Wrap Text
Summarised provisional consolidated financial statements for the year ended 30 June 2015
Attacq Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/000543/06)
JSE share code: ATT ISIN: ZAE000177218
("Attacq" or "the company" or "the Group")
SUMMARISED PROVISIONAL CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2015
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
30 June 30 June
2015 2014
R'000 R'000
Assets
Non-current assets
Property, plant and equipment 10 641 11 061
Investment properties 16 187 873 12 829 337
Per valuation 16 670 072 13 138 938
Straight-line lease debtor (482 199) (309 601)
Straight-line lease debtor 482 199 309 601
Deferred initial lease expenditure 9 154 7 174
Intangible assets 344 523 284 826
Goodwill 67 774 62 847
Investment in associates 2 369 884 2 950 274
Other financial assets 102 993 -
Other investments 402 414 523 750
Deferred tax assets 19 829 11 570
Total non-current assets 19 997 284 16 990 440
Current assets
Taxation receivable 408 896
Trade and other receivables 223 084 167 302
Loans to associates 741 037 771 936
Other financial assets 907 282 6 173
Cash and cash equivalents 747 145 389 293
Total current assets 2 618 956 1 335 600
Non-current assets held for sale 684 441 138 846
Total assets 23 300 681 18 464 886
Equity and liabilities
Equity
Stated capital 6 439 419 5 798 843
Distributable reserves 4 815 584 3 836 930
Available-for-sale reserve 682 579 83 746
Share-based payment reserve 90 359 83 317
Foreign currency translation reserve 45 740 111 929
Acquisition of non-controlling interests reserve (116 483) (2 574)
Equity attributable to owners of the holding company 11 957 198 9 912 191
Non-controlling interests 7 252 214 567
Total equity 11 964 450 10 126 758
Non-current liabilities
Long-term borrowings 8 863 852 6 226 221
Deferred tax liabilities 1 365 868 900 811
Other financial liabilities 28 086 48 026
Provisions for liabilities relating to associates 1 579 8 844
Finance lease obligation 71 346 56 009
Total non-current liabilities 10 330 731 7 239 911
Current liabilities
Other financial liabilities 113 258 5 851
Finance lease obligation 1 332 -
Loans from associates 70 989 246 079
Taxation payable 10 185 11 158
Trade and other payables 462 636 375 960
Provisions 1 422 10 142
Bank overdraft 19 349 -
Long-term borrowings 326 329 449 027
Total current liabilities 1 005 500 1 098 217
Total liabilities 11 336 231 8 338 128
Total equity and liabilities 23 300 681 18 464 886
Net asset value per share (cents) 1 706 1 477
Net asset value per share excluding deferred tax (cents) 1 898 1 610
SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
30 June 30 June
2015 2014
R'000 R'000
Gross revenue 1 312 935 876 850
Rental income 1 140 335 769 199
Straight-line lease income adjustments 172 600 107 651
Property expenses (358 885) (230 300)
Net rental income 954 050 646 550
Gross profit from sale of inventory - 41 332
Sale of inventory - 263 209
Cost of sales - (221 877)
Bargain purchase on acquisition of subsidiary - 43 783
Other income 205 590 59 325
Operating and other expenses (305 589) (283 743)
Operating profit 854 051 507 247
Amortisation of intangible asset (20 303) (14 634)
Fair value adjustments 1 114 224 953 192
Investment properties 1 110 711 919 094
Other financial assets and liabilities 68 089 34 098
Other investments (64 576) -
Net income (loss) from associates 50 568 (58 069)
Investment income 142 531 424 796
Finance costs (685 872) (582 122)
Profit before taxation 1 455 199 1 230 410
Income tax expense (471 038) (218 156)
Profit for the year 984 161 1 012 254
Attributable to:
Owners of the holding company 978 654 946 147
Non-controlling interests 5 507 66 107
Other comprehensive income
Items that will be reclassified subsequently to profit and loss
Gain on available-for-sale financial assets 661 986 104 950
Taxation relating to components of other comprehensive income (63 153) (21 204)
Other comprehensive income for the year net of taxation 598 833 83 746
Total comprehensive income for the year 1 582 994 1 096 000
Attributable to:
Owners of the holding company 1 577 487 1 029 893
Non-controlling interests 5 507 66 107
Earnings per share
Basic (cents) 142.4 163.4
Diluted (cents) 142.0 163.1
Reconciliation between earnings, headline earnings
and distributable (loss) earnings
Profit for the year 978 654 946 147
Headline earnings adjustments (964 063) (640 350)
Profit on disposal of associates (89 161) (7 790)
(Profit) loss on disposal of other investments (956) 65 150
