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Summarised audited consolidated financial statements for the year ended 30 June 2015
ROCKCASTLE GLOBAL REAL ESTATE COMPANY LIMITED
Incorporated in the Republic of Mauritius
Reg no 108869 C1/GBL
ISIN MU0364N00003
Primary listing SEM and JSE
SEM code Rock.N0000
JSE code ROC
(“Rockcastle” or “the group”)
SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2015
DIRECTORS’ COMMENTARY
1. STRUCTURE AND LISTING
Rockcastle Global Real Estate Company Limited (“the company”) is a Category One Global Business License Company
registered in Mauritius. The company has primary listings on both the Stock Exchange of Mauritius (“SEM”) and
the Johannesburg Stock Exchange (“JSE”). Its objectives are investing in direct property in growing economies as
well as listed real estate securities globally. During the year, Rockcastle successfully raised USD277 million
through the issue of 127.6 million shares by way of a private placement and a book build which were both substantially
oversubscribed. Rockcastle’s shareholders were provided with the option of electing to receive shares in lieu of cash
for the 2015 interim dividend. Over 97% of shareholders opted to take the scrip dividend resulting in the issue of
14.7 million new shares.
2. DISTRIBUTABLE EARNINGS
The board has declared a dividend of 4.42 USD cents per share for the six months ended 30 June 2015. Accordingly,
total dividends declared for 2015 are 8.7 USD cents per share, an increase of 5.5% over the annualised dividends
for the previous financial year. This is ahead of the guidance provided of approximately 5%.
3. OPTION TO RECEIVE A SCRIP DIVIDEND
Subject to final regulatory approvals, shareholders will be given the option to receive their dividend either in cash
or as a scrip dividend at a ratio of 2.096 new shares for every 100 shares held. A circular containing details of this
election, accompanied by announcements on the Stock Exchange News Service (“SENS”) of the JSE as well as the website of
the SEM will be issued in due course.
4. COMMENTARY
The past year was characterised by significant currency volatility and a stronger US dollar. In addition, Rockcastle’s
year end coincided with the height of the Greek financial crisis. Despite this volatility, Rockcastle’s net asset value
per share increased from USD1.39 to USD1.46 for the year ended 30 June 2015 and as the markets stabilised following year
end, the net asset value has recovered to above USD1.64 per share. Rockcastle continues to focus on growing its net asset
value and its dividend paying capacity for the 2016 financial year. Management has noticed a significant deterioration in
liquidity in many markets particularly in medium-sized companies, with resulting increase in risk during market corrections.
The increase in exposure to direct properties has provided the opportunity to reduce the number of investments from 20 to a
new target of 12 core listed property stocks that meet Rockcastle’s distribution growth, market capitalisation and liquidity
requirements. The company continues to drive the direct property strategy and significant progress is being made in this regard.
Listed security portfolio
The listed security portfolio is focused on undervalued counters offering growth, with emphasis on both geography and on
individual stock selection. Macro-economic conditions in different countries are diverging with some countries benefiting from
monetary and fiscal stimulus and improving economic conditions. Many countries are still suffering from structural and fiscal
deficits, leading to weak demand and high unemployment. The listed security portfolio now has significantly more exposure to the
developed markets of the US and UK. Rockcastle’s investment in economies exposed to the commodity cycle was substantially reduced
during the year. With the exception of Westfield, all Australian investments were sold. Although Westfield is listed in Australia,
its major property exposure is in the US and UK. The investments in Canada were reduced during the financial year and further
reduced post year end. These strategies protected Rockcastle from the decline in both share prices and currencies in these
countries.
The company has increased its holding in Hammerson, Simon and Unibail during the year and acquired a significant investment
in Prologis, the world’s largest logistics property owning company. Low interest rate policies have allowed many property
companies to reduce borrowing costs during a period of stagnant rental growth. Low rates combined with investors seeking higher
yields have pushed some share prices to levels in excess of the underlying property values. By using inexpensive debt as well
as issuing script at a premium, REITs have benefited from earnings accretive consolidation. In an environment of economic recovery
and normalisation of interest rates, differentiation remains a guiding investment principle and underscores the importance of
allocating capital to those companies which embody best in class management teams, strong operating platforms with wealth value
creation opportunities, balance sheet discipline and the ability to drive dividend growth over time.
