DELTA INTERNATIONAL PROPERTY HOLDINGS LIMITED - Unaudited consolidated interim financial statements for the three months and the nine months ended 31 March 2015

Release Date: 14/05/2015 14:25
Code(s): DLI
 
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Unaudited consolidated interim financial statements for the three months and the nine months ended 31 March 2015

DELTA INTERNATIONAL PROPERTY HOLDINGS LIMITED 
(The "Company")
(Registered by continuation in the Republic of Mauritius)
(Registration number 128881 C1/GBL)
JSE share code: DLI                                   SEM share code: DEL.N0000
ISIN: MU0473N00002 (Old ISIN number BMG2707T1018)

UNAUDITED Consolidated interim financial statements 
for the three months and the nine months ended 31 March 2015 (the "financial statements") 

DIRECTORS' COMMENTARY

Nature of the business 

The Company was initially incorporated in Bermuda on 16 May 2012 as a Bermudian exempted company under the laws of
Bermuda and has been operational since 01 June 2012. The Company was discontinued from Bermuda on 11 March 2015 and was
registered by continuation in Mauritius as a public company limited by shares on 11 March 2015. It holds a Category One
Global Business License as from 13 March 2015. 

On 30 March 2015 the Company transferred its primary listing from the Bermuda Stock Exchange to the Stock Exchange of
Mauritius Ltd ("SEM"). The Company has a secondary listing on the Alternative Exchange ("AltX") of the Johannesburg
Stock Exchange Limited ("JSE"). Delta International is in the process of migrating its listing on the AltX to the main
board of the JSE and will maintain two primary listings going forward. The rationale for the migrations was to attract a
more diverse shareholder base and to increase the liquidity of the shares.

The Company and its subsidiaries ("Delta International" or "the Group") have embarked on a strategy of acquiring a
portfolio of African real estate assets (excluding assets situated in South Africa) in furtherance of its objective of
investing in real estate assets that will provide strong sustainable income from high quality tenants. The Group has
been significantly restructured since the change in ownership in May 2014.

Review

During the three month period from 01 January 2015 the focus has been on restructuring the Group and raising additional
capital to complete the acquisition of the Hollard Building, the Vodacom Building and Zimpeto Square. These assets are
all based in Maputo, Mozambique and are in line with the investment criteria of sustainable income from high quality
tenants. 

The Anadarko Building in Mozambique is operating as expected and remains 100% occupied. The day to day management of the
property has been bedded down and it is generating attractive returns on capital. The development of phase 2 of the
Anadarko Building is expected to commence by the end of 2015. In addition to the net rental income to be generated on
the leased building, the Group will share in the development fee without taking any development risk. The development
fee is based on the Group's existing interest in the land. The development will be pre-committed with a long-term lease
to Anadarko and will create favourable growth on forward returns for the Group. 

Anfa Place in Morocco is performing well with vacancies improving monthly. McDonald's has recently been signed up as a
new tenant. The much anticipated opening of the adjacent Four Season's hotel in September 2015 should see further
reductions in vacancies and potential uplift in the footfall. The arrears are monitored continuously with strong efforts
on collections which are yielding positive results. Management will continue to work with centre management on bedding
down the asset in order to optimise its full potential. From a macro-economic perspective Morocco has seen a record
harvest in cereal this year. With agriculture being one of the main industries this should lead to positive GDP growth
and potential strengthening of the Moroccan Dirham.

Historically the Moroccan Dirham ("MAD") has been a stable currency against the United States Dollar ("USD"). This is
due to the fact that the MAD is a managed currency having been based on a basket of currencies consisting of the Euro
and the USD, with weights of 80% and 20% respectively. This weighting has now changed to a 60% Euro, 40% USD.

Since 1 July 2014 up until 13 May 2015, the USD has gained c.20% in value against the Euro. Due to the fact that the MAD
is managed as per the high weighting to the Euro above, this translates into the USD making significant value gains
against the MAD (c.17% since 1 July 2015).

Although the MAD has lost significant value against the USD since 1 July 2015, the Moroccan economy still provides a
strong investment case. The MAD has strengthened against the USD in recent weeks and through continued strengthening
will see USD earnings on Anfa Place increase in the same manner.

The loan to value ratio of the Group at 31 March 2015 was 54.6% which is greater than the targeted 50%. This is
temporarily higher than targeted due to debt facilities drawn down on to pay for deposits on the Hollard Building and
the Vodacom Building which had not yet transferred by 31 March 2015.

The Company is committed to progressively increasing its portfolio and continues to evaluate potential opportunities
consistent with its strategy and investment principles. In the short-term the Group will continue to be focused on
increasing its investments in Mozambique and Morocco.