Profit on disposal of investment property (29 132) (8 567)
Impairment of associates and other investments 3 486 14 995
Impairment of goodwill 109 670 -
Fair value adjustments (1 114 224) (953 192)
Gain arising from bargain purchase - (43 783)
Net (income) loss from associates (50 568) 58 069
Tax effect of adjustments 218 169 153 575
Non-controlling interests' share (11 347) 81 193
Headline earnings 14 591 305 797
Distributable earnings adjustments (144 095) 28 780
Straight-line lease income adjustments (115 840) (107 392)
Interest in respect of Attvest transaction - 123 571
Foreign currency translation effect (47 246) -
Depreciation and amortisation 17 575 13 034
Finance lease interest 1 808 -
Actual finance lease payments (392) (433)
Distributable (loss) earnings (129 504) 334 577
Number of shares in issue* 700 995 224 670 965 594
Weighted average number of shares
in issue* 687 046 081 578 976 838
Diluted weighted average number of
shares in issue* 689 256 626 580 271 131
Headline earnings per share
Basic (cents) 2.1 52.8
Diluted (cents) 2.1 52.7
* Adjusted for 46 427 553 treasury shares (2014: 46 427 553)
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
30 June 30 June
2015 2014
R'000 R'000
Cash flow generated from operating activities 66 575 276 516
Cash generated from operating activities 650 572 503 049
Investment income 119 673 424 796
Finance costs (627 902) (582 122)
Taxation paid (75 768) (69 207)
Cash flow utilised in investing activities (2 182 147) (3 970 959)
Cash flow from financing activities 2 453 684 3 751 402
Total cash movement for the year 338 112 56 959
Cash at the beginning of the year 389 293 44 389
Cash acquired with subsidiaries 391 287 945
Total cash at the end of the year 727 796 389 293
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Stated capital Distributable Available-for- Share-based Foreign Acquisition Equity Non- Total
R'000 reserves sale reserve payment currency of non- attributable controlling equity
R'000 R'000 reserve translation controlling to owners interests R'000
R'000 reserve interests of the R'000
R'000 reserve holding
R'000 company
R'000
Audited balance at 30 June 2013 2 196 594 3 150 726 - 5 488 159 - 5 352 967 352 283 5 705 250
Total comprehensive income - 946 147 83 746 - - - 1 029 893 66 107 1 096 000
Profit for the year - 946 147 - - - - 946 147 66 107 1 012 254
Other comprehensive income - - 83 746 - - - 83 746 - 83 746
Derecognition of non-controlling interest - - - - - - - (203 823) (203 823)
Foreign currency translation reserve - - - - 111 770 - 111 770 - 111 770
Cancellation of shares (158 673) (259 943) - - - - (418 616) - (418 616)
Issue of shares 3 760 922 - - - - - 3 760 922 - 3 760 922
Recognition of non-controlling interests reserve - - - - - (2 574) (2 574) - (2 574)
Recognition of share-based payments - - - 77 829 - - 77 829 - 77 829
Audited balance at 30 June 2014 5 798 843 3 836 930 83 746 83 317 111 929 (2 574) 9 912 191 214 567 10 126 758
Total comprehensive income - 978 654 598 833 - - - 1 577 487 5 507 1 582 994
Profit for the year - 978 654 - - - - 978 654 5 507 984 161
Other comprehensive income - - 598 833 - - - 598 833 - 598 833
Derecognition of non-controlling interest - - - - - - - (212 822) (212 822)
Foreign currency translation reserve - - - - (66 189) - (66 189) - (66 189)
Issue of shares 640 576 - - - - - 640 576 - 640 576
Recognition of non-controlling interests reserve - - - - - (113 909) (113 909) - (113 909)
Recognition of share-based payments - - - 7 042 - - 7 042 - 7 042
Audited balance at 30 June 2015 6 439 419 4 815 584 682 579 90 359 45 740 (116 483) 11 957 198 7 252 11 964 450
SUMMARISED SEGMENTAL ANALYSIS
Audited Audited
30 June 2015 30 June 2014
Note Revenue Net Investment Net Revenue Net profit Investment Net
R'000 profit properties asset value R'000 R'000 properties asset value
R'000 R'000 R'000 R'000 R'000
Business segment
Atterbury House 1 - - - - 4 462 (9 282) - -
Brooklyn Bridge Office Park 2 71 864 11 727 611 581 224 026 19 222 41 472 608 275 203 377
Great Westerford* 34 363 18 982 272 762 204 377 34 529 (21 787) 235 609 181 563
Harlequins Office Park 3 - - - - 2 694 2 094 - -
Lynnwood Bridge Precinct 144 335 74 517 1 283 202 280 420 118 079 48 852 829 661 300 755
Aurecon Building 97 596 23 867 641 770 176 559 101 230 19 093 637 953 152 692
Newtown Junction 117 254 (21 896) 1 268 703 217 363 - - - -
The Majestic 12 849 3 905 134 361 27 921 - - - -
PwC Sunninghill 4 18 961 4 075 351 306 (29 371) - - - -
Waterfall - Altech Building* 8 142 3 225 40 647 25 296 3 803 4 634 41 004 15 920
