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Reviewed condensed consolidated results for year ended 30 June 2015, changes to the board and the company secretary
Ascension Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2006/026141/06)
JSE share code: AIA ISIN: ZAE000204566
JSE share code: AIB ISIN: ZAE000204574
(Approved as a REIT by the JSE)
(“Ascension” or “the company” or “the fund” or “the group”)
Reviewed Condensed Consolidated Provisional Results
for the year ended 30 June 2015, changes to the board of directors
and change of company secretary
Directors’ Commentary
Introduction
Ascension is a REIT focusing on centrally located commercial office
buildings in South Africa with a strong focus towards government and
other empowerment sensitive tenants.
The results for the year ended 30 June 2015 represent the first full
year performance of Ascension since Rebosis acquired the asset
manager of Ascension in February 2014 and assumed responsibility for
the day to day operations as the asset manager of Ascension.
The company achieved distributable earnings of R222.8 million for the
year ended 30 June 2015 (30 June 2014: R202.7 million), in line with
expectations. The company will pay a final dividend on 31 August 2015
for the six months to 30 June 2015 of 20.94750 cents per A share
(2014: 19.95 cents) and 13.53232 cents per B share (2014: 12.23
cents). This brings the total dividend for the year under review to
41.90 cents per A share and 24.81 cents per B share.
Capital Conversion
As set out more fully in the circular issued to Ascension linked
unitholders on 22 May 2015, Ascension has converted its capital
structure from a linked unit capital structure to an all-share
capital structure, comprising Ascension A shares and Ascension B
shares.
Property portfolio
At 30 June 2015 the portfolio (including investment properties and
properties under development) consisted of 29 properties valued at
R3.83 billion, with a total gross lettable area (“GLA”) of 315 104m².
This translates to an average building value of R132.15 million.
The sectoral profile of the portfolio is 81.0% offices, 9.3% retail
and 9.7% other. The group does not own any retail focused properties
and the retail components are typically ground floor areas of office
buildings. The total portfolio is 62.1% tenanted by government in
line with Ascension’s strategic focus on this market. Total vacancies
have decreased to 6.46%. The weighted average rental escalation
remains healthy at 8.5%.
Borrowings
The company’s borrowings at 30 June 2015 amounted to R1.50 billion at
a weighted average rate of 8.08% per annum. R483 million of
borrowings has been fixed at an all-in rate of 7.35% until December
2015. R500 million of borrowings are subject to a three-month JIBAR
interest rate cap at 6.72%. The interest rate cap expires on 13
January 2017.
Offer to acquire Ascension Properties Limited – B scheme
Pursuant to a scheme of arrangement in terms of section 114 of the
Companies Act, 71 of 2008, between Ascension and Ascension B
shareholders (“B scheme”), with effect from 17 August 2015, all
Ascension B shares held by Ascension B shareholders were transferred
into the name of Rebosis Property Fund Limited (“Rebosis”). Rebosis
accordingly holds 100% of the issued B shares in Ascension and,
approximately 59% of the entire issued share capital of Ascension.
Ascension is accordingly a subsidiary of Rebosis.
Prospects
Despite the challenging business environment we believe that
Ascension has a defensive portfolio and that the quality of its
assets, together with healthy lease and escalation profiles, should
ensure that the group continues to deliver acceptable returns to its
shareholders.
Change of financial year-end
Ascension shareholders are advised that the company has changed its
financial year-end from 30 June to 31 August with effect from 31
August 2015.
Pursuant to the change of year end, Ascension will:
• publish reviewed results for the 2 months ending 31 August 2015
within three months of 31 August 2015; and
• issue audited financial statements for the 2 months ending 31
August 2015 within six months of 31 August 2015.
