Wrap Text
Condensed unaudited consolidated interim financial results for the six months ended 31 December 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")
CONDENSED UNAUDITED CONSOLIDATED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unuadited Unaudited Audited
31 December 31 December 30 June
2015 2014 2015
R'000 R'000 R'000
Assets
Non-current assets
Property, plant and equipment 10 620 11 599 10 641
Investment properties 17 521 479 14 046 936 16 187 873
Per valuation 18 077 984 14 450 766 16 670 072
Straight-line lease debtor (556 505) (403 830) (482 199)
Straight-line lease debtor 556 505 403 830 482 199
Deferred initial lease expenditure 7 658 8 097 9 154
Intangible assets 334 540 355 069 344 523
Goodwill 67 774 62 847 67 774
Investment in associates 3 091 557 2 835 966 2 369 884
Other financial assets 327 716 471 134 102 993
Other investments 440 280 406 909 402 414
Deferred tax assets 21 761 15 385 19 829
Total non-current assets 22 379 890 18 617 772 19 997 284
Current assets
Taxation receivable - 5 490 408
Trade and other receivables 280 178 219 532 223 084
Loans to associates 2 386 559 705 159 741 037
Other financial assets 1 229 461 1 084 907 282
Cash and cash equivalents 303 055 929 797 747 145
Total current assets 4 199 253 1 861 062 2 618 956
Assets held for sale 536 572 - 684 441
Total assets 27 115 715 20 478 834 23 300 681
Equity and liabilities
Equity
Stated capital 6 442 805 6 439 419 6 439 419
Distributable reserves 5 811 556 4 201 209 4 815 584
Available-for-sale reserve 900 574 160 566 682 579
Share-based payment reserve 97 943 86 623 90 359
Foreign currency translation reserve 433 017 105 156 45 740
Acquisition of non-controlling
interests reserve (129 483) (116 483) (116 483)
Equity attributable to owners
of the holding company 13 556 412 10 876 490 11 957 198
Non-controlling interests 41 614 (2 706) 7 252
Total equity 13 598 026 10 873 784 11 964 450
Non-current liabilities
Long-term borrowings 9 565 069 6 954 013 8 863 852
Deferred tax liabilities 1 697 902 1 070 856 1 365 868
Other financial liabilities 1 772 151 458 28 086
Provisions for liabilities relating to associates 1 079 8 834 1 579
Finance lease obligation 73 864 70 263 71 346
Total non-current liabilities 11 339 686 8 255 424 10 330 731
Current liabilities
Other financial liabilities 299 113 3 171 113 258
Finance lease obligation 1 304 - 1 332
Loans from associates 323 572 141 140 70 989
Taxation payable 1 334 6 282 10 185
Trade and other payables 370 105 272 684 462 636
Provisions 2 121 1 932 1 422
Bank overdraft - - 19 349
Short-term portion of long-term borrowings 1 066 304 924 417 326 329
Total current liabilities 2 063 853 1 349 626 1 005 500
Liabilities directly associated with assets held for sale 114 150 - -
Total liabilities 13 517 689 9 605 050 11 336 231
Total equity and liabilities 27 115 715 20 478 834 23 300 681
Net asset value per share (cents) 1 933 1 552 1 706
Net asset value per share adjusted for deferred tax (cents) 2 172 1 702 1 898
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
31 December 31 December 30 June
2015 2014 2015
R'000 R'000 R'000
Gross revenue 769 456 609 161 1 312 935
Rental income 689 671 514 932 1 140 335
Straight-line lease income adjustments 79 785 94 229 172 600
Property expenses (238 427) (185 940) (358 885)
Net rental income 531 029 423 221 954 050
Other income 569 871 70 073 205 590
Operating and other expenses (121 744) (61 005) (305 589)
Operating profit 979 156 432 289 854 051
Amortisation of intangible asset (9 982) (9 756) (20 303)
Fair value adjustments 635 703 306 512 1 114 224
Investment properties 426 805 310 499 1 110 711
Other financial assets and liabilities 229 568 (2 362) 68 089
Other investments (20 670) (1 625) (64 576)
Net income (loss) from associates 87 286 (24 960) 50 568