Waterfall - Cell C Campus 127 696 47 182 778 013 624 091 64 343 106 358 761 329 882 766
Waterfall - City Lodge 5 812 (468) 99 904 46 361 - - - -
Waterfall - Group Five 80 008 50 112 543 093 252 420 32 048 82 213 504 420 214 285
Waterfall - Maxwell Office Park - Phase I & II* 26 824 11 060 239 659 121 847 6 495 14 474 130 494 96 504
Waterfall - Novartis 2 190 33 303 194 620 122 126 - - - -
Office and mixed use 747 894 259 591 6 459 621 2 293 436 386 905 288 121 3 748 745 2 047 862
De Ville Shopping Centre 3 - - - - 20 204 31 074 - -
Glenfair Boulevard Shopping Centre 50 208 62 529 388 900 359 709 44 197 35 901 349 646 281 698
Sanridge Square 3 - - - - 511 2 016 - (388)
Garden Route Mall 122 846 74 004 1 186 014 452 361 114 759 110 978 1 111 741 362 632
Brooklyn Mall* 71 999 36 919 677 335 260 397 67 350 75 134 637 515 239 287
Mooirivier Mall 113 591 56 078 1 042 802 398 427 115 524 84 173 992 265 440 212
Andringa Walk 24 864 711 169 323 65 922 23 444 3 163 160 512 (110 516)
Eikestad Mall^ 65 200 26 021 529 416 202 783 60 121 17 461 503 449 97 335
Mill Square^ 7 596 1 778 78 975 30 161 4 214 260 73 196 9 365
Waterfall Corner 28 758 10 447 185 440 88 943 6 723 32 438 169 592 43 666
Waterfall Lifestyle 14 751 10 324 112 371 28 172 - - - -
Retail 499 813 278 811 4 370 576 1 886 875 457 047 392 598 3 997 916 1 363 291
Waterfall - Angel Shack 4 728 5 629 32 931 23 631 - - - -
Waterfall - Covidien 8 911 18 589 108 442 20 949 - - - -
Waterfall - Cummins* 1 105 14 357 78 008 76 814 - - - -
Waterfall - Drager 6 829 12 601 71 250 32 118 - - - -
Waterfall - Massbuild Distribution Centre 32 939 16 073 243 439 40 028 31 701 1 471 224 962 49 612
Waterfall - Westcon 9 977 9 209 99 176 88 324 - - - -
Light industrial 64 489 76 458 633 246 281 864 31 701 1 471 224 962 49 612
Le Chateau - (4) 17 000 14 755 - (70) 17 000 14 753
Waterfall - Development rights - 68 751 1 467 422 1 467 387 - 24 154 1 503 549 1 503 471
Waterfall - Infrastructure and services 25 (7 751) 615 991 207 744 - (31 149) 446 046 316 217
Vacant land 25 60 996 2 100 413 1 689 886 - (7 065) 1 966 595 1 834 441
Newtown - Carr Street - - 8 569 8 569 - - - -
Newtown - City Lodge - 4 656 73 018 25 425 - - - -
Waterfall - Allandale Building - 3 627 69 848 52 023 - - - -
Waterfall - Hilti - 9 963 38 981 28 575 - - - -
Waterfall - Mall of Africa^ - 339 686 2 010 139 624 601 - 141 149 994 714 732 865
Waterfall - Maxwell Office Park - Phase III* - 15 795 101 658 12 456 - - - -
Waterfall - PwC Tower~ - 27 895 152 688 187 564 - - - -
Waterfall - Servest - 28 073 127 134 40 125 - - - -
Waterfall - Stryker - 11 662 41 982 18 898 - - - -
Waterfall - Angel Shack - - - - - 1 134 21 031 18 705
Waterfall - City Lodge - - - - - 5 156 63 086 60 755
Waterfall - Covidien - - - - - 2 903 39 236 35 513
Waterfall - Cummins* - - - - - 1 118 24 312 15 216
Waterfall - Drager - - - - - 2 968 30 535 29 378
Waterfall - Maxwell Office Park - Phase II* - - - - - 8 281 83 671 72 491
Waterfall - Novartis - - - - - 5 146 54 168 49 292
Waterfall Lifestyle - - - - - (1 516) 87 299 84 867
Waterfall - Westcon - - - - - 489 52 348 46 436
Lynnwood Bridge - Phase III - - - - - 8 149 308 639 115 081
Newtown Junction - - - - - 6 035 987 919 187 323
The Majestic - - - - - 19 194 144 161 24 190
Developments - 441 357 2 624 017 998 236 - 200 206 2 891 119 1 472 112
Head office/other 714 465 781 - 4 832 041 1 197 220 669 - 3 359 440
Total 1 312 935 1 582 994 16 187 873 11 964 450 876 850 1 096 000 12 829 337 10 126 758
Notes:
1. Held for sale as at 30 June 2013, sold prior to 30 June 2014
2. Acquired during prior year
3. Disposed of during prior year
4. Acquired during current year
5. 100% held in prior year, 80% held in current year
Represents Attacq's undivided share in the property: *50%; #25%; ^80%; ~75%
Commentary
Introduction
Attacq is a leading South African capital growth property company listed on the JSE. Attacq's vision is to deliver exceptional sustainable capital
growth through creative local and international real estate developments and investments. Attacq pursues this vision through its strategic drivers of
Invest, Develop and Grow. Attacq's business has two key focus areas: Investments and Developments. Investments comprise completed buildings held
directly and indirectly. Developments comprise land, greenfields development of land or brownfields development by refurbishment of existing
buildings. Investments provide stable income and balance sheet strength to responsibly secure and fund high-growth opportunities within Developments.
