Wrap Text
Unaudited condensed consolidated interim results for the six months ended 31 December 2014
Attacq Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/000543/06)
JSE share code: ATT ISIN: ZAE000177218
("Attacq" or "the Company" or "the Group")
Unaudited condensed consolidated interim results for the six months ended 31 December 2014
Condensed consolidated statement of financial position
Unaudited Restated Audited
31 December 31 December 30 June
2014 2013 2014
R'000 R'000 R'000
Assets
Non-current assets
Property, plant and equipment 11 599 8 714 11 061
Investment property 14 046 936 10 682 229 12 829 337
Per valuation 14 450 766 10 876 355 13 138 938
Straight-line lease debtor (403 830) (194 126) (309 601)
Straight-line lease debtor 403 830 194 126 309 601
Deferred initial lease expenditure 8 097 1 902 7 174
Intangible assets 355 069 294 469 284 826
Goodwill 62 847 60 658 62 847
Investment in associates 2 835 966 1 554 337 2 950 274
Other investments 406 909 410 453 523 750
Other financial assets 471 134 - -
Deferred tax assets 15 385 15 710 11 570
Total non-current assets 18 617 772 13 222 598 16 990 440
Current assets
Inventory - 177 698 -
Taxation receivable 5 490 15 966 896
Trade and other receivables 219 532 131 713 167 302
Loans to associates 705 159 714 769 771 936
Other financial assets 1 084 69 088 6 173
Cash and cash equivalents 929 797 187 686 389 293
Total current assets 1 861 062 1 296 920 1 335 600
Non-current assets held for sale - 200 299 138 846
Total assets 20 478 834 14 719 817 18 464 886
Equity and liabilities
Equity
Stated capital/Issued share capital and share premium 6 439 418 4 205 186 5 798 843
Distributable reserves 4 201 209 3 246 786 3 836 930
Available-for-sale reserve 160 566 - 83 746
Share-based payment reserve 86 623 8 873 83 317
Foreign currency translation reserve 105 156 227 111 929
Acquisition of non-controlling interest reserve (116 483) (3 183) (2 574)
Equity attributable to owners of the holding company 10 876 489 7 457 889 9 912 191
Non-controlling interests (2 706) 157 719 214 567
Total equity 10 873 783 7 615 608 10 126 758
Non-current liabilities
Long-term borrowings 6 954 013 4 003 365 6 226 221
Deferred tax liabilities 1 070 857 830 317 900 811
Other financial liabilities 151 458 182 505 48 026
Provisions for liabilities relating to associates 8 834 71 353 8 844
Finance lease obligation 70 263 58 858 56 009
Total non-current liabilities 8 255 425 5 146 398 7 239 911
Current liabilities
Other financial liabilities 3 171 2 029 5 851
Loans from associates 141 140 215 355 246 079
Taxation payable 6 282 11 879 11 158
Trade and other payables 272 684 149 148 375 960
Provisions 1 932 7 205 10 142
Long-term borrowings 924 417 1 471 514 449 027
Total current liabilities 1 349 626 1 857 130 1 098 217
Non-current liabilities directly associated with assets held for sale - 100 681 -
Total liabilities 9 605 051 7 104 209 8 338 128
Total equity and liabilities 20 478 834 14 719 817 18 464 886
Cents Cents Cents
Net asset value per share 1 552 1 285 1 477
Net asset value per share excluding deferred tax 1 702 1 425 1 610
Condensed consolidated statement of comprehensive income
Unaudited Restated Audited
31 December 31 December 30 June
2014 2013 2014
R'000 R'000 R'000
Gross rental income 609 161 368 696 876 850
Rental income 514 932 346 059 769 199
Straight-line lease income adjustments 94 229 22 637 107 651
Property expenses (185 940) (130 966) (230 300)
Net rental income 423 221 237 730 646 550
Gross profit on sale of inventory - - 41 332
Sale of inventory - - 263 209
Cost of sales - - (221 877)
Bargain purchase on acquisition of subsidiary - - 43 783
Other income 70 073 7 669 59 325
Operating and other expenses (61 005) (155 341) (283 743)
Operating profit 432 289 90 058 507 247
Amortisation of intangible asset (9 756) (4 878) (14 634)
Fair value adjustments 306 512 571 857 953 192
Investment properties 310 499 466 226 919 094
Other financial (liabilities) assets (2 362) 16 092 34 098
