Wrap Text
Summarised unaudited interim results for the six months ended 31 August 2015
ACSION Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2014/182931/06)
JSE share code: ACS
ISIN code: ZAE000198289
("Acsion" or "the company")
SUMMARISED UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2015
Statement of financial position
Group
Six months Three months
31 August 28 February
2015 2015
R R
Assets
Non-current assets
Investment property 3 752 585 518 3 434 689 962
Property, plant and equipment 104 170 550 119 368 619
Operating lease asset 103 664 645 101 959 225
Goodwill 625 464 153 625 464 153
Prepayments 199 834 928 409 661 602
Investment in associate 1 248 521 1 136 021
Other financial assets 12 981 768 13 324 344
4 799 950 083 4 705 603 926
Current assets
Operating lease asset 14 707 319 11 423 330
Loans to group companies 1 715 241 1 715 241
Loans to shareholders - 258 812
Current tax receivables 426 448 -
Trade and other receivables 13 880 388 11 321 364
Cash and cash equivalents 20 135 782 16 800 288
50 865 178 41 519 035
Non-current assets held for sale 82 323 874 87 658 711
Total assets 4 933 139 135 4 834 781 672
Equity and liabilities
Equity
Equity attributable to equity holders of parent
Share capital 3 979 780 958 3 979 955 592
Retained profit 136 815 216 40 810 869
4 116 596 174 4 020 766 461
Non-controlling interest (47 794) (17 678)
4 116 548 380 4 020 748 783
Liabilities
Non-current liabilities
Deferred tax 539 885 446 545 141 460
Other financial liabilities 210 731 270 189 565 363
750 616 716 734 706 823
Current liabilities
Current tax payable 65 581 13 086 757
Loans from shareholders 516 373 361 373
Other financial liabilities 9 012 532 8 746 882
Provisions 2 019 290 6 108 015
Trade and other payables 54 360 263 51 023 039
65 974 039 79 326 066
Total liabilities 816 590 755 814 032 889
Total equity and liabilities 4 933 139 135 4 834 781 672
NAV per share 10.42 10.18
NAV per share excluding deferred taxation 11.79 11.56
Statement of Cash Flows
Group
Six months Three months
31 August 28 February
2015 2015
R R
Cash flows from operating activities
Cash generated from operations 130 660 907 55 085 304
Interest income 1 075 806 474 200
Finance costs (6 369 912) (3 729 019)
Tax paid (35 816 796) (20 010 694)
Net cash from operating activities 89 550 005 31 819 791
Cash flows from investing activities
Purchase of property, plant and equipment (988 833) (4 615 371)
Sale of property, plant and equipment 446 -
Development costs of investment property (108 493 680) (20 668 596)
Sale of investment property 1 254 386 1 221 659
Guarantees released 342 575 -
Increase in financial assets - (4 950 908)
Cash acquired with purchase of investments in subsidiaries - 13 095 903
Net cash from investing activities (107 885 106) (15 917 313)
Cash flows from financing activities
Purchase of treasury shares (174 894) -
Proceeds from other financial liabilities - 4 347 831
Repayment of other financial liabilities 21 431 557 -
Loans received from shareholders 155 000 361 373
Loans advanced or repaid to shareholders 258 812 (3 811 394)
Net cash from financing activities 21 670 475 897 810
Total cash movement for the period 3 335 574 16 800 288
Cash at the beginning of the period 16 800 408 -
Total cash at end of the period 20 135 782 16 800 288
Statement of Profit or Loss and Other Comprehensive Income
Group
Six months Three months
31 August 28 February
2015 2015
R R
Revenue 215 351 657 107 423 590
Other income 17 618 201 4 604 667
Operating expenses (109 146 306) (56 135 158)
Operating profit 123 823 552 55 893 099
Finance income 1 075 806 474 200
Income from equity accounted investments 112 500 160 166
Finance costs (6 369 912) (3 729 019)
Profit before taxation 118 641 946 52 798 446
Taxation (22 667 715) (12 005 255)
Profit for the period 95 974 231 40 793 191
Other comprehensive income - -
Total comprehensive income for the period 95 974 231 40 793 191
Profit (loss) attributable to:
Owners of the parent 96 004 347 40 810 869
Non-controlling interest (30 116) (17 678)
95 974 231 40 793 191
Total comprehensive income (loss) attributable to:
Owners of the parent 96 004 347 40 810 869
Non-controlling interest (30 116) (17 678)
95 974 231 40 793 191
Earnings per share
Per share information
Headline earnings per share (cent) 24.18 41.33
Basic/Diluted earnings per share (cent) 24.31 41.33
Weighted number of shares 394 958 459 98 739 994
IFRS 8 - Segment reporting
Due to the current investment property portfolio exposure being heavily weighted to retail, the chief operating decision maker (CODM) considers the operations to be a single operating segment and as such reviews financial information
on this basis.
