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Abridged Consolidated Audited Results For The Year Ended 30 September 2015
ARROWHEAD PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2011/000308/06)
JSE share code: AWA ISIN: ZAE000203105
JSE share code: AWB ISIN: ZAE000203113
(Approved as a REIT by the JSE)
("Arrowhead" or "the company")
ABRIDGED CONSOLIDATED AUDITED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2015
- Annual distribution of 150,30 cents per combined A and B shares equates to growth of 13%
- Core property portfolio growth of 6,2% and 8,5% with the effect of gearing
- Forecast distribution growth of between 8% to 10% per combined A and B shares to 30 September 2016
- Growth in NAV per combined share of 26,7% to R17,40
NATURE OF BUSINESS
Arrowhead is a Real Estate Investment Trust ("REIT") holding a diverse portfolio of 157 commercial (office,
retail and industrial) properties and through its 70% owned subsidiary Indluplace Properties Limited ("Indluplace"),
95 residential properties comprising of 3 690 units with 9 469m(2) of retail space. The total portfolio is valued at R8,6 billion and
located in all provinces of South Africa. Its main focus is on paying growing income returns to its investors. This is achieved through
escalating rentals in terms of leases with satisfied tenants, satisfactory renewal of leases with existing tenants, renting of vacant
space within the property portfolio, managing and reducing, where possible, costs associated with the property portfolio and by acquiring revenue
enhancing properties. The company also owns an effective 11% interest in Dipula Income Fund Limited ("Dipula").
During the year under review Indluplace was listed as a REIT on the Johannesburg Stock Exchange ("JSE"). Indluplace is the
only focused residential REIT on the JSE which owns a substantial residential property portfolio (including limited ground
floor retail exposure attached to certain apartment blocks) from which it will pay growing distributions to its shareholders.
Previously Arrowhead owned 100% shareholding in Indluplace. However pursuant to the listing of Indluplace, its shareholding reduced to 70%.
CONDENSED CONSOLIDATED FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 SEPTEMBER 2015
R'000 2015 2014
Revenue (excluding straight line rental income) 1 217 913 712 239
Listed securities income 19 115 65 788
Property expenses (411 883) (245 511)
Administration and corporate costs (31 130) (26 708)
Finance expenses (219 679) (115 007)
Finance income 32 650 13 998
Transaction cost on business combination - 6 409
Non-controlling interest profits elimination (16 688) -
Distributable income 590 298 411 208
Antecedent interest 21 169 31 598
Accrued distribution on listed securities 22 587 -
Total distribution 634 054 442 806
Distribution to the Arrowhead Charitable Trust* 11 749 12 015
Total distribution after effects of the Arrowhead Charitable Trust 645 803 454 821
* Distribution to the Arrowhead Charitable Trust (eliminated on consolidation)
Property expenses as a percentage of revenue 34% 35%
Distribution for the quarter ended 31 December 156 374 87 566
Distribution for the quarter ended 31 March 157 681 99 983
Distribution for the quarter ended 30 June 165 457 129 179
Distribution for the quarter ended 30 September^ 166 291 138 093
Total distribution 645 803 454 821
Distribution per combined share / unit for the quarter ended 31 December (cents) 37,09 30,20
Distribution per combined share / unit for the quarter ended 31 March (cents) 37,40 32,38
Distribution per combined share / unit for the quarter ended 30 June (cents) 37,81 34,23
Distribution per combined share / unit for the quarter ended 30 September (cents)^ 38,00 36,43
150,30 133,24
^ The distribution was declared on 17 November 2015
Net assets value per share (cents) - calculated on shares in issue net of the Arrowhead Charitable Trust 870,22 687,04
Net assets value per share (cents) - calculated on gross shares in issue at year end 839,40 670,73
Net assets value per share (cents) - calculated on gross shares in issue at year end net of undeclared distribution 820,40 670,73
COMMENTARY
REVENUE
Revenue includes rental income and expenditure that is recoverable from tenants.
The substantial increase in revenue is due to the full effect of the acquisitions concluded during the previous financial year,
together with the partial impact of acquisitions concluded during the current financial year and annual escalations to existing leases.