Other investments (1 625) 89 539 -
Net (loss) income from associates (24 960) 55 573 (58 069)
Investment income 73 542 61 187 424 796
Finance costs (301 103) (334 860) (582 122)
Profit before taxation 476 524 438 937 1 230 410
Income tax expense (116 696) (77 886) (218 156)
Profit for the period 359 828 361 051 1 012 254
Attributable to:
Owners of the company 364 279 356 003 946 147
Non-controlling interests (4 451) 5 048 66 107
Other comprehensive income
Items that will be reclassified subsequently to profit or loss
Gain on available-for-sale financial assets 67 804 - 104 950
Taxation relating to components of other comprehensive income 9 016 - (21 204)
Other comprehensive income for the period net of taxation 76 820 - 83 746
Total comprehensive income for the period 436 648 361 051 1 096 000
Attributable to:
Owners of the company 441 099 356 003 1 029 893
Non-controlling interests (4 451) 5 048 66 107
Earnings per share
Basic (cents) 54.1 67.9 163.4
Diluted (cents) 54.0 67.7 163.1
Unaudited Restated Audited
31 December 31 December 30 June
2014 2013 2014
R'000 R'000 R'000
Reconciliation between earnings, headline earnings (loss) and distributable earnings
Profit for the period 364 279 356 003 946 147
Headline earnings adjustments (263 388) (422 209) (640 350)
Profit on disposal of associates (331) (7 543) (7 790)
(Profit) loss on disposal of other investments (956) 65 153 65 150
Loss (profit) on disposal of investment property 1 277 (2 651) (8 567)
(Reversal of impairment) impairment of associates and other investments (14 838) 4 954 14 995
Fair value adjustments (306 512) (571 857) (953 192)
Gain arising from bargain purchase - - (43 783)
Net loss (income) from associates 24 960 (55 573) 58 069
Tax effect of adjustments 52 226 105 831 153 575
Non-controlling interests share (19 214) 39 477 81 193
Headline earnings (loss) 100 891 (66 206) 305 797
Distributable earnings adjustments (64 701) 72 200 28 780
Straight-line lease income adjustments (64 965) (15 999) (94 358)
Interest in respect of Attvest transaction - 88 971 123 571
Finance lease interest 638 - -
Actual finance lease payments (374) (772) (433)
Distributable earnings 36 190 5 994 334 577
Number of shares in issue* 700 995 224 580 416 250 670 965 594
Weighted average number of shares in issue* 673 324 370 524 687 572 578 976 838
Diluted weighted average number of shares in issue* 674 741 882 526 050 170 580 271 131
Headline earnings (loss) per share
Basic (cents) 15.0 (12.6) 52.8
Diluted (cents) 15.0 (12.6) 52.7
* December 2014 and June 2014: Adjusted for 46 427 553 treasury shares (December 2013: 73 583 735)
Condensed consolidated statement of cash flows
Unaudited Restated Audited
31 December 31 December 30 June
2014 2013 2014
R'000 R'000 R'000
Net cash flow (utilised in) generated from operating activities (179 164) (287 017) 276 516
Cash generated from (utilised in) operating activities 76 808 (84 143) 503 050
Investment income 73 542 61 187 424 796
Finance costs (298 071) (184 997) (582 122)
Taxation paid (31 443) (79 064) (69 208)
Net cash flow utilised in investing activities (1 026 557) (1 127 497) (3 970 959)
Net cash flow from financing activities 1 746 225 1 598 894 3 751 402
Total cash movement for the period 540 504 184 380 56 959
Cash at the beginning of the period 389 293 44 389 44 389
Cash (disposed) acquired with subsidiaries - (41 083) 287 945
Total cash at the end of the period 929 797 187 686 389 293
Condensed consolidated statement of changes in equity
Share Foreign Share- Available- Distributable Acquisition Equity Non- Total
capital currency based for-sale reserves of non- attributable controlling
and share translation payment reserve controlling to owners interests
premium/ reserve reserve interest of the
Stated reserve company
capital
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1 July 2013 - as previously reported 2 196 594 159 5 488 - 3 170 832 - 5 373 073 355 831 5 728 904
