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Preliminary Financial Results for the year ended 31 March 2015
ACCELERATE PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration No 2005/015057/06)
JSE code: APF
ISIN code: ZAE000185815
(REIT status approved)
(“Accelerate” or “the company”)
PRELIMINARY FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2015
INTRODUCTION AND HISTORY
Accelerate listed on 12 December 2013 with 51 properties and was formed for the purpose of investing in direct
real estate for income generation and capital growth. Accelerate is classified as a Real Estate Investment Trust
(REIT) in the Retail REIT sector of the JSE Limited (JSE).
REIT legislation was introduced to South Africa on 1 April 2013 and is unique to listed property companies. This
legislation brings South Africa in line with international best practice and will make South Africa’s listed property
sector attractive to foreign investors.
The year ended 31 March 2015 is Accelerate’s first full year of trading (110 days for the year ended 31 March
2014).
OPERATING ENVIRONMENT
The global and local economic outlook remains weak and South Africa is still feeling the effects of slow economic
growth. The impact of the interest rate hike earlier in 2014 has increased pressure on consumers to service debt
and all indications are that there may be further interest rate increases. Coupled with increasing inflation rates, this
will result in greater pressure on consumer spending. These negative factors will also place the retail sector under
pressure.
The listed property sector has seen a wave of new listings since 2011. This was as a result of various factors,
including the demand for higher yielding investments in a low interest rate environment, the introduction of REIT,
unlisted portfolios attempting to benefit from cheaper listed equity capital for expansion and access to growing
debt capital markets, amongst others.
However, the sector has recently undergone a fair amount of consolidation. The listed property sector continues to
offer investors a stable cash flow and consistent capital returns.
FINANCIAL REVIEW
We are pleased to report that during the year under review, Accelerate reported a profit after taxation of R741,05
million and a distributable profit of R298,82 million, which is higher than the forecast distributable profit of
R289,68 million for the year ended 31 March 2015, as disclosed in the pre-listing statement dated Wednesday, 27
November 2013. The variation between profit before taxation and distributable profit is as a result of a fair value
adjustment relating to property valuations of R441,6 million, a mark to market movement of R60,6 million on
financial instruments, a straight lining adjustment of R49,1 million and a capital profit of R12,1 million on the sale
of a centre. In addition, our distribution per share for the year of 49,21 cents per share was in line with our forecast
of 49,19 cents per share. Refer to the distribution analysis for more detail as well as comparatives.
Accelerate’s projected annualised yield (based on a closing share price at 31 March 2015 of R 6.75) of 7.9% is above
the overall property sector yield. Accelerate has maintained its local blue-chip tenants and has been approached by
international retail brands, which is encouraging for revenue streams.
There were no material changes in the company’s property and tenant profiles.
Accelerate earned a gross rental income of R699 million for the year (2014: R205 million). This comprises net
rentals of R528,7 million (2014: R160,7 million) and includes R171 million (2014: R44 million) of operating expense
recoveries.
Income and expenses were well managed and this combined with the effect of fixing debt interest rates on 87.7%
of Accelerate's debt, had a positive effect on profitability, which would otherwise have been detrimentally affected
by the interest rate increase.
The company’s major expenses were largely recovered in terms of its leases and consisted of:
- utility charges of R140 million (2014: R50 million);
- security of R23 million (2014: R6 million); and
- cleaning costs of R10million (2014: R2 million).
The company spent R16,5 million (2014:2,7 million) on the repair and maintenance of its properties . The net
property expenses of R34,7 million (2014:21,5 million), in conjunction with R36,3 million in other operating costs
(2014:8,4 million), resulted in Accelerate reporting a 13.44% cost-to-income ratio (2014: 18,6%) The company's
operating activities resulted in cash inflows of R236.6 million (2014: 113,6 million), after paying net finance costs of
R172 million (2014: R51 million).
Distributions per share is used as a performance measure for trading statement purposes.
OUTLOOK
Accelerate is well positioned to create shareholder value by being a participant in the major development in the
Fourways area, making the most of opportunities to acquire properties, and ensuring properties are well managed
and maintained, thereby ensuring sustainable returns to its shareholders.
