Wrap Text
Unaudited consolidated interim financial results for the three months ended 30 September 2015
DELTA AFRICA PROPERTY HOLDINGS LIMITED
(Registered by continuation in the Republic of Mauritius)
(Registration number 128881 C1/GBL)
JSE share code: DLA
SEM share code: DEL.N0000
ISIN: MU0473N00010
(“Delta”, “Company”)
UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS for the three months ended 30 September 2015 (the
“financial statements”)
DIRECTORS’ COMMENTARY
NATURE OF THE BUSINESS
The Company holds primary listings on the Stock Exchange of Mauritius (“SEM”) as well as the main board of the Johannesburg
Stock Exchange (“JSE”). In its first year of trading, the Company and its subsidiaries (“Group”) successfully acquired three
properties in Mozambique and one property in Morocco.
The Group has continued its expansion strategy of acquiring a portfolio of African real estate assets (excluding assets situated in
South Africa) by concluding agreements to acquire two properties in Zambia and an additional property in Mauritius. The
Group’s strategy remains to expand its property portfolio to assets that will provide strong sustainable US Dollar based income
from high quality tenants with a strong focus on protecting shareholder value and dividend yields.
REVIEW
During the three month period from 1 July 2015, the Group issued its maiden full year results, declared and paid a dividend of
4.65 US$ cents per share to shareholders (bringing the total dividend for the 2015 financial year to 11.28 US$ cents per share)
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and completed the acquisition of Zimpeto Square, a 4,764m mall in Maputo, Mozambique for US$10.2 million. On 22 July 2015,
the Group finalised a medium term finance agreement with Standard Bank of South Africa. The facility of US$38.0 million was
utilised to settle the Standard Bank Mozambique bridging facility of US$24.3 million that was in place at year end for the
acquisition of the Hollard Building and the Vodacom Building (with the remainder of the funds being utilised to secure the
current pipeline of acquisitions in Mozambique).
Profit for the three months to 30 September amounted to US$1.8 million. Although the profit includes the high cost of the
bridging facilities, the figures are in line with growth expectations for the 2016 financial year. LTV is at 47.8%, within the Group’s
self-imposed limit of 50%.
The weighted average cost of debt is currently at 7.04% (versus 6.94% at 30 June 2015). The increase is attributable to the
interest rate ramp up on the vendor loan on the Anfa Place shopping Centre, however this is expected to decrease significantly
in November 2015 when the refinancing transaction on the vendor loan amounting to MAD479.0 million (or US$49.5 million) is
completed with Investec Bank.
Net operating expenses as a percentage of revenue has decreased significantly to 15.3% for the quarter from the 24.5% of the
previous financial year, with the decline being attributed to the triple net lease buildings that were acquired at the end of the
2015 financial year.
The Anadarko Building in Mozambique is operating as expected and remains 100% occupied. The Anadarko Phase II Building’s
development plans have now obtained the required local authority approvals and the terms of the lease with Anadarko have
been agreed. Hodari Properties are expected to commence the development in early 2016. In addition to the net rental income
to be generated on Phase II, the Group will share in the development fee without taking any development risk. The
development fee is based on the Group’s existing interest in the land and the ability to provide backing for the required
financing facilities. The Group has billed fees amounting to US$0.6 million to the developer for services rendered to date.
The Vodacom Building and Hollard Building, which transferred in April 2015 and May 2015 respectively, have now been bedded
down and are operating as expected. Both buildings remain fully occupied and arrears are insignificant.
Anfa Place Shopping Centre in Morocco is performing within expectations. The recent addition of McDonalds and the plans to
provide additional recreational facilities and GLA will further bolster the centre’s enviable food court. The Four Season’s hotel,
which has direct access to the centre, opened on 28 October 2015, this should see further uplift in the ever increasing footfall.
The restaurants and vacancies within the adjacent street retail section of the centre will no longer be hindered by the close
proximity to the construction site and the Group is now expecting significant interest of this area of the complex. Arrears are
monitored continuously with strong efforts on collections which are yielding positive results.