The acquisition of Vividend Income Fund Limited ("Vividend") is the main driver of this as it was consolidated into Arrowhead's results
from July 2014. Prior to this, Vividend was an investment and income received from Vividend was in the form of distributions received
on units held and was recognised as income from listed securities.
As at 30 September 2014, Arrowhead owned 159 commercial and 30 residential properties. At 30 September 2015, Arrowhead
owned 157 commercial properties (by value retail 43%, offices 45% and industrial 12%) and 95 residential properties. The average
monthly rentals per m(2) per sector are R90 for retail, R98 for offices and R41 for industrial. Vacancies within the commercial
portfolio have increased to 7,3% (2014: 6,3%). Vacancies are down from 8,2% at March 2015 to 7,3% at year end (retail 5,19%,
office 10,38% and industrial 5,66%). The vacancy within the residential portfolio is 3,0%.
11% of the commercial portfolio by revenue and 24% of the office portfolio is let to government and parastatal tenants.
During the year 149 662 m(2) of gross lettable area ("GLA") in the commercial portfolio expired of which 64,0% was renewed. Rental
escalations of 8,4% have been achieved on lease renewals across the commercial portfolio and the average lease profile across the
portfolio has increased to 3,73 years.
12 month letting report (excluding residential portfolio)
Total m(2) Let m(2) Vacant m(2) Let % Vacant %
At beginning of the year (1 October 2014) 868 301 813 953 54 348 94 6
Acquisitions 26 425 26 202 223
Disposals (12 320) (8 376) (3 944)
Net adjustments 4 369 5 632 (1 263)
Adjusted totals 886 775 837 411 49 364 94 6
Net (loss)/gain - (15 124) 15 124
At the end of the year (30 September 2015) 886 775 822 287 64 488 93 7
LISTED SECURITIES INCOME
Listed securities income comprise income received on units held in Dipula. The reduction in listed securities income is as a
result of Vividend having become a subsidiary. In prior years the company recognised anticipated distributions on linked units
held in listed property loan stock companies. In this financial year, Arrowhead has recognised the anticipated dividends in the
form of an adjustment in the distributable earnings reconciliation at year end to match the anticipated income of the distribution
to the period to which the distribution relates.
PROPERTY EXPENSES
Municipal expenses have increased in line with the increased revenue. The gross cost to income ratio achieved has improved marginally
from 35% to 34% with the bulk of the recoverable expenditure being recovered.
ADMINISTRATIVE EXPENSES AND CORPORATE COSTS
R'000 2015 % of total 2014 % of total
Salaries 18 465 59 10 885 41
Professional service fees 4 923 16 9 667 36
Other 7 742 25 6 157 23
Total 31 130 100 26 709 100
The largest contributor to administrative expenses is salaries, which has increased as a result of the additional staff complement
in line with the enlarged portfolio. The decrease in professional fees was due to the once off costs incurred in the acquisition of
Vividend in the prior financial year.
FINANCE INCOME
R'000 2015 % of total 2014 % of total
Interest on group share purchase and option schemes 26 894 82 11 344 81
Interest on cash balances and tenants 5 756 18 2 654 19
Total 32 650 100 13 998 100
Interest on the group share purchase and option schemes was in respect of interest charged on the loans granted
to participants of both the Arrowhead Unit Purchase Trust and the Indluplace Share Purchase and Option Scheme. The loans incur interest
at rates applicable to each scheme.
FINANCE CHARGES
R'000 2015 % of total 2014 % of total
Interest paid - secured financial liabilities 193 176 88 104 682 91
Interest paid - interest rate swaps 23 688 11 9 044 8
Amortisation of structuring fee and other interest paid 2 815 1 1 281 1
Total 219 679 100 115 007 100
Finance charges increased from R115,0 million to R219,7 million as the full effects of the secured financial liabilities of Vividend's
interest bearing borrowings came into effect in the current financial year.
DEBENTURE INTEREST
During the year under review, Arrowhead's REIT conversion process was successfully completed and the company's linked units were delinked on the JSE.