IFRS 13 - Fair value measurement
The group's policy is to value investment properties at year-end, with independent valuations performed on a rotational basis to ensure each property is valued at least every three years by an independent external valuer. The directors
value properties by applying the discounted cashflow method. There were no revaluations for the six-month period ended 31 August 2015.
Fair value hierarchy Level 3
Investment property R3.755bn
IAS 24 - Related parties
During the financial period, Anastasi Construction close corporation of which K Anastasiadis is the sole member, undertook construction of the Hyde Park Terrace development as well as the phase III extension of Mall@Carnival to the value
of R46 168 776 for the six-month period ended 31 August 2015. Kinsella Consultants - a company owned by the wife of I Anastasiadis - were used for ad hoc repairs and maintenance for the upgrade to Mall@Reds to the value of R515 946 for
the six-month period ended 31 August 2015.
Statement of Changes in Equity
Share capital Treasury Total Retained Total attributable Non-controlling Total
R shares share capital profit to equity holders interest equity
R R R of the R R
group/company
R
Group
Profit for the period - - - 40 810 869 40 810 869 (17 678) 40 793 191
Issue of shares 3 979 955 852 - 3 979 955 852 - 3 979 955 852 - 3 979 955 852
Balance at 1 March 2015 3 979 955 852 - 3 979 955 852 40 810 869 4 020 766 721 (17 678) 4 020 749 043
Profit for the period - - - 96 004 347 96 004 347 (30 116) 95 974 231
Treasury share purchase - (174 894) (174 894) - (174 894) - (174 894)
Balance at 31 August 2015 3 979 955 852 (174 894) 3 979 780 958 136 815 216 4 116 596 174 (47 794) 4 116 548 380
GEOGRAPHIC AND TENANT PROFILES
The tenant profile is separated into national and semi-national tenants, to indicate the exposure Acsion has to direct head office leases and individual franchises. Exposure to national and semi-national tenants as a percentage of
gross lettable area is relatively high at 87% (82% based on revenue) compared to the property industry norm of approximately 70%. Line shops and other franchises are carefully vetted by Acsion's leasing division to promote maximum
dwelling time and footfall in each centre, underpinning trading densities and the overall sustainability of tenants' lease terms.
COMMENTARY
About Acsion
Acsion ("the group" or "the company") is a property manager, developer and owner that listed on the Johannesburg Stock Exchange on 9 December 2014. Acsion is differentiated from Real Estate Investment Trusts (REITs) in the listed
property sector as it focuses on the delivery of superior net asset value (NAV) growth. NAV growth drivers include enhancing existing properties, completing the secured development pipeline and obtaining additional future development
opportunities. To a lesser extent, the group derives capital growth from selling completed developments and purchasing existing properties.
The group's development function and "value-engineering" approach to development, significantly enhances return to shareholders. Value engineering focuses on optimising upfront feasibility studies, planning, design and construction in
an innovative and more cost-effective way, resulting in lower construction costs, without compromising on quality. Existing investment properties consist of six predominantly retail developments strategically located in Gauteng,
Mpumalanga and Limpopo with an aggregate gross lettable area (GLA) of 188 716 m2. The tenant profile by GLA comprises 72% national tenants, 15% semi-national and 13% line and other franchises. The current value of these six properties
from which the group derives income was valued at R3.246bn at the time of listing.
Operational update
During the first nine months since listing, Acsion commenced construction of four of the developments that were included in its R1.981bn development cost pipeline at the time of listing. These include Acsiopolis (Benmore, Gauteng),
Mall@55, Trade 55 (Monavoni, Gauteng) and Mall@Moutsiya (Walkraal, Limpopo). It also started on a new development, Mall@Mfula (Piet Retief, Mpumalanga), which was not previously included in the reported pipeline. More details on these
developments are available in the section "Development pipeline progress update". During the review period, the company also completed the Hyde Park Terrace (Hyde Park, Gauteng) development. The sale of units in Hyde Park Terrace are
continuing in line with expectations.The construction of Phase III of Mall@Carnival, was near completion and subsequent to the reporting period opened its doors for trading on 24 September 2015.