Real estate fundamentals will invariably determine the course of potential returns and, accordingly, management believe that
some markets and some companies will benefit from rising demand and little or no new property supply. The senior executives of
the group continue to engage with the management teams of these core stocks and conduct physical property inspections
TOP TEN LARGEST HOLDINGS
Geographical profile by market value
USA 52,1%
UK 17,0%
Europe 9,7%
Singapore 9,0%
Canada 4,8%
Hong Kong 4,2%
Australia 3,2%
Sectoral profile by market value
Retail 57,4%
Industrial 11,4%
Healthcare 9,4%
Hotel 7,5%
Residential 7,0%
Mortgage 1,8%
Other/Diversified 5,5%
The following table indicates the group’s top 10 investment holdings by market value as at 30 June 2015:
Company Sector Jurisdiction Market value as at
Jun 2015
(USD Million)
Hammerson Retail United Kingdom 367.7
Simon Property Retail USA 288.9
Unibail Rodamco Retail Europe 166.0
Prologis Inc Industrial USA 161.4
Ventas Inc Healthcare USA 158.3
Avalonbay Communities Residential USA 153.5
CapitaMall Trust Retail Singapore 109.9
Host Hotels and Resorts Inc Hotel USA 108.1
The Link REIT Retail Hong Kong 89.8
Ascendas REIT Industrial Singapore 85.6
Direct property
POLAND
Substantial progress was made during the year in executing Rockcastle’s strategy of acquiring retail assets in Poland. In addition
to its previously announced acquisitions of Solaris Centre in Opole for EUR52 million and the 16 500m2 mall development in Tomaszow
Mazowiecki, Rockcastle has made three further investments in Poland.
Silesian Retail Portfolio
Rockcastle concluded an agreement to acquire a portfolio of two shopping centres situated in the prosperous southern region of the
country. Karolinka is a prime, large scale and dominant regional shopping centre situated in the City of Opole with a population of
120 000 inhabitants and a catchment area of over 300 000 people. It has a gross lettable area (“GLA”) of 69 997m2 divided into a
37 702m2 Shopping Gallery and an adjoining 32 395m2 Retail Park. The shopping centre is anchored by a 13 239m2 Auchan hypermarket,
Leroy Merlin, Decathlon and includes international and national fashion brands Carry, CCC, Deichmann, H&M, New Yorker, Pepco, Pull&Bear,
Reserved, Sinsay and TK Maxx. Other tenants include Burger King, KFC, Media Expert, McDonalds, Pizza Hut, RTV Euro AGD, and Smyk.
The centre was acquired at an acquisition yield of 6.46% and a price of EUR145.4 million.
Pogoria is centrally located in Dabrowa Gornicza and is the largest shopping centre and leisure destination in the city. It offers
36 705m2 of retail GLA over two levels and includes an 8 198m2 stand-alone OBI DIY store. The shopping centre is anchored by a 9 450m2
Auchan hypermarket and contains numerous international fashion brands including Bershka, Carry, CCC, Deichmann, H&M, House, New Yorker,
Reserved, Sinsay, Stradivarius and Takko. Notably the centre has an existing leisure and entertainment area including a 5 screen Helios
multiplex cinema and 7 food court restaurants including KFC and McDonalds. The purchase price for Pogoria is EUR75.4 million at an
acquisition yield of 6.76%. Completion of the transaction is expected before November 2015 and is only subject to the relevant VAT
approvals for transactions of this nature from the Polish tax authorities.
Fabryka Wolomin
Park Handlowy Wolomin sp. z o.o, a company owning the retail development project known as Fabryka Wolomin in the City of Wolomin 30km
outside Warsaw, was purchased by a joint venture company owned 90% by Rockcastle and 10% by its development partner Acteeum BV on
13 August 2015. The development is currently under construction and is scheduled to be completed before the end of the 3rd quarter 2016.
The development timeline has been extended to complete design and format changes required to accommodate tenant demand and to enhance
the initial offering. The development is currently 50% let and on opening the centre will be 23 500m2 of GLA anchored by a 5 691m2
Carrefour hypermarket and includes Carry, CCC, Cropp, H&M, Media Expert and Reserved. The completed development cost will be EUR45
million at a budgeted initial yield of 7.8%. The site includes a further 6 500m2 of gross lettable retail bulk which can be used to
expand the centre based on tenant demand.
Solaris Shopping Centre, the company’s 18 000m2 centre in the City of Opole is trading well and progress is being made with the City
authorities to secure the adjoining site to enable the construction of an underground basement parking and the extension of the centre.
Galeria Tomaszow, the company’s 16 500m2 retail project being developed in the city of Tomaszow Mazowieki in partnership with Acteeum BV,
will be anchored by French grocer Intermarche and tenants that include CCC, Cropp, Deichmann, H&M, House, Pepco, Reserved, Rossmann
and Sinsay. Construction is scheduled to commence in October 2015 for opening in September 2016.