Statement of financial position
31 March 2015 31 March 2014
(R’000) (R’000)
ASSETS
Non current assets 6 874 824 6 228 588
Investment property 6 803 437 6 096 790
Derivative financial instruments 71 153 131 709
Equipment 234 89
Current assets 229 476 176 694
Current tax receivable 15 -
Trade and other receivables (including tax) 170 644 119 051
Cash and cash equivalents 58 817 57 643
Investment property held for sale 28 420 66 866
Fair value of investment property assets 28 420 66 866
Total assets 7 132 720 6 472 148
EQUITY AND LIABILITIES
Shareholders' interest 4 604 143 3 771 961
Share capital 3 422 723 3 117 914
Other reserves 7 223 -
Retained earnings 1 174 197 654 047
Total equity 4 604 143 3 771 961
Non-current liabilities 2 201 394 2 240 060
Long-term borrowings 2 155 158 2 030 276
Contingent liability on conditional purchase costs 46 236 209 784
Current liabilities 327 183 460 127
Trade and other payables 88 327 101 843
Short-term portion of long-term borrowings 238 856 358 284
Total equity and liabilities 7 132 720 6 472 148
Statement of comprehensive income
31 March 2015 31 March 2014
(R’000) (R’000)
Revenue, excl straight-line rental revenue adjustment 699 696 204 844
Straight-line rental revenue adjustment 49 116 16 457
Revenue 748 812 221 301
Property expenses (205 750) (65 697)
Net property income 543 062 155 604
Other operating expenses (36 317) (8 354)
Operating profit 506 745 147 250
Fair value adjustments 381 008 455 391
Other income 465 48
Profit on disposal of asset 12 104 -
Finance income 12 743 1 607
Profit before long-term debt interest and taxation 913 065 604 296
Long-term debt interest (172 016) (51 485)
Profit before taxation 741 049 552 811
Taxation - -
Profit after taxation attributable to equity holders 741 049 552 811
EARNINGS PER SHARE
Basic earnings per share (cents) 112.49 287.10
Diluted earnings per share (cents) 111.25 269.00
DISTRIBUTABLE EARNINGS
Profit after taxation attributable to equity holders 741 049 552 811
Less: straight-line rental revenue adjustment (49 116) (16 457)
Less: fair value adjustments (381 008) (455 391)
Add: Antecedent distribution Checkers acquisition 4 200 –
Less: profit on sale of property (12 104) –
Distributable earnings 303 021 80 963
Distribution per share (cents) 49,209 13.773
Statement of changes in equity
Other Share Capital Retained Total Equity
Reserves Income
(R’000) (R’000) (R’000) (R’000)
Balance at 1 April 2013 (12) (12)
Total Comprehensive income attributable to equity - 552 811 552 811
holders
Issue of shares 3 117 914 - 3 117 914
Retained earnings on listing - 101 248 101 248
Total contributions by and distributions to owners 3 117 914 101 248 3 219 162
of company recognised directly in equity
Balance at 1 April 2014 3 117 914 654 047 3 771 961
Total Comprehensive income attributable to equity - 741 049 741 049
holders
Issue of shares – 304 809 – 304 809
Distribution paid – – (220 899) (220 899)
Other reserves 3 023 – – 3 023
Distribution reserve* 4 200 – – 4 200
Total contributions by and distributions to owners
of company recognised directly in equity 304 809 (220 889) 91 133
Balance at 31 March 2015 7 223 3 422 723 1 174 197 4 604 143
* This reserve relates to the antecendant distribution portion of the capital raised for the acquisition of the
Checkers Distribution Centre.
Statement of cash flows
31 March 2015 31 March 2014
(R’000) (R’000)
Cash flows from operating activities
Cash generated from operations 395 970 113 626
Finance income 12 743 1 607
Tax paid (15) –
Net cash from operating activities 408 698 115 233
Cash flows from investing activities
Purchase of property, plant and equipment (184) (94)
Purchase of investment property (244 080) (5 512 474)
Contingent purchase (163 548) –
Proceeds from disposal of investment property 78 740 –
Net cash from investing activities (329 072) (5 512 568)
Cash flows from financing activities
Proceeds on share issue 304 809 3 117 914
New in long-term borrowings 740 998 2 388 560
Settled long-term borrowings (735 544) –
Finance costs (172 016) (51 485)
Adjustment: opening retained earnings – (11)
Distribution paid (220 899) –
Antecedent distribution 4 200 –
Net cash from financing activities (78 452) 5 454 978
Total Cash movement for the year 1 174 57 643
Cash at the beginning of the year 57 643 –
Total cash at end of the year 58 817 57 643
Distribution Analysis
Year ended 31 Year ended 31 March
March 2015 2014 (110 Days)
R'000 R'000
Distributable earnings 303 021 80 963
Less: Interim distribution 141 555 -
Final distribution 161 466 80 963
Shares qualifying for distribution
Number of shares at year end 691 423 255 638 916 916
Less: Bulk ceded shares to Accelerate* (51 070 184) (51 070 184)
Shares qualifying for distribution 640 353 071 587 846 732
Distribution per share
Final distribution per share (cents) 25,21490 13,77289
Interim distribution per share made (cents) 23,99368 -
Total distribution per share for the year (cents) 49,20858 13,77289
Earnings per share
Year ended Year ended 31 March
31 March 2014 (110 Days)
2015
R'000 R'000
Basic earnings per share (EPS) amounts are calculated by dividing profit
for the year attributable to ordinary equity holders of Accelerate by the
weighted average number of ordinary shares outstanding during the year.