Investment income 74 191 73 542 142 531
Finance costs (403 895) (301 103) (685 872)
Profit before taxation 1 362 459 476 524 1 455 199
Income tax expense (332 125) (116 696) (471 038)
Profit for the period 1 030 334 359 828 984 161
Attributable to:
Owners of the holding company 995 972 364 279 978 654
Non-controlling interests 34 362 (4 451) 5 507
Other comprehensive income
Items that will be reclassified subsequently to profit and loss
Gain on available-for-sale financial assets 153 734 67 804 661 986
Taxation relating to components of other
comprehensive income 64 261 9 016 (63 153)
Other comprehensive income for the
period net of taxation 217 995 76 820 598 833
Total comprehensive income for the period 1 248 329 436 648 1 582 994
Attributable to:
Owners of the holding company 1 213 967 441 099 1 577 487
Non-controlling interests 34 362 (4 451) 5 507
Earnings per share
Basic (cents) 142.0 54.1 142.4
Diluted (cents) 141.6 54.0 142.0
Reconciliation between earnings, headline earnings
and distributable earnings (loss)
Profit for the period 995 972 364 279 978 654
Headline earnings adjustments (617 789) (263 388) (964 063)
Profit on disposal of associates (145 019) (331) (89 161)
Profit on disposal of other investments (1 994) (956) (956)
Loss (Profit) on disposal of investment property 9 364 1 277 (29 132)
Impairment (reversal of impairment) of associates
and other investments 43 706 (14 838) 3 486
Impairment of goodwill - - 109 670
Fair value adjustments (635 703) (306 512) (1 114 224)
Net (income) loss from associates (87 286) 24 960 (50 568)
Tax effect of adjustments 173 811 52 226 218 169
Non-controlling interests' share 25 332 (19 214) (11 347)
Headline earnings 378 183 100 891 14 591
Distributable earnings adjustments (345 332) (64 701) (144 095)
Straight-line lease income adjustments (52 623) (64 965) (115 840)
Depreciation and amortisation 8 452 - 17 575
Foreign currency translation effect (302 164) - (47 246)
Finance lease interest 1 246 638 1 808
Actual finance lease payments (243) (374) (392)
Distributable earnings (loss) 32 851 36 190 (129 504)
Number of shares in issue* 701 395 224 700 995 224 700 995 224
Weighted average number of shares in issue* 701 382 181 673 324 370 687 046 081
Diluted weighted average number of shares in issue* 703 265 640 674 741 882 689 256 626
Headline earnings per share
Basic (cents) 53.9 15.0 2.1
Diluted (cents) 53.8 15.0 2.1
* Adjusted for 46 427 553 treasury shares (2014: 46 427 553)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
31 December 31 December 30 June
2015 2014 2015
R'000 R'000 R'000
Cash flow (utilised in) generated from
operating activities (108) (179 164) 66 575
Cash generated from operating activities 307 303 76 808 650 572
Investment income 118 641 73 542 119 673
Finance costs (403 895) (298 071) (627 902)
Taxation paid (22 157) (31 443) (75 768)
Cash flow utilised in investing activities (1 923 647) (1 026 557) (2 182 147)
Cash flow generated from financing activities 1 499 014 1 746 225 2 453 684
Total cash movement for the period (424 741) 540 504 338 112
Cash at the beginning of the period 727 796 389 293 389 293
Cash acquired with subsidiaries - - 391
Total cash at the end of the period 303 055 929 797 727 796
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity
Acquisition attributable
Foreign of non- to owners
Available- Share-based currency controlling of the Non-
Stated Distributable for-sale payment translation interests holding controlling Total
capital reserves reserve reserve reserve reserve company interests equity
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Audited balance at 1 July 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 - 364 279 76 820 - - - 441 099 (4 451) 436 648
Profit for the period - 364 279 - - - - 364 279 (4 451) 359 828
Other comprehensive income - - 76 820 - - - 76 820 - 76 820