Restatement - - - - (20 106) - (20 106) (3 548) (23 654)
Balance at 1 July 2013 - restated 2 196 594 159 5 488 - 3 150 726 - 5 352 967 352 283 5 705 250
Issue of shares 2 167 265 - - - - - 2 167 265 - 2 167 265
Issue of shares - adjustment (136 373) - - - - - (136 373) - (136 373)
Share buy-back through reserves (22 300) - - - (259 943) - (282 243) - (282 243)
Total comprehensive income - - - - 356 003 - 356 003 5 048 361 051
Derecognition of FCTR and non-controlling interests - - - - - - - (199 612) (199 612)
Foreign currency translation reserve - 68 - - - - 68 - 68
Recognition of change in ownership reserve - - - - - (3 183) (3 183) - (3 183)
Recognition of share-based payments - - 3 385 - - - 3 385 - 3 385
Balance at 31 December 2013 - restated 4 205 186 227 8 873 - 3 246 786 (3 183) 7 457 889 157 719 7 615 608
Balance at 31 December 2013 - as previously reported 4 205 186 227 8 873 - 3 268 435 (3 183) 7 479 538 157 991 7 637 529
Restatement - - - - (21 649) - (21 649) (272) (21 921)
Issue of shares 1 593 657 - - - - - 1 593 657 - 1 593 657
Total comprehensive income - - - 83 746 590 144 - 673 890 61 059 734 949
Derecognition of non-controlling interest - - - - - - - (4 211) (4 211)
Foreign currency translation reserve - 111 702 - - - - 111 702 - 111 702
Recognition of change in ownership reserve - - - - - 609 609 - 609
Recognition of share-based payments - - 74 444 - - - 74 444 - 74 444
Audited balance at 30 June 2014 5 798 843 111 929 83 317 83 746 3 836 930 (2 574) 9 912 191 214 567 10 126 758
Issue of shares 640 575 - - - - - 640 575 - 640 575
Total comprehensive income - - - 76 820 364 279 - 441 099 (4 451) 436 648
Recognition of change in ownership reserve - - - - - (113 909) (113 909) - (113 909)
Foreign currency translation reserve - (6 773) - - - - (6 773) - (6 773)
Derecognition of non-controlling interest - - - - - - - (212 822) (212 822)
Recognition of share-based payments - - 3 306 - - - 3 306 - 3 306
Unaudited balance at 31 December 2014 6 439 418 105 156 86 623 160 566 4 201 209 (116 483) 10 876 489 (2 706) 10 873 783
Summarised segmental analysis
Unaudited Restated Audited
31 December 2014 31 December 2013 30 June 2014
Revenue Net profit Investment Net asset Revenue Net profit Investment Net asset Revenue Net profit Investment Net asset
Business segment (loss) properties value (loss) properties value (loss) properties value
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 - - - - 4 367 (1 571) - - 4 462 (9 282) - -
Brooklyn Bridge Office Park 34 140 4 020 608 227 207 397 - - - - 19 222 41 472 608 275 203 377
Great Westerford 15 972 8 304 261 303 189 867 16 691 914 264 757 156 290 34 529 (21 787) 235 609 181 563
Harlequins Office Park - - - - 2 692 (769) - - 2 694 2 094 - -
Lynnwood Bridge 76 511 26 746 1 208 727 327 501 60 800 45 017 835 312 385 968 118 079 48 852 829 661 300 755
Aurecon Building 48 827 9 668 637 822 162 360 37 967 7 577 649 061 142 019 101 230 19 093 637 953 152 692
Majestic Offices 4 551 9 722 144 468 33 910 - - - - - - - -
Waterfall - Altech Building 3 181 1 251 41 412 17 171 536 7 949 42 292 13 490 3 803 4 634 41 004 15 920
Waterfall - Cell C Campus 59 872 13 654 762 722 896 420 9 207 61 151 708 616 55 341 64 343 106 358 761 329 882 766
Waterfall - City Lodge - (1 205) 100 092 59 550 - - - - - - - -
Waterfall - Group 5 41 239 23 546 520 922 237 831 - - - - 32 048 82 213 504 420 214 285
Waterfall - Maxwell Office Park - Phase I & II 11 890 (4 434) 221 797 92 070 134 17 103 121 627 34 629 6 495 14 474 130 494 96 504
Office and mixed use 296 183 91 272 4 507 492 2 224 077 132 394 137 371 2 621 665 787 737 386 905 288 121 3 748 745 2 047 862
De Ville Shopping Centre - - - - 13 586 8 130 200 299 101 651 20 204 31 074 - -
Glenfair Boulevard Shopping Centre 23 595 13 585 338 791 295 283 21 675 15 342 328 202 259 843 44 197 35 901 349 646 281 698
Sanridge Square - - - - 2 944 2 125 - - 511 2 016 - (388)
Garden Route Mall 64 710 24 314 1 131 866 386 946 58 711 31 532 1 056 042 653 650 114 759 110 978 1 111 741 362 632