The new financial instruments were listed on the JSE on 19 July 2015 and traded as shares in the company. As a result, the debenture interest in
the statement of comprehensive income only represents two quarterly distributions. The third quarter was distributed as a dividend under the new
REIT structure as ordinary shares and was accounted for under the statement of changes in equity.
INVESTMENT PROPERTIES
The company owns a commercial portfolio of 157 retail, industrial and office properties, and 95 residential properties held indirectly
through Indluplace, valued at R8,6 billion, represented amongst all of the provinces. The number of commercial properties has increased
from 89 at listing in 2011 to 157 at present with the average value per property increasing from R17 million to R44,5 million.
Analysis of movement in investment property
Commercial portfolio Residential portfolio* Total
No. of buildings R'000 No. of buildings R'000 No. of buildings R'000
Balance at beginning of the year 159 6 495 394 30 519 950 189 7 015 344
Acquisitions and fair value adjustments 1 500 629 65 1 191 507 66 1 692 136
Disposals (3) (61 173) - - (3) (61 173)
Balance at the end of the year 157 6 934 850 95 1 711 457 252 8 646 307
* The residential portfolio is a separately listed fund on the JSE. Arrowhead's shareholding in Indluplace was 70,2% at 30 September 2015.
Investment property has increased from R7,0 billion (30 September 2014) to R8,6 billion. The increase was attributable to fair value adjustments
of R498,2 million, acquisitions and additions of R1,2 billion and disposals of R61,2 million. During the year under review, 57,9% of the property
portfolio was valued externally with the balance being valued by the executive directors. Real Insight carried out the independent valuation.
Arrowhead made the following acquisitions and disposals during the year:
Property acquisitions
Acquisition Transfer or effective
Property name yield % Province Sector date R
Matsulu Shopping Centre 10,5 Mpumalanga Retail 12 August 2015 60 500 000
Residential portfolio* Variable Various Residential Various 1 090 018 712
1 150 518 712
* Arrowhead owns 70,2% of Indluplace.
Property disposals
Property Name Province Sector Sold date R
Fabriek and Sterling Gauteng Industrial 15 May 2015 13 673 500
Premier Milling KwaZulu Natal Industrial 25 November 2014 35 000 000
Emerson Gauteng Office 12 December 2014 12 500 000
61 173 500
Properties disposed and in the process of being transferred
Property Name Province Sector R
Beyers Naude (Blackheath) Gauteng Office 27 200 000
Gradner Street (Roggebaai) Western Cape Office 51 000 000
Benoni Rynfield Shopping Centre Gauteng Retail 30 000 000
108 200 000
The above assets have been disclosed as non-current assets held for sale.
CORE PORTFOLIO
NET INCOME GROWTH ON PROPERTIES OWNED AT 1 OCTOBER 2013 AND STILL OWNED ON 30 SEPTEMBER 2015
Description Year ended Year ended % Growth
30 September 30 September
2015 2014
R'000 R'000
Revenue 525 082 494 829 6,1%
Property Expenses (185 235) (174 942) 5,9%
Net Operating Income 339 847 319 887 6,2%
Assuming a gearing ratio on the portfolio of 28% and an annual effective interest rate of 9% the total growth in distributable
income would grow to 8,5%.
LOANS TO PARTICIPANTS OF GROUP SHARE PURCHASE OPTION SCHEMES
The loans to the participants of both the Arrowhead and Indluplace share option schemes increased from R143,0 million to R433,9 million.
Loans to the value of R303,2 million were advanced to participants of the loan purchase schemes. The recipients include the executive directors
and staff of Arrowhead and Indluplace. The loans bear interest at the company's effective rate of borrowings (in respect of Arrowhead) and bear
interest at a rate equal to the distribution of the company (in respect of Indluplace) and are secured by a cession of the shares.
TRADE AND OTHER RECEIVABLES
Trade receivables, deposits, other receivables and payments in advance increased from R31,3 million to R61,1 million. The balance outstanding
has increased from the prior year as a result of the enlarged property portfolio. Bad debts amounting to R2,8 million have been written off during
the year, whilst the provision for bad debt increased from R6,7 million to R6,9 million. The combined amounts are less than 1% of revenue.