Attacq has a total asset value of R23.3 billion (2014: R18.5 billion), including landmark commercial and retail property assets and developments. Its
portfolio of properties and investments consists of geographically diverse assets across South Africa as well as a growing representation of
international investments in sub-Saharan Africa via retail-focused AttAfrica Limited ("AttAfrica") and in Germany, Switzerland and the United Kingdom via
a strategic stake in MAS Real Estate Inc. ("MAS").
Highlights
- Net asset value per share ("NAVPS") adjusted for deferred tax increased by 17.9% to R18.98
- Net rental income increased by 47.6% to R954.0 million
- The long-awaited 131 038 m2 Mall of Africa is on track to open in April 2016
- 13 new developments completed contributing to a 45.1% increase in attributable primary gross leasable area ("GLA") to 565 796 m2
- Average cost of debt reduced to 9.0% (2014: 9.5%) with 75% of total committed debt facilities hedged (2014: 63%)
Net asset value ("NAV") and NAVPS
NAV attributable to Attacq shareholders increased by 20.6% compared with the prior year. NAVPS adjusted for deferred tax increased by 17.9% from
R16.10 to R18.98 and NAVPS increased by 15.5% from R14.77 to R17.06.
Capital raised
On 9 December 2014, Attacq raised R640 million in cash by way of a vendor placement of 29.6 million shares at R21.60 per share to fund the
acquisition of the non-controlling interest in Attacq Waterfall Investment Company (Pty) Ltd ("AWIC"), as detailed further below.
Non-controlling interests acquired
The acquisition of the non-controlling interests in AWIC and Lynnaur Investments (Pty) Ltd ("Lynnaur") detailed below took place at a premium to the
accounting NAV of each entity, resulting in the acquisition of non-controlling interests reserve increasing by R113.9 million. The premium paid to
accounting NAV was justified by the existence of future economic benefits not reflected in the underlying assets' carrying values as at the
transaction date.
AWIC transaction
In December 2014, as part of Attacq's strategy to manage the entire Waterfall pipeline and to take full control of the strategic planning and
management of Waterfall, including the roll out of its infrastructure, Attacq became the sole shareholder of AWIC. Atterbury Property Holdings (Pty)
Ltd ("Atterbury") previously held an 18.775% effective shareholding in AWIC. The total purchase consideration for Atterbury's stake was
R655.1 million.
The AWIC transaction enables Attacq to accelerate the unlocking of value in respect of the Waterfall development rights by engaging, without
restriction, with Atterbury and other developers. This strategy was formulated jointly with Atterbury, which is increasing its development capacity
in other markets including Central and Eastern Europe, a direction which supports Attacq's diversification strategy.
As part of the AWIC transaction, Attacq secured a pre-emptive right in respect of all material developments to be undertaken by Atterbury, locally
and internationally, thus ensuring Attacq's continued access to Atterbury's development pipeline.
In return for the pre-emptive right, the disposal by Atterbury of its shareholding in AWIC and the amendments to Atterbury's exclusive rights to act
as Waterfall's developer, Attacq reduced its shareholding in Atterbury from 25% to 10% for a consideration of R83 million. Attacq has retained a
seat on Atterbury's board of directors. From an accounting perspective, no value was attributed to the pre-emptive right.
Lynnaur
Effective 12 December 2014, Attacq acquired the 25% non-controlling interest in Lynnaur, the owner of the Aurecon Building in Pretoria, for an amount
of R50 million. Attacq is now the sole owner of all the properties located in the Lynnwood Bridge Precinct, in accordance with Attacq's acquisition
strategy of owning properties located in strong nodes.
Acquisitions
Acquisition of PwC Sunninghill offices
Effective 31 January 2015, AWIC acquired 100% of the issued share capital and loan claims of Micawber 832 (Pty) Ltd ("Micawber"), the owner of the
PwC offices located in Sunninghill, Gauteng, for a total consideration of R71.7 million.
Attacq has measured identifiable assets and liabilities at fair value at the acquisition date as follows:
R'000
Purchase consideration 71 670
Total identifiable net liabilities acquired at fair value 38 000
Identifiable assets acquired (365 595)
Liabilities acquired, including deferred tax recognised 403 595
Goodwill recognised, subsequently
impaired via profit and loss 109 670
The purchase consideration, which was in excess of the fair value of the identifiable net assets acquired, was factored into the development
feasibility of PwC's new 26-storey head office in Waterfall City as well as the 12-year lease entered into with PwC for the new premises. R109.7
million has been recognised in operating and other expenses as an impairment of goodwill.