Reconciliation of basic/diluted earnings to headline earnings
Total profit after tax 741 049 552 811
Fair value adjustment excluding straight-lining (381 008) (455 390)
Applicable taxation – –
Headline profit attributable to shareholders 360 041 97 421
Basic earnings per share (cents) 112,49 287,10
Diluted earnings per share (cents) 111,25 269,00
Headline earnings per share (cents) 54,65 50,59
Diluted headline earnings per share (cents) 54,05 47,41
Shares in issue at the end of the year 691 423 255 638 916 916
Weighted average number of 658 789 533 192 550 303
Shares subject to the deferred acquisition costs
shares in issue 6 849 747 42 988 555
Shares subject to the conditional share plan 447 872 -
Weighted average number of deferred shares 7 297 619 12 955 455
Total diluted weighted average number of shares in issue 666 087 152 205 505 758
SEGMENTAL ANALYSIS
The individual properties are aggregated into segments with similar economic characteristics such as
nature of the property and the occupier market it serves. Management considers that this is best achieved
by aggregating properties into office, industrial, retail and specialised retail segments.
Consequently, the company is considered to have four reportable operating segments, as follows:
• Office segment: acquires, develops and leases offices;
• Industrial segment: acquires, develops and leases warehouses and factories;
• Retail segment: acquires, develops and leases shopping malls, community centres as well as
retail centres; and
• Specialised retail segment: acquires, develops and leases specialised buildings not within the
previous segments.
Group administrative costs, profit/loss on disposal of investment property, finance revenue, finance costs,
income taxes and segment liabilities are not reported to the members of executive management on a
segmented basis.
There are no sales between segments.
For the year ended 31 March Office Industrial Retail Specialised Total
2014 R’000 R’000 R’000 R’000 R’000
Statement of comprehensive
income 2014
Revenue, excluding straight-line
rental revenue adjustment 32 069 4 524 162 400 5 852 204 845
Straight-line rental adjustment 2 137 293 12 859 1 168 16 457
Property expenses (9 882) (471) (53 128) (2 215) (65 696)
Segment operating profit 24 324 4 346 122 131 4 805 155 606
Fair value adjustments on
property
investment 10 478 2 230 399 254 12 980 424 942
Segment profit 34 802 6 576 521 385 17 785 580 547
Other operating expenses (8 354)
Other income 48
Fair value gain on financial
instruments 30 449
Finance income 1 607
Long-term debt interest (51 486)
Profit before tax 552 811
For the year ended 31 March 2015 Office Industrial Retail Specialised Total
Statement of comprehensive income R’000 R’000 R’000 R’000 R’000
2015
Revenue, excluding straight-line rental 109 308 19 962 549 534 20 892 699 696
revenue adjustment
Straight-line rental adjustment 7 864 586 36 872 3 794 49 116
Property expenses (37 380) (4 128) (162 285) (1 957) (205 750)
Segment operating profit 79 792 16 420 424 121 22 729 543 062
Fair value adjustments on
investment property 64 698 20 889 327 137 28 841 441 565
Segment profit 144 490 37 309 751 258 51 570 984 627
Other operating expenses (36 317)
Other income 12 569
Fair value gain on financial
instruments (60 557)
Finance income 12 743
Long-term debt interest (172 016)
Profit before tax 741 049
Office Industrial Retail Specialised Total
For the year ended 31 March 2014 R’000 R’000 R’000 R’000 R’000
Statement of financial position
extracts at 31 March 2014
Assets
Investment property balance
1 April 2013 – – – – –
Acquisitions through listing 677 663 109 488 4 399 852 254 470 5 441 473
Conditional purchase price 108 013 – 101 771 – 209 784
Acquisitions – – 71 000 – 71 000
Disposals/classified as held for sale – – (66 866) – (66 866)
Investment property held for sale – – 66 866 – 66 866
Straight-line rental revenue
adjustment 2 137 293 12 859 1 168 16 457
Fair value adjustments 10 478 2 230 399 254 12 980 424 942
Segment assets at 31 March 2014 798 291 112 011 4 984 736 268 618 6 163 656
Other assets not managed on a
segmental basis
Derivative financial instruments 131 709
Equipment 89
Current assets 176 694
Total assets 6 472 148
For the year ended 31 March 2015 Office Industrial Retail R’000 Specialised Total
R’000 R’000 R’000 R’000
Statement of financial position
extracts at 31 March 2015
Assets
Investment property
balance 1 April 2014 798 291 112 011 4 984 736 266 618 6 163 656
Acquisitions – 149 388 – – 149 388
Capitalised costs 50 475 – 44 217 – 94 692
Disposals/classified as held for sale (28 420) – (66 560) – (94 980)
Investment property held for sale 28 420 – – – 28 420