SECURED FINANCIAL LIABILITIES
The loans of R2,4 billion (2014: R2,3 billion) measured against investment properties of R8,6 billion (2014: R7,0 billion) represents a loan to
value of 27,9% (2014: 33,0%). The interest rate swaps of R1,8 billion and the fixed rate loan of R387 million results in interest on R2,2 billion
of the total R2,4 billion being fixed. This equates to 90% of the total borrowings. Excess funds are placed in an access facility to reduce the
overall interest charge. The effective interest rate for the year ended 30 September 2015 was 8,96% (2014: 8,61%).
Capital 2015 Capital 2014
Maturity Fixed rate % 3 month Jibar margin % Prime rate margin % R'000 R'000
August 2017 - - Minus 1,5 200 000 200 000
March 2018 - - Minus 1,4 162 880 150 000
March 2018 - 2,1 - 280 000 280 000
December 2018 - 1,8 - - 300 000
December 2018 - 1,8 - 300 000 -
April 2019 - 1,8 - 270 000 270 000
April 2019 - 2,1 - 60 000 60 000
June 2019 - - Minus 1,4 51 000 -
August 2019 - 1,8 - - 500 000
August 2019 - 1,8 - - 70 000
November 2019 - 1,8 - 610 000 -
March 2020 - - Minus 1,3 - 49 754
March 2020 9,4 - - 387 284 387 284
March 2020 - 2,5 - 92 716 92 716
Total exposure 2 413 880 2 359 754
(Excluding loan initiation fees and fair value adjustments on swaps)
Arrowhead has further entered into interest rate swaps to hedge its exposure to fluctuations in interest rates of its debt as follows:
- an interest rate swap over R140 million until 15 August 2017;
- an interest rate swap over R35 million until 15 August 2017;
- an interest rate swap over R189 million until 31 May 2018;
- an interest rate swap over R73 million until 31 May 2018;
- an interest rate swap over R629 million until 31 March 2019;
- an interest rate swap over R113 million until 17 June 2019; and
- an interest rate swap over R595 million until 2 September 2019.
PROSPECTS
During the 2016 financial year the company intends to transfer 101 properties valued at R1,9 billion to a separate subsidiary. It proposes
to list the subsidiary on the JSE in or about March 2016. After this transaction, Arrowhead (excluding its subsidiaries) will
own 56 properties (562 993m(2)) valued at R5,5 billion with a vacancy of 5,0% at an average property value of R97 million.
The average length of leases will be just under 4 years and 9% will be let to Government. The new company will have its own dedicated and
incentivised management team who will focus on growing the portfolio in the company on an accretive basis with properties valued at under
R50 million per property which Arrowhead is no longer acquiring and in which market there are significant opportunities.
PROJECTED 2016 DISTRIBUTION PER COMBINED A AND B SHARES
The forecast excludes the effects of any acquisitions (excluding Cleary Park) that will be made during the year as well as the letting of
any vacant space. It also assumes that all leases expiring during the year will be renewed other than when the company has information to
the contrary. For the 2016 financial year the company is projected to produce distribution growth of between 8% and 10% per combined A and B share.
The projections have not been reviewed or reported on by Grant Thornton Johannesburg Partnership.
SUMMARY OF FINANCIAL PERFORMANCE
R / AUDITED 30 September 2015 30 September 2014
Annualised distribution per A–shares / linked units (cents) 75,15 66,62
Annualised distribution per B–shares / linked units (cents) 75,15 66,62
A–shares / linked units in issue 437 607 408 379 064 856
B–shares / linked units in issue 437 607 408 379 064 856
Net assets value per share (cents) - calculated on shares in issue net of the Arrowhead Charitable Trust 870,22 687,04
Net assets value per share (cents) - calculated on gross shares in issue at year end 839,40 670,73
Net assets value per share (cents) - calculated on gross shares in issue at year end net of undeclared distribution 820,40 670,73
Loan to value ratio 28% 33%
ANNUAL GENERAL MEETING
Arrowhead's integrated report for the year ended 30 September 2015, containing a notice of the annual general meeting which is to be held at
the company's offices at 10h00 on Wednesday, 27 January 2016 and incorporating the audited annual financial statements for the
year ended 30 September 2015, will be posted during the week ending 27 November 2015 to shareholders who have requested that these items be posted
to them, and will also be available in hard copy from Arrowhead's offices at 2nd floor, 18 Melrose Boulevard, Melrose Arch, or in electronic
form on the company's website, www.arrowheadproperties.co.za from this date. The last day to trade in order to be eligible to participate in and
vote at the annual general meeting is Friday, 15 January 2016 and the record date for voting purposes is Friday, 22 January 2016.