Waterfall Wi-Fi rights
During the year, AWIC acquired the Wi-Fi rights in respect of all its Waterfall land parcels for an amount of R80 million.
This amount is recognised as an intangible asset as at 30 June 2015.
Disposals
Part-disposal of stake in Atterbury and disposal of 20% undivided share in the Mall of Africa
As part of the AWIC restructure, AWIC disposed of a 20% undivided share in the Mall of Africa for R318 million to Atterbury, which prior to the
restructure held an effective 18.775% stake in the mall. An agterskot is payable to Attacq for the additional 1.225% stake acquired by Atterbury in
the mall. The amount will be re-measured with reference to the market value of the mall one year after its opening which is scheduled for April 2016.
Restructure of African Land Investments Limited ("ALI")
During the year, Attacq and Hyprop Investments Limited ("Hyprop") restructured 50% of Manda Hill Mall under AttAfrica, with the remaining 50% being
held directly by Hyprop. Attacq's 12.43% shareholding in ALI was disposed of effective 1 July 2014 for an amount of R110.4 million.
Disposal of Rapfund Holdings (Pty) Ltd ("Rapfund")
In July 2014, Attacq sold its shareholding in Rapfund to a consortium of existing and new Rapfund shareholders for an amount of R139 million.
Financial position 30 June 2015 30 June 2014
Investment property R'000 R'000
Completed developments 11 945 642 8 281 224
Developments under construction 2 624 017 2 891 119
Development rights 1 467 422 1 503 549
Infrastructure and services 615 991 446 046
Vacant land 17 000 17 000
Per valuation 16 670 072 13 138 938
Straight-line lease debtor (482 199) (309 601)
Total 16 187 873 12 829 337
Completed developments
During the year, the following properties under development were completed or acquired. Attacq's attributable share of the total of 190 865m2 GLA of
these properties is 176 376m2:
Property Sector Completion Primary GLA Occupancy
date (m2) %
Waterfall
Waterfall Lifestyle Retail July 2014 7 139 60
Maxwell Office Park - Premier Foods^ Office July 2014 4 000 100
Angel Shack Industrial August 2014 4 652 100
Westcon Industrial September 2014 8 087 100
Drager Industrial November 2014 5 027 100
Maxwell Office Park - Honda^ Office November 2014 3 972 76
City Lodge Hotel November 2014 6 180 100
Covidien Industrial December 2014 11 082 100
Novartis Office April 2015 7 982 100
Cummins^ Industrial June 2015 21 007 100
Other
Lynnwood Bridge Phase III (Lynnwood) Office October 2014 14 219 69
Newtown Junction (Newtown) Retail & Office October 2014 63 564 93
The Majestic (Newtown) Office September 2014 8 429 69
Acquisitions
PwC (Sunninghill) Office January 2015 25 525 100
Total 190 865 92
100% of the GLA is reflected above
^ Attacq has a 50% undivided share in the property
Developments under construction
The following properties were either under development at 30 June 2015 or were secured subsequently thereto:
Property Sector Anticipated Primary GLA % pre-let
completion (m2)*
date
Under development
Waterfall
Mall of Africa# Retail April 2016 131 038 >90
Maxwell Office Park - Colgate^ Office August 2015 4 242 100
Maxwell Office Park - Mac Mac House^ Office October 2015 6 280 >75
Allandale Building Office August 2016 14 670 >30
PwC Tower~ Office February 2018 40 000 100
Stryker Industrial September 2015 3 219 100
Hilti Industrial September 2015 3 821 100
Servest Industrial July 2015 6 650 100
Other
City Lodge (Newtown) Hotel December 2015 4 228 100
Secured post 30 June 2015
Waterfall
Maxwell Office Park - Magwa House^ Office August 2016 7 086 -
Torre Industries Industrial August 2016 8 910 100
PWC Annex~ Office February 2018 5 223 100
Speculative warehouse Industrial June 2016 8 250 -
Total 243 617 >83
* Estimated GLA for 100% of development. Subject to change upon final remeasurement post completion
Attacq has an undivided share in the property: #80%; ^50%; ~75%
Development rights
Development rights are AWIC's contractual rights to develop certain land parcels in Waterfall. These rights form a material element of the overall
land valuation. As at 30 June 2015, 1.37 million m2 (2014: 1.39 million m2) of Waterfall's total bulk of 1.83 million m2 (2014: 1.75 million m2)
remains available for development.
Infrastructure and services
The net growth in infrastructure and services is as a result of the costs incurred to service the Waterfall land in preparation for the development
of Waterfall City and future top structures. While this asset generated no cash return, it creates the platform for future economic benefits with
respect to top structure developments.