Numerous other potential acquisitions are at various stages of negotiation. Rockcastle continues to actively pursue both existing
centres as well as development projects which meet its financial and property fundamental criteria. A substantial mall acquisition
secured during the year did not meet these criteria during the due diligence and therefore was not concluded.
A senior South African project manager has relocated to Warsaw and the company has agreed terms for the employment of an experienced
Polish transaction analyst. Other full time and contract personnel have been engaged in Poland to staff Rockcastle’s operational office
and further appointments will be made as the abovementioned properties are transferred.
ZAMBIA
Kafubu Mall in Ndola, the dominant shopping and leisure offering in the town, opened in April 2014 and is trading on budget. The mall
is anchored by Shoprite and the tenant profile includes Edcon, Foschini, Innscor, Jet, Pep and a number of other South African retailers.
Mukuba Mall in Kitwe opened in April 2015. Feedback from retailers is positive. The centre is 100% let, has a GLA of 28,235m2 and is
anchored by Game, Pick n Pay, Shoprite and the tenant profile includes Ackermans, Edgars, Foschini, Jet, Mr Price, Pep, Truworths and
Woolworths.
Rockcastle has agreed to acquire a 50% interest in the 26,000m2 GLA Cosmopolitan Mall being developed in Southern Lusaka, Zambia at a
yield of 9.5%. The mall will be anchored by Game and Shoprite, and include Ackermans, Edgars, Foschini, Jet, Innscor, Mr Price,
Truworths and Woolworths as tenants and is scheduled to open in March 2016.
5. CAPITAL STRUCTURE AND HEDGING
In addition to its direct holdings in shares, Rockcastle utilises equity derivatives in its portfolio. Rockcastle also utilises interest
rate swaps to hedge its interest rate exposures. The principal counter parties are Morgan Stanley and BoA Merrill Lynch. The group does
not hedge the currency relating to its capital positions but continues to fund the purchase of counters in the currency in which that
stock is denominated. The company does hedge its distributable income one year ahead. Rockcastle’s loan to value ratio was 46.4% as at
30 June 2015.
Current Interest Rate Hedges are as follows:
Interest rate swaps expiry (financial year) Equivalent Average
Amount swap rate
USD’000
Jun 2020 80 210 0.79%
Jun 2021 44 168 0.53%
Jun 2022 55 210 0.57%
Jun 2025 292 788 1.79%
472 376 1.36%
6. SUMMARY OF FINANCIAL PERFORMANCE
Jun 2015 Dec 2014 Jun 2014 Dec 2013
Dividend/
distribution
per share 4.42USD cents 4.28USD cents 4.18USD cents 4.07USD cents
Shares in
issue (‘000) 847 862 769 700 705 500 530 000
Net asset value
per share USD 1.46 USD 1.50 USD 1.39 USD 1.16
Loan to value ratio* 46.4% 37.5% 38.3% 42.3%
* The loan to value ratio is calculated by dividing net interest-bearing borrowings by total assets.
7. OUTLOOK
Based on projections provided by the management of the property stocks in which Rockcastle invests and the company’s projections for
its direct property investments, the board forecasts growth in dividends of between 8% and 10% for the 2016 financial year.
The aforegoing forecast statement and the forecasts underlying such statement are the responsibility of the board and have not been
reviewed or reported on by the group’s external auditors. The forecast is based on the assumptions that a stable global macroeconomic
environment will prevail and no failures of listed REITs will occur.