Straight-line rental revenue
adjustment 7 864 586 36 873 3 793 49 116
Fair value adjustments 64 698 20 889 327 137 28 841 441 565
Segment assets at 31 March 2015 921 328 282 874 5 326 403 301 252 6 831 857
Other assets not managed on a
segmental basis
Derivative financial instruments 71 153
Equipment 234
Current assets 229 476
Total assets 7 132 720
Gauteng R’000 Western Cape Kwazulu Natal Limpopo Total R’000
For the year ended 31 March 2014 R’000 R’000 R’000
Statement of comprehensive
income 2014
Revenue, excluding straight-line
rental revenue adjustment 177 818 22 507 3 221 1 299 204 845
Straight-line rental adjustment 14 321 1 682 134 320 16 457
Property expenses (58 238) (3 750) (2 931) (777) (65 696)
Segment operating profit 133 901 20 439 424 842 155 606
Fair value adjustments on
investment property 406 346 15 229 2 866 500 424 941
Segment profit 540 247 35 668 3 290 1 342 580 547
Other operating expenses (8 354)
Other income 48
Fair value gain on financial
instruments 30 449
Finance income 1 607
Long-term debt interest (51 486)
Profit before tax 552 811
For the year ended 31 March 2015 Gauteng R’000 Western Cape Kwazulu Natal Limpopo Total R’000
R’000 R’000 R’000
Statement of comprehensive
income 2015
Revenue, excluding straight-line
Rental revenue adjustment 599 320 83 863 7 599 8 914 699 696
Straight-line rental adjustment 42 339 5 241 359 1 177 49 115
Property expenses (180 686) (22 434) (1 559) (1 071) (205 750)
Segment operating profit 460 973 66 670 6 399 9 019 543 062
Fair value adjustments on
investment property 391 100 45 393 6 547 (1 475) 441 565
Segment profit 852 073 112 063 12 946 7 544 984 627
Other operating expenses (36 317)
Other income 12 569
Fair value gain on financial
instruments (60 557)
Finance income 12 743
Long-term debt interest (172 016)
Profit before tax 741 049
Gauteng R’000 Western Cape Kwazulu Natal Limpopo Total R’000
R’000 R’000 R’000
Statement of financial position
extracts at 31 March 2014
Investment property balance
1 April 2013 – – – – –
Acquisitions through listing 4 819 556 574 660 47 258 – 5 441 474
Conditional purchase price 188 171 18 285 3 328 – 209 784
Acquisitions – – – 71 000 71 000
Disposals/classified as held for sale (66 866) – – – (66 866)
Investment property held for sale 66 866 – – – 66 866
Straight-line rental revenue
adjustment 14 321 1 682 134 320 16 457
Fair value adjustments 406 346 15 229 2 866 500 424 941
Investment property at 31 March 2014 5 428 394 609 856 53 586 71 820 6 163 656
Other assets not managed on a
segmental basis
Derivative financial instruments 131 709
Equipment 89
Current assets 176 694
Total assets 6 472 148
Gauteng R’000 Western Cape Kwazulu Natal Limpopo Total R’000
Statement of financial position R’000 R’000 R’000
extracts at 31 March 2015
Investment property balance
1 April 2014 5 499 394 609 856 53 586 820 6 163 656
Acquisitions – 149 388 – – 149 388
Capitalised costs 5 251 45 224 – 44 217 94 692
Disposals/classified as held for sale (66 560) (28 420) – – (94 980)
Investment property held for sale – 28 420 – – 28 420
Straight-line rental revenue adjustment 42 340 5 241 359 1 176 49 116
Fair value adjustments 391 100 45 393 6 547 (1 475) 441 565
Investment property at 31 March 2015 5 871 524 855 102 60 492 44 739 6 831 857
Other assets not managed on a
segmental basis
Derivative financial instruments
71 153
Equipment 234
Current assets 229 476
Total assets 7 132 720
NOTES TO THE FINANCIAL STATEMENTS
CORPORATE INFORMATION
The condensed financial statements of Accelerate for the year ended 31 March 2015 were authorised for issue in
accordance with a resolution of the directors passed on 19 June 2015. Accelerate is a public company incorporated
and domiciled in South Africa whose shares are publicly traded on the JSE. The registered office is located at Cedar
Square Shopping Centre, corner Cedar Road and Willow Avenue. The principal activities of Accelerate are
acquisition, development and leasing of properties. The functional and presentation currency of Accelerate is South
African rand thousands. All figures are rounded off to R’000 except where otherwise stated.
BASIS OF PREPARATION
These condensed financial statements for the year ended 31 March 2015 are prepared in accordance with the
framework concepts and the measurement and recognition requirements of International Financial Reporting
Standards (IFRS), contains the minimum information required by IAS 34 Interim Financial Reporting, the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee, the Financial Reporting
Pronouncements as issued by Financial Reporting Standards Council, the requirements of the Companies Act, 71 of
2008, as amended and the JSE Listings Requirements.