Financial results
In the first six months of the financial year, the group recorded revenue of R215.4m and a net profit after tax of R96m. The operating environment remains challenging and as a result the focus remained on cost control. Finance costs
increased in line with expectations during the review period as a result of the ongoing developments, however as at the end of August 2015, the group remained largely ungeared at a loan to value ratio of 5.74%. As per the company's
policy on valuations, assets are only revalued at year-end. Net profit after tax attributable to ordinary shareholders of R96m equated to basic and diluted weighted earnings per share of 24.31 cents and weighted headline earnings per
share of 24.18 cents for the six months ended 31 August 2015. On an annualised basis, the comparative number is 48.24 cents compared to the 41.33 cents reported in February 2015, excluding any revaluation of any existing properties or
new developments.
The movement in investment property and prepayments is attributable to the Acsiopolis development (Benmore, Gauteng) which was previously classified as prepayments, as the land had not been transferred prior to the year-end results.
The land has subsequently transferred and construction commenced and as a result this development is now classified as investment property. Mortgage bonds increased from R198m as at February 2015 to R220m as at August 2015 mainly as
a result of the Mall@Carnival Phase III extension and the commencement of construction at Acsiopolis, Benmore. Mortgage bonds were prepaid by R121m as at August 2015. The weighted average cost of debt for the reporting period was
7.61% with a remaining average term of 7.03 years. As a result of the current low quantum and cost of debt, all debt is at a floating interest rate. Goodwill is carried at R625.4m. Goodwill originated on the restructuring transaction
through which Acsion was formed and was paid to acquire the development function that has successfully developed the investment portfolio to date. The estimated profit from the development pipeline exceeds the value of goodwill and
as such no impairment of goodwill occurred.
Treasury share purchase
The group repurchased 18 252 shares during August 2015 and currently holds them as treasury shares. The decision to repurchase shares was made as the share price is trading significantly below the reported NAV of the company. These
shares were purchased at approximately 24% below the reported net asset value per share as at 31 August 2015. It is company policy to continue with this approach when the share offers value to the reported NAV which is in line with the
growth expectations of the group.
Vacancy levels
Tenant relocations at Mall@Carnival and Mall@Reds were completed, resulting in a reduction in the weighted average vacancy level from 5.05% to 3.39% across the portfolio as at 31 August 2015.
Lease expiry profile
The weighted average lease expiry by GLA for the portfolio is currently 4.87 years. The increase is attributable to the extension of Mall@Carnival Phase III.
Developed investment property portfolio
The developed investment portfolio as at 31 August 2015 consisted of six properties with a total GLA of 188 716 m2. Details of the existing portfolio are as follows:
Property name Independent valuation (Rm) GLA (m2) Value/m2 (excluding bulk, where applicable) Percentage of total portfolio by value (%)
Mall@Carnival 1 525 72 338 21 082 47.0
Mall@Reds 820 53 423 15 349 25.3
Mall@Emba 419 24 477 17 118 12.9
Mall@Lebo 314 23 964 13 103 9.7
Moreleta Square 136 8 507 15 987 4.2
Simarlo Rainbow 32 6 007 5 377 0.9
Total developed investment portfolio 3 246 188 716 17 200 100.0
The developed investment property portfolio is trading at an annualised operating profit yield of approximately 7.63% based on these results.
Development pipeline progress update
The Mall@Carnival Phase III opened for trade on 24 September 2015. The construction of the Phase IV expansion (2 900 m2) has been completed and beneficial occupation has been approved. It is expected that this phase will start trading
in December 2015. Negotiations for Phase V is well under way. The expansion project entrenches Mall@Carnival's position as the preferred regional retail destination in its primary catchment area of Brakpan, Benoni, Springs, Boksburg
and Germiston by increasing the Mall@Carnival's total GLA to 88 335 m2. Acsion has secured rights to develop up to a total of 217 000 m2 at Mall@Carnival and, dependent on sufficient tenant demand to justify further expansion, the group
aims to expand Mall@Carnival to 110 000 m2 over the next five to seven years.