Investments in and loans to associates
MAS
During the year, Attacq's shareholding in MAS decreased slightly from 47.3% to 45.3%, largely due to the issue of new shares by MAS as part of the
transaction to internalise its asset manager. MAS has achieved both strong balance sheet and income growth for the 2015 financial year, increasing
its adjusted NAVPS by 16.8% to EUR1.21 per share. Attacq's equity accounted investment in MAS increased from R1.9 billion to R2.2 billion, driven
largely by MAS' strong performance.
MAS' underlying development pipeline remains strong and, with its low portfolio gearing of 4.8% and bank funding available at attractive interest
rates, MAS has the ability to create further value by optimising its capital structure.
Included in other financial assets and in other comprehensive income in 2015, is an amount of R359.4 million (EUR26.4 million), being an estimate of
the fair value of the agterskot payable by MAS to Attacq following Attacq's disposal of Karoo Investment Fund S.C.A. SICAV-SIF ("Karoo") to MAS in
December 2013. The agterskot is payable on Karoo's anticipated termination in January 2016 and will be settled by way of the issue of new MAS shares.
AttAfrica
During the year, Atterbury Africa Limited ("Atterbury Africa") was rebranded as AttAfrica following the restructure of 50% of Manda Hill Mall under
Atterbury Africa and the merger of the management teams of ALI and Atterbury Africa. Attacq's investment in AttAfrica increased to R599.3 million
during the year, which increase was utilised to part fund AttAfrica's underlying development pipeline and the Manda Hill Mall acquisition noted above
under disposals. At 30 June 2015, AttAfrica's underlying assets were as follows:
Property and location Location GLA AttAfrica AttAfrica Attacq
(m2*) ownership attributable property value effective
% (USD'000) interest
%
Completed developments
Accra Mall Accra, Ghana 19 000 47 40 782 14.7
West Hills Mall Accra, Ghana 27 500 45 40 140 14.1
Manda Hill Mall Lusaka, Zambia 44 000 50 76 700 15.6
Developments under construction
Achimota Mall Accra, Ghana 14 624* 75 24 098 23.4
Kumasi City Mall Accra, Ghana 18 360* 75 18 227 23.4
Waterfalls Lusaka, Zambia - 25 1 013 7.8
* Proposed size
Planned disposal of Mauritian assets and Bishopsgate Holdings Ltd ("Bishopsgate")
Non-current assets held for sale as at 30 June 2015 comprises an amount of R656.4 million in respect of Attacq's 49.9% shareholding in each of
Bagaprop Ltd and Mall of Mauritius at Bagatelle Ltd, the owners of the Bagatelle Mall and the Bagatelle Precinct's development land respectively, as
well as an amount of R28.0 million in respect of a 30% shareholding in Bishopsgate, the owner of a student residential development in Birmingham,
United Kingdom. All of these assets were equity accounted in the prior year and presented under investments in associates and are now presented under
non-current assets held for sale.
Attacq has decided to exit its Mauritian investments in order to pursue more favourable investment opportunities.
Other financial assets
In addition to the Karoo agterskot of R359.4 million, other financial assets include an amount of R434.1 million owed by Atterbury for the
acquisition of their 20% undivided share in the Mall of Africa. The amount is due to be settled upon completion of the mall in April 2016.
Other investments
Other investments decreased by a net of R121.3 million compared with the prior year due to the restructure of ALI under AttAfrica during the current
year. Attacq's remaining 10% shareholding in Atterbury is included in other investments in the current year. In 2014, prior to the AWIC restructure,
Attacq held 25% of Atterbury which was equity accounted under investment in associates. Also included in other investments is Attacq's 19.9% interest
in Stenham European Shopping Centre Fund Ltd, the owner of the Nova Eventis regional shopping centre in Leipzig, Germany.
Borrowings
Total net interest-bearing borrowings increased by 34.6% compared to 30 June 2014 with additional debt being incurred to fund Attacq's growing
property portfolio.
Gearing, calculated as total net interest-bearing debt less cash on hand to total assets, increased from 34.0% as at 30 June 2014 to 36.3% as at 30
June 2015. In order to mitigate interest rate risk, approximately 75.0% (2014: 63.0%) of total committed facilities of R12.0 billion as at 30 June
2015 (2014: R10.4 billion) was hedged in terms of either fixed interest rate loans or interest rate swaps. The weighted average cost of funding has
improved from 9.5% in 2014 to 9.0% in 2015.
Financial performance
Profit before taxation
Net rental income
Net rental income, which includes straight-line lease income adjustments, increased by 47.6% compared with the previous year. A year-on-year
comparison of net rental income is of limited use due to changes in the property portfolio with 13 properties being completed during the current year
(2014: five), one property being acquired (2014: one) and four properties being disposed of during 2014 as well as the impact of the internalisation
of the asset management function during the 2014 financial year.