The accounting policies applied in the preparation of these condensed financial statements are in terms of IFRS and
are consistent with those applied in the previous financial period, except for the new and amended IFRSs that
became effective during the 31 March 2015 reporting period. None of which had any material impact on
Accelerate’s financial result.
These condensed financial statements have been prepared under the historical cost convention except for
investment properties which are measured at fair value .
The fair value of investment properties is determined by directors with reference to market-related information
while other financial liabilities are valued with reference to market-related information and valuations as
appropriate. All investment propertie are valued by independent external valuers on a 3 year rolling cycle.
These condensed financial statements were prepared under the supervision of Mr Dimitri Kyriakides (CA)SA in his
capacity as Chief Financial Officer.
BUSINESS COMBINATIONS
Acquisitions in 2014
On 12 December 2013, Accelerate acquired a property portfolio consisting of 51 properties during the listing on the
JSE. The portfolio consists of retail, office, industrial and specialised buildings let under operating leases and the
acquisition was made to give Accelerate access to those assets. The existing strategic management function and
associated processes were acquired with the property and, as such, the directors consider this transaction to
constitute the acquisition of a business, rather than that of an asset. The fair value of the identifiable assets and
liabilities as at the date of acquisition was:
Year ended Year ended 31 March
31 March 2014
2015
R'000 R'000
Fair value recognised at acquisition
Investment property – 5 651 258
Derivative financial instruments – 101 249
Gain on bargain purchase from derivative financial instrument obtained for
no consideration – (101 249)
Purchase consideration transferred – 5 651 258
The purchase consideration was settled in cash and equity for R5 441 474 071 on the acquisition date and R209 784
554 in contingent purchase consideration. The incidental costs incurred in connection with the acquisition were
carried by the Fourways Precinct (Pty) Ltd in accordance with the sales agreement.
Contingent purchase consideration
As part of the sale and purchase agreement, an amount of contingent purchase consideration has been agreed with
the seller in accordance with the conditional deferred payment agreement. In accordance with this agreement,
Accelerate will provide the seller with additional purchase consideration for any lettable vacant space excluded
from the purchase consideration which is let within the first three years. This payment will be settled by Accelerate
through the issue of additional shares in Accelerate in future when certain conditions have been met. As at the
acquisition date, the fair value of the contingent purchase consideration was estimated at R209 784 554. During the
year ended 31 March 2015 a portion of the vacant lettable space has been let in compliance with the conditions
laid down in the agreement. As a result of this an amount R163 548 205 in shares was issued in terms of the
contingent purchase consideration. The remaining contingent purchase consideration at 31 March 2015 is
R46 235 795.This is a level 3 measurement in the fair value measurement hierarchy as at 31 March 2015. The fair
value was determined using a discounted cash-flow analysis using the significant unobservable valuation inputs, as
provided below:
Inputs Range
Estimated rental value (ERV) per square metre R45.36 - R133.38
Vacancy assumptions 5% - 10%
Equivalent yield 8.5% - 21.8%
Significant increases/(decreases) in the ERV (per square meter per annum) and rental growth p.a. in isolation would
result in a significantly higher/(lower) fair value measurement. Significant increases/(decreases) in the long-term
vacancy rate and discount rate (and exit or yield) in isolation would result in a significantly lower/(higher) fair value
measurement. Generally, a change in the assumption made for the ERV (per square meter per annum) is
accompanied by:
- A similar change in the rent growth p.a. and discount rate (and exit yield); and/or
- An opposite change in the long-term vacancy rate.
A reconciliation of fair value measurement of the contingent purchase consideration liability is provided below:
Year ended 31 Year ended 31 March
March 2015 2014 (110 Days)
Contingent purchase consideration R'000 R'000
Opening balance 209 784 –
Liability arising on business combination – 209 784
Reduction due to vacancies filled (163 548) –
46 236 209 784
The contingent purchase consideration is a mechanism used to shift the risk of vacant space from purchaser
(Accelerate) to the vendor. The manner in which additional shares are issued to Fourways Precinct is unlikely to
have a dilutive effect on yield.