Brooklyn Mall 36 744 23 017 663 526 262 304 34 148 22 383 604 193 244 056 67 350 75 134 637 515 239 287
Mooirivier Mall 60 086 32 508 1 019 424 472 720 56 690 57 714 974 683 381 053 115 524 84 173 992 265 440 212
Andringa Walk 11 740 (3 179) 164 354 (113 695) 11 386 2 435 155 834 (116 948) 23 444 3 163 160 512 (110 516)
Eikestad Mall 32 433 10 535 512 971 107 870 29 136 16 942 504 575 66 453 60 121 17 461 503 449 97 335
Mill Square 3 660 438 77 431 9 803 1 491 (4 804) 58 573 98 251 4 214 260 73 196 9 365
Newtown Junction 32 808 (45 800) 1 220 920 141 523 - - - - - - - -
Waterfall Corner 14 240 (3 122) 169 528 40 544 - - - - 6 723 32 438 169 592 43 666
Waterfall Lifestyle 6 802 2 340 100 497 87 207 - - - - - - - -
Retail 286 818 54 636 5 399 308 1 690 505 229 767 151 799 3 882 401 1 688 009 457 047 392 598 3 997 916 1 363 291
Waterfall - Angel Shack 2 078 2 687 30 084 21 392 - - - - - - - -
Waterfall - Covidien 1 219 9 017 98 635 44 530 - - - - - - - -
Waterfall - Drager 1 574 6 281 62 660 35 659 - - - - - - - -
Waterfall - Massbuild Distribution Campus 17 610 7 220 231 984 56 832 6 535 8 310 239 415 98 917 31 701 1 471 224 962 49 612
Waterfall - Westcon 3 099 (1 664) 87 071 44 772 - - - - - - - -
Light industrial 25 580 23 541 510 434 203 185 6 535 8 310 239 415 98 917 31 701 1 471 224 962 49 612
Le Chateau - (5) 17 000 14 748 - (52) 17 000 14 751 - (70) 17 000 14 753
Waterfall - Infrastructure and Services 31 (7 780) 587 231 308 437 - - 408 243 260 869 - (31 149) 446 046 316 217
Waterfall - Land - 31 172 1 518 088 1 534 643 - (18 333) 1 516 385 1 737 306 - 24 154 1 503 549 1 503 471
Vacant land 31 23 387 2 122 319 1 857 828 - (18 385) 1 941 628 2 012 926 - (7 065) 1 966 595 1 834 441
Waterfall - Angel Shack - - - - - - 4 813 558 - 1 134 21 031 18 705
Waterfall - City Lodge - - - - - 2 614 22 309 10 857 - 5 156 63 086 60 755
Waterfall - Covidien - - - - - - - - - 2 903 39 236 35 513
Waterfall - Cummins - 4 619 54 418 19 835 - - - - - 1 118 24 312 15 216
Waterfall - Drager - - - - - 13 359 1 220 - 2 968 30 535 29 378
Waterfall - Group 5 - - - - - 108 912 491 800 107 048 - - - -
Waterfall - Mall of Africa* - 115 355 1 228 979 848 220 - 44 686 581 407 307 482 - 141 149 994 714 732 865
Waterfall - Maxwell Office Park - Phase I - - - - - - - - - - - -
Waterfall - Maxwell Office Park - Phase II - - - - - 2 823 33 370 30 579 - 8 281 83 671 72 491
Waterfall - Maxwell Office Park - Phase III - (3 838) 35 120 (3 838) - - - - - - - -
Waterfall - Novartis - 9 210 132 946 58 502 - - - - - 5 146 54 168 49 292
Waterfall - Servest - 4 800 55 920 4 800 - - - - - - - -
Waterfall Corner - - - - - 33 899 130 364 45 237 - - - -
Waterfall Lifestyle - - - - - - 31 201 13 483 - (1 516) 87 299 84 867
Waterfall - Westcon - - - - - - 23 343 6 918 - 489 52 348 46 436
Lynnwood Bridge - Phase III - - - - - (12 573) 206 208 35 229 - 8 149 308 639 115 081
Newtown - - - - - (26 994) 577 670 147 905 - 6 036 987 919 187 323
Majestic Offices - - - - - 8 082 81 575 22 519 - 19 194 144 161 24 188
Developments - 130 146 1 507 383 927 519 - 161 449 2 197 419 729 035 - 200 207 2 891 119 1 472 110
Head office/other 549 118 117 - 3 970 669 - (84 541) - 2 298 984 1 197 154 561 - 3 359 442
Total 609 161 441 099 14 046 936 10 873 783 368 696 356 003 10 882 528 7 615 608 876 850 1 029 893 12 829 337 10 126 758
* 80% undivided share as at 31 December 2014. 100% held in prior periods
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 or brownfields development by refurbishment of 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 R20 billion, including
landmark commercial and retail property assets and developments. Its portfolio of properties and investments is geographically diverse across South Africa and includes a growing
representation of international investments in sub-Saharan Africa via AttAfrica Limited ("AttAfrica") and Germany, Switzerland and the United Kingdom via a strategic stake in MAS Real
Estate Inc. ("MAS").
