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Unaudited results for the six months ended 28 February 2015
REBOSIS PROPERTIES LIMITED
("Rebosis" or the "company")
(Registration number 2010/003468/06)
(Approved as a REIT by the JSE)
JSE share code: REB
ISIN: ZAE000156147
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2015
Distribution Market Assets under Net property Cost to
growth capitalisation management income income ratio
up 8,2% up 33,4% up 12,4% up 10,1% down 6,6%
STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited
for the for the
six months six months
ended ended
28 February 28 February
2015 2014
R'000 R'000
REVENUE
Property portfolio 458 444 395 856
Rental income 396 800 362 882
Listed property securities income 30 477 1 907
Straight-line rental income accrual 31 167 31 067
Net income from facilities management agreement 10 525 8 549
Management fees received 7 570 1 367
Sundry income 454 570
Total revenue 476 993 406 342
Property expenses (106 046) (98 892)
Administration and corporate costs (16 295) (13 825)
Net operating profit 354 652 293 625
Amortisation of intangibles – (1 499)
Changes in fair values 152 707 131 423
Profit from operations 507 359 423 549
Finance charges (117 068) (82 137)
Finance charges – secured loans (121 064) (82 568)
Interest received – other 3 996 432
Profit before taxation 390 291 341 413
Debenture interest (208 813) (187 468)
Profit before taxation 181 478 153 945
Taxation – –
Total comprehensive income for the year 181 478 153 945
Reconciliation of earnings and distributable earnings 181 478 153 945
Profit for the year attributable to equity holders
Debenture interest 208 813 187 468
Change in fair value of properties (net of deferred taxation) (66 568) (144 179)
Headline profit attributable to linked unitholders 323 723 197 234
Change in fair value of derivatives 14 421 306
Straight-line rental income accrual (31 167) (31 067)
Change in fair value of investment in listed property securities (100 561) 12 450
Amortisation of intangibles – 1 499
Antecedent interest*** 27 102 5 419
Corporate transaction costs 323 –
Structuring fee amortisation 2 159 1 626
Distributable earnings attributable to linked unitholders 236 000 187 467
Number of linked units in issue as at 28 February 2015 434 010 569* 386 531 577
Weighted average number of linked units in issue 394 300 155 372 589 086
Basic and diluted earnings per linked unit (cents) 46,03 93,49
Headline profit per linked unit (cents) 82,10 54,79
Distributable earnings per linked unit (cents) 52,46** 48,50
Year-on-year distribution growth (%) 8,16 9,00
*Linked units of 15 923 566 were issued post 28 February 2015
**Distributable earnings per linked unit calculated on incorporation of post period linked units
issued of 15 923 566 (cum distribution)
***Antecedent interest includes post period linked units issued of 15 923 566 (cum distribution)
STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited
as at as at
28 February 28 February
2015 2014
R'000 R'000
ASSETS
Non-current assets 7 984 275 7 126 069
Investment property 6 999 500 6 592 000
Listed property securities 728 630 267 941
Goodwill 95 703 95 703
Intangibles 149 964 148 427
Derivative instruments 10 025 21 291
Property, plant and equipment 453 707
Current assets 676 210 87 400
Trade and other receivables 51 345 66 842
Cash and cash equivalents 624 863 20 558
8 660 483 7 213 469
EQUITY AND LIABILITIES
Equity 2 444 334 1 685 369
Stated capital 1 484 108 1 053 732
Reserves 960 226 631 637
Non-current liabilities 5 278 324 4 840 241
Debentures 2 910 917 2 806 219
Interest-bearing borrowings 2 355 069 2 031 879
Derivative instruments 12 338 2 143
Current liabilities 937 826 687 859
Short-term portion of interest-bearing borrowings 642 824 442 824
Trade and other payables 59 090 57 567
Unitholders for distribution 235 911 187 468
Total equity and liabilities 8 660 483 7 213 469
Gearing ratio (%) 38,05 35,30
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited
for the for the
six months six months
ended ended
28 February 28 February
2015 2014
R'000 R'000
Stated capital 1 484 108 1 053 732
Balance at beginning of year 1 053 732 910 426
Issue of shares 430 376 143 306
Reserves 960 226 631 637
Balance at beginning of year 631 637 472 272
Profit for the year 328 589 159 365
2 444 334 1 685 369
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
For the For the
six months six months
ended ended
28 February 28 February
2015 2014
R'000 R'000
Cash flows from operating activities 18 135 38 106
Cash generated from operations 379 984 278 559
Net finance costs (114 909) (75 090)
Debenture interest paid (196 940) (165 363)
Cash outflows from investing activities (37 712) (1 564 757)
Cash inflows from financing activities 595 585 1 507 673
Net movement in cash and cash equivalents 576 009 (18 978)
Cash and cash equivalents at the beginning of the year 48 854 39 536
Cash and cash equivalents at the end of the year 624 863 20 558
INVESTMENT CASE
- High growth, low risk portfolio of assets
- First black-managed and substantially black-held REIT on the JSE
- Consistent distribution growth since listing in May 2011
- Diversified portfolio
- Balanced exposure to retail, office and industrial
- Dominant regional malls in the retail portfolio
- Office portfolio offers long-term visibility
CHIEF EXECUTIVE'S OVERVIEW
INTRODUCTION
Rebosis is pleased to announce an exciting set of results for this period ended 28 February 2015. The
company has continued in achieving excellent results with our strategy well on track to build a diversified
portfolio of properties yielding strong, secure income and high returns.