Changes to the Board

On 14 April 2015 the Company announced that Mr Gideon Louis Schnetler, Delta International's chief executive officer and
a director of the Company, had tendered his resignation due to unforeseen personal reasons. Mr Schnetler's resignation
is effective on 07 July 2015. The Board is currently undergoing a process of identifying an appropriate replacement for
Mr Schnetler and is over-seeing the hand-over of his responsibilities to ensure minimal disruption to the Company. The
Company is in the process of appointing new directors who have key skills in the property sector and the listed
environment.

Subsequent events 

On 20 April 2015 the Group completed the acquisition of the Hollard Building through the acquisition of 100% of the
issued shares of HM&K Properties Limited ("HM&K"). The delay in settlement of the balance owing to the HM&K shareholders
resulted in the purchase price increasing to US$14.9 million. The price increase was a direct correlation to the
increase in rentals which took place over the period of the delayed settlement and had no impact on the acquisition
yield.

On 22 April 2015 the Company raised US$39 million through the issue of 26 354 444 new ordinary shares through a private
placement. The proceeds will be utilised to fund the acquisition of the Vodacom Building, Zimpeto Square and to retire a
portion of debt associated with the completed acquisition of the Hollard Building. The equity raise brought on
additional shareholders including the Public Investment Corporation, the largest pension fund in Africa, who now own 25%
of the shares in issue. The Group has commenced applications with the Mozambique Central Bank for the approval of a
foreign loan to be brought into Mozambique to complete the acquisition of the Vodacom Building and Zimpeto Square.

Outlook 

The Board remains confident on the prospects of the business and the future returns.

The aforegoing forecast statement and the information underlying such statement are the responsibility of the Board and
has not been reviewed or reported on by the Group's external auditors. The forecast is based on assumptions, including
assumptions that a stable regional, political and economic environment as well as a stable global macro-economic
environment will prevail.

By order of the Board
Apex Fund Services (Mauritius) Ltd
Company Secretary
14 May 2015

Consolidated Statements of Financial Position
                                                                      Unaudited    Unaudited
                                                                  For the three  For the six
                                                                  months ended months ended
                                                                       31 March  31 December
                                                                           2015         2014
                                                                         $'000        $'000
Assets                                                                         
Non-current assets                                                             
Investment property                                                     145 184      150 406
Fair value of property portfolio                                        143 125      149 490
Straight line rental income accrual                                       2 059          916
Property, plant and equipment                                                97           81
Goodwill                                                                  5 205        5 205
Total non-current assets                                                150 486      155 692
Current assets                                                                 
Trade and other receivables                                              18 522       17 199
Other financial assets                                                    7 515        3 275
Cash and cash equivalents                                                 4 069        1 844
Total current assets                                                     30 106       22 318
Total assets                                                            180 592      178 010
Equity and liabilities                                                         
Total equity attributable to equity holders                                    
Share capital                                                            87 103       87 643
Foreign currency translation reserve                                      1 065          789
Retained loss                                                           (7 843)      (2 136)
Total equity attributable to equity holders                              80 325       86 296
Liabilities                                                                    
Non-current liabilities                                                        
Interest-bearing borrowings                                              79 316       74 418
Deferred tax                                                              9 245        7 975
Total non-current liabilities                                            88 561       82 393
Current liabilities                                                            
Trade and other payables                                                 11 506        8 799
Current tax payable                                                         200          522
Total current liabilities                                                11 706        9 321
Total liabilities                                                       100 267       91 714
Total equity and liabilities                                            180 592      178 010
Net asset value per share (cents)                                        179.87       193.24
Net asset value per share (excluding deferred taxation) (cents)          200.57       211.10

Consolidated Statements of Comprehensive Income
                                                         Unaudited    Unaudited
                                                     For the three For the nine
                                                      months ended months ended
                                                          31 March     31 March
                                                              2015         2014
                                                            $'000        $'000
Gross rental income                                          3 206       10 042
Straight-line rental income accrual                          1 143        2 059
Revenue                                                      4 349       12 101
Property operating expenses                                (1 218)      (2 889)
Net property income                                          3 131        9 212
Other income                                                     –           65
Administrative expenses                                      (376)        (947)
Operating profit                                             2 755        8 330
Acquisition fees                                             (203)      (2 690)
Set-up costs                                                 (149)        (673)
Fair value adjustment on investment property                 3 149        8 483
Realised foreign currency gain                                   –          516
Unrealised foreign currency loss                           (6 303)     (12 676)
(Loss)/Profit before interest and taxation                   (751)        1 290
Interest income                                                 25           44
Interest expense                                           (1 201)      (2 901)
Loss for the period before tax                             (1 927)      (1 567)
Current tax expense                                            556           26
Deferred tax expense                                       (1 373)      (3 357)
Loss for the period after tax                              (2 744)      (4 898)
Gain on translation of functional currency                     276        1 012
Other comprehensive income                                       –            –
Total comprehensive loss                                   (2 468)      (3 886)
Actual number of shares in issue                        44 656 447   44 656 447
Weighted number of shares in issue                      44 656 447   41 271 622
Basic loss per share (cents)                                (5.53)       (9.42)
Headline loss per share (cents)                            (14.10)      (36.04)
Reconciliation of basic and headline earnings:                    
Profit for the period attributable to shareholders         (2 468)      (3 886)
Fair value adjustments on investment property              (1 776)      (5 126)
– Fair value adjustment                                    (3 149)      (8 483)
– Deferred tax                                               1 373        3 357
Foreign currency translation reserve movement                (276)        (736)
Headline earnings attributable to equity holders           (4 520)      (9 748)