Vacancies
Overall portfolio vacancies, measured in terms of primary GLA, have increased by 10 068m2 compared with 30 June 2014. On a like-for-like basis,
vacancies have decreased by 765m2. The balance of the vacant space relates primarily to Newtown Junction, The Majestic, Lynnwood Bridge Phase III and
Waterfall Lifestyle, all of which came into operation during the financial year. Subsequent to year end, 7 926m2 of the vacant space in these
properties has been taken up.
30 June 2015 30 June 2014
Sector Vacancy Vacant Vacancy Vacant
% GLA m2 % GLA m2
Retail 1.8 10 387 0.9 3 317
Office 2.2 12 387 2.4 9 389
Industrial - - - -
Hotel - - - -
Portfolio vacancy 4.0 22 774 3.3 12 706
Other income
Other income of R205.6 million includes foreign exchange gains of R65.6 million, a profit of R28.1million realised on the disposal of the 20%
undivided share in the Mall of Africa as well as the profit generated by the disposal of the 15% shareholding in Atterbury.
Operating and other expenses
The 2014 results include a loss of R68.1 million realised on the disposal of Attacq's investment in Karoo in return for a then 23.4% stake in MAS.
The MAS agterskot of R359.4 million recognised in the current year is included under other comprehensive income. Included in operating and other
expenses in the current year is a R109.7 million impairment of goodwill relating to the acquisition of Micawber as detailed earlier under
acquisitions.
Fair value adjustments
Compared with the prior year, fair value adjustments on investment properties increased by 20.8% to R1.1 billion. Fair value adjustments on
investment properties, after accounting for straight-line lease income adjustments, is made up as follows:
30 June 2015 30 June 2014
R'000 R'000
Completed developments 434 677 325 389
Developments under construction 591 562 560 113
Development rights 84 472 33 592
Total fair value adjustments in investment properties 1 110 711 919 094
Property valuations as at 30 June 2015 are based on external valuations performed by Jones Lang LaSalle (Pty) Ltd, Old Mutual Investment Group (South
Africa) (Pty) Ltd and Mills Fitchet KZN CC.
The valuation in respect of Waterfall's development rights is based on an external valuation performed on a freehold basis. The valuation is then
adjusted downward by management to take into account, inter alia, the nature of the contractual rights and the estimated future rental obligations
attached to the development rights.
Investment income
Included in investment income in the current year is interest income of R113.9 million and dividend income of R28.6 million. The June 2014 financial
results include a once-off dividend of R325.8 million resulting from the unbundling of the underlying investments held by Attacq via investments in
various associates.
Finance costs
Finance costs increased by 17.8% compared with the prior year. Included in the June 2014 financial year is a non-cash, non-recurring amount of R123.6
million arising from the transaction concluded between Attacq, Atterbury Investment Managers (Pty) Ltd and Razorbill Properties 91 (Pty) Ltd
(a wholly-owned subsidiary of Attacq) as fully detailed in Attacq's listing prospectus and as approved by shareholders at the general meeting held on
27 August 2013. Excluding this amount, the increase is 49.6% which is attributable to the 13 properties completed over the last 12 months, resulting in
the related finance costs being expensed and no longer capitalised to the specific development.
Change in directors and company secretary
Lebo Masekela resigned from the board with effect from 30 November 2014. Keneilwe Moloko was appointed to the board with effect from 2 February 2015.
Talana Smith resigned as company secretary, effective 11 March 2015 and Tasja Kodde was appointed as company secretary effective from the same date.
Effective 1 July 2015, Brett Nagle joined the board as a non-executive director, Louis van der Watt's status changed from executive to non-executive
and Wilhelm Nauta's status changed from non-executive to independent non-executive.
Subsequent events
Attacq, via a 48.8% shareholding in Atterbury Cyprus Limited ("Atterbury Cyprus"), acquired an effective 48.6% interest in ITTL Trade & Tourist Leisure
Park Plc, owner of the Shacolas Emporium Park and an effective 48.3% interest in Woolworth Commercial Centre Plc, the owner of The Mall of Engomi.
The properties are located in Nicosia, the capital city of Cyprus and were secured together with Atterbury Europe BV which, together with minorities,
owns the balance of the shareholding in Atterbury Cyprus. The 47 000m2 Shacolas Emporium Park is in the heart of Nicosia and comprises the 27 000m2
Mall of Cyprus and a 20 000m2 Ikea store. It attracts over five million shoppers and visitors annually. The Mall of Engomi is a 13 600m2 retail
centre located in the west of Nicosia and attracts more than 1.5 million visitors annually. Both centres provide expansion opportunities. Attacq's
share of the acquisition costs was EUR48.4 million and payment was made during the course of July 2015, prior to the recent depreciation in the Rand.