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES - 31 MARCH 2015
R’000
Carried at fair Amortised
Financial assets value cost# Total
Derivative financial assets* 71 153 - 71 153
Trade and other receivables - 170 644 170 644
Cash and cash equivalents - 58 817 58 817
Total financial assets 71 153 229 461 300 614
Financial liabilities
Long-term interest-bearing
borrowings - (2 155 158) (2 155 158)
Trade and other payables - (88 327) (88 327)
Current portion of long-term
debt - (238 856) (238 856)
Total liabilities - (2 482 341) (2 482 341)
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES - 31 MARCH 2014
R’000
Carried at fair Amortised
Financial assets value cost# Total
Derivative financial assets* 131 709 - 131 709
Trade and other receivables - 119 051 119 051
Cash and cash equivalents - 57 643 57 643
Total financial assets 131 709 176 694 308 403
Financial liabilities
Long-term interest-bearing
borrowings - (2 030 276) (2 030 276)
Trade and other payables - (101 843) (101 843)
Current portion of long-term
debt - (358 284) (358 284)
Total liabilities - (2 490 403) (2 490 403)
* The values of the derivative financial asset shown at fair value are based on inputs other than quoted
prices that are observable in the market for the assets and liabilities, either directly (i.e. as prices) or
indirectly (i.e. derived from prices) - level 2. The value of the swaps is determined as the discounted
value of the future cash flows to be received from the swap assets. For the valuation current JIBAR was
used as an indication of future JIBAR.
# The carrying value of financial assets and liabilities carried at amortised cost is considered to
approximate the fair value of those financial assets and liabilities. There have been no significant
changes in valuation techniques or transfers between fair value hierarchy levels.
DIRECTORS REMUNERATION
Year ended 31 Year ended 31 March
March 2015 2014 (110 Days)
R'000 R'000
Total gauranteed package
M Georgiou Nil Nil
A Costa 2 333 333 500 000
D Kyriakides 1 866 667 450 000
JRJ Paterson 1 833 333 425 000
Short term incentive payment
M Georgiou Nil Nil
A Costa 780 154 Nil
D Kyriakides 469 718 Nil
JRJ Paterson 650 128 Nil
Non – executive directors fees
TT Mboweni 1 580 800 506 667
GC Cruywagen 520 000 166 667
TJ Fearnhead 364 000 116 667
JRP Doidge 316 500 100 000
K Madikizela 312 000 100 000
F Viruly 312 000 -
RELATED-PARTY TRANSACTION
Relationships
M Georgiou and A Costa are directors of both Accelerate Property Fund Ltd and Accelerate Property Management
Company (Pty) Ltd, both directors’ full remuneration is paid by Accelerate.
Year ended 31 Year ended 31 March
March 2015 2014 (110 Days)
Related party transactions and balances R'000 R'000
Property acquisitions
Fourways Precinct (Pty) Ltd
Property Acquisitions – 3 715 049
Number of properties – 11
GLA – 175 132
Contingent purchase (note 1.12)
Fourways Precinct (Pty) Ltd 46 236 209 784
Vacancy guarantee
Fourways Precinct (Pty) Ltd (included in Trade receivables) 11 549 2 716
Interest charged
Interest charged on outstanding amounts owed from Fourways Precinct
(Pty) Ltd 1 967 861
Accelerate Property Management costs
Fourways Precinct (Pty) Ltd 3 885 1 158
Accelerate Property Management Company (Pty) Ltd 2 648 1 148
FAIR VALUE ADJUSTMENTS
Year ended 31 Year ended 31 March
March 2015 2014 (110 Days)
Fair value adjustments R'000 R'000
Investment property (Fair value model) 441 565 424 942
Mark to market movement on swap (60 557) 30 449
381 008 455 391
CAPITAL COMMITMENTS
In terms of Accelerate’s budgeting process, R60.5 million was allocated to Accelerate’s planned capital expenditure.
As such, Accelerate views this amount as authorised and not contracted.
SUBSEQUENT EVENTS
Non Adjusting events after year end
On 14 May 2015 Accelerate acquired a portfolio of 6 A grade office properties occupied by KPMG Inc. and KPMG
Services (Pty) Ltd (collectively, “KPMG”) through the purchase of the entire issued ordinary share capital of
Parktown Crescent Properties Proprietary Limited (“PCP”) and 30% of the issued ordinary share capital of Wanooka
Properties Proprietary Limited (“Wanooka”), representing the remaining shares in Wanooka not already owned by
PCP from current and retired KPMG partners.
The shareholding was acquired for a purchase consideration of R850 000 000 which equialed the value of the
properties acquired, thus no goodwill or gain and bargain purchase was required to be accounted for in this
transaction. The portfolio will yield a total net rental of R64 500 000 per year in terms of a 15 year triple net lease
with KPMG, escalating at 8% per annum for the first twelve years of the lease. In year 13 the rentals will revert to
market related rentals less 10% and will continue to escalate at 8% for year 14 and 15.
The acquisition was fully debt funded at a weighted average cost of funding of JIBAR plus 164 basis points.
AUDITOR’S REVIEW
Ernst & Young Inc, Accelerate’s independent auditors, have reviewed these condensed financial statements and
have expressed an unmodified review conclusion on these condensed financial statements, which are available for
inspection at the company’s registered office.