Consolidated Statement of Changes in Equity
                                                                                Total
                                                                         attributable
                                                                                   to
                                                 Share       Retained         equity
                                                Capital       Earnings        holders
                                                  $'000 $'000    $'000          $'000
Balance as at 1 July 2014                           865    53       19            937
Total comprehensive loss for the period               -     -  (2 156)        (2 156)
Foreign currency translation reserve movement         -   736        -            736
Shares issued                                    87 942     -        -         87 942
Share issue expenses                            (1 163)     -        -        (1 163)
Balance as at 31 December 2014                   87 644   789  (2 137)         86 296
Total comprehensive loss for the period               -     -  (2 745)        (2 745)
Dividends paid                                        -     -  (2 962)        (2 962)
Foregn currency translation reserve movement          -   276        -            276
Shares issued                                         -     -        -              -
Share issue expenses                              (540)     -        -          (540)
Balance as at 31 March 2015                      87 104 1 065  (7 844)         80 325

Consolidated Statement of Cashflows
                                                         Unaudited    Unaudited
                                                     For the three For the nine
                                                     months ended months ended
                                                          31 March     31 March
                                                              2015         2014
                                                             $'000        $'000
Net cash   utilised in operating activities                (6 238)     (10 035)
Net cash   utilised in investing activities                   (22)     (94 390)
Net cash   generated from financing activities               8 485      107 845
Increase   in cash and cash equivalents                      2 226        3 420
Cash and   cash equivalents at beginning of period           1 844          649
Cash and   cash equivalents at end of period                 4 069        4 069

Consolidated segmental analysis
                                      Unaudited      Unaudited
                                  For the three   For the nine
                                   months ended   months ended
                                       31 March       31 March
                                           2015           2014
                                         $'000          $'000
Profit/(Loss) before tax                       
Morocco                                 (6 789)       (10 289)
Mozambique                                3 368         10 158
Corporate                                 1 496        (1 437)
Total                                   (1 925)        (1 568)

                                  For the three    For the six
                                   months ended   months ended
                                       31 March    31 December
                                           2015           2014
                                         $'000          $'000
Total Assets                
Morocco                                 118 371        118 718
Mozambique                               50 730         46 439
Corporate                                11 491          5 158
Total                                   180 592        170 315

NOTES

The Group is required to publish financial results for the three months and nine months ended 31 March 2015 in
accordance with the Listing Rule 12.19 of the SEM. Accordingly, this announcement presents the financial results of the
Group in respect of the three month period from 1 January 2015 to 31 March 2015, the nine month period from 1 July 2014
to 31 March 2015. Comparatives from the prior periods have not been disclosed due to the significant restructuring and
the change in year-end which has taken place subsequent to May 2014. 

The accounting policies which have been applied are consistent with those used in the preparation of the audited
financial statements for the period ended 30 June 2014. 

The financial statements for the quarter ended 31 March 2015 have been prepared in accordance with the measurement and
recognition requirements of IFRS, the requirements of IAS 34: Interim Financial Reporting, the JSE Listings
Requirements, the SEM Listing Rules and the Securities Act of Mauritius 2005.

The financial statements have not been reviewed or reported on by the Group's external auditors.

These financial statements were approved by the Board on 14 May 2015.

Copies of the financial statements and the Statement of direct and indirect interests of each officer of the Group,
pursuant to rule 8(2)(m) of the Securities (Disclosure Obligations of Reporting Issuers) Rules of Mauritius 2007, are
available free of charge, upon request at the Company's registered address.

This communiqué is issued pursuant to SEM Listing Rule 12.20 and section 88 of the Securities Act of Mauritius 2005. The
Board accepts full responsibility for the accuracy of the information contained in these financial statements. The
directors are not aware of any matters or circumstances arising subsequent to the period ended 31 March 2015 that
require any additional disclosure or adjustment to the financial statements.

Directors: Sandile Nomvete (chairman), Gideon Schnetler*, Gregory Pearson*, Greg Booyens*, Bronwyn Corbett, Peter Todd
(lead independent) and Maheshwar Doorgakant (*executive director)
Company Secretary: Apex Fund Services (Mauritius) Ltd
Registered address: 4th Floor, Raffles Tower, 19 Cybercity, Ebene, Mauritius
Transfer secretary (South Africa): Computershare Investor Services Proprietary Limited
Registrar and Transfer Agent (Mauritius): Mauritius Computing Services
JSE sponsor: Nedbank
SEM sponsor: LCF Securities

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