Wrap Text
Condensed interim consolidated financial statements for the six-month period ended 31 December 2014
MAS Real Estate Inc.
Registered in British Virgin Islands
Registration number 1750199
Registered as an external company in the Republic of South Africa
Registration number 2010/000338/10
ISIN: VGG5884M1041
SEDOL (XLUX): B96VLJ5
SEDOL (JSE): B96TSD2
JSE share code: MSP
("MAS" or "the company")
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 31 DECEMBER 2014
The condensed interim consolidated financial statements of the company and its subsidiaries (together referred to as the "group")
have been restated as a result of the decision to early adopt 'IFRS 9: Financial Instruments' in the current year.
The early adoption of IFRS 9 is a response to the compulsory redemption of a portion of the investment in the Karoo Fund.
This redemption required the investment to be reclassified in accordance with 'IAS 39: Financial Instruments – Recognition
and Measurement' from held-to-maturity to available-for-sale, as the redemption date was no longer fixed or determinable and
the group no longer had the ability to hold the investment until maturity. The group's Investments, comprising the
Karoo Investment Fund S.C.A. SICAV-SIF (the "Karoo Fund") and Sirius Real Estate Limited ("Sirius") were classified as
available-for-sale and measured at fair value at the reporting date, with such changes in fair value being recognised within
other comprehensive income. As the group is an investment business, it is considered appropriate that fair value movements in
relation to all investments should be recognised directly in profit or loss, and not in reserves for certain investments,
and in profit or loss for others. The early adoption of IFRS 9 results in more reliable and relevant information.
A detailed analysis of the impact of the restatement is disclosed in note 16.
The decision to early adopt IFRS 9 was made after the interim results had been issued. The group has therefore restated
these previously released interim results in accordance with IAS 34, in order to improve the comparability of information
and for the policies adopted in the interim results to be in line with the group's year-end accounting policies.
As part of the JSE's proactive monitoring, the company was required to make a SENS announcement on 7 August 2015. The
announcement related to additional disclosures in the interim results for the six months ended 31 December 2014 and a
restatement of headline earnings and headline earnings per share. The additional disclosure required has been updated
and included within these condensed interim consolidated financial statements for the six month period
ended 31 December 2014, which have also been restated for the correction of the computation of headline earnings and
headline earnings per share.
The directors do not use headline earnings or headline earnings per share in their analysis of the group's performance, and
do not consider it to be a useful or relevant metric for the group. The directors make no reference to headline earnings or
headline earnings per share in their commentaries. Instead, the directors use adjusted core income as a key metric of the
group's performance. Adjusted core income per share, upon which the company's distribution is based, is not affected as a
result of the change in accounting policy, reclassifications and error.
Reporting currency
The group's results are reported in euros.
Listings
MAS is listed on the Euro MTF Market of the Luxembourg Stock Exchange and on the Main Board of the
Johannesburg Stock Exchange.
Statement of compliance
These condensed interim consolidated financial statements have been prepared in accordance with
International Financial Reporting Standard IAS 34: Interim Financial Reporting, Luxembourg Stock Exchange ("LuxSE") rules
and regulations, the Johannesburg Stock Exchange ("JSE") Listings Requirements and applicable legal and regulatory
requirements of the BVI Companies Act 2004.
Comparative information
The comparative period is for ten months as a result of the company changing its year end from 28 February to 30 June.
Assurance
KPMG Audit LLC has independently reviewed the condensed interim consolidated financial statements for the six month
period ended 31 December 2014, their report can be found on below.
By order of the board
Ron Spencer Malcolm Levy
Chairman Chief financial officer
Douglas, Isle of Man
11 September 2015
Registered office For correspondence
Midocean Chambers 25 Athol Street
Road Town Douglas
Tortola Isle of Man
British Virgin Islands IM1 1LB
Registrar
Computershare Investor Services (BVI) Limited Transfer secretary
Woodbourne Hall Computershare Investor Services (Proprietary)
PO Box 3162 Limited
Road Town, Tortola Ground Floor
British Virgin Islands 70 Marshall Street
Johannesburg, 2001
Directors South Africa
Ron Spencer (non-executive chairman)
Lukas Nakos (chief executive officer)
Malcolm Levy (chief financial officer)
Jonathan Knight (chief investment officer) - appointed 12 August 2014
Gideon Oosthuizen (non-executive)
Pierre Goosen (non-executive) - appointed 12 August 2014
Morne Wilken (non-executive)) - appointed 12 August 2014
Jaco Jansen (non-executive)
Company secretary
Helen Cullen
JSE sponsor
Java Capital Trustees and Sponsors Proprietary Limited
Review report by KPMG Audit LLC to MAS Real Estate Inc
We have been engaged by MAS Real Estate Inc (the "company") and its subsidiaries (collectively the "group") to review the condensed set
of consolidated financial statements in the interim report for the six months ended 31 December 2014 which comprise the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of financial position, the consolidated statement
of cash flows, the consolidated statement of changes in equity and the related notes.
This report is made solely to the company in accordance with the terms of our engagement. Our review has been undertaken so that we
might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report,
or for the conclusions we have reached.
Directors' responsibilities
The interim report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing
the interim report in accordance with LuxSE and JSE requirements.
The annual financial statements of the group are prepared in accordance with IFRSs. The condensed set of financial statements
included in this interim report have been prepared in accordance with IAS 34 Interim Financial Reporting.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of consolidated financial
statements in the interim report based on our review.
Scope of review
We have conducted our review in accordance with International Standard on Review Engagements (UK and Ireland)
2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the
Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with applicable law and International
Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Opinion on the financial statements
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of
consolidated financial statements in the interim report for the six months ended 31 December 2014 is not prepared,
in all material respects, in accordance with IAS 34.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man IM99 1HN
CONDENSED INTERIM CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Audited
Six month Ten month Sixteen month
period ended period ended period ended
31 December 31 December 30 June
2014 2013 2014
Euro Note Restated* Restated* Restated*
Revenue
Gross rental income 4 2 625 058 3 450 408 5 247 429
Expenses
Portfolio related expenses (489 420) (402 560) (665 096)
Investment adviser fees (1 248 330) (831 786) (2 410 812)
Administrative expenses (841 855) (535 581) (884 564)
Net operating income 45 453 1 680 481 1 286 957
Fair value adjustments 5 16 296 691 795 613 707 528
Exchange differences 2 543 511 1 341 039 3 931 722
Disposal of investment property 5 - - 1 008 336
Equity accounted earnings - 1 479 1 479
Profit before net finance costs 18 885 655 3 818 612 6 936 022
Finance income 6 146 500 117 507 199 348
Finance costs 6 (281 280) (556 241) (876 699)
Profit before taxation 18 750 875 3 379 878 6 258 671
Taxation 373 864 (127 843) (1 198 435)
Profit for period 19 124 739 3 252 035 5 060 236
Other comprehensive income
Items that are or may be reclassified
subsequently to profit or loss
Foreign operations-foreign currency translation
differences 94 500 46 707 156 323
Total comprehensive income for the period
attributable to the owners of the group 19 219 239 3 298 742 5 216 559
Basic and diluted earnings per share (euro cents) 15 6,74 4,40 2,76
* See note 16
Notes 1 to 18 form part of these condensed interim consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited
As at As at As at
31 December 31 December 30 June
2014 2013 2014
Euro Note Restated* Restated* Restated*
Non-current assets
Goodwill 7 26 475 251 1 371 537 1 371 537
Investment property 8 153 722 421 70 640 221 64 751 842
Investments 9 75 152 433 34 650 536 35 743 617
Property, plant and equipment 17 838 55 512 -
Deferred taxation asset 659 187 - 52 886
Total non-current assets 256 027 130 106 717 806 101 919 882
Current assets
Short term loans receivable - 262 341 -
Trade and other receivables 2 147 757 1 243 925 2 270 221
Treasury Investments 10 31 933 437 - -
Cash and cash equivalents 71 256 824 18 385 502 205 800 188
Total current assets 105 338 018 19 891 768 208 070 409
Total assets 361 365 148 126 609 574 309 990 291
Equity
Share capital 11 304 161 079 107 980 979 289 978 080
Retained earnings/(loss) 14 261 661 (1 415 864) (1 276 580)
Foreign currency translation reserve 12 717 428 513 312 622 928
Shareholder equity attributable to the owners of the group 319 140 168 107 078 427 289 324 428
Non-current liabilities
Interest bearing borrowings 13 984 633 15 671 626 14 340 752
Financial instruments 13 23 176 439 1 513 121 2 104 606
Deferred taxation liability 713 904 - 926 285
Total non-current liabilities 37 874 976 17 184 747 17 371 643
Current liabilities
Interest bearing borrowings 890 919 638 086 1 757 425
Trade and other payables 3 459 085 1 708 314 1 536 795
Total current liabilities 4 350 004 2 346 400 3 294 220
Total liabilities 42 224 980 19 531 147 20 665 863
Total shareholder equity and liabilities 361 365 148 126 609 574 309 990 291
Actual number of ordinary shares in issue 290 602 608 104 158 624 279 483 999
Net asset value per share (euro cents) 109,8 102,8 103,5
Adjusted net asset value per share (euro cents)# 109,8 102,8 103,8
Ron Spencer Malcolm Levy
Chairman Chief financial officer
* See note 16
# Net asset value per share as adjusted for deferred taxation
Notes 1 to 18 form part of these condensed interim consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
currency
Retained translation Available for
Share earnings/(loss) reserve sale reserve
Euro Note capital Restated* Restated* Restated* Total
Balance at 28 February 2013 67 423 236 (3 674 324) 466 605 - 64 215 517
Comprehensive income for the
period
Profit for the period - 3 252 035 - - 3 252 035
Other comprehensive income - - 46 707 - 46 707
Total comprehensive income
for the period - 3 252 035 46 707 - 3 298 742