By order of the Board
Intercontinental Trust Limited
Company Secretary
Mauritius
24 August 2015
STATEMENT OF FINANCIAL POSITION
Audited as at Audited as at
30 Jun 2015 30 Jun 2014
USD'000 USD'000
ASSETS
Non-current assets 2 295 139 1 587 451
Investment property 58 708 -
Straight-lining of rental revenue adjustment 415 - Investment property
under development 7 436 -
Listed security investments 2 161 724 1 565 259
Investment in and loans to joint ventures 41 727 5 192
Rockcastle management
incentive loans 25 129 17 000
Current assets 31 366 19 125
Investment income receivable 7 589 6 934
Cash and cash equivalents 3 035 486
Trade and other receivables 15 410 3
Loans to development partners 5 332 11 702
Total assets 2 326 505 1 606 576
EQUITY AND LIABILITIES
Total equity attributable
to equity holders 1 241 128 983 184
Stated capital 1 180 670 871 154
Retained income 183 601 131 714
Non-distributable reserves (123 947) (19 684)
Currency translation reserve 804 -
Total liabilities 1 085 377 623 392
Non-current liabilities 16 614 340 057
Interest-bearing borrowings 16 614 340 057
Current liabilities 1 068 763 283 335
Trade and other payables 4 966 6 832
Interest-bearing borrowings 1 063 777 275 896
Income tax payable 20 607
Total equity and liabilities 2 326 505 1 606 576
Total number of
shares in issue 847 862 018 705 500 000
Net asset value
per share (USD) 1,46 1,39
STATEMENT OF CHANGES IN EQUITY
Non- Currency
Stated Retained distributabletranslation
capital income reserves reserve Total
/(loss)
USD'000 USD'000 USD'000 USD'000 USD'000
Balance at 30 June 2013 409 771 (8 410) - - 401 361
Transactions with equity
holders: 461 383 (21 571) - - 439 812
- Issue of 90 million
shares on 15 Oct 2013 118 232 118 232
- Issue of 90 million
shares on 10 Dec 2013 116 975 116 975
-Issue of 175.5 million
shares on 30 May 2013 240 176 240 176
- Reclassification of
stated capital (14 000) 14 000 -
-Distributions declared (14 000) (14 000)
- Dividend declared (21 571) (21 571)
Total comprehensive
income for the year 142 011 142 011
Transfer to non-
distributable reserves 19 684 (19 684) -
Balance at 30 June 2014 871 154 131 714 (19 684) - 983 184
Transactions with equity
holders: 309 516 (62 508) - - 247 008
- Issue of 64.2 million
shares on 2 Oct 2014 113 950 113 950
- Issue of 63.4 million
shares on 1 Apr 2015 163 292 163 292
- Dividends declared 32 274 (62 508) (30 234)
Exchange differences on
translation of foreign
operations 804 804
Profit for the year 10 132 10 132
Transfer to non-
distributable reserves 104 263 (104 263) -
Balance at 30 June
2015 1 180 670 183 601 (123 947) 804 1 241 128
STATEMENT OF COMPREHENSIVE INCOME
Audited for the Audited for the
year ended year ended
30 Jun 2015 30 Jun 2014
USD'000 USD'000
Net rental and related revenue 1 992 -
Dividends received from listed
security investments 77 931 54 088
Income from joint ventures 5 892 35
Fair value gain on investment property and
listed security investments 20 727 105 081
Foreign exchange (loss)/gain (77 935) 6 915
Operating expenses (2 994) (1 327)
Profit before net finance costs 25 613 164 792
Net finance costs (15 461) (22 174)
Finance income 2 363 753
Interest on Rockcastle
management incentive loans 1 149 441
Interest on development partner loan 1 214 312
Finance costs (17 824) (22 927)
Interest on borrowings (11 913) (9 667)
Capitalised interest 179 -
Unrealised fair value gain/(loss) on
interest rate derivatives 5 331 (4 667)
Fair value loss on
bond shorts (11 421) (8 593)
Profit before income tax expense 10 152 142 618
Income tax expense (20) (607)
Profit for the year attributable
to equity holders of the company 10 132 142 011
OTHER COMPREHENSIVE INCOME NET OF TAX
Items that may be reclassified subsequently to
profit or loss
Exchange differences on translation of foreign
operations 804 –
Total comprehensive income for the year
attributable to equity holders of the
company 10 936 142 011
Weighted average number of shares in issue 772 800 853 478 682 693
Basic earnings per share from continuing
operations (USD cents) 1,31 29,67
Headline earnings per share from continuing
operations (USD cents) 0,69 29,67
Basic earnings per share and headline earnings per share are based on the weighted average of 772 800 853 shares in issue for the
year ended 30 June 2015 (year ended 30 June 2014: 478 682 693 shares).
Rockcastle has no dilutionary instruments in issue.
