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Timing of publication of annual results additional disclosures relating to interim results and restatement of HEPS
MAS Real Estate Inc.
Registered in the British Virgin Islands
Registration number 1750199
Registered as an external company in the Republic of South Africa
Registration number 2010/000338/10
JSE share code: MSP
ISIN: VGG5884M1041
(“MAS” or the “Company”)
TIMING OF PUBLICATION OF ANNUAL RESULTS, ADDITIONAL DISCLOSURES RELATING TO THE INTERIM RESULTS AND THE
RESTATEMENT OF HEADLINE EARNINGS AND HEADLINE EARNINGS PER SHARE
Timing of publication of annual results
Shareholders are advised that the Company’s summarised preliminary consolidated financial statements, for the year ended
30 June 2015, will be published on the Stock Exchange News Service (“SENS”) of the Johannesburg Stock Exchange (“JSE”) and on
the Luxembourg Stock Exchange (“LuxSE”) on Monday 14 September 2015. In addition, a results presentation will be placed on
the Company’s website: www.masrei.com.
A results presentation by teleconference call will take place on Monday 14 September 2015 at 1pm (UK time)/2pm (SA time).
Dial-in details will be available on the Company’s website from 1 September 2015.
Matters identified as part of the JSE’s proactive monitoring process
As part of the JSE’s proactive monitoring process, two matters were identified that require an announcement. The first, detailed
in point 1 below, refers to additional IFRS 7 and 13 disclosures relating to the interim results for the six months ended
31 December 2014. The second, detailed in point 2 below, relates to the incomplete methodology used in the computation of
headline earnings and headline earnings per share, for which figures are restated below.
1. Additional disclosures relating to the interim results
The interim results to 31 December 2014 did not include detailed IFRS 7 and 13 disclosures regarding the Company’s investment
portfolio. These additional disclosures does not affect any of the amounts previously disclosed.
In relation to the interim results to 31 December 2014:
Fair value disclosure
Investments
The Company has two investments – a direct interest in Sirius Real Estate Limited (“Sirius”) and a direct interest in the Karoo
Fund. The Karoo Fund also holds an interest in Sirius and therefore the Company also has an indirect interest in Sirius (i.e. the
Company has a direct and an indirect interest in Sirius).
The carrying amount of the Company’s investments at 31 December 2014 was as follows:
Euro 31 Dec 2014 31 Dec 2013 30 Jun 2014
Karoo Fund 43 486 680 34 650 536 35 743 617
Sirius 11 053 629 - -
Total 54 540 309 34 650 536 35 743 617
The investments are classified as available-for-sale at 31 December 2014. Accordingly, they are measured at fair value at the
reporting date with changes in fair value being recognised within other comprehensive income. These investments have been
classified as available-for-sale as they are non-derivative financial assets which do not meet the criteria of other classes of
financial assets under IAS 39.
On 5 December 2014 the Company acquired a 4.2% direct shareholding in Sirius for €10 178 432. This has been fair valued at
31 December 2014 and a gain of €1 263 565 was recognised in other comprehensive income. No dividends have been received
since acquisition.
As at 30 June 2014 the Karoo Fund was classified as held-to-maturity in accordance with IAS 39, due to: its fair value acquisition
at a discount to net asset value; the 3 year fixed redemption date; and the Company’s firm intention to hold the investment to
maturity. On 30 October 2014 the Karoo Fund compulsorily redeemed a portion of the investment amounting to €11 796 175,
and consequently the Company’s investment was reclassified from held-to-maturity to available-for-sale as the redemption date
was no longer fixed or determinable. On reclassification, the investment was fair valued to €50 618 597 and a gain of
€14 097 046 was recognised in other comprehensive income. Upon partial redemption, a gain of €2 468 737 was recycled from
the available-for-sale reserve to profit and loss. The Karoo Fund was subsequently fair valued at 31 December 2014 and a gain of
€4 529 136 was recognised in other comprehensive income.
Reconciliation of Investments
Six month Ten month 16 month
period ended period ended period ended
Euro 31 Dec 2014 31 Dec 2013 30 Jun 2014
Opening balance 35 743 617 34 199 731 34 199 731
Capitalised fees - 356 997 356 997
Unwinding of purchase discount 777 934 93 808 1 186 889
Fair value movement 19 889 747 - -
Disposal – compulsory redemption (11 796 175) - -
Acquisition - Sirius 10 178 432 - -
Foreign exchange (253 246) - -
Total 54 540 309 34 650 536 35 743 617
As at 31 December 2014 the reported net asset value of the Karoo Fund was €153 592 877. Under the purchase agreement
entered into by the Company, the seller, Attacq Limited (“Attacq”), is entitled to a contingent adjustment in the consideration
paid, dependent upon the value at which the Karoo Fund redeems. This contingent payment will be share-based and would
amount to €20 522 539 if the current reported net asset value were to be realised.
Fair value hierarchy
The following table shows the carrying amount and fair value of the Company’s investments and the fair value hierarchy as at 31
December 2014. The Company held no investments at fair value as at 30 June 2014. The carrying amount was considered to be a
reasonable approximation of fair value.