PAYMENT OF DISTRIBUTIONS FOR THE QUARTER ENDED 30 SEPTEMBER 2015
The board of directors ("Board") has approved distribution number 16 of 19,00000 cents per A share and 19.00000 cents per B share for the
quarter ended 30 September 2015 in accordance with the timetable set out below:
2015
Last date to trade cum distribution Friday, 4 December
Shares trade ex distribution Monday, 7 December
Record date Friday, 11 December
Payment date (cash dividend deposited or cheques posted to certificated shareholders on or about) Monday, 14 December
Share certificates may not be dematerialised or rematerialised between Monday, 7 December 2015 and Friday 11 December 2015, both days inclusive.
In accordance with Arrowhead's status as a REIT, shareholders are advised that the distributions meet the requirements of a "qualifying distribution"
for the purposes of section 25BB of the Income Tax Act, No. 58 of 1962 ("Income Tax Act"). The distributions on the shares will be deemed to be dividends,
for South African tax purposes, in terms of section 25BB of the Income Tax Act.
The distributions received by or accrued to South African tax residents must be included in the gross income of such shareholders and will not be exempt
from income tax (in terms of the exclusion to the general dividend exemption, contained in paragraph (aa) of section 10(1)(k)(i) of the Income Tax Act)
because they are dividends distributed by a REIT. These distributions are, however, exempt from dividend withholding tax in the hands of South African
tax resident shareholders, provided that the South African resident shareholders provided the following forms to their
Central Securities Depository Participant ("CSDP") or broker, as the case may be, in respect of uncertificated shares, or the company,
in respect of certificated shares:
a) a declaration that the distributions are exempt from dividends tax; and
b) a written undertaking to inform the CSDP, broker or the company, as the case may be, should the circumstances affecting the exemption change or
the beneficial owner cease to be the beneficial owner,
both in the form prescribed by the Commissioner for the South African Revenue Service. Shareholders are advised to contact their CSDP, broker or the company,
as the case may be, to arrange for the abovementioned documents to be submitted prior to payment of the distributions, if such documents have not already been
submitted.
Distributions received by non-resident shareholders will not be taxable as income and instead will be treated as ordinary dividends which is exempt from
income tax in terms of the general dividend exemption in section 10(1)(k)(i) of the Income Tax Act. It should be noted that up to 31 December 2013 distributions
received by non-residents from a REIT were not subject to dividend withholding tax. From 1 January 2014, any distributions received by a non-resident from
a REIT will be subject to dividend withholding tax at 15%, unless the rate is reduced in terms of any applicable agreement for the avoidance of
double taxation ("DTA") between South Africa and the country of residence of the shareholders. Assuming dividend withholding tax will be withheld at a rate
of 15%, the net dividend amount due to non-resident shareholders is 16.150000 cents per A share and 16.150000 cents per B share. A reduced dividend withholding
rate in terms of the applicable DTA, may only be relied on if the non-resident shareholder has provided the following forms to their CSDP or broker, as the
case may be, in respect of uncertificated shares, or the company, in respect of certificated shares:
a) a declaration that the distributions are subject to a reduced rate as a result of the application of a DTA; and
b) a written undertaking to inform their CSDP, broker or the company, as the case may be, should the circumstances affecting the reduced rate change or the
beneficial owner cease to be the beneficial owner,
both in the form prescribed by the Commissioner for the South African Revenue Service. Non-resident shareholders are advised to contact their CSDP, broker
or the company, as the case may be, to arrange for the abovementioned documents to be submitted prior to payment of the distribution if such documents have
not already been submitted, if applicable.