Foreign currency translation reserve - - - - (6 773) - (6 773) - (6 773)
Derecognition of non-controlling interest - - - - - - - (212 822) (212 822)
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 - - - 3 306 - - 3 306 - 3 306
Unaudited balance at 31 December 2014 6 439 419 4 201 209 160 566 86 623 105 156 (116 483) 10 876 490 (2 706) 10 873 784
Total comprehensive income - 614 375 522 013 - - - 1 136 388 9 958 1 146 346
Profit for the period - 614 375 - - - - 614 375 9 958 624 333
Other comprehensive income - - 522 013 - - - 522 013 - 522 013
Foreign currency translation reserve - - - - (59 416) - (59 416) - (59 416)
Recognition of share-based payments - - - 3 736 - - 3 736 - 3 736
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
Total comprehensive income - 995 972 217 995 - - - 1 213 967 34 362 1 248 329
Profit for the period - 995 972 - - - - 995 972 34 362 1 030 334
Other comprehensive income - - 217 995 - - - 217 995 - 217 995
Foreign currency translation reserve - - - - 387 277 - 387 277 - 387 277
Issue of shares 3 386 - - - - - 3 386 - 3 386
Recognition of non-controlling interests reserve - - - - - (13 000) (13 000) - (13 000)
Recognition of share-based payments - - - 7 584 - - 7 584 - 7 584
Unaudited balance at 31 December 2015 6 442 805 5 811 556 900 574 97 943 433 017 (129 483) 13 556 412 41 614 13 598 026
CONDENSED SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
31 December 2015 31 December 2014 30 June 2015
Notes Net Investment Net Net Investment Net Net Investment Net
Revenue profit (loss) properties asset value Revenue profit (loss) properties asset value Revenue profit (loss) properties asset value
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Business segment
Brooklyn Bridge Office Park 38 561 20 942 624 768 299 206 34 140 4 020 608 227 207 397 71 864 11 727 611 581 224 026
Great Westerford* 1 19 405 14 385 284 822 252 558 15 972 8 304 261 303 189 867 34 363 18 982 272 762 204 377
Lynnwood Bridge Precinct 80 830 29 958 1 309 635 518 300 76 511 26 746 1 208 727 327 501 144 335 74 517 1 283 202 280 420
Aurecon Building 49 464 16 699 650 641 254 639 48 827 9 668 637 822 162 360 97 596 23 867 641 770 176 559
Newtown Junction 78 350 12 537 1 410 437 208 308 32 808 (45 800) 1 220 920 141 523 117 254 (21 896) 1 268 703 217 363
The Majestic 11 233 (7 038) 124 907 23 272 4 551 9 722 144 468 33 910 12 849 3 905 134 361 27 921
PwC Sunninghill 2 25 518 (1 080) 346 041 (48 001) - - - - 18 961 4 075 351 306 (29 371)
Waterfall - Altech Building* 1 (1 487) 2 674 48 500 24 192 3 181 1 251 41 412 17 171 8 142 3 225 40 647 25 296
Waterfall - Cell C Campus 71 120 22 231 761 717 421 804 59 872 13 654 762 722 896 420 127 696 47 182 778 013 624 091
Waterfall - City Lodge 7 687 5 241 101 907 44 792 - (1 205) 100 092 59 550 5 812 (468) 99 904 46 361
Waterfall - Group Five 30 725 1 726 536 577 206 144 41 239 23 546 520 922 237 831 80 008 50 112 543 093 252 420
Waterfall - Maxwell Office Park - Phase I, II & III* 18 550 19 545 381 774 185 001 11 890 (4 434) 221 797 92 071 26 824 11 060 239 659 121 847
Waterfall - Novartis 12 628 3 894 200 461 49 038 - - - - 2 190 33 303 194 620 122 126
Office and mixed use 442 584 141 714 6 782 187 2 439 253 328 991 45 472 5 728 412 2 365 601 747 894 259 591 6 459 621 2 293 436
Glenfair Boulevard Shopping Centre 27 506 22 166 404 462 405 833 23 595 13 585 338 791 295 283 50 208 62 529 388 900 359 709
Garden Route Mall 66 692 31 938 1 221 072 475 849 64 710 24 314 1 131 866 386 946 122 846 74 004 1 186 014 452 361
Brooklyn Mall# 37 857 20 800 701 064 277 496 36 744 23 017 663 526 262 304 71 999 36 919 677 335 260 397
MooiRivier Mall 59 811 8 573 1 055 221 418 786 60 086 32 508 1 019 424 472 720 113 591 56 078 1 042 802 398 427
Andringa Walk 13 013 6 730 178 164 74 738 11 740 (3 179) 164 354 (113 695) 24 864 711 169 323 65 922