Net asset value per share ("NAVPS")
NAVPS as at 31 December 2014 was R15.52, 20.8% higher than the prior comparative period (restated) of 31 December 2013 and 5.0% higher than the NAVPS as at 30 June 2014.
Capital raised
On 9 December 2014, Attacq raised R640 million in cash from shareholders by way of a vendor placement to fund the acquisition of the Attacq Waterfall Investment Company (Pty) Ltd ("AWIC") minority shareholding,
as detailed further below.
Acquisitions
Non-controlling interests
AWIC transaction
As part of Attacq's strategy to manage the entire Waterfall pipeline, its key asset, and to take full control of the strategic planning of Waterfall, including the roll-out of its
infrastructure, Attacq became the sole shareholder of AWIC in which Atterbury Property Holdings (Pty) Ltd ("Atterbury") previously held an 18.775% effective shareholding through its
wholly-owned subsidiary, Atterbury Waterfall City (Pty) Ltd ("AWC"). The total purchase consideration for Atterbury's stake was R655.1 million.
The AWIC transaction enables Attacq to accelerate the unlocking of value in respect of the Waterfall development rights by working on an unrestricted basis with Atterbury and other
developers. This strategy was formulated jointly with Atterbury, which is increasing its deployment of development capacity in other markets including Central and Eastern Europe, a
direction which supports Attacq's diversification strategy.
As part of the AWIC transaction, Attacq secured a pre-emptive right in respect of all material developments to be undertaken by Atterbury, locally and internationally, thus ensuring
Attacq's continued access to Atterbury's development pipeline.
In return for this right, the disposal by AWC of its shareholding in AWIC and the amendments to Atterbury's exclusive development rights, Attacq reduced its shareholding in Atterbury from
25% to 10% for a consideration on R83 million. Attacq has retained a seat on Atterbury's board.
Lynnaur Investments (Pty) Ltd ("Lynnaur")
Effective 12 December 2014, Attacq acquired the 25% non-controlling interest in Lynnaur, the owner of the Aurecon building in Pretoria, for an amount of R50 million. Attacq is now the
sole owner of all the properties located in the Lynnwood Bridge Precinct and the acquisition is in accordance with Attacq's strategy of owning properties located in strong nodes.
Impact on NAV
The acquisition of these non-controlling interests took place at a premium to the accounting NAV of each entity, resulting in the acquisition of non-controlling interest reserve
increasing by R113.9 million. The premium paid to accounting NAV was justified by the existence of future economic benefits not reflected in the underlying asset carrying values as at
the transaction date.
Disposals
Part-disposal of stake in Atterbury and disposal of 20% undivided share in the Mall of Africa
As part of the AWIC restructure, AWIC disposed of a 20% undivided share in the Mall of Africa for R318 million to Atterbury, who prior to the restructure held an 18.775% indirect stake
in the Mall of Africa via their shareholding in AWIC. An agterskot amount is payable to Attacq on the additional 1.225% stake in the Mall of Africa acquired by Atterbury. The amount will
be determined with reference to the market value of the mall one year after its opening.
Restructure of African Land Investments Limited ("ALI")
During the period, Attacq and Hyprop Investments Limited ("Hyprop") restructured 50% of Manda Hill Mall under AttAfrica Limited, with the remaining 50% being held directly by Hyprop.
Attacq's 12.43% shareholding was disposed effective 1 July 2014 for an amount of R110.4 million.