RECONCILIATION OF PROFIT FOR THE YEAR
TO HEADLINE EARNINGS
Audited for the Audited for the
year ended year ended
30 Jun 2015 30 Jun 2014
USD'000 USD'000
Basic earnings - profit for the period
attributable to equity holders 10 132 142 011
Adjusted for:
- fair value gain on investment property
of joint ventures (4 814) -
Headline earnings 5 318 142 011
Headline earnings per share (USD cents) 0,69 29,67
STATEMENT OF CASH FLOWS
Audited for the Audited for the
year ended year ended
30 Jun 2015 30 Jun 2014
USD'000 USD'000
Cash inflow from operating activities 53 759 41 952
Cash outflow from investing activities (751 235) (793 478)
Cash inflow from financing activities 700 025 751 817
Increase in cash and cash
equivalents 2 549 291
Cash and cash equivalents at beginning of year 486 195
Cash and cash equivalents at end of year 3 035 486
Current accounts 3 035 486
SEGMENTAL ANALYSIS
Audited for the Audited for the
year ended year ended
30 Jun 2015 30 Jun 2014
USD'000 USD'000
Profit before income tax expense
Australia 28 843 8 845
Canada 1 940 11 588
Europe 20 976 30 319
UK 11 944 21 544
Hong Kong 10 221 9 031
Singapore 27 339 6 371
USA (19 242) 48 544
Zambia 5 892 35
Corporate (77 761) 6 341
10 152 142 618
Audited for the Audited for the
year ended year ended
30 Jun 2015 30 Jun 2014
USD'000 USD'000
Total assets
Australia 69 835 125 174
Canada 105 231 209 459
Europe 276 235 193 275
UK 376 507 143 045
Hong Kong 91 756 79 592
Singapore 199 308 192 218
USA 1 135 445 629 916
Zambia 41 727 5 192
Corporate 30 461 28 705
2 326 505 1 606 576
RECONCILIATION OF PROFIT FOR THE YEAR TO
DISTRIBUTABLE EARNINGS
Unaudited for the Unaudited for the
year ended year ended
30 Jun 2015 30 Jun 2014
USD'000 USD'000
Reconciliation of profit for the year to
distributable earnings
Profit for the year 10 132 142 011
Foreign exchange loss/(gain) 77 935 (6 915)
Fair value loss on bond shorts 11 421 8 593
Fair value gain on listed security investments (21 142) (105 081)
Unrealised fair value (gain)/loss on interest
rate derivatives (5 331) 4 667
Dividends received from listed security
investments (77 931) (54 088)
Accrued income from listed securities investments 76 962 50 399
Income from joint ventures (5 892) -
Distributable income from joint ventures 1 163 -
Adjustment to taxation for accrued income - 56
Shares issued cum dividend 3 102 11 419
Distributable earnings for the year 70 419 51 061
Less:
Interim dividend declared (32 943) (21 571)
Final dividend declared (37 476) (29 490)
- -
NOTES
PREPARATION, ACCOUNTING POLICIES AND AUDIT OPINION
The summarised audited consolidated financial statements for the year ended 30 June 2015 have been prepared in accordance with
the measurement and recognition requirements of International Financial Reporting Standards(“IFRS”), the requirements of IAS 34:
Interim Financial Reporting, the JSE Listings Requirements, the SEM Listing
Rules and the requirements of the Mauritian Companies Act 2001.
The group is required to publish financial results for the year ended 30 June 2015 in terms of the Listing Rule 12.14 of the SEM.
This report was compiled under the supervision of Nick Matulovich CA(SA), the chief financial officer.
This communiqué is issued pursuant to SEM Listing Rule 12.14 and section 88 of the Mauritian Securities Act 2005. The board accepts
full responsibility for the accuracy of the information contained in these summarised audited consolidated financial statements.
The directors are not aware of any matters or circumstances arising subsequent to the year ended 30 June 2015 that require any
additional disclosure or adjustment to the financial statements. These summarised audited consolidated financial statements were
approved by the board on 24 August 2015.
BDO & Co have issued their unmodified audit opinion on the group’s financial statements for the year ended 30 June 2015. These
summarised audited consolidated financial statements have been derived from the group financial statements and are, in all material
respects, consistent with the group financial statements. A copy of their audit report is available for inspection at Rockcastle’s
registered address.
Copies of the summarised audited consolidated financial statements and the statement of direct and indirect interests of each
officer of Rockcastle, pursuant to rule 8(2)(m) of the Securities (Disclosure Obligations of Reporting Issuers) Rules 2007,
are available free of charge, upon request at Rockcastle’s registered address.
Contact person: Mr Kesaven Moothoosamy
Directors Mark Olivier (chairman); Spiro Noussis (CEO)*; Nick Matulovich*; Andries de Lange; Rory Kirk; Andre van der Veer;
Yan Ng; Paul Pretorius* (*executive director)
Company secretary Intercontinental Trust Limited
Registered address c/o Intercontinental Trust Limited, Level 3, Alexander House, 35 Cybercity, Ebene, 72201, Mauritius
Transfer secretary in South Africa Link Market Services South Africa Proprietary Limited
JSE sponsor Java Capital
SEM sponsor Capital Markets Brokers Limited
www.rockcastleglobalre.mu
Date: 24/08/2015 01:28:00 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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