Eikestad Mall^ 33 253 22 296 553 942 227 582 32 433 10 535 512 971 107 870 65 200 26 021 529 416 202 783
Mill Square^ 4 054 7 860 90 694 35 589 3 660 438 77 431 9 803 7 596 1 778 78 975 30 161
Waterfall Corner 14 980 5 638 191 822 50 256 14 240 (3 122) 169 528 40 544 28 758 10 447 185 440 88 943
Waterfall Lifestyle 10 920 6 149 114 567 32 706 6 802 2 340 100 497 87 207 14 751 10 324 112 371 28 172
Retail 268 086 132 150 4 511 008 1 998 835 254 010 100 436 4 178 388 1 548 982 499 813 278 811 4 370 576 1 886 875
Waterfall - Angel Shack 1 559 3 290 35 794 27 819 2 078 2 687 30 084 21 392 4 728 5 629 32 931 23 631
Waterfall - Medtronic 7 842 10 005 118 614 54 586 1 219 9 017 98 635 44 530 8 911 18 589 108 442 20 949
Waterfall - Cummins* 6 179 8 416 86 437 25 133 - - - - 1 105 14 357 78 008 76 814
Waterfall - Drager 4 712 2 050 72 562 31 790 1 574 6 281 62 660 35 659 6 829 12 601 71 250 32 118
Waterfall - Massbuild 18 555 9 003 252 297 83 604 17 610 7 220 231 984 56 832 32 939 16 073 243 439 40 028
Waterfall - Westcon 6 542 4 429 102 228 41 325 3 099 (1 664) 87 071 44 772 9 977 9 209 99 176 88 324
Waterfall - Hilti 1 991 (32) 52 615 17 190 - - - - - - - -
Waterfall - Servest 6 185 14 406 148 271 75 824 - - - - - - - -
Waterfall - Stryker 2 026 4 352 59 659 20 681 - - - - - - - -
Light industrial 55 591 55 919 928 477 377 952 25 580 23 541 510 434 203 185 64 489 76 458 633 246 281 864
Le Chateau - (2) 17 000 14 754 - (5) 17 000 14 748 - (4) 17 000 14 755
Waterfall - Development rights - (155 053) 1 188 704 1 188 708 - 31 172 1 518 088 1 534 643 - 68 751 1 467 422 1 467 387
Waterfall - Infrastructure and services - (13 543) 733 803 453 581 31 (7 780) 587 231 308 437 25 (7 751) 615 991 207 744
Vacant land - (168 598) 1 939 507 1 657 043 31 23 387 2 122 319 1 857 828 25 60 996 2 100 413 1 689 886
Newtown - City Lodge - - - - - - - - - 4 656 73 018 25 425
Newtown - Carr Street - - 15 519 15 521 - - - - - - 8 569 8 569
Waterfall - Allandale Building - 16 015 174 991 100 396 - - - - - 3 627 69 848 52 023
Waterfall - Hilti - - - - - - - - - 9 963 38 981 28 575
Waterfall - Mall of Africa^ - 319 789 3 006 156 944 390 - 115 355 1 228 979 848 220 - 339 686 2 010 139 624 601
Waterfall - Maxwell Office Park - Phase IV* - 5 868 41 730 39 582 - (3 838) 35 120 (3 838) - 15 795 101 658 12 456
Waterfall - PwC Tower and PwC Annex~ - 41 145 271 388 75 096 - - - - - 27 895 152 688 187 564
Waterfall - Servest - - - - - 4 800 55 920 4 800 - 28 073 127 134 40 125
Waterfall - Stryker - - - - - - - - - 11 662 41 982 18 898
Waterfall - Torre Industries - 3 846 46 222 43 260 - - - - - - - -
Waterfall - Amrod - 7 725 114 162 99 172 - - - - - - - -
Waterfall - Spec Warehouse - - 23 454 22 200 - - - - - - - -
Waterfall - Cummins* - - - - - 4 619 54 418 19 835 - - - -
Waterfall - Novartis - - - - - 9 210 132 946 58 502 - - - -
Developments under construction - 394 388 3 693 622 1 339 617 - 130 146 1 507 383 927 519 - 441 357 2 624 017 998 236
Head office/other 3 195 692 756 - 5 785 326 549 113 666 - 3 970 669 714 465 781 - 4 814 153
Total 769 456 1 248 329 17 854 801 13 598 026 609 161 436 648 14 046 936 10 873 784 1 312 935 1 582 994 16 187 873 11 964 450
Notes:
1. Held for sale as at 31 December 2015
2. Acquired during prior 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 Develop, Invest 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
and brownfields development by refurbishment of existing buildings. Investments provide stable income and balance sheet strength to responsibly secure and fund sound growth
opportunities. Attacq has a total asset value of R27.1 billion, which includes landmark commercial and retail property assets and developments. Attacq's 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, Western,
Central and Eastern Europe.