Transactions with the owners of
the group
Issue of shares 11 40 557 743 - - - 40 557 743
Distributions - (993 575) - - (993 575)
Total transactions with the
owners of the group 40 557 743 (993 575) - - 39 564 168
Balance at 31 December 2013 107 980 979 (1 415 864) 513 312 - 107 078 427
Comprehensive income for the
period
Profit for the period - 1 808 201 - - 1 808 201
Other comprehensive income - - 109 616 - 109 616
Total comprehensive income
for the period - 1 808 201 109 616 1 917 817
Transactions with the owners of
the group
Issue of shares 11 181 997 101 - - - 181 997 101
Distributions - (1 668 917) - - (1 668 917)
Total transactions with the
owners of the group 181 997 101 (1 668 917) - - 180 328 184
Balance at 30 June 2014
(audited) 289 978 080 (1 276 580) 622 928 - 289 324 428
Comprehensive income for the
period
Profit for the period - 19 124 739 - - 19 124 739
Other comprehensive income - - 94 500 - 94 500
Total comprehensive income
for the period - 19 124 739 94 500 - 19 219 239
Transactions with the owners of
the group
Issue of shares 11 14 182 999 - - - 14 182 999
Distributions - (3 586 498) - - (3 586 498)
Total transactions with the
owners of the group 14 182 999 (3 586 498) - - 10 596 501
Balance at 31 December 2014 304 161 079 14 261 661 717 428 - 319 140 168
* See note 16
Notes 1 to 18 form part of these condensed interim consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
Audited
Six month Ten month Sixteen month
period ended period ended period ended
31 December 31 December 30 June
Euro 2014 2013 2014
Profit before taxation 18 505 530 3 379 878 6 258 671
Cash generated from/(used in) operating activities 299 519 937 643 (575 325)
Cash (used in)/generated from investing activities (133 320 881) (46 933 089) 3 563 687
Cash (used in)/generated from financing activities (3 530 316) 39 626 100 177 209 574
Net (decrease)/increase in cash and cash equivalents (136 551 678) (6 369 346) 180 197 936
Cash and cash equivalents at the beginning of the period 205 800 188 24 708 091 24 708 091
Effect of exchange rate fluctuations 2 008 314 46 757 894 161
Cash and cash equivalents at the end of the period 71 256 824 18 385 502 205 800 188
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. Reporting entity
MAS Real Estate Inc. (the "company" or "MAS") is domiciled in the British Virgin Islands. These condensed interim
consolidated financial statements as at and for the six month period ended 31 December 2014 comprise the
company and its subsidiaries (together referred to as the "group" and individually as "group entities").
MAS is a real estate investment group with a portfolio of commercial properties in Western Europe. The group
aims to provide investors with an attractive, sustainable euro-based distribution and growth in value over time
through its acquisition, development and asset management strategy. The current investment focus of the group
is in Germany, Switzerland and the United Kingdom.
2. Basis of preparation
Statement of compliance
These interim consolidated financial statements have been prepared in accordance with International Financial
Reporting Standard IAS 34: Interim Financial Reporting, the Johannesburg Stock Exchange ("JSE") Listings
Requirements, Luxembourg Stock Exchange ("LuxSE") rules and regulations and applicable legal and regulatory
requirements of the BVI Companies Act 2004.
In the prior reporting period the group prepared the consolidated financial statements in accordance with
International Financial Reporting Standards as adopted by the EU. However, as a result of the company
transferring its listing to the Main Board of the JSE, the group has prepared these interim consolidated financial
statements in accordance with IFRS as issued by the IASB ("IFRS").
In accordance with IFRS 1 the group's accounting policies were assessed and it was concluded the change to
IFRS did not materially affect the accounting policies or the manner in which the financial statements are
prepared or presented, as such there have been no adjustment to prior reported figures as a result of this
change. In accordance with IFRS 1 this has been explained further in note 18.
3. Significant accounting policies
Change in accounting policy
The group has applied IFRS 9 (2013) ("IFRS 9") in the current and prior reporting period. This standard is
effective for annual periods beginning on or after 1 January 2018, however, the group has early adopted it as at
1 July 2014. The standard includes the following categories for the classification and measurement of
financial assets:
- Financial assets at amortised cost: Financial assets held within a business model whose objective is
to hold assets in order to collect contractual cash flows that are solely payments of principal and
interest on the principal amount outstanding.
- Financial assets at fair value through other comprehensive income: Financial assets include
investments in equity instruments that are not held for trading and where the fair value option is
elected.
- Financial assets at fair value through profit or loss ("FVTPL"): Financial assets acquired for realising
capital gains from fluctuations in market prices.
The impact of the early adoption of IFRS 9 has been summarised in note 16.
The accounting policies applied in the preparation of these condensed interim consolidated financial statements
are consistent with those applied in the preparation of the consolidated financial statements for the sixteen month
period ended 30 June 2014, except for the following in accounting policies;
Financial instruments
i. Financial assets
The group classifies its financial assets in to the following categories: financial assets at amortised
cost and financial assets at fair value. Financial assets are recognised when the group becomes party to the
contractual provisions of the asset.
Financial assets at amortised cost
Financial assets are classified as financial assets at amortised cost only if both the following criteria
are met: the financial asset is held within a business model whose objective is to hold assets in order to
collect contractual cash flows; and the contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and interest on the principal amount
outstanding. Interest is the consideration for the time value of money and credit risk associated with
the principal amount outstanding.
The group may classify financial assets that meet the criteria to be classified as financial assets at
amortised cost as financial assets at fair value through profit or loss if doing so eliminates or
significantly reduces a measurement or recognition inconsistency that would arise if the financial asset
were measured at amortised cost.
Financial assets classified as financial assets at amortised cost are recognised initially at fair value
plus any directly attributable transaction costs at the settlement date. Subsequent to initial recognition,
these financial assets are measured at amortised cost using the effective interest method, less any
impairment losses.
Financial assets classified as financial assets at amortised cost comprise: Trade and other receivables,
cash and cash equivalents and short-term loans receivable.
Financial assets at fair value
A financial asset is classified as fair value if it does not meet either criteria for classification of a
financial asset at amortised cost. The group initially recognises these financial assets at trade date, and
attributable transaction costs are recognised in profit or loss as incurred. Financial assets at fair value
through profit or loss are subsequently measured at fair value, and changes therein are recognised in
profit or loss in the period in which they occur.
The group may irrevocably elect on initial recognition to present changes in the fair value of an
individual financial asset in other comprehensive income. The group only makes this election if the
financial asset is an equity instrument that is not held for trading.
For equity investments for which the election is made, gains and losses recognised in other
comprehensive income are not transferred to profit or loss on disposal. These gains and losses are
reclassified to retained earnings. The group has not made any such election as yet.
Financial assets classified as fair value through profit or loss comprise equity and fund investments
within the group's Investment and treasury Investments.
Derecognition of financial assets
The group derecognises a financial asset when the contractual rights to the cash flows from the asset
expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a
transaction in which substantially all the risks and rewards of ownership of the financial asset are
transferred. Any interest in transferred financial assets that is created or retained by the group is
recognised as a separate asset or liability.
ii. Financial liabilities
The group classifies its financial liabilities in to the following categories: financial liabilities at
amortised cost and financial liabilities at fair value. Financial liabilities are recognised when the
group becomes party to the contractual provisions of the liability.
Financial liabilities at amortised cost
All financial liabilities are classified as financial liabilities at amortised cost unless they meet the criteria
for classification as financial liabilities at fair value.
These financial liabilities are initially recognised at fair value plus any directly attributable transactions
costs at the settlement date. Subsequent to initial recognition, these financial liabilities are measured at
amortised cost using the effective interest method, less any impairment losses.
Financial liabilities classified as financial liabilities at amortised cost comprise interest bearing
borrowings and trade and other payables.
Financial liabilities at fair value
Financial liabilities are classified as financial liabilities at fair value if they are: financial liabilities
that are held for trading; derivative financial instruments; financial liabilities designated as fair value;
financial liabilities that arise when a transfer of a financial liability does not qualify for derecognition or
when the continuing involvement applies; financial guarantees; and commitments to provide loans at a below-
market interest rate.
The group may elect to designate financial liabilities as fair value financial liabilities that would
otherwise meet the criteria to be classified as a financial liability at amortised cost, if doing so
eliminates or significantly reduces a measurement or recognition inconsistency that would arise if the
financial liability were measured at amortised cost.
The group initially recognises financial liabilities at fair value at trade date, and attributable transaction
costs are recognised in profit or loss as incurred. Financial liabilities at fair value through profit or loss
are subsequently measured at fair value, and changes therein are recognised in profit or loss in the
period in which they occur.
Financial liabilities classified as financial liabilities at fair value comprise derivative financial instruments
included in financial liabilities.