Acsiopolis, Benmore, has been designed as a twenty storey mixed use development, situated in the heart of Sandton. The site is positioned on Benmore Drive and consists of an approximate 1 hectare parcel of land. Mixed use development
rights for 70 000 m2 have been obtained and transfer of the land has been completed. A majority of the rights, comprising approximately 61 000 m2, have been earmarked for residential use which supports Acsion's vision of sectoral
diversification. Of the 61 000 m2 approximately 35 000 m2 would be available as executive apartments, 26 000 m2 would be subject to short term rentals, 5 000 m2 will be utilised for retail and 1 000 m2 could be utilised as office space
bringing the total square meters to be developed to 67 000 m2. Acsiopolis will further offer 6 levels of parking equating to approximately 1 500 underground parking spaces, some of which will be on-grade parking to the retail section,
which is expected to further enhance convenience for shoppers and residents. In addition to vehicular access, Acsiopolis has been designed to take into consideration the evolving public transport systems in Sandton to accommodate the
integration of pedestrian accessibility and bus routes. Construction of the development has commenced and is estimated to be completed in April 2018. Since the construction started 75 000 m3 of soil has been removed. The main contractor
will be on site shortly, starting with the construction of the group's biggest development to date.
Mall@Moutsiya Phase I is a 15 000 m2 development, comprising a 13 500 m2 retail offering and a 1 500 m2 petrol station in Walkraal, Limpopo. The highly visible and easily accessible location has direct access onto the R573 "Moloto
Road" and R568, two major regional arterial roads through the Elias Motsoaledi municipality in Limpopo. The primary catchment market consists of approximately 136 000 people and secondary catchment market consists of approximately
396 000 people. Leasing of the premises commenced steadily and the contractor is moving on site by the end of October 2015.
Mall@55 Phase I, consists of a 15 000 m2 convenience shopping centre in Monavoni, Gauteng. It is located on an extremely busy arterial route accessible from the N14 freeway and the R55 provincial route. This development is ideal for a
value/convenience/lifestyle centre, which is underrepresented in the Monavoni area. The anticipated start date for this development has been moved out to the first half of 2016 mainly due to municipal delays in road infrastructure
surrounding the development.
Trade 55 Phase I, comprises a 10 000 m2 large ("big box") retail component with special commercial rights already obtained in Monavoni, Gauteng. It is located on an extremely busy arterial route accessible from the N14 freeway and the
R55 provincial route and across from the Mall@55 site. Trade 55's value offering will be complementary to Mall@55's offering. The timing of the development is anticipated to be similar to that of Mall@55.
Hyde Park Terrace, a residential development comprising 12 completed cluster units and 27 residential land parcels is located in Hyde Park, Gauteng. This high-end residential development is in the heart of one of Sandton's most
exclusive areas. The total land size comprises 2.5 hectares and is situated 500 m from the exclusive Hyde Park shopping centre. The 12 units are approximately 350 m2 to 540 m2 under roof, with the remaining land to be sold as stands of
450 m2 to 650 m2 with or without building packages. There is significant appetite based on initial marketing and sales, and a growing demand for luxury residential properties in close proximity to the Sandton CBD driven by rising
living standards. Completed four to five-bedroom units start from R5.5m. As at the end of August 2015, 2 completed houses have been let (now carried as investment property), 2 completed houses have been sold and 9 parcels of land have
been sold and are pending transfer.
Mamahlodi Gardens (previously Residential@Moutsiya) is an affordable housing development in Walkraal, Limpopo with a total land size of 40 hectares. Acsion has formed a partnership with local residents and the local municipality to
approach prospective buyers with access to housing subsidies from the Department of Human Settlements. Proclamation of the land is at its final stage with all services (water, sewage and electricity) already secured. Plans to build up
to 551 residential units for sale are supported by a shortage of affordable housing in the Walkraal area. The market price will be between R300 000 and R350 000 per unit. Interest for approximately 50 units has already been secured and
construction is anticipated to commence in the near future. The development will be demand driven.
Mall@Mfula (previously Mall@PietRetief) will consist of a 17 300 m2 shopping centre with an anticipated 70% national tenancy and will provide a complete formal retail offering for Piet Retief. Acsion has finalised the township
establishment application of this property, and the contractor moved on site on 27 October 2015 with the opening scheduled for October 2016. Sufficient national retailer commitments have been received and negotiations for the remaining
GLA are anticipated to be finalised by the end of November 2015.
Further development opportunities
Acsion continuously evaluates a consistent stream of new opportunities and is in advanced discussions on certain projects to further enhance capital growth in financial years 2018 and beyond. Details of these projects are not contained
in these results and will be communicated to shareholders in due course and in line with JSE Listings Requirements once an appropriate level of certainty has been reached. At the last practicable date, the following further development
opportunities were under investigation by Acsion, among others:
Mall@Frankfort will comprise an 8 000 m2 shopping centre in Frankfort, Free State. The rezoning of land is currently in process and construction is anticipated to commence as soon as the rezoning of the land is finalised. Interest from
a potential anchor tenant for 4 000 m2 has already been received.