The change in financial year end will affect Ascension’s distribution
periods and accordingly after the change of financial year end the
distributions will be payable in respect of the 2 months ending 31
August 2015 and thereafter in respect of the six month periods ending
28 February and 31 August.
Condensed Consolidated Statement of Profit or Loss and other
Comprehensive Income for the year ended 30 June 2015
Reviewed Audited
30-Jun-15 30-Jun-14
12 months 12 months
R’000 R’000
Revenue 412 333 353 101
Contractual rental income 365 895 335 110
Straight-line lease income adjustment 46 438 17 991
Property operating expenses
(net of recoveries) (35 481) (42 570)
Net property and related income 376 852 310 531
Sundry income 1 039 567
Asset management fees (18 535) (15 857)
Operating expenses (4 233) (3 704)
Operating profit 355 123 291 537
Fair value adjustments (42 368) 194 535
Fair value adjustment - investment
property (30 727) 197 902
Fair value adjustment - interest rate
derivative (11 641) (3 367)
Finance income 3 563 1 765
Interest received 3 563 1 765
Finance cost (91 812) (75 035)
Interest on non-current borrowings &
other interest (89 452) (72 580)
Amortisation of debenture discount (728) (728)
Amortisation of bond raising fees (1 632) (1 727)
Net profit before distribution to
shareholders 224 506 412 802
Distribution to shareholders (222 796) (202 730)
Distribution to A-debentures (129 405) (117 711)
Distribution to B-debentures (93 391) (85 019)
Net profit before tax for the year 1 710 210 072
Income tax expense – –
Net profit after tax for the year 1 710 210 072
Other comprehensive income – –
Total comprehensive income for the year 1 710 210 072
Reconciliation between earnings, headline earnings and distributable
earnings
Reviewed Audited
30-Jun-15 30-Jun-14
12 months 12 months
R’000 R’000
Profit for the period attributable to
shareholders 1 710 210 072
Adjusted for:
Amortisation of discount on debentures 728 728
Net fair value gain on revaluation of
investment property net of taxation 30 727 (197 902)
Headline earnings attributable to
shareholders 33 165 12 898
Adjusted for:
Debenture interest 222 796 202 730
Headline earnings attributable to
shareholders 255 961 215 628
Adjusted for:
Straight-line lease income adjustment
(net of taxation) (46 438) (17 991)
Fair value adjustment - interest rate
derivative 11 641 3 367
Amortisation of bond raising fees (net
of taxation) 1 632 1 726
Distributable earnings attributable to
shareholders 222 796 202 730
Less: dividend declared (222 796) (202 730)
Distribution to A-debentures (129 405) (117 711)
Distribution to B-debentures (93 391) (85 019)
Earnings not distributed – –
Basic and fully diluted / earnings per
share (cents) 0.25 31.31
Basic and fully diluted headline
earnings / per share (cents) 4.84 1.92
Basic and fully diluted earnings per A
share (cents) 42.15 71.25
Basic and fully diluted earnings per B
share (cents) 25.06 53.90
Headline- and fully diluted headline
earnings per A share (cents) 46.74 41.87
Headline- and fully diluted headline 29.65 24.51
earnings per B share (cents)
Distribution per A and B share
Distribution per A share 41.90 39.90
Distribution per B share 24.81 22.59
Number of A share in issue at
30 June 2015 308 860 859 308 860 859
Number of B share in issue at
30 June 2015 376 359 014 376 359 014
Weighted average number of
A share in issue 308 860 859 294 675 376
Weighted average number of
B share in issue 376 359 014 376 359 014
- The calculation of basic and fully diluted earnings per share is
based on earnings of R1.71 million (30 June 2014: R210,1 million) and
a weighted average number of 685 219 873 shares (30 June 2014: 671
034 390) in issue throughout the financial period.
- The calculation of headline earnings and diluted headline earnings
per share is based on a headline earnings of R33.17 million (30 June
2014: R12,9 million) and a weighted average number of 685 219 873
shares (30 June 2014: 671 034 390) in issue throughout the financial
period.