Derecognition of financial liabilities
The group derecognises a financial liability when the contractual obligations of the liability expire, i.e.
when the obligation specified in the contract is discharged or cancelled or expires.
iii. Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary
shares are recognised as a deduction from equity, net of any taxation effects.
iv. Impairment
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to
determine whether there is objective evidence that it is impaired. A financial asset is impaired if
objective evidence indicates that an incurred loss event has occurred after the initial recognition of the
asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that
can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the
difference between its carrying amount and the present value of the estimated future cash flows
discounted at the asset's original effective interest rate. Losses are recognised in profit or loss and
reflected in an allowance account against loans and receivables. Interest on the impaired asset
continues to be recognised to the extent that it is probable that the interest will be collected. When a
subsequent event (e.g. repayment by a debtor) causes the amount of impairment loss to decrease, the
decrease in impairment loss is reversed through profit or loss.
Finance income and finance costs
The group's finance income and costs include the following;
- Interest income
- Interest expense
Interest income or expense is recognised using the effective interest rate method.
Earnings per share
Basic and diluted earnings per share
The group presents basic and diluted earnings per share (EPS) data for its ordinary shares.
Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of
the company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for
the effects of all dilutive potential ordinary shares.
Adjusted core income
Adjusted core income is the group's basis for determining semi-annual distributions. Core income is
the group's measure of the underlying income, as represented by the cash rental and interest income
received, less interest expenses, operating expenses that do not relate to capital raising and structure
costs and taxation paid, that can be distributed to shareholders, as adjusted for further realised
profit or losses on investment property, investment and treasury assets to the extent that the board
deems it appropriate to distribute these.
Headline earnings per share
Headline earnings are derived from basic earnings adjusted for re-measurements that relate to the
platform of the group per Circular 2/2013 issued by the South African Institute of Chartered Accountants.
New and amended standards and interpretations not yet adopted
Below is a summary of amendments/improvements to standards and interpretations that are not yet
effective and were not early adopted:
Amendments/improvements to standards and interpretations not IASB effective for annual periods
yet effective beginning on or after
IFRS 14 Regulatory Deferral Accounts 1 January 2016
Accounting for Acquisitions of Interests in Joint Operations – 1 January 2016
Amendments to IFRS 11
Clarification of Acceptable Methods of Depreciation and Amortisation 1 January 2016
- Amendments to IAS 16 and IAS 38.
Equity Method in Separate Financial Statements – Amendments to 1 January 2016
IAS 27
Sale or Contribution of Assets between an Investor and its Associate 1 January 2016
or Joint Venture – Amendments to IFRS 10 and IAS 28
Annual Improvements to IFRSs – 2012-2014 Cycle 1 January 2016
Investment entities: Applying the Consolidation Exception – 1 January 2016
Amendments to IFRS 10, IFRS 12 and IAS 28
Disclosure Initiative – Amendments to IAS 1 1 January 2016
IFRS 15 Revenue from Contracts with Customers 1 January 2018
The directors have not yet assessed the impact of adopting these standards and interpretations.
4. Revenue
Audited
Six month Ten month Sixteen month
period ended period ended period ended
Euro 31 December 14 31 December 13 30 June 14
Rental income 2 582 538 3 450 408 5 247 429
Service charge 42 520
2 625 058 3 450 408 5 247 429
5. Fair value adjustments and disposal of investment property
Audited
Six month Ten month Sixteen month
period ended period ended period ended
31 December 14 31 December 13 30 June 14
Euro Note Restated* Restated* Restated*
Fair value adjustments
Gain on fair value of investments 41 394 078 68 714 1 186 890
Gain on fair value of treasury investments 1 847 018 - -
Loss on fair value of investment property (5 732 013) - (623 630)
(Loss)/gain on fair value of financial instruments (21 212 392) 726 899 144 268
16 296 691 795 613 707 528
Disposal of investment property
Gain on disposal of investment property - - 1 008 336
- - 1 008 336
Summarised as follows:
Fair value of investments
Karoo Fund 40 130 514 68 714 1 186 890
Sirius Real Estate Limited ("Sirius") 1 263 564 - -
9 41 394 078 68 714 1 186 890
Fair value of treasury investments
Treasury investments 1 847 018 - -
1 847 018 - -
Fair value of investment property
United Kingdom (2 105 788) - (729 799)
Germany (3 626 225) - 310 000
Switzerland - - (203 831)
8 (5 732 013) - (623 630)
Fair value of financial instruments
Interest rate swap-Petrusse Capital S.a.r.l. (233 519) 383 166 91 483
Interest rate swap-Inventive Capital S.a.r.l. (214 184) 343 733 52 785
Attacq Limited ("Attacq") financial liability 13 (20 764 689) - -
(21 212 392) 726 899 144 268
Disposal of investment property
United Kingdom - - 821 976
Germany - - 186 360
- - 1 008 336
* The group has early adopted IFRS 9, with retrospective application. These figures have therefore been
restated. The impact of adopting IFRS 9 on the group's primary statements has been summarised in note 16.
6. Finance income and finance costs
Audited
Six month Ten month Sixteen month
period ended period ended period ended
31 December 14 31 December 13 30 June 14
Euro Restated* Restated* Restated*
Finance income
Interest earned on bank deposits at amortised cost 146 500 7 925 86 395
Interest earned on loans at amortised cost - 109 582 112 953
146 500 117 507 199 348
Finance costs
Interest paid on bank debt at amortised cost (281 280) (556 241) (876 699)
(281 280) (556 241) (876 699)
* The group has early adopted IFRS 9, with retrospective application. These figures have therefore been
restated. The impact of adopting IFRS 9 on the group's primary statements has been summarised in note 16.
7. Goodwill
The group's goodwill comprises:
Audited
As at As at As at
Euro 31 December 14 31 December 13 30 June 14
New Waverley 10 Limited (previously Artisan Investment
Projects 10 Limited) 1 445 049 1 371 537 1 371 537
MAS Property Advisors Limited 25 030 202 - -
26 475 251 1 371 537 1 371 537
Reconciliation of the group's carrying amount of goodwill:
Audited
Ten month Sixteen month
period ended period ended
Six month period ended 31 December 14 31 December 13 30 June 14
MAS Property New New Waverley New
Advisors Waverley 10 10 Limited Waverley 10
Euro Limited Limited Total Limited
Cost
Opening balance - 1 371 537 1 371 537 - -
Acquisition of
subsidiary 24 970 329 - 24 970 329 1 371 537 1 371 537
Foreign exchange
movement in OCI 59 873 73 512 133 385 - -
Closing balance 25 030 202 1 445 049 26 475 251 1 371 537 1 371 537
Accumulated
impairment losses
Opening balance - - - - -
Acquisition of
subsidiary - - - - -
Foreign exchange
movement in OCI - - - - -
Closing balance - - - - -
Carrying amount 25 030 202 1 445 049 26 475 251 1 371 537 1 371 537
Acquisition of subsidiary
On 15 October 2014 the group internalised the investment adviser acquiring 100% of the share capital and voting
rights of MAS Property Advisors Limited.
The group acquired the investment adviser due to identified cost reductions as a result of incurring the operating
cost of the investment advisory services instead of a net asset based investment advisory fee. From the date of
acquisition to 31 December 2014 the group has had a reduction of EUR1 505 090 in relation to investment adviser
fees which would have been charged under the investment advisory agreement and incurred additional costs of
EUR445 243 in the normal course of operations.
The board of MAS (BVI) Holdings Limited was advised as to the reasonableness of the transaction by Java Capital.
In the prior period on 19 August 2013 the group acquired a 62,5% interest in New Waverley 10 Limited, the
remaining shares that were not owned by the group. The acquisition was treated as a step-acquisition and the
group's pre-existing carrying amount of New Waverley 10 Limited was determined to be the fair value. Accordingly
no gain or loss was recognised as a result of the step-acquisition.
Consideration transferred
Audited
31 December 14 31 December 13 30 June 14
MAS Property Advisors New Waverley 10 Limited
Limited
Sterling Euro Sterling Euro Sterling Euro
Cash 9 889 006 12 500 000 1 920 000 2 250 087 1 920 000 2 250 087
Equity instruments 9 889 006 12 500 000 4 666 667 5 468 965 4 666 667 5 468 965
19 778 012 25 000 000 6 586 667 7 719 052 6 586 667 7 719 052
The fair value of the ordinary shares issued was based on the listed share price of the company at 16 October 2014
of EUR1,28 per share (ZAR equivalent R19,95 per share) (December 2013 and June 2014: EUR1,07 per share (ZAR
equivalent R15,81 per share)).
The group incurred acquisition-related costs of EUR59 788 (December 2013: nil; June 2014: nil) on legal and due
diligence fees. These costs have been included in the profit or loss within administrative expenses.
Fair value of identifiable assets and liabilities acquired
The following table summarises the fair value of assets and liabilities that were acquired at the date of acquisition:
Audited
31 December 14 31 December 13 30 June 14
MAS Property Advisors New Waverley 10 Limited
Limited
Sterling Euro Sterling Euro Sterling Euro
Property, plant and 23 473 29 671 - - - -
equipment
Investment property - - 9 191 005 10 679 948 9 191 005 10 679 948
Trade receivables - - 91 894 106 781 91 894 106 781
Cash and cash equivalents - - 201 819 234 514 201 819 234 514
Interest bearing borrowings - - (7 055 920) (8 198 979) (7 055 920) (8 198 979)
Foreign currency translation - - 1 434 1 666 1 434 1 666
reserve
23 473 29 671 2 430 232 2 823 930 2 430 232 2 823 930
There were no differences between the carrying amounts and the fair values of the assets and liabilities.
The group's pre-existing investment advisory contractual relationship with MAS Property Advisors Limited was
determined to have been at market value and settled on acquisition. Accordingly, the carrying amounts of net
assets acquired were determined to be the identifiable net asset at fair value.