Highlights
- Net asset value per share ("NAVPS") adjusted for deferred tax ("Adjusted NAVPS") increased by 27.6% to R21.72 year-on-year
- NAVPS increased by 24.5% to R19.33 year-on-year
- Total assets increased by 32.4% to R27.1 billion year-on-year
- Investments in international assets increased by 72.8% to R6.4 billion year-on-year
- Net rental income increased by 25.5% to R531.0 million against the prior comparative period
- The Mall of Africa, a super-regional mall, opening on 28 April 2016
Net asset value ("NAV") and NAVPS
NAV attributable to Attacq shareholders increased by 24.6% year-on-year. Adjusted NAVPS increased by 27.6% year-on-year from R17.02 to R21.72 and NAVPS increased by 24.5% from
R15.52 to R19.33.
Acquisitions
Investment in Cyprus
On 24 July 2015, the Group acquired an effective 48.6% interest in ITTL Trade & Tourist Leisure Park Plc, owner of the Shacolas Emporium Park and an effective 48.5% 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 acquired by Atterbury Cyprus
Limited ("Atterbury Cyprus") in which Attacq has a 48.8% shareholding. Atterbury Europe B.V. ("Atterbury Europe"), together with minorities, owns the balance of the
shareholding in Atterbury Cyprus.
The 47 000 m2 Shacolas Emporium Park comprises the 27 000 m2 Mall of Cyprus and a 20 000 m2 Ikea store. It attracts over five million shoppers annually. The Mall of Engomi is a
13 600 m2 retail centre located in the west of Nicosia and attracts more than one and a half million shoppers annually. Both centres provide expansion opportunities. Attacq's
share of the acquisition consideration was R670.6 million and the investment was valued at R968.0 million as at 31 December 2015.
Investment in Serbia
Effective 1 December 2015, the Group, jointly with Atterbury Europe, acquired a 33.0% shareholding in a portfolio of five operational Serbian retail properties with a gross
value of EUR228.0 million. The acquisition was made via Atterbury Serbia B.V. ("Atterbury Serbia"), in which Attacq has a 25.0% shareholding. The seller, Balkans Real Estate B.V.
("BRE"), has retained a 67.0% shareholding in the portfolio. An interest in a further two properties will be acquired upon completion during the course of the 2016 calendar
year. The portfolio was acquired at a euro yield in excess of 8.0% and Attacq's investment is valued at R358.9 million as at 31 December 2015.
Serbia's largest mall, the 47 363 m2 Usce Shopping Centre, located in the capital city Belgrade, forms part of the investment portfolio. Belgrade is a city of close to two
million people and currently has only two large shopping malls. Usce Shopping Centre, with a diverse retail offering via its 150 stores, dominates the local market and averages
over one million shoppers per month.
In addition to the operational properties acquired, Atterbury Serbia and BRE have jointly invested EUR40.0 million into a development fund which will undertake retail
developments in Serbia and neighbouring countries.
Investment in Nigeria
The Group acquired a 25.0% shareholding in Ikeja City Mall located in Lagos, Nigeria with the balance of 75.0% acquired by Hyprop Investments Limited ("Hyprop"). The effective
date of the transaction was 17 November 2015 and as at 31 December 2015 the investment was valued at R360.8 million.
The 22 349 m2 Ikeja City Mall receives in excess of 650 000 shoppers per month and was acquired at a US dollar yield in excess of 8.0%. The mall was acquired as part of a
strategy by Attacq, Hyprop and AttAfrica Limited ("AttAfrica") to create a portfolio of dominant malls in large cities across Africa.
Disposals
Mauritian assets
Effective 27 November 2015, the Group disposed of a 34.9% shareholding in Bagaprop Limited, the owner of the Bagatelle Mall in Mauritius and its 49.9% interest in Mall of
Mauritius at Bagatelle Limited, the owner of the land and developments surrounding the Bagatelle Mall. These investments were held via Attacq's 85.0% (80.0% as at 30 June 2015)
subsidiary, Atterbury Mauritius Consortium (Pty) Ltd ("AMC"). Attacq completed the exit from its Mauritius assets subsequent to interim period end by disposing of its
shareholding in AMC to Atterbury Property Holdings (Pty) Ltd ("Atterbury"). Total cash funds received by Attacq from the exit of these assets amounted to R676.4 million.