Disposal of Rapfund Holdings (Pty) Ltd ("Rapfund")
In July 2014, Attacq sold its shareholding in Rapfund to a consortium of existing and new Rapfund shareholders for an amount of R139 million.
Profit before taxation
Net rental income
Net rental income including straight-line lease income adjustments increased by 78.0% compared with December 2013. This large increase is driven by the roll-out of the Waterfall
pipeline. A like-for-like comparison of net rental income is of limited use due to the internalisation of the asset management function during the December 2013 reporting period as well
as a result of changes in the property portfolio. Four properties were disposed of, one property was acquired and a further 14 properties under development were completed since December
2013.
Vacancies
Overall portfolio vacancies, measured in terms of primary gross lettable area ("GLA") have increased by 14 300m2 compared to 30 June 2014. On a like-for-like basis, vacancies have
decreased by 2 369m2. The balance of the increase, being 16 669m2, relates primarily to Newtown Junction, The Majestic, Lynnwood Bridge Phase III and Waterfall Lifestyle, all of which
came into operation during the period. Subsequent to 31 December 2014, 4 877m2 of the vacant space in these properties was taken up.
31 December 2014 30 June 2014
Sector Vacancy % Vacant GLA m2 Vacancy % Vacant GLA m2
Retail 2.2 11 335 0.9 3 317
Office 3.0 15 671 2.4 9 389
Industrial - - - -
Hotel - - - -
Portfolio vacancy 5.2 27 006 3.3 12 706
Operating and other expenses
The significant reduction in operating and other expenses is due to a loss of R68.1 million included in the December 2013 period realised on the disposal of Attacq's investment in the
merged Karoo I and Karoo II funds in return for a then 23.4% stake in MAS. Attacq will share in any realised upside on the Karoo assets directly by way of an agterskot mechanism and
indirectly via its increased shareholding in MAS. On the assumption that the underlying Karoo assets will be realised at their stated values as at 31 December 2014, the agterskot would
amount to approximately R267 million, prior to any related taxes. Attacq will only recognise the agterskot amount upon final realisation in 2016.
Other income
The two main contributors to other income are the profits realised on the disposal of the 15% shareholding in Atterbury and the 20% undivided share in the Mall of Africa.
Fair value adjustments
Compared to the prior period, fair value adjustments on investment properties decreased by 33.4% to R310.5 million. Fair value adjustments on investment properties, after accounting for
straight-line lease income adjustments, is made up as follows:
31 December 31 December
R'000 2014 2013
(restated)
Completed properties 65 120 193 863
Properties under development 202 127 257 152
Vacant land 43 252 15 211
Total fair value adjustments in investment properties 310 499 466 226
In the current period, fair value adjustments in respect of completed properties were negatively impacted by a conservative outlook on the filling of vacancies on recently completed
properties, reductions on forecast net property income on certain properties and a 25 basis point increase in the market capitalisation rates applied to five properties.
Property valuations as at 31 December 2014 are based on external desktop valuations performed by Jones Lang LaSalle (Pty) Ltd, Old Mutual Investment Group (South Africa) (Pty) Ltd, Mills
Fitchet KZN CC and Broll Valuation & Advisory Services (Pty) Ltd.
The valuation in respect of Waterfall's vacant leasehold land is based on an external desktop valuation performed on a freehold basis. The desktop valuation is then adjusted downward by
management to take into account, inter alia, land currently held by way of development rights and the estimated future rental obligations attached to the land.
Investment income
Included in investment income in the current period is interest income of R49.6 million and dividend income of R23.9 million.
Finance costs
Finance costs decreased by 10.1% compared to the prior period. Included in the December 2013 period is a non-cash, non-recurring amount 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. Excluding this amount, the increase is 42.5%, which is attributable to the 14 properties
completed since December 2013, resulting in the related finance costs being expensed and no longer capitalised to the property under development.