Goodwill
The goodwill arising on acquisitions has been recognised as follows:
31 December 14 31 December 13 30 June 14
MAS Property Advisors New Waverley 10 Limited
Limited
Sterling Euro Sterling Euro Sterling Euro
Consideration transferred 19 778 012 25 000 000 6 586 667 7 719 052 6 586 667 7 719 052
Fair value of identifiable
net assets (23 473) (29 671) (2 430 232) (2 823 930) (2 430 232) (2 823 930)
Additional debt acquired - - (3 941 686) (4 580 239) (3 941 686) (4 580 239)
Movement in foreign
currency translation
reserve - - - (1 695) - (1 695)
Fair value of pre-existing
interest in New Waverley
10 Limited - - 910 799 1 058 349 910 799 1 058 349
19 754 539 24 970 329 1 125 548 1 371 537 1 125 548 1 371 537
The goodwill arising on the acquisition of MAS Property Advisors Limited has been allocated to MAS Property
Advisors Limited as a single cash generating unit and represents the future discounted cost savings to the group.
The goodwill arising on New Waverley 10 Limited was allocated to the New Waverley development and represents
a portion of the estimated future value above that of the current carrying amount of the New Waverley
development.
8. Investment property
The group's investment property comprises income-generating property and development property:
Audited
As at As at As at
Euro 31 December 14 31 December 13 30 June 14
Income-generating property 102 787 078 49 186 877 39 650 572
Development property 50 935 343 21 453 344 25 101 270
153 722 421 70 640 221 64 751 842
The group's investment property is measured at fair value. The group holds three classes of investment property:
Retail; Industrial; and mixed use developments under construction ("Mixed use") in three jurisdictions (UK,
Germany and Switzerland).
As at 31 December 14
UK Germany Switzerland
Euro Mixed use Industrial Retail Retail Industrial Total
Opening balance 25 101 270 8 359 590 4 866 030 7 900 000 18 524 952 64 751 842
Property
acquisitions 16 262 250 24 821 334 - 35 333 931 - 76 417 515
Capitalised
expenditure 8 742 653 - - - 9 428 8 752 081
Capitalised
acquisition costs 953 220 1 439 409 - 5 855 355 - 8 247 984
Fair value
adjustment (839 576) (1 266 212) - (3 626 225) - (5 732 013)
Foreign exchange
movement in OCI 715 526 224 198 141 032 - 204 256 1 285 012
Closing balance 50 935 343 33 578 319 5 007 062 45 463 061 18 738 636 153 722 421
As at 31 December 13
UK Germany Switzerland
Euro Mixed use Industrial Retail Residential Retail Industrial Total
Opening balance 8 474 979 7 531 550 5 445 890 7 183 940 9 750 000 18 626 334 57 012 693
Business
combinations 9 808 953 - - - - - 9 808 953
Capitalised
expenditure 3 169 412 - - 10 635 - - 3 180 047
Foreign
exchange
movement in
OCI - 272 874 191 629 252 786 - (78 761) 638 528
Closing balance 21 453 344 7 804 424 5 637 519 7 447 361 9 750 000 18 547 573 70 640 221
Audited as at 30 June 14
UK Germany Switzerland
Euro Mixed use Industrial Retail Residential Retail Industrial Total
Opening balance 8 474 979 7 531 550 5 445 890 7 183 940 9 750 000 18 626 334 57 012 693
Business -
combinations 9 808 953 - - - - 9 808 953
Capitalised
expenditure 4 424 841 - - - - - 4 424 841
Disposals - - - (7 183 940) (2 160 000) - (9 343 940)
Fair value
adjustment - 232 761 (962 560) - 310 000 (203 831) (623 630)
Foreign exchange
movement in OCI 2 392 497 595 279 382 700 - - 102 449 3 472 925
Closing balance 25 101 270 8 359 590 4 866 030 - 7 900 000 18 524 952 64 751 842
Changes in fair values are recognised as gains and losses in fair value adjustments in profit or loss. There are no
realised gains in the current period (June 2014: EUR1 008 336).
Investment properties are subject to operating leases. The group's investment property portfolio generated
EUR2 582 538 (December 2013: EUR3 450 408; June 2014: EUR5 247 429) in rental income and EUR42 520 (December 2013:
nil; June 2014: nil) in service charge income with portfolio related expenses of EUR489 420 (December 2013:
EUR402 560; June 2014: EUR665 096) recognised in profit or loss.
Bank borrowings of EUR14 875 552 (December 2013: EUR16 309 712; June 2014: EUR16 098 177) are secured on
investment property.
The group has capitalised costs incurred from related parties amounting to EUR8 560 753 (December 2013: EUR2 099
477; June 2014: EUR2 807 115) during the year (see note 17).
Measurement of fair values
Valuation process for level 3 investment property
Income-generating Investment properties are carried at the same valuation as the previous year end expect where they
have been acquired in the period. In such situations they are carried at the valuation at the date of acquisition.
Development properties are carried at capitalised cost less impairment, which is determined to be the best estimate of
fair value given the early stage of development.
For all investment properties their current use equates to the highest and best use. The external valuations
received are initially reviewed by the relevant internal asset manager and compared to their expectation of what
fair value would be for individual investment properties. If the asset manager is in agreement with the valuation,
the valuation reports are then checked by the finance team to confirm their numerical and methodological
accuracy. Lastly, the investment property valuation is reviewed by the Audit Committee.
Development properties where fair value cannot be reliably determined, but for which the group expects the fair
value will be reliably determinable as construction progresses, are measured at cost less impairment until fair value
becomes reliably determinable, as cost less impairment is the best estimate of fair value.
Fair value hierarchy
The fair value measurement of all the group's investment properties has been categorised as level 3 in the fair
value hierarchy based upon the significant unobservable inputs into the valuation technique used.
The following table shows the carrying amount and fair value of the group's investments in the fair value hierarchy
as at 31 December 2014:
As at 31 December 14
Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Income-generating property 102 787 078 - - 102 787 078
Development property 50 935 343 - - 50 935 343
153 722 421 - - 153 722 421
As at 31 December 13
Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Income-generating property 49 186 877 - - 49 186 877
Development property 21 453 344 - - 21 453 344
70 640 221 - - 70 640 221
Audited as at 30 June 14
Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Income-generating property 39 650 572 - - 39 650 572
Development property 25 101 270 - - 25 101 270
64 751 842 - - 64 751 842
Valuation technique and significant unobservable inputs
The following table shows the valuation technique used in measuring the fair value of investment property, as well
as the significant unobservable inputs used.
Investment Valuation technique Significant Inter-relation between key
property type unobservable inputs unobservable inputs and fair
value measurement
Income- Discounted cash flows: The - Risk adjusted The estimated fair value
generating valuation model considers the discount rates would increase (decrease) if:
property present value of net cash flows - Market rent - Expected market rental
to be generated from the - Net rental growth growth were higher
property, taking into account - Reversionary (lower)
expected rental growth rate, discount rate - The occupancy rate were
void periods, occupancy rate, higher (lower)
lease incentive costs such as - The reversionary discount
rent-free periods and other rate were lower (higher)
costs not paid by tenants. The - The risk adjusted discount
expected net cash flows are rate were lower (higher)
discounted using risk-adjusted
discount rates. Among other
factors, the discount rate
estimation considers the
quality of a building and its
location, tenant credit quality
and lease terms.
Development Cost less impairment: Costs - Capitalised costs The estimated fair value
property directly associated with the - Impairment would increase (decrease) if:
construction of development
property are capitalised. An - Impairment were lower
impairment review is (higher)
performed to the extent that
there are indicators of
impairment. As fair value
cannot be reliably determined
cost is the best indication of
fair value.
A fair value sensitivity analysis has not been disclosed for investment properties acquired during the period
ended 31 December 2014 as a result of sensitivity analysis' not being obtained as part of the independent valuers
report at the time of acquisition. The group considers that it is impracticable to obtain these sensitivities.
All income-generating investment property continues to be held at their last valuation for which a sensitivity
analysis is available in the group's annual integrated report 2015. Development properties are carried at capitalised
cost less impairment, which is determined to be the best estimate of fair value therefore a sensitivity analysis isn't applicable.
9. Investments
The carrying amount of the group's investments at 31 December 2014 was as follows:
Audited
As at As at As at
31 December 14 31 December 13 30 June 14
Euro Restated* Restated* Restated*
non-current
Karoo Fund 64 098 804 34 650 536 35 743 617
Sirius 11 053 629 - -
75 152 433 34 650 536 35 743 617
* The group has early adopted IFRS 9, with retrospective application. These figures have therefore been restated.
The impact of adopting IFRS 9 on the group's primary statements is presented in note 16.
The investments are classified as FVTPL. Accordingly they are measured at fair value at the reporting date with
changes in fair value being recognised in profit or loss. These investments have been classified as FVTPL because
the contractual terms of the financial assets do not give rise to cash flows that are solely payments of principal
and interest on the amount outstanding.
On 5 December 2014 the group acquired a 4,2% shareholding in Sirius for EUR10 178 432. This has been fair valued
at 31 December 2014 and a gain of EUR1 263 564 was recognised in fair value adjustments in profit or loss.
The Karoo fund is classified as FVTPL. On 30 October 2014 the Karoo Fund compulsorily redeemed a portion of the
investment amounting to EUR11 796 176. At 31 December 2014 the investment was fair valued to EUR64 098 804 and a
gain of EUR40 130 514 was recognised in fair value adjustments in profit or loss.