The review report does not necessarily report on all of the information contained in these condensed financial
statements. Shareholders are therefore advised that, in order to obtain a full understanding of the nature of the
auditor’s engagement, they should obtain a copy of the auditor’s report together with the accompanying financial
information from the company’s registered office.
DIRECTORS’ RESPONSIBILITY STATEMENT
The directors of Accelerate assume full responsibility for the preparation of the condensed financial statements,
and has been correctly extracted from the underlying annual financial statements.
FINAL DISTRIBUTION WITH AN ELECTION TO REINVEST CASH DISTRIBUTION FOR SHARES
The board of Accelerate has declared a final cash distribution (number 3) (“Cash Distribution”) of 25,21490 cents
per ordinary share (2014: 13,77289 cents per ordinary share) for the year ended 31 March 2015.
Shareholders will be entitled to elect to reinvest the Cash Distribution of 25,21490 cents per share after the
deduction of the applicable dividend tax, in return for shares (“Share Re-investment Alternative”), failing which
they will receive the net Cash Distribution in respect of all or part of their shareholding.
Shareholders who have dematerialised their shares are required to notify their duly appointed Central Securities
Depository Participant (“CSDP”) or broker of their election in the manner and time stipulated in the custody
agreement governing the relationship between the shareholder and their CSDP or broker.
The source of the distribution comprises net income from property rentals earned from the company’s property
investments as well as interest earned on excess cash on deposit. Please refer to the condensed statement of
comprehensive income for further details.
A dividend withholding tax of 15% will be applicable on the dividend portion to all shareholders who are not
exempt.
The issued share capital at the declaration date is 691 423 255 ordinary shares. The company’s income tax
reference number is: 9868626145
Tax implications for South African resident shareholders
Accelerate was granted REIT status by the JSE with effect from 12 December 2013 in line with the REIT structure as
provided for in the Income Tax Act, No. 58 of 1962, as amended (the Income Tax Act) and section 13 of the JSE
Listings Requirements.
The REIT structure is a tax regime that allows a REIT to deduct qualifying distributions paid to investors in
determining its taxable income.
The Cash Distribution of 25,21490 cents per ordinary share meets the requirements of a “qualifying distribution”
for the purposes of section 25BB of the Income Tax Act (a qualifying distribution). Accordingly, qualifying
distributions received by local tax resident shareholders must be included in the gross income of such shareholders
(as a non-exempt dividend in terms of section 10(1)(k)(aa) of the Income Tax Act), with the effect that the
qualifying distribution is taxable as income in the hands of the Accelerate shareholder. These qualifying
distributions are, however, exempt from dividend withholding tax in the hands of South African tax resident
shareholders, provided that the South African resident shareholders have provided the following forms to their
CSDP or broker, as the case may be, in respect of uncertificated ordinary shares, or the transfer secretaries, in
respect of certificated ordinary shares:
- a declaration that the distribution is exempt from dividends tax; and
- a written undertaking to inform the CSDP, broker or transfer secretaries, as the case may be, should the
circumstances affecting the exemption change or the beneficial owner ceases to be the beneficial owner, both
in the form prescribed by the Commissioner for the South African Revenue Service. Shareholders are advised to
contact their CSDP, broker or the transfer secretaries, as the case may be, to arrange for the abovementioned
documents to be submitted prior to payment of the distribution, if such documents have not already been
submitted.
Tax implications for non-resident shareholders
Qualifying distributions received by non-resident shareholders will not be taxable as income and instead will be
treated as ordinary dividends, but which are exempt in terms of the usual dividend exemptions per section 10(1)(k)
of the Income Tax Act. It should be noted that until 31 December 2013, qualifying distributions received by non-
residents were not subject to dividend withholding tax. From 1 January 2014, any qualifying 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 shareholder. Assuming dividend withholding tax will be withheld at a rate of 15%, the net amount
due to non-resident shareholders will be 21,43267cents per ordinary share. A reduced dividend withholding tax
rate in terms of the applicable DTA, may only be relied on if the non-resident shareholders have provided the
following forms to their CSDP or broker, as the case may be, in respect of the uncertificated ordinary shares, or the
transfer secretaries, in respect of certificated ordinary shares:
- a declaration that the dividend is subject to a reduced rate as a result of the application of a DTA; and
- a written undertaking to inform their CSDP, broker or the transfer secretaries, as the case may be, should the
circumstances affecting the reduced rate change or the beneficial owner ceases to be the beneficial owner,
both in the form prescribed by the Commissioner for the South African Revenue Service. Non-resident
shareholders are advised to contact their CSDP, broker or the transfer secretaries, as the case may be, to
arrange for the abovementioned documents to be submitted prior to payment of the distribution if such
documents have not already been submitted, if applicable.