With a market capitalisation of R5,69 billion and assets under management of R7,88 billion, our objective is to
continue to grow distributions and long term capital appreciation for the company's unitholders.
FINANCIAL RESULTS
Rebosis has declared a distribution of 52,46212 cents per linked unit for the six months ended 28 February
2015. This is an 8,2% increase on the distribution of 48,50 cents per linked unit declared for the comparable
period in 2014. The achieved distribution per linked unit exceeds the upper range of the targeted forecast of
52,38000 cents per linked unit for the first half of 2015. There were no acquisitions recorded for this period
and this growth is mainly contributed by better portfolio fundamentals and continued operating efficiencies
across the portfolio.
Property expenses continue to be well contained with the net cost to income ratio down to 12,7% from
13,6% (as at 28 February 2014).
During the period under review, total asset value of the company has grown to R7,97 billion. Receivables
continue to be tightly managed and at the reporting date, the provision for bad debt was R7,90 million
calculated on an ageing and specific identification basis to ensure accurate provision.
PORTFOLIO
The property portfolio was valued at R6,99 billion, an increase of 6,2% since 28 February 2014. Quadrant
Properties are the appointed valuers of the office/industrial portfolio and Old Mutual Investments Group SA
of the retail portfolio. The entire portfolio was valued using the discounted cash flow method at the reporting
date. The portfolio has a total GLA of 414 390 m2 and is located in Gauteng, Eastern Cape, KwaZulu-Natal and
North West Province. The portfolio consists of 44% retail, 54% office and 2% industrial, by value.
GLA Value Value/m2
(m2) R'000 R/m2
Retail 163 303 3 096 000 18 959
Office 232 133 3 762 500 16 208
Industrial 18 954 141 000 7 439
Total portfolio 414 390 6 999 500 16 891
The retail portfolio consists of four high quality shopping malls underpinned by strong anchor and national
tenants delivering secure, income streams escalating at 7,4%. The expansion and tenant mix optimisation
programme at Hemingways Mall, the largest centre in the portfolio has been completed positioning the mall
for exceptional growth in the future. The centre now also boasts a go-kart track which has added to the
unmatched entertainment node in East London. The development of the bridge at Bloed Street Mall linking the
two sections has been successfully completed. Trading has commenced with some retailers with other shops
being fitted out to commence trading shortly.
The office portfolio consists of 14 buildings which are well located in nodes attractive to government tenants.
These are mainly single-tenanted buildings let to the National Department of Public Works under long leases
providing average escalations of 8,6%. The office portfolio represents a sovereign underpin to a substantial
portion of the earnings and shields it from the private sector risks such as tenant insolvency and default. The
company's only industrial property is a specialised single-tenanted warehouse located in Selby, Johannesburg,
occupied under a triple net lease escalating at 7,0%, expiring in December 2019.
As at 28 February 2015, vacancies for the total portfolio was 2,2%. The expiry profile by gross lettable area
is as follows:
28 Feb 2016 28 Feb 2017 28 Feb 2018 28 Feb 2019 Beyond
Retail 9% 12% 10% 26% 43%
Office 3% 3% 13% 54% 28%
Industrial 0% 0% 0% 0% 100%
Total portfolio 6% 7% 11% 38% 39%
STRATEGIC ACQUISITION
Rebosis acquired 62% of New Frontier Properties Limited ("New Frontier") at a forward income yield of 7,01%
as of 26 March 2015. The total purchase price of the investment was R1,18 billion which was funded through
cash, debt and the issue of linked units. No further details of net assets acquired are available at this stage.
This event is subsequent to the interim reporting period and has therefore not been included in the results.
New Frontier is incorporated in Mauritius and has its primary listing on the Stock Exchange of Mauritius and a
secondary inward listing on the Alternative Exchange of the JSE. The company has a defined strategic focus
on only retail properties in the United Kingdom.