Reconciliation of investments
Audited
As at As at As at
Euro 31 December 14 31 December 13 30 June 14
Opening balance 35 743 617 - -
Acquisition 10 178 432 34 199 731 34 199 731
Capitalised fees - 354 114 356 996
Redemption (11 796 176) - -
Fair value movement 41 394 078 68 714 1 186 890
Foreign exchange movement in OCI (367 518) 27 977 -
75 152 433 34 650 536 35 743 617
A liability of EUR20 612 124 is due to Attacq when the investment in the Karoo Fund is realised, (see note 13).
Fair value hierarchy
The following table shows the carrying amount and fair value of the group's investments in the fair value
hierarchy as at 31 December 2014:
As at 31 December 14 Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Karoo Fund 64 098 804 - 64 098 804 -
Sirius 11 053 629 11 053 629 - -
75 152 433 11 053 629 64 098 804 -
As at 31 December 13
Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Karoo Fund 34 650 536 - - 34 650 536
34 650 536 - - 34 650 536
Audited as at 30 June 14
Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Karoo Fund 35 743 617 - - 35 743 617
35 743 617 - - 35 743 617
Transfers between the levels in the fair value hierarchy are recognised at the reporting date. During the period
the Karoo Fund has been reclassified from level 3 to level 2 in the fair value hierarchy.
Reconciliation of transfer of the Karoo Fund
Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Opening balance 1 Juyl 14 35 743 617 - - 35 743 617
Transfer - - 35 743 617 (35 743 617)
Movement 28 355 187 - 28 355 187 -
Closing balance 31 December 14 64 098 804 - 64 098 804 -
Valuation process for level 3 investments
On an annual basis the fair value of investments is determined by external investment managers, having
appropriate valuation experience.
These valuations are initially reviewed by the group's analyst and compared to their expectation of fair value.
The valuation is then checked by the finance team to ensure the numerical and methodological accuracy. Lastly,
the investment valuation is reviewed by the Audit Committee.
Valuation techniques and unobservable inputs
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 percentage of total investment held. In the current period, such
discounts are no longer considered appropriate given the nature of assets held and progress 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.
The following table shows the valuation technique used to measure investments held at fair value as well as the
unobservable inputs used for Level 2 and significant unobservable inputs used for level 3 investments.
31 December 14
Level 2 Investments Valuation technique Inputs Inter-relationship between
inputs and fair value
measurement
Karoo Fund Fair value is based on the NAV per share-EUR1 730 The estimated fair value
fund's reported net asset would increase (decrease)
value ("NAV"). All inputs used by the if:
fund's investment
The NAV of the fund is manager in determining - NAV per share were
valued by the fund's the fund's NAV are higher (lower).
investment manager as observable with the
follows: exception of a
convertible debenture
- Investments in that is not significant to
equities by the Karoo the input for fair
Fund are valued at valuation.
quoted prices in
active markets.
- Where there is not
an 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.
31 December 13 and 30 June 14
Level 3 Investments Valuation technique Significant unobservable Inter-relationship between
Inputs significant unobservable
inputs and fair value
measurement
Karoo Fund Fair value of the equity - Illiquidity The estimated fair value
fund is determined by - Specific risks facing would increase (decrease)
applying discounts to each investment if:
each of the underlying - Per cent of total
investments held by the investment held - Illiquidity was lower
Karoo Fund. (higher)
- Specific risks facing each
investment were lower
(higher)
- Per cent of total
investment held was
lower (higher)
10. Treasury investments
Treasury investments comprise the group's short term treasury investments. The carrying value of the group's
treasury investments at 31 December 2014 was as follows:
Audited
As at As at As at
Euro 31 December 14 31 December 13 30 June 14
Treasury investments 31 933 437 - -
Due to the low interest rate environment, management sought better returns on the group's cash over the course
of the last year by investing in a portfolio of European real-estate equities. These treasury investments are
classified as FVTPL. Accordingly they are measured at fair value at the reporting date with changes in fair
value being recognised in profit or loss. These investments have been classified as FVTPL because the objective
of the group's business model is to sell the instrument prior to its contractual maturity to
realise its fair value changes.
Reconciliation of treasury investments
Audited
As at As at As at
Euro 31 December 14 31 December 13 30 June 14
Opening balance - - -
Investment 30 000 000 - -
Fees 86 419 - -
Fair value movement 1 847 018 - -
31 933 437 - -
Fair value hierarchy
The following table shows the carrying amount and fair value of the group's investment in the fair value
hierarchy as at 31 December 2014:
30 December 14
Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Treasury investments 31 933 437 31 933 437 - -
11. Share capital
Share capital
The ordinary share capital of the company has no par value and in addition the company has unlimited authorised
share capital as it is continued in the British Virgin Islands as a BVI Business company.
Number of Share Capital
shares Euro
Balance at 28 February 13 66 238 363 67 423 236
Issued during the period
- Acquisition of New Waverley 10 Limited (previously: Artisan
Investment Projects 10 Limited) 5 111 182 5 468 964
- Acquisition of the Karoo Fund 31 962 365 34 199 732
- Scrip distributions 846 714 889 047
Balance at 31 December 13 104 158 624 107 980 979
Issued during the period
- Capital raised 173 987 429 180 391 564
- Acquisition of the Karoo Fund 1 337 946 1 605 537
Balance at 30 June 14 279 483 999 289 978 080
Issued during the period
- Acquisition of MAS Property Advisors Limited (note 7) 9 751 326 12 489 097
- Scrip distributions 1 367 283 1 693 902
Balance at 31 December 14 290 602 608 304 161 079
During the year the group incurred EUR10 903 (December 2013: EUR28 751; June 2014: EUR2 897 232) in expenses in
relation to issuing shares. These were offset against share capital.
12. Foreign currency translation reserve
The group recognised a foreign currency translation gain of EUR94 500 (December 2013: EUR46 707; June 2014:
EUR156 323) resulting in a foreign currency translation reserve at the reporting date of EUR717 428 (December 2013:
EUR513 312; June 2014: EUR622 928). The foreign currency translation reserve as at 31 December 2014 has been
restated as a result of the group adopting IFRS 9 (see note 16).
This reserve results from the translation of foreign subsidiaries from a functional currency other than euros
into the presentation currency of euros. The assets and liabilities including goodwill and fair value adjustments
arising on business combinations are translated using the exchange rates at the reporting date. Items in the
consolidated statement of profit or loss and other comprehensive income and consolidated statement of cash flows are
translated into euros using the actual, or approximate average rates of exchange for the transactions.
The resulting translation adjustments are recorded in other comprehensive income and accumulated in the foreign
currency translation reserve. Cumulative translation adjustments are recognised as income or expense upon partial
or complete disposal of a foreign entity. Exchange differences arising from the translation of the net investment
in a foreign operation are taken to other comprehensive income. These are recycled and recognised in the profit or
loss upon disposal of the operation.
13. Financial instruments
The carrying amount of the group's financial instruments as at 31 December 2014 was as follows:
Audited
As at As at As at
Euro 31 December 14 31 December 13 30 June 14
non-current
Derivative financial instruments 2 564 315 1 513 121 2 104 606
Financial liabilities 20 612 124 - -
23 176 439 1 513 121 2 104 606
Financial liabilities
The group's financial liabilities comprise:
Audited
As at As at As at
31 December 14 31 December 13 30 June 14
Euro Restated*
Current
Attacq financial liability 20 612 124 - -
*See note 16
Reconciliation of financial liabilities:
Attacq
Euro financial liability
Audited balance at 1 July 14 -
Fair value adjustment 20 764 689
Foreign exchange movement in OCI (152 565)
Balance at 31 December 14 20 612 124
Attacq financial liability
Under the purchase agreement of the Karoo Fund (see note 9) Attacq is entitled to a contingent adjustment (the
"Adjustment") in the consideration paid to them by the group. This contingent adjustment is dependent upon the
value at which the Karoo Fund redeems. The contingent payment will be share-based and would amount to
EUR20 612 124 if the current reported net asset value were to be realised. The Karoo Fund's NAV as at 31 December
2014 was EUR153 598 589.
At the point when the Karoo Fund is realised ("the Realised Value") an Adjustment will be made as follows:
1. To the extent that the Realised Value is below the purchase price, 25% of such deficit shall be deemed to be a
cost to Attacq, who shall have a corresponding number of consideration shares bought back by MAS for nil
consideration and subsequently cancelled.
2. To the extent that the Realised Price is above the purchase price and below 85% of EUR49 382 605, no further
MAS shares will be issued to Attacq.
3. To the extent that the Realised Price is above 85% and below 100% of EUR49 382 605, such a surplus shall be
deemed to be a benefit to Attacq, who shall be issued a corresponding number of additional MAS shares at a
price per share equal to the 30-day volume weighted average price of a MAS share at the point when the Karoo
Fund is realised.
4. To the extent that the Realised Price is above 100% of EUR49 382 605, 50% of such further surplus shall be settled
through the issue of additional MAS shares to Attacq at a price per share equal to the 30-day volume weighted
average price of a MAS share at the point when the Karoo Fund is realised.
The Karoo Fund is due to be fully redeemed on 31 January 2016.
This financial liability has been classified as FVTPL by opting to use the fair value option. This matches the cost
of the financial liability with the gain on the related investment directly in profit or loss.