Summary of the salient dates relating to the Cash Distribution and Share Re-investment Alternative are as follows:
2015
Circular and form of election posted to shareholders Friday, 26 June
Announcement of Share re-investment Alternative issue price
and finalisation information Friday, 3 July
Last day to trade (“LDT”) cum dividend Friday, 10 July
Shares to trade ex-dividend Monday, 13 July
Listing of maximum possible number of Share Re-investment
Alternative shares commences on the JSE Wednesday, 15 July
Last day to elect to receive the Share Re-investment Alternative
(no late forms of election will be accepted) by 12:00 (South
African time) Friday, 17 July
Record date Friday, 17 July
Announcement of results of Cash Distribution and Share Re-
investment Alternative on SENS Monday, 20 July
Cheques posted to certificated shareholders and accounts
credited by CSDP or broker to dematerialised shareholders
electing the Cash Distribution on or about Monday, 20 July
Announcement of results of Cash Distribution and Share Re-
investment Alternative in the press Tuesday, 21 July
Share certificates posted to certificated shareholders and
accounts credited by CSDP or broker to dematerialised
Wednesday, 22 July
shareholders electing the Share Re-investment Alternative on or
about
Adjustment to shares listed on or about Friday, 24 July
Notes:
1. Shareholders electing the Share Re-investment Alternative are alerted to the fact that the new shares will
be listed on LDT + 3 and that these new shares can only be traded on LDT + 3, due to the fact that
settlement of the shares will be three days after record date, which differs from the conventional one
day after record date settlement process.
2. Share certificates may not be dematerialised or rematerialised between Monday, 13 July 2015 and Friday,
17 July 2015, both days inclusive.
3. The above dates and times are subject to change. Any changes will be released on SENS and published in
the press.
The Cash Dividend or Share Re-investment Alternative may have tax implications for resident and non-resident
shareholders. Shareholders are therefore encouraged to consult their professional advisors should they be in any
doubt as to the appropriate action to take.
ANNUAL GENERAL MEETING
The company’s first annual general meeting (“AGM”) will be held at Accelerate’s registered office, in the main
boardroom, Cedar Square Shopping Centre, Management Office, 1st Floor, Cnr Willow Avenue and Cedar Road,
Fourways, Johannesburg on Monday, 27 July 2015 at 10:00. Further details on the company’s AGM will be included
in Accelerate’s integrated annual report to be posted to shareholders on or before 30 June 2015. A PDF of the
integrated annual report and notice of AGM will be available to download at www.acceleratepf.co.za on the same
day of distribution.
On behalf of the board
Mr TT Mboweni
(Non-executive chairman)
Mr M Georgiou
(Chief executive officer)
Mr D Kyriakides
(Chief financial officer)
22 June 2015
Corporate information
DIRECTORS
Mr TT Mboweni (non-executive chairman)
Mr A Costa (chief operating officer)
Dr GC Cruywagen (lead independent, non-executive director)
Mr JRP Doidge (independent non-executive director)
Mr TJ Fearnhead (independent non-executive director)
Mr M Georgiou (chief executive officer)
Mr D Kyriakides (financial director)
Ms K Madikizela (independent non-executive director)
Mr JRJ Paterson (executive director)
Prof F Viruly (independent non-executive director)
Registered office and business address
Cedar Square Shopping Centre, Management Office, 1st Floor, Cnr Willow Ave and Cedar Rd,
Fourways, Johannesburg, 2055
Tel: 010 001 0790
Web: www.acceleratepf.co.za
Investor relations
Instinctif Partners: Louise Fortuin
Tel: 011 447 3030
Email: louise.fortuin@instinctif.com
Company secretary
Joanne Matisonn
iThemba Governance and Statutory Solutions Proprietary Limited
Monument Office Park, Block 5, Suite 102, 79 Steenbok Avenue, Monument Park
Tel: 086 111 1010
Email: joanne@ithembaonline.co.za
Transfer secretaries
Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107, South Africa
Tel: 011 370 5000
Email: proxy@computershare.co.za
Fax: 011 688 2238
Sponsor
KPMG Services Proprietary Limited
(Registration number 1999/012876/07)
KPMG Crescent, 85 Empire Road, Parktown, Johannesburg, 2193
Private Bag 9, Parkview, 2122
Auditors
Ernst & Young Incorporated
102 Rivonia Road, Sandton, Johannesburg, 2149
Tel: 011 772 3000
Internal Auditors
LateganMashego Auditors (Pty)Ltd
Registration number 2001/107847/07
Registered address: 11 Boca Walk, Highveld, Centurion, 0157
Email: lindie@lateganmashego.co.za
Tel: 0828987644/0836091159
Attorneys
Glyn Marais Inc.
(Registration number 1990/000849/21)
2nd Floor, The Place
1 Sandton Drive
Sandton
2196
(PO Box 652361, Benmore, 2010)
Date: 22/06/2015 08:00:00 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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