The Moroccan Dirham (“MAD”), being the functional currency of the Moroccan investment, has improved slightly against the US
Dollar, moving from 9.78 at year end to 9.68 at 30 September 2015, resulting in the clawback of US$0.4 million of the previous
years unrealised foreign exchange losses.
SUBSEQUENT EVENTS
In line with the strategy to expand the Group’s geographical footprint on the continent, the Company has concluded agreements
to purchase a 50% interest in two shopping malls in Zambia, as well as the Barclay’s House Building in Mauritius.
The Zambian shopping malls consist of the Mukuba Mall in Kitwe and the Kafubu Mall in Ndola. Both assets are the dominant
retail assets in their respective regions. The Group has acquired a 50% stake in both the assets from Rockcastle Global Real
Estate Company Limited. A key aspect of the investment was to form close ties to the other 50% partner, Heriot Properties, who
have extensive experience in Zambia. The local knowledge gained by Heriot Properties over their years of development and
operations in Zambia provided the Group with a unique opportunity to enter this new jurisdiction without the need to invest
valuable time and resources to gain the local knowledge required to setup an efficient operation.
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The Makuba Mall provides 28,235m of GLA and is valued at US$63.1 million. The mall is anchored by Shoprite, Game and Pick n
Pay. Other notable tenants include Mr Price, Woolworths, Spur, Barclays and FNB. The net purchase price for the acquisition of
50% of the centre amounted to US$17.5 million (made up of the asset value of US$31.5 less debt of US$14 million).
The Kafubu Mall provides 11,964m2 of GLA, is valued at US$17.5 million and is anchored by Shoprite. Other notable tenants
include Spur and OK Furnitures. The net purchase price for the acquisition of 50% of the centre is US$4.1 million (made up of the
asset value of US$9.1 less debt of US$4 million).
The acquisition of the Barclays House Building in Ebene, Mauritius provided the Group with the opportunity to capitalise on its
existing administrative infrastructure in Mauritius. The building houses the corporate head office for Barclays in Mauritius and
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has twelve years remaining on the lease. The 7,700m building is valued at Rs490 million (approximately US$13.6 million) and
will be acquired for Rs470 million (approximately US$13.1 million). Although the leases are denominated in Mauritian Rupees,
the Group will hedge the currency exposure to the US$ for a period of three years.
Unaudited for Unaudited for
the quarter the quarter
ended ended
Consolidated statement of comprehensive income 30 September 30 September
2015 2014
US$ US$
Gross rental income 5,560,233 3,060,979
Straight-line rental income accrual 576,908 4,022,318
Revenue 6,137,141 7,083,297
Property operating expenses (938,799) (626,018)
Net property income 5,198,342 6,457,279
Other income 604,528 23,969
Administrative expenses (562,292) (173,615)
Profit from operations 5,240,578 6,307,633
Acquisition fees (537,412) (2,361,462)
Acquisition fees - Asset management fees (102,172) -
Acquisition fees – Other (435,240) (2,361,462)
Set-up costs - (508,593)
Fair value adjustment on investment property 1,274,205 1,740,000
Fair value adjustment on financial instruments (479,533)
Unrealised foreign currency loss (922,844) (3,836,433)
Realised foreign currency gain 434,919 -
Profit before interest and taxation 5,009,913 1,341,145
Interest income 480 87
Finance costs (2,308,920) (788,277)
Profit for the period before tax 2,701,473 552,955
Current tax expense (573,852) (272,756)
Deferred tax expense (314,194) (1,822,647)
Profit/(loss) for the period after tax 1,813,427 (1,542,448)
(Loss)/profit on translation of functional currency (1,498,489) 257,354
Other comprehensive income - -
Total comprehensive income/(loss) 314,938 (1,285,094)
Reconciliation of basic earnings and headline earnings