Measurement of fair values
Fair value hierarchy
The following table shows the carrying and fair value of the group's derivative financial instruments in the fair
value hierarchy as at 31 December 2014:
As at 31 December 14
Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Derivative financial instruments 2 564 315 - 2 564 315 -
Attacq financial liability 20 612 124 - 20 612 124 -
23 176 439 - 23 176 439 -
Unaudited as at 31 December 13
Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Derivative financial instruments 1 513 121 - 1 513 121 -
Audited as at 30 June 14
Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Derivative financial instruments 2 104 606 - 2 104 606 -
Valuation techniques and unobservable inputs
The following table shows the valuation technique used to measure investments held at fair value as well as the
unobservable inputs used for Level 2 financial instruments:
Level 2 financial Valuation technique Inputs Inter-relationship
liability between inputs and fair
value measurement
Attacq financial liability Fair value is based on the NAV per share EUR1 730 The estimated fair value
fund's reported net asset would increase (decrease)
value ("NAV"). if:
The NAV of the fund is All inputs used by the - NAV per share were
valued by the fund's fund's investment higher (lower).
investment manager as manager in determining
follows: the fund's NAV are
observable with the
- Investments in exception of a
equities by the convertible debenture
Karoo Fund are that is not significant to
valued at quoted the input for fair
prices in active valuation.
markets.
- Where there is not
an 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
14. Operating segments
The group has the following four strategic divisions identified as reportable segments:
Reportable segment Description
Income-generating property Consists of all the income-generating investment property
in the portfolio.
Development property Consists of development property namely the New
Waverley development in Edinburgh, North Street
Quarter development in Lewes and the Langley
development in Chippenham.
Investments Consists of the holding in the Karoo Fund and Sirius.
Corporate and treasury Consists of all of the cash holdings outside of the other
reporting segments, treasury investments and goodwill
on the acquisition of MAS Property Advisors Limited.
The group's chief operating decision maker is determined to be the executive management team. The executive
management team analyses the performance and position of the group by aggregating the group into the four
reportable segments. These reportable segments have different risk profiles and generate revenue/income from
different sources, accordingly, it allows the executive management team to make better informed strategic
decisions for the group. Management reports are prepared and reviewed on a quarterly basis by the executive
management team to facilitate this process.
31 December 14
Income-generating Development Investments Corporate and
Euro property property treasury Total
Restated* Restated* Restated* Restated* Restated*
Statement of comprehensive income
External revenue 2 445 959 179 099 - - 2 625 058
Inter-segment revenue - - - - -
Segment (loss)/profit before tax (3 854 352) (900 100) 20 416 052 3 089 275 18 750 875
Interest income 35 23 - 146 442 146 500
Interest cost (276 486) (4 794) - - (281 280)
Depreciation - - - (13 646) (13 646)
Other material non-cash items
- Fair value adjustments (5 340 140) (839 576) 20 629 389 1 847 018 16 296 691
- Foreign exchange 45 295 59 219 - 2 438 997 2 543 511
Statement of financial position
Segment non-current assets 103 446 288 52 380 369 75 152 433 25 048 040 256 027 130
Segment current assets 1 653 468 447 495 - 103 237 055 105 338 018
Segment non-current liabilities 17 262 852 - 20 612 124 - 37 874 976
Segment current liabilities 4 158 558 72 237 - 119 209 4 350 004
* The group has early adopted IFRS 9, with retrospective application. These figures have therefore been restated.
The impact of adopting IFRS 9 on the group's primary statements has been summarised in note 16.
31 December 13
Income-generating Development Corporate and
Euro property property Investments treasury Total
Restated* Restated* Restated* Restated* Restated*
Statement of comprehensive income
External revenue 3 140 125 310 283 - - 3 450 408
Inter-segment revenue - - - - -
Segment profit/(loss) before tax 2 499 018 (43 732) - 924 592 3 379 878
Interest income 63 4 (1 737) 119 177 117 507
Interest cost (539 431) (16 810) - - (556 241)
Depreciation (15 046) - - - (15 046)
Other material non-cash items
-Fair value adjustments 726 899 - 68 714 - 795 613
-Foreign exchange 49 (5) - 1 340 995 1 341 039
Statement of financial position
Segment non-current assets 49 186 877 22 824 881 34 650 536 55 512 106 717 806
Segment current assets 2 267 425 352 973 - 17 271 370 19 891 768
Segment non-current liabilities 16 313 367 871 380 - - 17 184 747
Segment current liabilities 1 958 778 366 349 - 21 273 2 346 400
* The group has early adopted IFRS 9, with retrospective application. These figures have therefore been restated.
The impact of adopting IFRS 9 on the group's primary statements has been summarised in note 16.
30 June 14
Income-generating Development Corporate and
Euro property property Investments treasury Total
Restated*
Statement of comprehensive income
External revenue 4 741 159 506 270 - - 5 247 429
Inter-segment revenue - - - - -
Segment profit before tax 4 432 254 6 531 870 308 949 578 6 258 671
Interest income 91 4 - 199 253 199 348
Interest cost (816 987) (59 712) - - (876 699)
Depreciation (14 941) - - - (14 941)
Other material non-cash items
-Fair value adjustments (479 362) - 1 186 890 - 707 528
-Foreign exchange (89) - (31 893) 3 963 704 3 931 722
Statement of financial position
Segment non-current assets 40 452 451 25 723 814 35 743 617 - 101 919 882
Segment current assets 1 818 984 451 237 - 205 800 188 208 070 409
Segment non-current liabilities 17 371 643 - - - 17 371 643
Segment current liabilities 1 705 683 1 155 707 - 432 830 3 294 220
*The group has early adopted IFRS 9, with retrospective application. These figures have therefore been restated.
The impact of adopting IFRS 9 on the group's primary statements has been summarised in note 16.
Where assets/liabilities and income/expense are shared by reportable segments they are allocated to each
respective reportable segment based on a rational driver of use or ownership of the assets/liabilities,
income/expense.
Geographical information
The group invests in investment property in Western Europe.
The geographical information below analyses the group's revenue and non-current assets by the company's
country of domicile and the jurisdiction in which the underlying assets are held; UK, Germany and Switzerland.
Revenue
Audited
Six month Ten month Sixteen month
period ended period ended period ended
Euro 31 December 14 31 December 13 30 June 14
BVI - - -
UK 923 739 1 939 330 2 899 821
Germany 1 153 790 621 682 914 427
Switzerland 547 529 889 396 1 433 181
2 625 058 3 450 408 5 247 429
Non-current assets
Audited
Six month Ten month Sixteen month
period ended period ended period ended
Euro 31 December 15 31 December 13 30 June 14
BVI - - -
UK 191 166 246 78 420 234 75 442 044
Germany 46 122 248 9 750 000 7 952 886
Switzerland 18 738 636 18 547 573 18 524 952
256 027 130 106 717 807 101 919 882
15. Earnings per share and diluted earnings per share
Basic and diluted earnings per share
The calculation of basic and diluted earnings per share has been based on the following profit attributable to
ordinary shareholders and the weighted-average number of ordinary shares outstanding.
Profit attributable to ordinary shareholders
Audited
Six month Ten month Sixteen month
period ended period ended period ended
31 December 14 31 December 13 30 June 14
Euro Restated*
Profit for the year attributable to the
owners of the group 19 124 739 3 252 035 5 060 236
19 124 739 3 252 035 5 060 236
*See restatement below
Weighted-average number of ordinary shares
Audited
Six month Ten month Sixteen month
period ended period ended period ended
Euro 31 December 14 31 December 13 30 June 14
Issued ordinary shares at 1 July/1 March 279 483 999 66 238 363 66 238 363
Effect of shares issued 4 401 877 7 698 568 116 830 485
Weighted-average number of ordinary shares 283 885 876 73 936 931 183 068 848
Basic earnings per share
Audited
Six month Ten month Sixteen month
period ended period ended period ended
31 December 14 31 December 13 30 June 14
Euro Restated*
Profit attributable to ordinary
shareholders 19 124 739 3 252 035 5 060 236
Weighted-average number of ordinary
shares 283 885 876 73 936 931 183 068 848
Basic earnings per shares (euro cents) 6,74 4,40 2,76
There are no dilutionary instruments in issue and therefore basic earnings and diluted earnings are the same.
*Restatement
As a result of the group early adopting IFRS 9 the following adjustments have been made to the previously reported
basic and diluted earnings per share for the year ended 31 December 2014 as follows:
Impact of change in accounting policy
Euro As previously Adjustment As restated
reported
Profit for the year attributable to the owners of
the group# 1 703 730 17 421 010 19 124 739
Weighted-average number of ordinary shares 283 885 876 - 283 885 876
Basic and diluted earnings per shares (euro cents) 0,60 6,14 6,74
# See note 16
There has been no change to the previously reported basic and diluted earnings per share for the periods ended
31 December 2013 and 30 June 2014 as a result of the early adoption of IFRS 9.
Adjusted core income and adjusted core income per share
Six month Ten month Sixteen month
period ended period ended period ended
31 December 14 31 December 13 30 June 14
Euro Restated* Restated* Restated*
Profit for the year attributable to the owners of the
group 19 124 739 3 252 035 5 060 236
Adjusted for:
Fair value adjustments (16 296 691) (795 613) (707 528)
Previously recognised held to maturity unwind 774 410 68 714 1 186 890
Disposal of investment property - - (1 008 336)
Exchange differences (2 543 511) (1 341 039) (3 931 722)
Capital raising fees and structure costs 375 450 191 801 595 891
Deferred taxation (526 128) - 873 399
Realised profits on the Karoo Fund redemptions 2 433 970 - -
Realised profits on investment property disposal - - 2 453 149
Income shortfall guarantee - 304 331 635 123
Adjusted core income 3 342 239 1 680 229 5 157 102
Weighted average number of ordinary shares 283 885 876 73 936 931 183 068 848
Adjusted core income per share (euro cents) 1,18 2,27 2,82
*The group has early adopted IFRS 9, with retrospective application. These figures have therefore been restated.