31 Dec 2014 Fair value
Euro Carrying Level 1 Level 2 Level 3
amount
Karoo Fund 43 486 680 - 43 486 680 -
Sirius Real Estate Limited 11 053 629 11 053 629 - -
(“Sirius”)
Total 54 540 309 11 053 629 43 486 680 -
Transfers between the levels in the fair value hierarchy are recognised at the reporting date. During the interim period the Karoo
Fund has been reclassified from level 3 to level 2 in the fair value hierarchy.
As the prior period net asset value of the Karoo Fund did not reflect fair value, the valuation was determined by applying
discounts to each of the underlying investments held. The discounts applied related to: illiquidity; specific risks facing each
investment; and the per cent of total investment held. In the current period, such discounts are no longer considered
appropriate given the nature of assets held and developments in the underlying investments. Accordingly, NAV is now
considered the appropriate valuation technique to determine the fair value of the Karoo Fund.
At 31 December 2014 all inputs into the valuation are observable as the underlying investments are listed, with the exception of
a convertible debenture that is not significant to the fair valuation.
Valuation techniques and unobservable inputs
The following table shows the valuation techniques used to measure investments held at fair value, as well as the inputs used
for Level 2 investments:
Investment Valuation technique Inputs Inter-relationship
type between inputs and
fair value
measurement
Equity fund Fair value is based on the fund’s reported net NAV per share - €1 730 The estimated fair
asset value (“NAV”). value would increase
All inputs used by the fund’s (decrease) if:
The NAV of the fund is valued by the fund’s investment manager in
investment manager as follows: determining the fund’s NAV are NAV per share were
observable with the exception higher (lower).
- Investments in equities held by the Karoo Fund of a convertible debenture that
are valued at quoted prices in active markets. is not significant to the input
for fair valuation.
- Where there is no active market, fair value is
based on broker quotes on similar contracts that
are traded in an active market and the quotes
reflect the actual transactions in similar
instruments.
2. Restatement of headline earnings and headline earnings per share
The JSE Listings Requirements require the calculation of headline earnings and diluted headline earnings per share and the
disclosure of a detailed reconciliation of headline earnings to the earnings numbers used in the calculation of basic earnings per
share, to be in accordance with the requirements of IAS 33 – Earnings per Share. Disclosure of headline earnings is not a
requirement of International Financial Reporting Standards (IFRS). The directors do not use headline earnings or headline
earnings per share in their analysis of the Company’s performance, and do not consider it to be a useful or relevant metric for
the Company. The directors make no reference to headline earnings or headline earnings per share in their commentaries.
There are no dilutionary instruments in issue and therefore headline earnings and diluted headline earnings are the same.
The methodology used by the Company to compute headline earnings and headline earnings per share is incomplete for the
sixteen months ended 30 June 2014 and the interim period to 31 December 2014. Restated figures are presented below.
The adjustments required to be made are isolated purely to the technical methodology for computing headline earnings. All
other amounts, metrics and ratios presented in the respective financial statements, remain unchanged. In particular, the
adjusted NAV per share is not impacted by these restatements, and neither is the adjusted core income per share, upon which
the Company’s dividend distribution is based. The directors re-iterate their target of reaching an adjusted core income per
share run-rate of 6,2 euro cents per share by the end of 2016.
In accordance with the Circular 2/2013 as issued by the South African Institute of Chartered Accountants, the restated headline
earnings and restated headline earnings per share for the sixteen months ended 30 June 2014 is as follows:
30 Jun 2014
Euro
restated restated reported
Gross Net
Profit for the period 5 060 236 5 060 236 5 060 236
Adjusted for:
Revaluation of investment property 623 630 434 159 623 630
Profit on disposal of investment property ( 1 008 336) ( 998 284) -
Headline earnings 4 675 530 4 496 111 5 683 866
Weighted average number of ordinary shares
183 068 848 183 068 848 183 068 848
in issue
Headline earnings per share (euro cents) 2,55 2,46 3,10
In accordance with the Circular 2/2013 as issued by the South African Institute of Chartered Accountants, the restated headline
earnings and headline earnings per share for the six months ended 31 December 2014 is:
31 Dec 2014
Euro
restated restated reported
Gross Net
Profit for the period 1 703 730 1 703 730 1 703 730
Adjusted for:
Revaluation of investment property 5 732 013 5 002 709 5 732 013
Reclassified gain – available for sale item (2 468 737) (2 468 737) -
Headline earnings 4 967 006 4 237 702 7 435 743
Weighted average number of ordinary shares
283 885 876 283 885 876 283 885 876
in issue
Headline earnings per share (euro cents) 1,75 1,49 2,62
The financial information presented in this announcement is the responsibility of the board of directors and has not been
reviewed or reported on by the Company’s external auditors.
MAS is listed on the Euro MTF Market of the Luxembourg Stock Exchange and on the main board of the Johannesburg Stock
Exchange.
7 August 2015
For further information please contact:
Helen Cullen, Company Secretary, MAS Real Estate Inc. +44 1624 625000
Java Capital, JSE Sponsor +27 11 722 3050
Charl Brand, M Partners, Luxembourg +352 263 868 602
Date: 07/08/2015 05:00:00 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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