Other disposals
The Group disposed of its 25.0% shareholding in Atterbury Mauritius Limited, which held a minority interest in the asset manager of the Bagatelle Precinct for R8.0 million as
well as its effective 30.0% interest in The Pavilion, a student residential accommodation property located in Birmingham, UK, held via Bishopsgate Limited, for R34.9 million.
Financial position 31 December 31 December 30 June
Investment properties 2015 2014 2015
R'000 R'000 R'000
Completed buildings 12 444 855 10 821 064 11 945 642
Developments under construction 3 693 622 1 507 383 2 624 017
Development rights 1 188 704 1 518 088 1 467 422
Infrastructure and services 733 803 587 231 615 991
Vacant land 17 000 17 000 17 000
Per valuation 18 077 984 14 450 766 16 670 072
Straight-line lease debtor (556 505) (403 830) (482 199)
Total 17 521 479 14 046 936 16 187 873
Buildings completed during the period
During the six months ended 31 December 2015, the following six buildings were completed. Attacq's attributable share of the total of 28 663m2 primary gross leasable area
("GLA") of these properties is 23 398 m2:
Property Sector Completion GLA Occupancy
date (m2) %
Waterfall
Hilti Industrial October 2015 3 948 100
Stryker Industrial September 2015 3 220 100
Servest Industrial August 2015 6 737 100
Maxwell Office Park - Colgate^ Office August 2015 4 242 100
Maxwell Office Park - Mac Mac House^ Office October 2015 6 288 100
Other
City Lodge Newtown Hotel November 2015 4 228 100
Total 28 663 100
100% of the GLA is reflected above
^ Attacq has a 50% undivided share in the property
Developments under construction
The following properties were under development at 31 December 2015. Attacq's attributable share of the total of 253 740 m2 GLA of these properties is 212 619 m2:
Property Sector Anticipated GLA % pre-let
completion (m2)*
date
Waterfall
Mall of Africa# Retail April 2016 131 038 >95
Maxwell Office Park - Magwa House^ Office June 2016 7 214 >75
Allandale Building Office August 2016 14 670 >55
PwC Tower and Annex~ Office January 2018 45 223 100
Amrod Industrial November 2016 38 455 100
Speculative warehouse Industrial July 2016 8 230 -
Torre Industries Industrial July 2016 8 910 100
Total 253 740 >90
* 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 relate to the contractual rights held by Attacq Waterfall Investment Company (Pty) Ltd ("AWIC") to develop certain land parcels in Waterfall. These rights
form a material element of the overall land valuation. As at 31 December 2015 1.26 million m2 (30 June 2015: 1.35 million m2) of Waterfall's total bulk of 1.85 million m2 (30
June 2015: 1.83 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 from top structure developments.
Investments in and loans to associates
MAS Real Estate Inc. ("MAS")
As at 31 December 2015, Attacq held a 44.9% shareholding in MAS (30 June 2015: 45.3%). Attacq's equity accounted investment in MAS increased from R2.2 billion as at 30 June
2015 to R2.6 billion as at 31 December 2015, driven mainly by the 23.6% weakening in the rand against the euro.
MAS' adjusted NAVPS increased by 10.4% from 109.8 euro cents per share as at 31 December 2014 to 121.2 euro cents per share as at 31 December 2015. After taking into account
MAS' distribution of 2.2 euro cents per share paid in September 2015, adjusted NAVPS compared with 30 June 2015 was lower by 2.2% or 2.7 euro cents per share, being negatively
impacted by the strengthening of the euro, MAS' reporting currency, against the pound sterling and Swiss franc.
MAS has made favourable progress in achieving its short-term income goals, however, given the current stage of the market cycle in many parts of Western Europe and muted
outlook for capital growth in these markets, the MAS board has decided to alter MAS' strategy of focusing purely on income returns to a total return strategy. In terms of this
new strategy, MAS will continue to distribute all available income profits with the reinvestment of capital profits remaining at the discretion of the MAS board. As part of
this strategy, MAS will widen its Western Europe investment focus to include opportunities in Central and Eastern Europe ("CEE").
MAS has entered into a joint venture ("JV") with Prime Kapital Limited, a real estate development and investment business established by Martin Slabbert and Victor Seminonov
and backed by an experienced team with a proven track record. The JV will provide MAS with access to high growth euro denominated jurisdictions and will focus on the
development and redevelopment of commercial real assets in CEE to create a high quality portfolio of assets in dominant locations.
