14
November 2014. Unitholders may elect to receive the distribution in
cash or to reinvest the distribution at a rate of 2.76191 units at
1,774.26 cents per units (in aggregate) for every 100 units so held.
Unitholders should take note of the corporate action timetable as set out
below in respect of the above reinvestment and cash distribution and the
election in terms thereof:
Declaration announcement on SENS of Thursday, 16 October 2014
distribution and right of election to
receive cash distribution
Circular and form of election posted to Thursday, 23 October 2014
unitholders
Finalisation announcement on SENS in respect Friday, 24 October 2014
of distribution and right of election to
receive cash distribution
Last day to trade in order to be eligible Friday, 7 November 2014
for the distribution
Trading commences ex-entitlement Monday, 10 November 2014
Listing of maximum possible number of units Wednesday, 12 November 2014
that may be purchased, at commencement of
trade on
Closing date for the election of cash Friday, 14 November 2014
distribution or reinvestment at 12:00
Record date for the distribution Friday, 14 November 2014
Cash distribution cheques posted and Monday, 17 November 2014
CSDP/broker accounts updated with cash
Unit certificates posted and CSDP/broker Wednesday, 19 November 2014
accounts updated with units
Announcement of the results of the Wednesday, 19 November 2014
distribution on SENS
Adjustment of number of new units listed Friday, 21 November 2014
Note:
1. Unitholders electing to reinvest their distribution in new units are
alerted to the fact that the new units will be listed 3 business days
after the Last Day to Trade and that these new units can only be traded 3
business days after the Last Day to Trade, due to the fact that settlement
of the units will be 3 business days after the record date, which differs
from the conventional one business day after the record date settlement
process.
2. Units may not be dematerialised or rematerialised between Monday, 10
November 2014 and Friday, 14 November 2014.
3. The above dates and times may be subject to change. Any changes will be
announced on the Securities Exchange News Service (“SENS”).
4. All times quoted are South African times.
5. Dematerialised unitholders should provide their CSDP or broker with
their election instructions by the cut-off time stipulated in terms of
their custody agreement with such CSDP or broker.
6. If no election is made, the distribution accrued to the unitholder will
be reinvested and used to purchase additional units, as set out above.
Tax implications of the distribution
In respect of the distribution, the Manager hereby advises unitholders,
who will receive the distribution, that for taxation purposes, OCPF is
a REIT as defined in the Income Tax Act as from 1 April 2013 and,
accordingly, the tax implications of the distribution have changed as
from that date. The distribution will not be exempt from income tax in
terms of section 10(1)(k) of the Income Tax Act.
For South African tax residents, the distribution will be exempt from
dividends tax in terms of section 64F(l) of the Income Tax Act,
provided that you, as unitholder, provide your transfer secretary,
nominee, custodian or CSDP with confirmation of your tax residence
status in the prescribed form. If you do not provide the required
residence status, they will have no choice but to withhold dividends
tax at a rate of 15%. Where dividends tax is withheld at 15%, the
reinvestment ratio for non-resident unitholders will be 2.347624 units
at 1,774.26 cents per unit, for every 100 (one hundred) units held.
Kindly contact the transfer secretaries, or your nominee, custodian or
CSDP for a copy of the prescribed declaration form.
For non-residents, for South African tax purposes, the distribution
received by a non-resident from a REIT will be subject to dividend
withholding tax at 15%, unless the rate is reduced in terms of any
applicable agreement for the avoidance of double taxation (“DTA”)
between South Africa and the country of residence of the unitholder.
Non-resident unitholders that believe that a reduced rate of tax
applies in respect of their applicable DTA should contact their
transfer secretary, nominee, custodian or CSDP for the prescribed form
to record the reduced rate of tax.
The Income Tax Act sections applicable to the distributions made are as
follows:
- Property income distribution from a REIT – section 10(1)(k) and
section 64F(l)
Both resident and non-resident unitholders are encouraged to consult
their professional tax advisors with regard to their individual tax
liability in this regard.
Units in issue at date of declaration of the distribution: 45 427 278.
Income tax reference number: 3354212148
A circular will be posted to unitholders on or about 23 October 2014 in
respect of the income and unit distribution.
By order of the Board
Oasis Crescent Property Fund Managers Ltd.
Cape Town
16 October 2014
Designated Advisor
PSG Capital Proprietary Ltd.
Date: 16/10/2014 05:30:00 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.
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