Shareholders are encouraged to consult their professional advisors should they be in any doubt as to the appropriate action to take.
A shares in issue at the date of declaration of distributions: 437 607 408
B shares in issue at the date of declaration of distributions: 437 607 408
Arrowhead's income tax reference number: 9779/439/15/8
EVENTS AFTER REPORTING PERIOD END
- As announced on SENS on 2 October 2015 Arrowhead has concluded an agreement with Redefine Properties Limited for the acquisition of the rental enterprise
of the retail centre known as Cleary Park in the Eastern Cape.
- As announced on SENS on 19 October 2015 Indluplace entered into a memorandum of understanding subject to certain conditions precedent, with SAWHF, a
fund managed by the International Housing Solutions Group, for the acquisition of an approximately R782,0 million portfolio of residential properties
("the residential property portfolio") ("the acquisition") at a net yield of 8,4%. The residential property portfolio consists of about 1 400 units
located in Western Cape (21%), Mpumalanga (23%) and the remainder in Gauteng. The residential property portfolio also includes a development that will be
completed early in 2016.
- As announced on SENS on 21 October 2015 Indluplace conducted a book build initially looking to raise R350,0 million and in light of the strong demand raised
R470,0 million through the issue of 44 761 904 new shares at R10,50 per share, a discount of 2,9% to the closing price of the previous day.
DISTRIBUTION DECLARATION AFTER REPORTING DATE
In line with IAS 10 Events after the Reporting Period, the declaration of the distribution occurred after the end of the reporting period, resulting in a
non-adjusting event which is not recognised in the financial statements.
LITIGATION STATEMENT
There are no legal or arbitration proceedings, including any proceedings that are pending or threatened, of which Arrowhead is aware, that may have or have
had in the recent past, being the previous 12 months, a material effect on the group's financial position.
CHANGES TO BOARD
On 19 June 2015, Taffy Adler stepped down as chairman of the Board of Arrowhead, but remains on the Board as an independent non-executive director.
Independent non-executive director Mathew Nell will replace Taffy Adler as chairman of the Board.
BASIS OF PREPARATION
The consolidated audited results for the year ended 30 September 2015 have been audited by the company`s independent auditors, Grant Thornton Johannesburg Partnership.
Their unqualified audited opinion is available for inspection at the company's registered offices at 2nd floor, 18 Melrose Boulevard, Melrose Arch.
The financial statements have been prepared in accordance with the requirements of International Financial Reporting Standards, the
SAICA Financial Reporting Guides as issued by the Financial Practices Committee as issued by the Financial Reporting Standard Council,
IAS 34: Interim Financial Reporting, the JSE Listings Requirements and the requirements of the South African Companies Act, 2008.
These results have been prepared under the supervision of I Suleman, Arrowhead's Chief Financial Officer.
The accounting policies adopted are consistent with those applied in the preparation of the financial statements for the year ended 30 September 2014.
This consolidated report is extracted from audited information, but is not itself audited. The directors take full responsibility for the preparation
of the provisional report and for ensuring that the financial information has been correctly extracted from the underlying audited annual financial statements.