Basic earnings 1,813,427 (1,542,448)
Less: Fair value adjustments on investment property (net of deferred taxation) (1,274,205) (1,127,863)
Change in fair value of investment property (1,274,205) (1,740,000)
Deferred taxation on investment property revaluation - 612,137
Headline earnings/(loss) attributable to shareholders 539,222 (2,670,311)
Number of shares in issue 73,656,446 43,918,556
Weighted average number of shares * 73,656,446 9,168,569
Earnings per share
Basic and diluted profit/(loss) per share (cents) 2.46 (16.82)
Headline diluted profit/(loss) earnings per share (cents) 0.73 (29.12)
Unaudited for the Audited for the Unaudited for the
Consolidated statement of financial quarter ended period ended quarter ended
30 September 2015 30 June 2015 30 September 2014
position
US$ US$ US$
Assets
Non-current assets
Investment property 222,544,519 210,390,631 153,883,474
Fair value of property portfolio 219,347,391 207,768,336 149,861,156
Straight line rental income accrual 3,197,128 2,622,295 4,022,318
Property, plant and equipment 107,655 96,512 79,857
Intangible assets 29,828 8,774 -
Goodwill - - 4,904,212
Related party loans - 11,778 -
Deferred tax - 190,143 -
Total non-current assets 222,682,002 210,697,838 158,867,543
Current assets
Trade and other receivables 17,374,020 18,777,373 7,263,298
Cash and cash equivalents 16,292,470 6,565,282 2,039,185
Total current assets 33,666,490 25,342,655 9,302,483
Total assets 256,348,492 236,040,493 168,170,027
Equity and liabilities
Total equity attributable to equity holders
Share capital 127,956,113 127,958,794 86,291,281
Foreign currency translation reserve (2,283,878) (785,389) 310,219
Retained loss (4,370,390) (2,760,583) (1,522,976)
Total equity attributable to equity holders 121,301,845 124,412,822 85,078,524
Liabilities
Non-current liabilities
Interest-bearing borrowings 48,920,933 10,490,966 68,450,312
Derivative instruments 479,533 - -
Deferred tax 929,744 807,205 7,813,474
Total non-current liabilities 50,330,210 11,298,171 76,263,786
Current liabilities
Interest-bearing borrowings 73,831,819 91,165,629 -
Trade and other payables 10,380,706 8,671,831 6,418,635
Withholding tax payable - 11,893 -
Current tax payable 503,912 137,756 409,082
Cash and cash equivalents - 342,391 -
Total current liabilities 84,716,437 100,329,500 6,827,717
Total liabilities 135,046,647 111,627,671 83,091,503
Total equity and liabilities 256,348,492 236,040,493 168,170,026
Net asset value per share (cents) 164.69 168.91 193.72
Net asset value per share (excluding deferred taxation)
(cents) 165.95 169.75 211.51
Unaudited for Unaudited for
the quarter the quarter
ended ended
Consolidated statement of cash flows 30 September 30 September
2015 2014
US$ US$
Net cash generated from operating activities 3,205,627 85,055
Dividends paid (3,423,234) -
Net cash utilised in investing activities (10,806,291) (94,756,207)
Net cash generated from financing activities 21,093,477 96,061,007
Net movement in cash and cash equivalents 10,069,579 1,389,856
Cash at the beginning of the year 6,222,891 649,328
Total cash at the end of the year 16,292,470 2,039,184
Unaudited for Unaudited for
the quarter the quarter
ended ended
Condensed consolidated segmental analysis 30 September 30 September
2015 2014
US$ US$
Profit/(loss) before income tax expense
Morocco 1,107,218 (2,483,058)
Mozambique 1,797,836 5,424,669
Mauritius (203,581) (2,388,656)
2,701,473 552,955
Total assets
Morocco 119,712,498 124,806,751
Mozambique 135,169,592 37,938,102
Mauritius 1,466,402 5,425,174
256,348,492 168,170,027
Foreign currency Retained earnings
Total equity
Consolidated statement of Share capital translation / (Accumulated
holders
reserve losses)
changes in equity
US$ US$ US$ US$
Unaudited for the quarter ended
30 September 2014
Balance as at 30 June 2014 864,655 52,865 19,471 936,991
Loss for the period - - (1,542,448) (1,542,448)
Foreign currency translation reserve
movement - 257,354 - 257,354
Shares issued 86,508,752 - - 86,508,752