Development property
In the current interim period, the following properties under development were completed:
Property Sector Completion Primary Occupancy
date GLA
(m2) %
Waterfall
Premier Foods (Maxwell Office Park)^ Office July 2014 3 902 100
Waterfall Lifestyle Retail July 2014 7 018 >60
Angel Shack Industrial August 2014 4 648 100
Honda (Maxwell Office Park)^ Office November 2014 3 972 >75
Westcon Industrial October 2014 7 868 100
City Lodge Hotel December 2014 6 180 100
Drager Industrial October 2014 5 027 100
Covidien Industrial November 2014 11 082 100
Other
Newtown Junction Retail & Office October 2014 64 190 >90
The Majestic Office September 2014 8 852 >70
Lynnwood Bridge Phase III Office October 2014 14 210 >65
^ 50% joint arrangement with the Moolman Group. 100% of the GLA is reflected above
The following properties were either under development at 31 December 2014 or development commenced subsequently:
Property Sector Anticipated Primary GLA % pre-let
completion date (m2)*
Under development
Waterfall
Novartis Office April 2015 7 055 100
Servest Industrial May 2015 6 650 100
Cummins~ Industrial June 2015 20 833 100
Colgate (Maxwell Office Park)^ Office August 2015 4 241 100
Speculative building (Maxwell Office Park)^ Office August 2015 6 280 -
Mall of Africa# Retail April 2016 131 037 >75
Commenced post 31 December 2014
Waterfall
Hilti Industrial August 2015 3 700 100
Stryker Industrial August 2015 3 219 100
Allandale building Office May 2016 14 670 >30
Other
PwC Office February 2018 40 000 100
City Lodge - Newtown Hotel November 2015 4 228 100
* Estimated GLA, subject to change upon final remeasurement after completion
~ 50% joint arrangement with Zenprop. 100% of the GLA is reflected above
^ 50% joint arrangement with the Moolman Group. 100% of the GLA is reflected above
# 80% undivided share, 20% held by Atterbury. 100% of GLA is reflected above
Borrowings
Total net interest-bearing borrowings increased by 29.0% from December 2013 with additional debt being incurred to fund Attacq's growing property portfolio in accordance with its capital
growth model.
Gearing, calculated as total net interest-bearing debt (including debt on non-current assets held for sale) less cash on hand to total assets, improved from 36.6% as at 31 December 2013
(restated) to 33.9% as at 31 December 2014. In order to mitigate interest rate risk, approximately 82.5% (31 December 2013: 69.6%) of utilised debt of R7.9 billion as at 31 December 2014
(31 December 2013: R5.6 billion) was hedged in terms of either fixed interest rate loans or interest rate swaps. Including forward starting hedges, 70.8% of total drawn and undrawn
committed debt facilities have been hedged. The weighted average cost of funding as at 31 December 2014 was 9.7% (31 December 2013: 9.7%).
AttAfrica Limited
During the period, Atterbury Africa Limited was rebranded as AttAfrica following the restructure of 50% of Manda Hill Mall under Atterbury Africa and the merger of the management teams
of ALI and Atterbury Africa. Attacq's investment in AttAfrica increased to R461.8 million during the period in order to fund its share of AttAfrica's underlying development pipeline as
well as the Manda Hill Mall acquisition. At 31 December 2014, AttAfrica's underlying assets were as follows:
Property and location GLA AttAfrica Attributable Attacq
ownership value effective
interest
(m2) % (USD'000) % Status
Accra Mall 19 000 47 39 997 14.7 Income producing, fully let. Future expansion planned
Accra, Ghana
West Hills Mall 27 500 45 48 250 14.1 Fully let. Opened late October 2014
Accra, Ghana
Manda Hill Mall 44 000 50 68 850 15.6 99% let, income producing. Future expansion planned
Lusaka, Zambia
Achimota Mall 13 400* 75 12 605 23.4 Under construction. Anchored by Shoprite, Mr Price and Jet. Completion October 2015
Accra, Ghana
Kumasi City Mall 29 000* 75 8 270 23.4 Pre-letting underway. Completion date early 2017
Kumasi, Ghana
Waterfalls - 25 1 215 7.8 Land acquired for retail and hotel development
Lusaka, Zambia
* GLA (m2) proposed
Change in directors and company secretary
Lebo Masekela resigned from the board with effect from 30 November 2014. Subsequent to period-end, Keneilwe Moloko was appointed to the board with effect from 2 February 2015.
T Smith resigned as company secretary, effective 11 March 2015 and T Kodde was appointed as company secretary effective from the same date.
Subsequent events
Acquisition of PwC Sunninghill offices
Effective 31 January 2015, AWIC acquired 100% of the issued share capital and loan claims of Micawber 832 (Pty) Ltd, the owner of the current PwC offices located in Sunninghill,
Gauteng, for a total consideration of R475.8 million.