The auditors, Grant Thornton Johannesburg Partnership have issued their unmodified opinion on the annual financial statements for the year ended 30 September 2015 and a copy of the
audit opinion, together with the underlying audited annual financial statements are available for inspection at the company's registered office.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 SEPTEMBER 2015
R'000 / Audited 2015 2014
Rental income 1 217 913 712 239
Straight line rental income accrual 19 341 25 795
Listed securities income 19 115 65 788
Total revenue 1 256 369 803 822
Property expenses (411 883) (245 510)
Administration and corporate costs (31 130) (26 709)
Net operating profit 813 356 531 603
Changes in fair values 640 713 272 392
Profit from operations 1 454 069 803 995
Finance charges (219 679) (115 007)
Finance income 32 650 13 998
Profit before debenture interest and taxation 1 267 040 702 986
Debenture interest (278 137) (375 201)
Profit before taxation 988 903 327 785
Taxation - -
Total comprehensive income for the year 988 903 327 785
Profit for the year attributable to:
Equity shareholders of Arrowhead Limited 945 118 327 785
Non-controlling interest 43 785 -
988 903 327 785
RECONCILIATION OF EARNINGS, HEADLINE EARNINGS AND DISTRIBUTABLE EARNINGS
Profit for the year attributable to Arrowhead shareholders 945 118 327 785
Debenture interest - 375 201
Earnings 945 118 702 986
Changes in fair value of investment property (498 214) (219 627)
Changes in fair value of investment property - non-controlling interest 26 672 -
Profit on sale of property (596) (7 955)
Headline profit attributable to shareholders / linked unit holders 472 980 475 404
Debenture interest at effective interest rates - prior to de-linking* 278 137 -
Changes in fair values of listed securities and financial instruments (141 903) (44 810)
Straight line rental income accrual (19 341) (25 795)
Straight line rental income accrual - non-controlling interest 425 -
Interest received on loan to the Arrowhead Charitable Trust eliminated on group level 11 749 -
Accrued distribution on listed securities 22 587 -
Antecedent interest 21 169 31 598
Transaction cost on business combination - 6 409
Distributable earnings attributable to shareholders / linked unitholders 645 803 442 806
Number of A shares / linked units in issue^ 422 107 370 065
Number of B shares / linked units in issue^ 422 107 370 065
Weighted average number of A shares / linked units in issue 405 621 278 807
Weighted average number of B shares / linked units in issue 405 621 278 807
Basic and diluted earnings per A share / linked unit (cents) 116,50 126,07
Basic and diluted earnings per B share / linked unit (cents) 116,50 126,07
Headline and diluted headline earnings per A share / linked unit (cents) 58,30 85,26
Headline and diluted headline earnings per B share / linked unit (cents) 58,30 85,26
* During the current year the debenture interest paid has been excluded from headline earnings as the linked units have been de-linked resulting
in disclosure of earnings per share compared to earnings per unit holder in the prior year. This resulted in a significant decrease in the basic
and diluted earnings per share as well as the headline earnings per share.
^ The number of A and B shares are net of the shares issued to the Arrowhead Charitable Trust.
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 SEPTEMBER 2015
R'000 / Audited 2015 2014
ASSETS
Non-current assets 9 649 996 7 601 370
Investment property 8 538 107 6 967 844
Fair value of property portfolio for accounting purposes 8 450 213 6 899 291
Straight line rental income accrual 87 894 68 553
Property, plant and equipment 284 310
Loans to participants of group share purchase option schemes 433 886 142 950
Goodwill 176 830 176 830
Financial assets 482 420 290 727
Derivative instruments 18 469 22 709
Current assets 148 307 114 377
Trade and other receivables 61 119 31 302
Cash and cash equivalents 87 188 83 075
Non-current assets held for sale 108 200 47 500
Total assets 9 906 503 7 763 247
EQUITY AND LIABILITIES
Shareholders interest 7 346 537 828 693
Stated capital 5 128 005 -
Non-controlling interest 576 127 -
Reserves 1 642 405 828 693
Non-current liabilities - debentures - 4 256 279
Shareholders / linked unitholders interest 7 346 537 5 084 972
Other non-current liabilities 2 426 048 2 373 910
Secured financial liabilities 2 408 033 2 355 683
Derivative instruments 18 015 18 227
Current liabilities 133 918 304 365
Trade and other payables 133 918 166 269
Unitholders for distribution - 138 096
Total equity and liabilities 9 906 503 7 763 247
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 SEPTEMBER 2015
Non-controlling
R'000 / Audited Stated capital Reserves interest Total
Balance at 30 September 2013 - 500 907 - 500 907
Total comprehensive income for the year - 327 786 - 327 786
Balance at 30 September 2014 - 828 693 - 828 693
Issue of shares - - 564 110 564 110
Transfers between equity holders - 28 194 (28 194) -
REIT Conversion 5 128 005 - - 5 128 005
Dividends paid - (159 600) (3 574) (163 174)
Total comprehensive income for the year - 945 118 43 785 988 903
Balance at 30 September 2015 5 128 005 1 642 405 576 127 7 346 537
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 SEPTEMBER 2015
R'000 / Audited 2015 2014
Net cash generated from operating activities (34 690) 93 493
Net cash utilised in investing activities (1 101 324) (1 364 550)
Net cash generated from financing activities 1 140 127 1 328 748
Net movement in cash and cash equivalents 4 113 57 691
Cash and cash equivalents at the beginning of the year 83 075 25 384
Cash and cash equivalents at the end of the year 87 188 83 075
CONSOLIDATED CONDENSED SEGMENTAL ANALYSIS
GEOGRAPHICAL
The entity has three reportable segments based on the geographic split of the country which are the entity's strategic business segments.