Share issue expenses (1,082,126) - - (1,082,126)
Balance as at 30 September 2014 86,291,281 310,219 (1,522,977) 85,078,523
Audited for the nine months ended
30 June 2015
Profit for the period - - 1,725,828 1,725,828
Dividends paid - - (2,963,434) (2,963,434)
Foreign currency translation reserve
movement - (1,095,608) - (1,095,608)
Shares issued 44,195,722 - - 44,195,722
Share issue expenses (2,528,209) - - (2,528,209)
Balance as at 30 June 2015 127,958,794 (785,389) (2,760,583) 124,412,822
Unaudited for the quarter ended
30 September 2015
Profit for the year - - 1,813,427 1,813,427
Dividends paid - - (3,423,234) (3,423,234)
Foreign currency translation reserve
movement - (1,498,489) - (1,498,489)
Shares issued - - - -
Share issue expenses (2,681) - - (2,681)
Balance as at 30 September 2015 127,956,113 (2,283,878) (4,370,390) 121,301,845
OUTLOOK
The Board remains confident on the prospects of the business growth and the future returns.
Any reference to future financial information included in the financial statements for the quarter ended 30 September 2015 are
the responsibility of the Board and has not been reviewed or reported on by the Group’s external auditors. The forecast growth
is based on assumptions, including assumptions that a stable regional, political and economic environment as well as a stable
global macro-economic environment will prevail.
By order of the Board
Apex Fund Services (Mauritius) Ltd
Company Secretary
10 November 2015
NOTES
The Group is required to publish financial results for the three months ended 30 September 2015 in accordance with the Listing
Rule 12.19 of the SEM. Accordingly, this announcement presents the financial results of the Group in respect of the three month
period from 1 July 2015 to 30 September 2015 and three month period from 1 July 2014 to 30 September 2014.
The accounting policies which have been applied are consistent with those used in the preparation of the audited financial
statements for the period ended 30 June 2015.
The financial statements for the quarter ended 30 September 2015 have been prepared in accordance with the measurement
and recognition requirements of IFRS, the requirements of IAS 34: Interim Financial Reporting, the SEM Listing Rules, the JSE
Listings Requirements and the Securities Act of Mauritius 2005.
The financial statements have not been reviewed or reported on by the Group’s external auditors.
These financial statements were approved by the Board on 10 November 2015.
Copies of the financial statements and the Statement of direct and indirect interests of each officer of the Group, pursuant to
rule 8(2)(m) of the Securities (Disclosure Obligations of Reporting Issuers) Rules of Mauritius 2007, are available free of charge,
upon request at the Company’s registered address.
This communiqué is issued pursuant to SEM Listing Rule 12.20 and section 88 of the Securities Act of Mauritius 2005. The Board
accepts full responsibility for the accuracy of the information contained in these financial statements. The directors are not
aware of any matters or circumstances arising subsequent to the period ended 30 September 2015 that require any additional
disclosure or adjustment to the financial statements.
Directors: Sandile Nomvete (chairman), Greg Pearson*, Greg Booyens*, Bronwyn Anne Corbett*, Peter Todd (lead
independent), Maheshwar Doorgakant, Chandra Kumar Gujadhur, Ian Macleod and Leon van de Moortele*
(*executive director)
Company Secretary: Apex Fund Services (Mauritius) Ltd
Registered address: 4 Floor, Raffles Tower, 19 Cybercity, Ebene, Mauritius
Transfer secretary (South Africa): Computershare Investor Services Proprietary Limited
Registrar and Transfer Agent (Mauritius): Mauritius Computing Services Ltd
Corporate advisor and JSE Sponsor: PSG Capital (Pty) Ltd
SEM sponsor: Capital Markets Brokers Ltd (effective from 7 October 2015)
Date: 10/11/2015 02:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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