As at 31 December 2015, the fair value of the agterskot owing by MAS in respect of the disposal of the Karoo Investment Fund S.C.A. SICAV-SIF ("Karoo") to MAS in December 2013
amounted to R490.2 million (EUR29.1 million). This amount was included under other financial assets at interim period end. The agterskot will be settled during the course of
March 2016 by the issue of 21.3 million new MAS shares which will result in Attacq's interest in MAS increasing to 48.6%.
AttAfrica
Presently, Africa in general is experiencing tough economic conditions given the recent USD strength, continued depressed commodity and oil prices and lack of stability in
power supply. The dominant malls in the portfolio, notably Manda Hill Mall and Accra Mall, have defensive qualities and continue to trade relatively well given the more
challenging operating environment.
During the period, the Group's investment in AttAfrica increased to R871.1 million (30 June 2015: R461.8 million). The investment relates to the shareholder's loan provided by
Attacq to AttAfrica. With the completion of Achimota Mall in November 2015, the only remaining development under construction is Kumasi City Mall which is expected to be
completed by April 2017.
At 31 December 2015, AttAfrica's underlying assets were as follows:
AttAfrica
Property Location GLA AttAfrica attributable Attacq
(m2*) ownership property value effective
% USD'000 interest
%
Completed buildings
Manda Hill Mall Lusaka, Zambia 40 561 50 76 550 15.6
Accra Mall Accra, Ghana 21 230 47 47 658 14.7
West Hills Mall Accra, Ghana 27 558 45 40 140 14.1
Achimota Mall Accra, Ghana 14 662 75 39 750 23.4
Development under construction
Kumasi City Mall Kumasi, Ghana 18 000* 75 28 091 23.4
* Proposed size
Other investments
Attacq's 19.9% interest in Stenham European Shopping Centre Fund Limited, the owner of the Nova Eventis regional shopping centre in Leipzig, Germany is included in other
investments together with Attacq's 10% shareholding in Atterbury.
Other financial assets
In addition to the Karoo agterskot of R490.2 million, other financial assets include an amount of R581.7 million owed by Atterbury for the acquisition of their 20.0% undivided
share in the Mall of Africa. The amount due by Atterbury in respect of 18.8% of the Mall is to be settled within 10 days after completion of the Mall with the balance of 1.2%
to be settled based on the fair market value of the Mall as at 30 June 2017 as determined by an external independent valuer.
Assets held for sale
The Club Retail Park (Pty) Ltd ("The Club")
Atterbury Property Fund (Pty) Ltd has offered to acquire Attacq's 32.0% shareholding in The Club. The transaction is subject to conditions precedent. As at 31 December 2015,
the investment is included under assets held for sale at an amount of R49.1 million.
50% undivided share in Great Westerford
Attacq's 50% undivided share in the Great Westerford property is included under assets held for sale at an amount of R292.0 million. The asset was disposed of at this value
effective 21 January 2016 to The Leaf Property Fund Trust.
50% undivided share in the Altech Building
The Altech building has been identified as a non-core asset and as a result management has commenced with an active programme to locate a buyer. The programme is at an advanced
stage and management anticipates the disposal of the building before year end.
Borrowings
Total net interest-bearing borrowings increased by 27.2% compared with 30 June 2015 due to additional debt being incurred to fund the growing property portfolio.
Gearing, calculated as total interest-bearing debt less cash on hand as a percentage of total assets, increased from 36.3% as at 30 June 2015 to 39.7% as at 31 December 2015.
In order to mitigate interest rate risk, approximately R10.3 billion or 72.0% of total committed facilities as at 31 December 2015 (30 June 2015: R8.9 billion or 74.7%) were
hedged by way of fixed interest rate loans and interest rate swaps. This is within the 70.0% minimum interest hedge policy set by the Attacq Board. The weighted average cost of
funding increased slightly over the last six months from 9.0% at 30 June 2015 to 9.1% as at 31 December 2015.
Approximately 13.6% (R1.5 billion) of the Group's debt is due for repayment over the next 12 months. Similarly, 13.3% of the Group's interest rate swaps or fixed rate loans
mature over the same period.
Financial performance
Profit before taxation
Net rental income
Net rental income, which includes straight-line lease income adjustments, increased by 25.5% compared with the prior comparative period. A year-on-year comparison of net rental
income is less meaningful, due to six buildings having been completed during the current reporting period (31 December 2014: 11 buildings). The weighted average lease expiry
profile is 6.8 years as at 31 December 2015 (31 December 2014: 7.2 years).