For each strategic business segment, the entity's executive directors review internal management reports on a monthly basis. All segments are
located in South Africa. There are no single major tenants. The following summary describes the operations in each of the entity's reportable segments.
CONDENSED SEGMENTAL ANALYSIS FOR THE YEAR ENDED 30 SEPTEMBER 2015
30 SEPTEMBER 2015 (R'000) Gauteng Kwa-Zulu Natal Eastern Cape Other Total
Contractual rental income 893 760 126 487 57 941 139 725 1 217 913
Straight line rental income - - - 19 341 19 341
Listed securities income - - - 19 115 19 115
Operating and administration costs (311 392) (48 191) (17 296) (66 134) (443 013)
Net operating profit 582 368 78 296 40 645 112 047 813 356
Interest received 1 063 78 19 31 490 32 650
Finance charges (13) - (1) (219 664) (219 679)
Net operating income / (loss) 583 418 78 374 40 663 (76 127) 626 327
Changes in fair values - - - 640 713 640 713
Reportable segment profit before debenture interest and tax 583 418 78 374 40 663 564 585 1 267 040
Debenture interest - - - (278 137) (278 137)
Taxation - - - - -
Reportable segment profit after debenture interest and tax 583 418 78 374 40 663 286 448 988 903
Reportable segment assets 4 490 347 829 676 374 610 4 211 870 9 906 503
Reportable segment liabilities (73 383) (14 040) (5 034) (2 467 509) (2 559 966)
4 416 964 815 636 369 576 1 744 361 7 346 537
30 SEPTEMBER 2014 (R'000) Gauteng KwaZulu-Natal Eastern Cape Other Total
Contractual rental income 443 660 80 721 45 653 141 895 711 928
Straight line rental income - - - 25 795 25 795
Listed securities income - - - 65 789 65 789
Other income 40 50 2 218 310
Operating and administration costs (152 526) (30 167) (12 326) (77 200) (272 219)
Net operating profit 291 174 50 604 33 329 156 496 531 603
Interest received 158 55 4 13 782 13 999
Finance charges (23) - (3) (114 981) (115 007)
Net operating income / (loss) 291 309 50 659 33 330 55 297 430 595
Changes in fair values - - - 272 392 272 392
Reportable segment profit before debenture interest and tax 291 309 50 659 33 330 327 689 702 987
Debenture interest - - - (375 201) (375 201)
Taxation - - - - -
Reportable segment profit after debenture interest and tax 291 309 50 659 33 330 (47 512) 327 786
Reportable segment assets 4 495 672 961 232 455 186 1 851 157 7 763 247
Reportable segment liabilities (795 503) (310 362) (73 957) (5 754 733) (6 934 554)
3 700 169 650 870 381 229 (3 903 576) 828 693
By order of the Board
18 November 2015
Directors: M Nell * (Chairperson), G Leissner (CEO), I Suleman (CFO), M Kaplan (COO), T Adler*, S Noik*, E Stroebel*
* Independent non-executive
All directors are South African.
Registered office
2nd Floor, 18 Melrose Boulevard, Melrose Arch, Melrose, Johannesburg 2196
PO Box 685, Melrose Arch, 2076
Transfer secretaries
Computershare Investor Services Proprietary Limited
Sponsor
Java Capital
Company secretary
CIS Company Secretaries Proprietary Limited
Website
www.arrowheadproperties.co.za
Date: 18/11/2015 07:23:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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