Prospects
Delivery of the Waterfall pipeline remains Attacq's main focus. During the 12 months ended 31 December 2014, 14 buildings were completed and Waterfall's secured pipeline of projects
planned or underway totalled 237 685m2 at 31 December 2014. Developable bulk remaining for development totals 1 399 440m2, being 78.3% of total available bulk.
With its three operational malls and a further two malls under development, AttAfrica will provide Attacq with increasing exposure to the African growth story and through Attacq's
investment in MAS, exposure is obtained to the developed property markets of the UK, Germany and Switzerland. MAS has been acquisitive in Germany and the UK in deploying the proceeds of
its 2014 capital raise in income producing properties at attractive returns.
Restatement
As reported in the results for the year ended 30 June 2014, wherein Attacq restated its results for the year ended 30 June 2013, it is the Group's policy to account for investment
properties at fair value under IAS 40: Investment Properties. Via its subsidiary, AWIC, Attacq accounted for the rental obligations arising as a result of its leasehold rights in respect
of Waterfall as a finance lease under IAS 17: Leases, taking estimates of all expected lease payments into account. During the 2014 financial year, following detailed advice received,
it was concluded that the rental obligations taken into account in the determination of the finance lease liability were contingent in nature and that the finance lease liability previously
raised should be derecognised. However, in applying the requirements of IFRS 13: Fair Value Measurement, investment properties should be carried at the fair value determined with reference
to an orderly transaction between market participants at the measurement date under current market conditions. As a result, the investment properties should be carried at their net values
after taking into account AWIC's future rental obligations arising from its leasehold rights in respect of Waterfall.
The cumulative impact of the restatement is a decrease in the December 2013 net asset value ("NAV") of R21.6 million.
The net impact of the restatement is a decrease in investment properties of R593.5 million in December 2013 with a corresponding decrease in the finance lease liability. Deferred tax
liabilities increased by R21.9 million as at December 2013 with a corresponding decrease in distributable reserves.
Basis of preparation
These unaudited condensed consolidated interim financial statements for the six months ended 31 December 2014 have been prepared in accordance with the framework concepts and the
measurement and recognition requirements of International Financial Reporting Standards ("IFRS") and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and Financial Reporting Pronouncements as issued by Financial Reporting Standards Council, and include disclosure as required by IAS 34: Interim Financial Reporting, the JSE Listings
Requirements and the Companies Act of South Africa. They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes
are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last consolidated
financial statements as at and for the year ended 30 June 2014. In preparing these condensed consolidated interim financial statements, management makes judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
The areas that include significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty were the same as those that were
identified in the consolidated financial statements as at and for the year ended 30 June 2014.
Significant accounting policies
The accounting policies applied in these condensed consolidated interim financial statements are the same as those applied in the consolidated financial statements for the year ended 30
June 2014, except as described below. The following amendments to standards have been adopted by the Group as from 1 July 2014 and have no impact on the results of the Group:
IFRS 2: Share-based Payment IAS 19: Employee Benefits
IFRS 3: Business Combinations IAS 24: Related Party Disclosure
IFRS 8: Operating Segments IAS 27: Separate Financial Statements
IFRS 10: Consolidated Financial Statements IAS 36: Impairment of Assets
IFRS 12: Disclosure of Interest in Other Entities IAS 39: Financial instruments: Recognition and
IFRS 13: Fair Value Measurement Measurement
IAS 16: Property, Plant and Equipment IAS 38: Intangible Assets
IAS 40: Investment Property
These condensed consolidated interim financial statements have not been reviewed or audited by the Group's independent external auditors.
The directors are not aware of any matters or circumstances arising subsequent to the period ended 31 December 2014 that require additional
disclosure or adjustment to the financial statements.
The preparation of the financial information was supervised by M Hamman CA(SA), Financial Director of Attacq.
On behalf of the board
P Tredoux MC Wilken
Chairman CEO
16 March 2015
Directors
P Tredoux#* (Chairman)
MC Wilken (CEO)
M Hamman (FD)
LLS van der Watt
AW Nauta*
JHP van der Merwe*
S Shaw-Taylor#*
HR El Haimer#*
PH Faure*
MM du Toit#*
KR Moloko#*
# Independent
* Non-executive
Company secretary
Tasja Kodde
Registered office
Att House, 2nd Floor
Maxwell Office Park
Magwa Crescent West
Waterfall City
2090
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
Date: 16/03/2015 09:22:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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