Condensed Consolidated Statement of Financial Position at 30 June
2015
Reviewed Audited
30-Jun-15 30-Jun-14
R’000 R’000
Assets
Non-current assets 3 836 944 3 722 898
Investment properties and properties
under development 3 832 400 3 706 700
Property, plant and equipment 12 24
Interest rate derivative 4 532 16 174
Current assets 112 716 100 954
Trade and other receivables 53 519 61 792
Cash and cash equivalents 59 197 39 162
Total assets 3 949 660 3 823 852
Equity and liabilities
Equity 874 445 872 734
Stated capital 322 603 322 603
Retained income 551 842 550 131
Non-current liabilities - Debentures 1 404 543 1 403 815
Total linked unitholders’ interest 2 278 988 2 276 549
Liabilities
Other non-current liabilities 1 499 981 1 377 259
Interest bearing liabilities 1 499 981 1 377 259
Current liabilities 170 691 170 044
Trade and other payables 55 055 62 330
Linked unitholders accrued interest /
dividend 115 636 107 714
Total liabilities 307 521 2 951 118
Total equity and liabilities 3 949 660 3 823 852
TNAV and NAV per A-linked unit (cents) 569.3 479.8
TNAV and NAV per B-linked unit (cents) 169.1 239.8
Condensed Consolidated Statement of Cash Flows for the year ended 30
June 2015
Reviewed Audited
30-Jun-15 30-Jun-14
12 months 12 months
R’000 R’000
Cash flow from operating activities
Cash generated from operations 309 697 289 029
Finance income 3 563 1 765
Finance costs (89 452) (72 581)
Net cash inflow from operating
activities 223 808 218 213
Cash flow from investing activities
Purchase of investment properties and
cost of improvements (137 104) (946 307)
Purchase of other financial assets – (13 173)
Net cash outflow from investing
activities (137 104) (959 480)
Cash generated from financing activities
Proceeds from the issue of linked units – 360 746
Net proceeds from interest bearing loans 148 205 581 245
Distributions paid (214 874) (188 277)
Net cash (outflow)/ inflow from
financing activities (66 669) 753 715
Net increase in cash and cash
equivalents for the year 20 035 12 448
Cash and cash equivalents at the
beginning of the year 39 162 26 715
Cash and cash equivalents at the end of
the year 59 197 39 162
Condensed Consolidated Statement of Changes in Equity for the year
ended 30 June 2015
Stated Retained Total
Capital income Equity
R’000 R’000 R’000
Balance at 1 July 2013 - 304 381 340 060 644 441
Audited
Issue of linked units net of 18 222 – 18 222
transaction costs
Total comprehensive income – 210 071 210 071
for the period
Balance at 1 July 2014 - 322 603 550 131 872 734
Audited
Total comprehensive income – 1 710 1 710
for the period
Balance at 30 June 2015 - 322 603 551 842 874 445
Reviewed
Notes
1. Basis of preparation and accounting policies
The condensed consolidated financial statements are prepared in
accordance with the requirements of the JSE Limited Listings
Requirements for provisional reports and the requirements of the
Companies Act of South Africa. The Listings Requirements require
provisional reports to be 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 Pronouncements as issued by Financial
Reporting Standards Council and to also, as a minimum, contain the
information required by IAS 34 Interim Financial Reporting. These
financial statements have been prepared under the supervision of the
financial director, Henry Dednam CA(SA).
Except for the new standards adopted as set out below, all accounting
policies applied in the preparation of these reviewed condensed
consolidated provisional financial results are in terms of IFRS and
are consistent with those applied in the prior year.
Ascension adopted the following amendments to standards during the
year:
– IAS 16 Property, Plant and Equipment
– IAS 24 Related-party disclosures
– IFRS 3 Business Combinations
– IFRS 8 Operating Segments
– IAS 40 Investment Property
The directors are not aware of any matters or circumstances arising
subsequent to 30 June 2015 that require any additional disclosure or
adjustment to the financial statements, other than as disclosed in
this announcement.
These reviewed condensed consolidated provisional financial results
for the year ended 30 June 2015 have been reviewed by Grant Thornton,
who expressed an unmodified review conclusion thereon. A copy of the
auditor’s review report is available for inspection at the company’s
registered office together with the financial statements identified
in the auditor’s reviewed report. The auditor’s reviewed report does
not necessarily report on all the information contained in these
financial results. 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 issuer’s
registered office. The directors take full responsibility for the
preparation of these results and confirm that the financial
information has been correctly extracted from the underlying
financial statements.