The impact of adopting IFRS 9 on the group's primary statements is presented in note 16.
Headline earnings and headline earnings per share
In accordance with the Circular 2/2013 as issued by the South African Institute of Chartered Accountants, headline
earnings and headline earnings per share for six months ended 31 December 2014 is as follows:
Six month period ended
31 December 14
Restated*
Euro Gross Net
Profit for the period 19 124 739 19 124 739
Adjusted for:
Revaluation of investment property 5 732 013 5 002 709
Headline earnings 24 856 752 24 127 448
Weighted-average number of ordinary shares 283 885 876 283 885 876
Headline earnings per share (euro cents) 8,76 8,50
Ten month period ended
31 December 13
Euro Gross Net
Profit for the period 3 252 035 3 252 035
Adjusted for:
Revaluation of investment property - -
Headline earnings 3 252 035 3 252 035
Weighted-average number of ordinary shares 73 936 931 73 936 931
Headline earnings per share (euro cents) 4,40 4,40
Sixteen month period ended
30 June 14
Restated*
Euro Gross Net
Profit for the period 5 060 236 5 060 236
Adjusted for:
Revaluation of investment property 623 630 434 159
Profit on disposal on investment property (1 008 336) (998 284)
Headline earnings 4 675 530 4 496 111
Weighted-average number of ordinary shares 183 068 848 183 068 848
Headline earnings per share (euro cents) 2,55 2,46
*Restatement
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 IFRS. The directors do not use headline earnings or headline earnings per
share in their analysis of the group's performance, and do not consider it to be a useful or relevant metric for the
group. The directors make no reference to headline earnings or headline earnings per share in their commentaries.
Instead, the directors use adjusted core income. There are no dilutionary instruments in issue and therefore
headline earnings and diluted headline earnings are the same.
Headline earnings and headline earnings per share for 30 June 2014 has been restated as follows:
Six month period ended 31 December 14
Interim financial statements
The condensed interim financial statements as issued on 4 March 2015 have been restated as follows:
Change in
Euro As previously reported accounting policy Error As restated
Net Net
Profit for the period 1 703 730 17 421 010 - 19 124 739
Revaluation of investment
property 5 732 013 - (729 304) 5 002 709
Headline earnings 7 435 743 17 421 010 (729 304) 24 127 448
Headline earnings per
share (euro cents) 2,62 6,14 (0,26) 8,50
Stock Exchange News Service ("SENS")
The group issued a SENS on 7 August 2015 to correct Headline earnings and Headline earnings per share as
disclosed in the condensed interim financial statements as issued on 4 March 2015. As a result of the group early
adopting IFRS 9 the figures disclosed in the SENS have been restated as follows:
As previously reported in Change in As restated
SENS announcement accounting policy
Euro Net Net
Profit for the period 1 703 730 17 421 010 19 124 739
Revaluation of investment
property 5 002 709 - 5 002 709
Reclassified gain –
available for sale item (2 468 737) 2 468 737 -
Headline earnings 4 237 702 19 889 747 24 127 448
Headline earnings per
share (euro cents) 1,49 7,01 8,50
Sixteen month period ended 30 June 14
As previously reported Change in As restated
Euro Net accounting policy Net
Profit for the period 5 060 236 - 5 060 236
Revaluation of investment
property 623 630 (189 471) 434 159
Profit on disposal on
investment property - (998 284) (998 284)
Headline earnings 5 683 866 (1 187 755) 4 496 111
Headline earnings per
share (euro cents) 3,10 (0,64) 2,46
16. Change in accounting policy, reclassifications and errors
Change in accounting policy
The group has early adopted IFRS 9: Financial Instruments, with an initial application date of 1 July 2014. The
rationale for the early adoption of IFRS 9 was a result of the Karoo Fund compulsorily redeeming a portion of the
group's investment in the fund, consequently the investment was required to be reclassified in accordance with IAS
39 from held-to-maturity to available-for-sale as the redemption date was no longer fixed or determinable.
Financial assets classified as available-for-sale are measured at fair value at the reporting date with changes in fair
value being recognised within other comprehensive income. As the group is an investment business, it is
considered that fair value movements in relation to all such investments should be recognised directly in profit or
loss, and not in reserves for certain investments, and in profit or loss for others. The adoption of IFRS 9 results in
more reliable and relevant information in that all changes in fair value are recognised in profit or loss.
IFRS 9 includes the following categories for the classification and measurement of financial
assets:
- Financial assets at amortised cost: Financial assets held within a business model whose objective is to
hold assets in order to collect contractual cash flows that are solely payments of principal and interest on
the principal amount outstanding.
- Financial assets at fair value through other comprehensive income: Financial assets include investments
in equity instruments that are not held for trading and where the fair value option is elected.
- Financial assets at FVTPL: Financial assets acquired for realising capital gains from fluctuations in market
prices.
There have been no alterations to the measurement basis of any financial instruments held by the group as a result
of the adoption of IFRS 9 with the exception of the group's Investments which comprise the Karoo Fund and Sirius
(see note 9).
As at 30 June 2014 the Karoo Fund was classified as held-to-maturity in accordance with IAS 39, and measured at
amortised cost, whereby such amortised cost approximated fair value.
On adoption of IFRS 9 the group has retrospectively reclassified the investment in the Karoo Fund as FVTPL. Financial
assets at FVTPL are measured at fair value, and changes therein are recognised in profit or loss. The Attacq financial
liability (see note 13) has been recognised gross of the group's investment in the Karoo Fund because Attacq is a
third party in relation to the group's investment in the Karoo Fund (see error note below).
Reclassifications
The group has made a reclassification to previously reported figures for the periods ending 31 December 2013 and
30 June 2014 to match the classification of the current period financial information. These reclassifications have
been made to aid comparability for readers of these restated audited condensed consolidated financial statements.
The reclassifications relate to:
- Splitting net finance income/(expense) into separate line items for finance income and finance costs; and
- Splitting disposal on investment property into a separate line item from net (loss)/gain on investment property
and changing the line item of net (loss)/gain on investment property to fair value adjustments.
- Presenting scrip distributions in “issue of shares” rather than “distributions” in the condensed consolidated
statement of changes in equity.
Errors
As part of the JSE's proactive monitoring MAS was required to make a SENS announcement on 7 August 2015. The
announcement related to additional disclosures in the interim results for the six months ending 31 December 2014
and an error identified with respect to the computation of headline earnings and headline earnings per share. The
additional disclosure has been included within these restated audited condensed interim consolidated financial
statements for the six month period ended 31 December 2014 which have also been restated for the error with
respect to the computation of headline earnings and headline earnings per share.
The directors do not use headline earnings or headline earnings per share in their analysis of the group's
performance, and do not consider it to be a useful or relevant metric for the group. The directors make no
reference to headline earnings or headline earnings per share in their commentaries. Instead, the directors use
adjusted core income as a basis for measuring the performance of the group.
The adjustments required to be made to headline earnings and headline earnings per share are isolated purely to
the technical methodology of computation. Adjusted core income per share, upon which the company's dividend
distribution is based, has not been impacted as a result of this restatement. The impact of restating this error has
been disclosed in note 15.
As noted above on adoption of IFRS 9 the group retrospectively reclassified the investment in the Karoo Fund as
FVTPL and recognised the group's investment in the Karoo Fund gross of the financial liability due to Attacq. The
Karoo Fund and financial liability due to Attacq were previously reported net in error.
There is no impact on the:
- Consolidated statements of cash flows any period;
- Consolidated statements of financial position for December 2013 and June 2014; or
- Consolidated statement of profit or loss and other comprehensive income for June 2014.
The impact of the change in accounting policy, reclassifications and errors is disclosed below except for the impact
on basic and diluted earnings and basic and diluted earnings per share as well as headline and diluted headline earnings
and headline and diluted headline earnings per share which are disclosed separately in note 15.