Prospects
Locally, in addition to optimising its growing R11.5 billion portfolio of operational properties and delivering on its Waterfall pipeline, Attacq
remains on the lookout for other growth opportunities. The Waterfall node continues to strengthen with 13 new properties being completed during the
current year, adding over 135 000m2 GLA to Attacq's portfolio and at year end a further 12 developments are underway or secured. The super-regional
Mall of Africa is on track to open in April 2016 and is expected to act as a strong catalyst for demand for premises in the surrounding Waterfall
City land parcel, which has a further 651 911m2 of bulk available for development. Waterfall City is seen to be the most significant South African
development of the decade and continues to attract local and international attention as the new corporate headquarters destination on the African
continent.
Internationally, Attacq's acquisition of assets in Cyprus subsequent to year end is part of a bigger Central and Eastern European strategy which is
intended to provide increased exposure to the Euro. MAS' deployment of proceeds from its 2014 EUR180 million capital raise is starting to bear fruit
and additional value should be created by MAS as it optimises its portfolio and capital structure.
Basis of presentation of summarised provisional consolidated financial statements
These summarised provisional consolidated financial statements for the year ended 30 June 2015 have been prepared in accordance with the framework
concepts and the measurement and recognition requirements of International Financial Reporting Standards ("IFRS") and the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and the Financial Reporting Pronouncements as issued by the Financial Reporting Standards
Council, and include disclosure as required by IAS 34: Interim Financial Reporting ("IAS 34"), the JSE Listings Requirements and the Companies Act of
South Africa. They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes
are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and
performance since the last consolidated financial statements as at and for the year ended 30 June 2015. In preparing these summarised provisional
consolidated financial statements, management made judgements, estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. These summarised provisional
consolidated financial statements do not include the information required pursuant to paragraph 16A(j) of IAS 34. The audited consolidated and
separate financial statements are available on the company's website, at its registered office and upon request.
The areas that include significant judgements made by management in applying the Group's accounting policies and key sources of estimation
uncertainty were the same as those that were identified in the consolidated financial statements as at and for the year ended June 2014.
Significant accounting policies
Except as described below, the accounting policies applied in these summarised provisional consolidated financial statements are the same as those
applied in the Group's consolidated financial statements as at and for the year ended 30 June 2014 and comply with IFRS. The following amendments to
standards have been adopted by the Group as from 1 July 2014 and have no impact on the results of the Group:
IFRS 2: Share-based Payment
IFRS 3: Business Combinations
IFRS 8: Operating Segments
IFRS 10: Consolidated Financial Statements
IFRS 12: Disclosure of Interest in Other Entities
IFRS 13: Fair Value Measurement
IAS 16: Property, Plant and Equipment
IAS 19: Employee Benefits
IAS 24: Related-Party Disclosure
IAS 27: Separate Financial Statements
IAS 36: Impairment of Assets
IAS 39: Financial instruments: Recognition and Measurement
IAS 38: Intangible Assets
IAS 40: Investment Property
Audit report
The auditor, Deloitte & Touche, has issued its opinion on Attacq's consolidated and separate financial statements for the year ended 30 June 2015.
The audit was conducted in accordance with International Standards on Auditing. The auditor early-adopted the International Auditing and Assurance
Standards Board's new and revised Auditor Reporting Standards and related conforming amendments, with the most significant change being the inclusion of
Key Audit Matters in the auditor's report. Deloitte & Touche has issued an unmodified opinion. A copy of the auditor's report together with a copy of
the audited consolidated and separate financial statements is available for inspection at the company's registered office and on the
company's website.
These summarised provisional consolidated financial statements have been derived from the Group's consolidated financial statements and are
consistent in all material respects with the Group's consolidated financial statements for the year ended 30 June 2015, but is not itself audited.
The directors take full responsibility for the preparation of these summarised provisional consolidated financial results and confirm that the
financial information has been correctly extracted from the underlying audited consolidated financial statements. Any reference to future financial
information included in this announcement has not been reviewed or reported on by the auditor. Shareholders are advised that, in order to obtain a
full understanding of the nature of the auditor's engagement, they should obtain a copy of that report together with the audited consolidated
financial statements as at 30 June 2015 from the company's registered office or from the company's website.
The preparation of the financial information was supervised by Melt Hamman CA(SA), financial director of Attacq.
On behalf of the board
P Tredoux MC Wilken
Chairman CEO
22 September 2015
Directors
P Tredoux#* (Chairman)
MC Wilken (CEO)
M Hamman (FD)
LLS van der Watt*
AW Nauta#*
JHP van der Merwe*
S Shaw-Taylor#*
HR El Haimer#*
PH Faure*
MM du Toit#*
KR Moloko#*
B Nagle*
# Independent
* Non-executive
Company secretary
T Kodde
Registered office
Att House, 2nd Floor
Maxwell Office Park
Magwa Crescent West
Waterfall City
2090
Postal address
PostNet suite 205
Private Bag X20009
Garsfontein
0042
Transfer secretaries
Computershare Investor Services (Pty) Ltd
Ground Floor, 70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Sponsor
Java Capital
22 September 2015
Date: 22/09/2015 07:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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