2. Debt facilities
Utilised
at
30 June
Cost of Facility at 2015
funding 30 June 2015 Expiry
Funder (R million) (R million) date
Investec Private Bank 8.50% 529 461 13-Mar-18
Standard Bank 1 7.95% 393 396 * 31-Aug-17
Standard Bank 2 7.75% 160 160 31-Aug-17
Nedbank - loan 1 7.75% 158 153 7-Mar-19
Nedbank - loan 2 7.75% 150 151 * 12-Sep-16
Nedbank - loan 3 7.75% 26 26 18-Jul-16
Nedbank - loan 4 8.40% 45 45 23-Apr-18
Nedbank - loan 5 7.75% 50 50 28-Jun-16
Nedbank - loan 6 7.75% 34 34 30-Aug-16
Nedbank - loan 7 7.75% 26 26 30-Aug-16
Unamortised bond
raising fees (2)
Total borrowings 1 571 1 500
The weighted average cost of debt at 30 June 2015 is 8.08% (30 June
2014: 7.86%).
* - Includes accrued interest
3. Interest rate derivatives
Average
Facility all-in swap
Rate (R million) rate Expiry date
Interest
rate swap 3-month
JIBAR 5,55% 483 7.35% 1-Dec-15
Interest
rate cap 3-month
JIBAR 6,72% 500 – 13-Jan-17
4. Trade and other receivables
Reviewed Audited
30-Jun-15 30-Jun-14
12 months 12 months
R’000 R’000
Trade receivables (net of impairment 31 064 11 950
provisions)
Debtor accruals (including consumption 10 126 20 786
charges not yet invoiced)
Amounts due on acquisition adjustment 827 7 483
accounts
Deposits 1 470 1 366
Sundry debtors, prepayments and VAT 10 032 20 208
53 519 61 793
5. Lease expiry profile (Based on GLA)
Retail Office Total
Vacant 0.28% 6.62% 6.46%
June 2016 30.56% 38.67% 36.21%
June 2017 2.99% 4.63% 6.96%
June 2018 11.99% 16.79% 14.8%
June 2019 3.07% 17.75% 15.44%
June 2020 27.26% 5.76% 9.98%
June 2021 0.87% 5.91% 4.90%
After June 2021 22.98% 3.87% 5.25%
Total 100.0% 100.0% 100.0%
6. Tenants: Government vs. non-government
Based on
monthly
contracted
Based on GLA revenue
Government 62.1% 63.4%
Non-Government 37.9% 36.6%
Total 100.0% 100.0%
7. Operating segments
The group classifies segments based on the type of property i.e.
Commercial, Retail, Industrial and Other. Properties can be mixed use
properties. In this instance the property will be classified
according to its principle use. Accordingly, the group only has one
reporting segment, namely Commercial property as the principle use of
all properties in the portfolio is for commercial office space. Most
of the buildings do have a small retail component (normally at street
level), but this seldom exceeds 10% of the total GLA per building.
8. Changes to the board of directors and change of company secretary
Pursuant to the implementation of the B scheme the board has been
reconstituted as follows.
AC Nissen, SL Rai, BC Bayvel, FW Arendse, HB Dednam and J de Villiers
have resigned as directors and company secretary of the company
respectively, with effect from 1 October 2015.
Sisa Ngebulana and Dr. Mbulelo Renene have been appointed as non-
executive director and chairman of the board and independent non-
executive director respectively, with effect from 1 October 2015.
M Burton and H Takolia, current independent non-executive directors
will remain on the board of Ascension.
Mande Ndema has been appointed as company secretary of Ascension with
effect from 1 October 2015.
The company is currently engaging with the JSE regarding the
appointment of a new CEO. The board will also seek to make two
further appointments, including the appointment of a new financial
director. A further announcement in this regard will be released on
SENS in due course.
By order of the board
Cape Town
18 August 2015
Directors
AC Nissen (chairman) / SL Rai * / FW Arendse * / HB Dednam * / J de
Villiers (alternate to SL Rai) * / M Burton / B Bayvel / H Takolia
* (executive director)
Company secretary
J de Villiers
Business address
25th Floor, 9 Riebeeck Street, Cape Town, 8001
Transfer secretaries
Computershare Investor Services Proprietary Limited, 70 Marshall
Street, Johannesburg, 2001
Sponsor
Java Capital, 6A Sandown Valley Crescent, Sandton, 2196
Date: 18/08/2015 04:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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