Condensed consolidated statement of financial position
31 December 14 Change in
Euro As previously reported accounting policy Reclassifications Error As restated
Assets
Investments 54 540 309 - - 20 612 124 75 152 433
Equity
Retained (loss)/profit (3 159 348) 17 421 010 - - 14 261 661
AFS Reserve 17 421 010 (17 421 010) - - -
Liabilities
Financial instruments 2 564 315 - - 20 612 124 23 176 439
Net assets 37 714 332 - - - 37 714 332
31 December 13
Change in
Euro As previously reported accounting policy Reclassifications Error As restated
Investments 34 650 536 - - - 34 650 536
34 650 536 - - - 34 650 536
30 June 14
Change in
Euro As previously reported accounting policy Reclassifications Error As restated
Investments 35 743 617 - - - 35 743 617
35 743 617 - - - 35 743 617
Condensed consolidated statement of profit or loss and other comprehensive income
31 December 14 Change in
Euro As previously reported accounting policy Reclassifications Error As restated
Net (loss)/gain on investment (6 179 716) - 6 179 716 - -
property activity
Fair value adjustments - 20 629 389 (4 332 698) - 16 296 691
Net finance 4 920 617 (3 208 379) (1 712 238) - -
income/(expense)
Finance income - - 146 500 - 146 500
Finance costs - - (281 280) - (281 280)
Available-for-sale financial
assets – net change in fair
value 17 421 010 (17 421 010) - - -
16 161 911 - - - 16 161 911
31 December 13
Euro As previously Change in Reclassifications Error As restated
reported accounting policy
Net fair value 726 899 - (726 899) - -
adjustments on
investment property
Fair value - 68 714 726 899 - 795 613
adjustments
Net finance
income/(expense) (370 021) - 370 021 - -
Finance income - (68 714) 186 220 - 117 507
Finance costs - - (556 241) - (556 241)
356 878 - - - 356 878
31 June 14
Change in
Euro As previously reported accounting policy Reclassifications Error As restated
Net/(gain) loss on
investment property
activity 528 974 - (528 974) - -
Fair value adjustments - 1 186 890 (479 362) - 707 528
Net finance
(costs)/income 509 539 (1 186 890) 677 351 - -
Finance income - - 199 348 - 199 348
Finance costs - - (876 699) - (876 699)
Disposal of investment
property - - 1 008 336 - 1 008 336
1 038 513 - - - 1 038 513
Condensed consolidated statement of changes in equity
31 December 14
Euro As previously Change in Reclassifications Error As restated
reported accounting policy
Profit for the period 1 703 730 17 421 010 - - 19 124 739
Issue of shares 12 489 097 - 1 693 902 - 14 182 999
Distributions (1 892 596) - (1 693 902) - (3 586 498)
Available-for-sale
reserve 17 421 010 (17 421 010) - - -
29 721 241 - - - 29 721 241
31 December 13
Euro As previously Change in Reclassifications Error As restated
reported accounting policy
Issue of shares 39 668 696 - 889 047 - 40 557 743
Distributions (104 528) - (889 047) - (993 575)
39 564 168 - - - 39 564 168
17. Related parties
Parent and ultimate controlling party
The group has no ultimate controlling party, but is controlled by its ordinary shareholders in aggregate.
Transactions with key management
Six months ended 31 December 14
Euro Role Basic salary Benefits Short-term incentive Long-term incentive
Lukas Nakos CEO 43 625 - - -
Malcolm CFO 65 788 - - -
Levy*
Jonathan CIO 16 363 - - -
Knight
Ron Spencer Chairman 9 500 - - -
Gideon NED 9 500 - - -
Oosthuizen
Jaco Jansen NED 9 500 - - -
Morne NED 4 008 - - -
Wilken
Pierre NED 4 008 - - -
Goosen
162 292 - - -
* Included in this amount is EUR24 940 that was paid directly to MAS Property Advisors Limited, the investment
advisor.
Ten months ended 31 December 13
Euro Role Basic salary Benefits Short-term incentive Long-term incentive
Lukas Nakos CEO - - - -
Malcolm
Levy* CFO 63 363 - - -
Ron Spencer Chairman 15 833 - - -
Gideon NED 15 833 - - -
Oosthuizen
Jaco Jansen NED 15 833 - - -
Total 110 862 - - -
* This amount was paid directly to MAS Property Advisors Limited, the investment advisor.
Sixteen month period ended 30 June 14
Euro Role Basic salary Benefits Short-term incentive Long-term incentive
Lukas Nakos CEO - - - -
Malcolm
Levy* CFO 103 579 - - -
Ron Spencer Chairman 25 333 -
Gideon NED 25 333 - - -
Oosthuizen
Jaco Jansen NED 25 333 - - -
179 578 - - -
* This amount was paid directly to MAS Property Advisors Limited, the investment advisor.
Other related party transactions:
Income/(expenses) Capitalised for the period ended Balances receivable/(payable) as at
for the period ended
Euro 31 December 31 December 30 June 31 December 31 December 30 June 31 December 31 December 30 June
14 13 14 14 13 14 14 13 14
MAS Property Advisors Limited
Investment adviser fee (1 248 330) (831 786) (2 410 812) - - - - - (204 053)
Transaction fee - - - 332 018 341 997 341 997 - - -
Oncharged staff costs (462 069) (383 286) (457 158) - - - - - -
(1 710 399) (1 215 072) (2 867 970) 332 018 341 997 341 997 - - (204 053)
New Waverley Advisors Limited
Oncharged development costs - - - 8 228 735 1 757 480 2 465 118 - - 14 431
- - - 8 228 735 1 757 480 2 465 118 - - 14 431
Corona Real Estate Partners Limited
Legal and professional expenses (104 590) - - - - - - - -
(104 590) - - - - - - - -
Attacq
Karoo Fund financial liability - - - - - - (20 612 124) - -
- - - - - - (20 612 124) - -
Artisan Real Estate investors Limited
Oncharged administrative
expenses (20 639) - (76 422) - - - (11 812) - -
(20 639) - (76 422) - - - (11 812) - -
(1 835 628) (1 215 072) (2 944 392) 8 560 753 2 099 477 2 807 115 (20 623 936) - (189 622)
All related party balances are unsecured and are repayable on demand.
MAS Property Advisors Limited ("MAS Prop")
MAS Prop is a real estate advisory company. During the period MAS Prop was acquired by the group, and, at the
reporting date is a 100% owned subsidiary of the group (see note 7). Prior to the acquisition MAS Prop was owned by a
group of investors of which Lukas Nakos and Malcolm Levy, the Chief Executive Officer and Chief Financial Officer of the
group respectively, had significant influence.
Prior to the group's acquisition of MAS Prop the group paid EUR1 248 330 (December 2013: EUR831 786; June 2014:
EUR2 410 812) in respect of investment adviser fees and on-harged staff costs. These fees were charged to the group in
accordance with the investment advisory agreement and on an arm's length basis.
Transaction fees in relation to the acquisition on investment property of EUR332 018 (December 2013: EUR341 997 June
2014: EUR341 997) were charged prior to the group's acquisition of MAS Prop. These fees were charged to the group in
accordance with the investment advisory agreement and on an arm's length basis and have been capitalised within
investment property.
Artisan Real Estate Investors Limited ("Artisan")
Artisan is a real estate management company and is owned by a group of investors of which Lukas Nakos and Malcolm
Levy, the chief executive officer and chief financial officer of the group respectively have significant influence.
New Waverley Advisers Limited ("NW Advisers")
NW Advisers is a real estate developer and is a 100% owned subsidiary of Artisan, as such is controlled by Artisan which
is a related party of the group.
During the year NW Advisers on-charged expenses in relation to the development of New Waverley which amounted to
EUR8 228 735 (December 2013: EUR1 757 480; June 2014: EUR2 465 118). These have been capitalised as part of the New
Waverley development within investment property. These on-charges were charged to the group in
accordance with the development management agreement and were on an arm's length basis.
Corona Real Estate Partners Limited ("Corona")
Corona is a real estate management company owned 100% by Jonathan Knight who is the Chief Investment Officer of
the group.
During the year the group used the professional services of Corona and incurred expenses of EUR104 590 (December 2013:
nil; June 2014: nil), which were charged to the group on an arm's length basis. At the end of the reporting period there
were no fees owed to Corona by the group (December 2013: nil; June 2014: nil). Professional services fees are expensed
in the profit or loss within Administrative expenses-Legal and professional expenses.
Attacq
Attacq is a significant shareholder in the company and has significant influence over the group.
The group purchased the Karoo Fund from Attacq in the prior period for an all share consideration of EUR34 199 731 (see
note 9). Under the purchase agreement of the Karoo Fund Attacq is entitled to a contingent adjustment (the
"Adjustment") in the consideration paid to them by the group. This contingent adjustment is dependent upon the value
at which the Karoo Fund redeems. The contingent payment will be share-based and would amount to EUR20 612 124 (see
note 13) if the current reported net asset value were to be realised. The Karoo Fund's NAV as at 31 December 2014 was
EUR153 598 589.
18. First time adoption of IFRS
In the prior reporting period the group prepared the consolidated financial statements in accordance with
International Financial Reporting Standards as adopted by the EU. However, as a result of the company transferring its
listing to the Main Board of the JSE, the group has prepared these interim consolidated financial statements in
accordance with IFRS as issued by the International Accounting Standards Board ("IASB").
The group has adopted the following standards for the year beginning 1 July 2014 as a result of preparing these
condensed interim consolidated financial statements in accordance with IFRS:
IAS 27 Consolidated and Separate Financial Statements – Reissued as IAS 27 Separate Financial
Statements (as amended in May 2011)
IAS 28 Investments in Associates – Reissued as IAS 28 Investments in Associates and Joint Ventures (as
amended in May 2011)
IAS 32 Financial Instruments: Presentation – Amendments to application guidance on the offsetting of
financial assets and financial liabilities (December 2011)
IFRS 10 Consolidated Financial Statements (May 2011)
IFRS 11 Joint Arrangements (May 2011)
IFRS 12 Disclosure of Interests in Other Entities (May 2011)
Annual improvements to IFRSs – 2010 to 2012 cycle
Annual improvements to IFRSs – 2011 to 2013 cycle
This change implies, under IFRS 1, that the group is technically preparing the financial statements in accordance with
IFRS for the first time. In accordance with IFRS 1, the group's accounting policies and newly adopted standards were
assessed, and it was concluded the change to IFRS as adopted by the IASB did not materially affect the accounting
policies or the manner in which the financial statements are prepared or presented. As such there has been no
adjustment to prior reported figures and no further disclosures have been made in respect of IFRS 1.
14 September 2015
Sponsor
Java Capital
Date: 14/09/2015 11:01:00 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.
Sharenet Sites 