The Mall@Maputo development will be located in northern Maputo and will be adjacent to the main Maputo ring road, with a total land size of 8.9 hectares. A memorandum of understanding has been signed with the Mozambican Ministry of
Sport to develop a 50 000 m2 shopping centre - a formal agreement is still to be finalised. Acsion's effective holding in the development project will be 85%, with 15% held by local Mozambican partners. The development is to be
completed in partnership with a reputable local Mozambican partner and is in line with Acsion's vision of geographic diversification into Southern African retail. There were some delays in this development, due to the extensive change
in government officials and the subsequent need to inform all new officials as to the proposed development. Interest has been received from South African national retailers looking to expand their footprint into Maputo. Letters of
intent have been received from Pepkor, Woolworths and other retailers for up to 10 000 m2. Discussions with various other South African national retailers for approximately 32 000 m2 are underway, and include the likes of Shoprite, Spar,
Foodlovers Market, Clicks, Truworths, Identity, Foschini and Mr Price group.
With Offices@Lusaka, Acsion aims to take advantage of Zambia's limited available infrastructure for multinational companies. Negotiations with a local land owner to co-develop up to 20 000 m2 of office space are currently underway.
The site is located in close proximity to Manda Hill Shopping Mall and next to Stanbic's Lusaka offices.
Several potential transactions in Europe were evaluated during the period under review. However, none of the transactions met Acsion's investment requirements and as such, no transactions have been concluded as yet. There are other
transactions still under review and should these meet Acsion's investment requirements, details of such transactions will be communicated to the market.
Acsion also installed its first solar solution at Mall@Emba (Embalenhle, Mpumalanga) post August 2015 at a cost of approximately R16m. The project is expected to generate approximately 1MW of electricity which will significantly reduce
the reliance the development currently place on the municipality. Depending on the success of this project, it is likely that additional solar projects will be installed at some of the larger existing developments as well as be
incorporated in suitable new developments from the planning phase. It is expected that these projects will add significant NAV to shareholders.
Prospects
Acsion's board and management remain confident that the group's growth objectives can be achieved despite a challenging economic operating environment. The group remains focused on the completion of its secured development pipeline
over the next three years. Acsion will also continue reinvesting in its existing portfolio and focus on its development expertise, or "value-engineering" approach, to ensure above average NAV growth. In addition, Acsion will explore
further development opportunities in high-growth markets in the rest of Africa and Europe. These prospects have not been reviewed or reported on by Acsion's independent external auditors.
Dividends
In line with the group's policy, no dividends have been declared for the period ending 31 August 2015.
By order of the board
Centurion, 29 October 2015
D Green K Anastasiadis
(Chairman) (Chief executive officer)
Basis of preparation and accounting policies
The interim unaudited condensed consolidated financial results for the six months ended 31 August 2015 were prepared in accordance with International Financial Reporting Standards (IFRS), the information required by IAS 34: Interim
Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the requirements of the Companies Act of South Africa and the JSE Listings Requirements. The accounting policies are consistent
in all material respects with those of the previous financial period.
The financial statements were summarised from the unaudited financial statements. The additional disclosure required in terms of IFRS 7 Financial Instruments: Disclosures and IFRS 13 Fair Value Measurements, will be included in the
integrated report in detail in the next integrated report for the period ended 29 February 2016.
The directors are not aware of any matters or circumstances arising subsequent to the period ended 31 August 2015 that require additional disclosure or adjustment to the financial statements. The directors take full responsibility for
the preparation of the summarised unaudited consolidated financial results for the six months ended 31 August 2015 and for ensuring that the financial information was correctly extracted from the underlying unaudited interim financial
statements. These results were prepared under the supervision of the chief financial officer, Pieter Scholtz CA(SA), MCom (Tax).
Independent audit by auditors
The interim condensed financial statements have not been audited or reviewed by the group's independent auditors.
Directors: D Green (Chairman)*, K Anastasiadis (CEO), P Scholtz (CFO), S Griesel*, PD Sekete*, T Jali* (*Independent non-executive)
Registered office: Mall@Reds, 1st Floor, Corner of Rooihuiskraal and Hendrik Verwoerd Drives, Rooihuiskraal, Ext 15, Centurion
Postal address: PO Box 569, Wierda Park, 0149
Registration number: 2014/182931/06
Transfer secretaries: Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg 2001
Sponsor: Investec Bank Limited
Company secretary: MWRK Accountants and Auditors Inc.
Date: 29/10/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