New Frontier has acquired two retail centres in Burton-Upon-Trent and Middlesbrough, both located on the
High Street of the CBD. These two centres have a combined total GLA of 74 300 m2 with over 180 tenancies
held by prominent UK and international brands including Boots, Marks and Spencer, H&M, Top Shop, WH Smith
and others. The combined annual footfall is circa 21 million people.
The New Frontier investment affords Rebosis the opportunity to access offshore retail property exposure and
to participate in a UK retail property investment which provides attractive GBP forward yields. New Frontier's
acquisition pipeline provides significant opportunities for value enhancement within the company's portfolio.
PROSPECTS
Rebosis announced on 24 February 2015 of the company intention to acquire 100% of the issued linked unit
capital of Ascension Properties Limited that it does not already own by way of a scheme of arrangement for
the Ascension "A" and "B" linked units.
The scheme of arrangements are based on the following swap ratios:
- 5,17 Ascension "A" linked units will be swapped for every 1 Rebosis A ordinary share; and
- 4,25 Ascension "B" units will be swapped for every 1 Rebosis ordinary share.
Rebosis foresees market conditions in which REITs with a smaller market capitalisation and less liquidity in
the trade of their shares are driven to consolidation and corporate activity in order to best serve the interests
of their investors and tenants.
Both Rebosis and Ascension share an objective of preserving black management and ownership credentials
in order to continue to be positioned and enhance their offering of office accommodation to government and
other empowerment sensitive tenants on a basis that best advances the interests of their investors.
Rebosis and Ascension are of the view that the proposed acquisition by Rebosis of the Ascension linked units
that Rebosis does not already own, through the implementation of the schemes of arrangement, best
advances the interests of their investors.
Rebosis has issued a capital conversion circular on 31 March 2015 to its unitholders for voting
on 30 April 2015. The scheme of arrangements circular is being finalised and will be issued to unitholders shortly.
On consummation of the Ascension transaction, total asset value for Rebosis will grow in access of R14bn
(including consolidation of New Frontier).
Given the strong performance of the underlying properties that have supported our interim distribution and the
strong outlook for Rebosis, we have revised our forecast from 6% - 8% as originally communicated to 8% - 10%
for the year ending 31 August 2015.
Payment of distribution
Distribution no. 8 of 52,46212 cents per linked unit for the six months ended 28 February 2015 will be
paid to the linked unitholders in accordance with the abbreviated timetable set out below:
Last day to trade cum distribution Friday 8 May 2015
Linked units trade ex distribution Monday 11 May 2015
Record date Friday 15 May 2015
Payment date Monday 18 May 2015
Linked unitholders may not dematerialise or rematerialise their linked units between Monday
11 May 2015 and Friday 15 May 2015 both days inclusive. An announcement relating to the treatment
of the distribution will be released separately on SENS.
Basis of preparation
The results for the six months ended 28 February 2015 have not been reviewed or reported on by
the company's independent auditors, Grant Thornton (Jhb) Inc. These results have been prepared in
accordance with International Financial Reporting Standards (IFRS), IAS 34: Interim Financial
Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and Financial Reporting Pronouncements as issued by the Financial Standards Council, JSE Limited
Listings Requirements of the South African Companies Act 2008. Except for new standards adopted as
set out below, in preparation of the financial statements for the year ending 31 August 2015:
- IAS 23 Borrowing costs
- IAS 39 Financial assists (listed property securities)
- IAS 18 Revenue recognition (listed securities revenue)
These financial results have been prepared under the supervision of the chief financial officer, K. Keshav
CA(SA).
While the company has complied with requirements by disclosing earnings and headline earnings
per share, the directors are of the view that distributable earnings and the distribution per linked
unit, as disclosed above, are more meaningful to investors.
CONCLUSION
In conclusion, Rebosis has had a solid first six months of this financial year with "year on year" growth
ahead of initial forecast. This is representative of true portfolio appreciation with no acquisitions recorded in
the period under review. We however continue to pursue high growth opportunities and take advantage of
redevelopment opportunities in our shopping centres in light of increasing tenant demand. I would like to
thank the Board for their continued support and counsel as well as the management team, property managers
and all staff for their commitment and hard work.
SM Ngebulana
Chief Executive Officer
Registered office
3rd Floor, Palazzo Towers West, Montecasino Boulevard Fourways, 2191 (PO Box 2972, Northriding, 2162)
Company secretary
M Ndema
Directors
ATM Mokgokong*†(Chairperson), SM Ngebulana (CEO), K Keshav (CFO), AM Mazwai*†, WJ Odendaal*†,
NV Qangule*†, KL Reynolds*, TSM Seopa*† *Non-executive † Independent
** SV Zilwa has resigned from the board
Transfer secretaries
Computershare Investor Services Proprietary Limited
Sponsor
Java Capital
15 April 2015
Date: 16/04/2015 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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