Vacancies
Overall portfolio vacancies, measured in terms of GLA, have decreased by 6 807 m2 compared with 31 December 2014. This decrease relates primarily to Newtown Junction, The
Majestic, Lynnwood Bridge Offices and Waterfall Lifestyle, all of which came into operation during the period ending 31 December 2014. Current vacant space amounts to 12 943
m2, which equates to 2.2% of the total GLA.
31 December 2015 31 December 2014 30 June 2015
Sector Vacancy Vacant Vacancy Vacant Vacancy Vacant
% GLA m2 % GLA m2 % GLA m2
Retail 1.1 6 728 2.2 11 335 1.8 10 387
Office 2.3 13 471 3.0 15 671 2.2 12 387
Industrial - - - - - -
Hotel - - - - - -
Portfolio vacancy 3.4 20 199 5.2 27 006 4.0 22 774
Property expenses
Property expenses increased by 28.2% mainly due to municipal charges that increased by 44.8%. Property expenses as a percentage of rental income improved marginally from 36.1%
to 34.6% for the six-month period ending 31 December 2015.
Other income
Other income of R569.9 million includes unrealised foreign exchange gains of R420.4 million (December 2014: R43.7 million) and a profit of R145.0 million on the disposal of a
34.9% shareholding in Bagaprop Limited and a 49.9% interest in Mall of Mauritius at Bagatelle Limited.
Operating and other expenses
The increase of 99.6% in operating and other expenses is primarily attributed to the marketing, rates and taxes and security expenses relating to Waterfall which are not
capitalised against the developments under construction.
Fair value adjustments
Compared with the corresponding prior period, fair value adjustments on investment properties increased by 37.5% to R426.8 million and are made up as follows:
Six months Six months 12 months
ended ended ended
31 December 31 December 30 June
2015 2014 2015
R'000 R'000 R'000
Completed buildings 221 931 65 120 434 677
Developments under construction 420 226 202 127 591 562
Development rights (215 352) 43 252 84 472
Total fair value adjustments to investment properties 426 805 310 499 1 110 711
Property valuations for interim reporting purposes are directors' valuations which are in the main, supported by external desktop valuations performed by Jones Lang LaSalle
(Pty) Ltd, Old Mutual Investment Group (South Africa) (Pty) Ltd and Mills Fitchet KZN CC.
The directors' valuation in respect of Waterfall's development rights is based on an external desktop valuation performed on a freehold basis. The desktop 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. The deteriorating economic environment and lower investor confidence have caused the directors to take a more conservative view on the timing of the roll-out of the
development rights, which resulted in a negative fair value adjustment of R215.4 million.
Over the last six months, the fair value of the interest rate swaps increased favourably by R229.6 million (December 2014: decrease of R2.4 million), displaying the effect of
the future outlook of interest rates as well as the interest rate hikes for the period under review.
Investment income
Included in investment income in the current period is interest income of R64.4 million (December 2014: R49.6 million) and dividend income of R9.8 million (December 2014:
R23.9 million).
Finance costs
The increase in finance costs of 34.1% compared with the prior reporting period is attributable to the six buildings (31 December 2014: 11 buildings) completed over the last
six months, resulting in the finance costs post completion being expensed and no longer capitalised to the specific development.
Change in directors
Effective 1 July 2015, BT Nagle was appointed to the Board as a non-executive director, LLS van der Watt's designation was changed from executive to non-executive and,
following a review of his independence by the Board, AW Nauta's designation was changed from non-independent to independent due to the fact that he is no longer a
representative of a significant shareholder of Attacq.
TJA Reilly, an alternate director to JHP van der Merwe, a non-independent non-executive director of the Company, resigned with effect from 30 October 2015.
BT Nagle and JHP van der Merwe no longer act as representatives of significant shareholders of Attacq. Based on the important contribution that both directors make to the Board,
the Board has decided to retain them in an independent non-executive capacity with effect from 1 February 2016.
Subsequent events
50% undivided share in Great Westerford
Effective 21 January 2016, Attacq sold its 50% undivided share in the Great Westerford property to The Leaf Property Fund Trust for an amount of R292.0 million.
Deferred taxation
As announced on 24 February 2016 by the Minister of Finance in the budget speech, the inclusion rate for capital gains for companies has been increased from 66.6% to 80.0%.
This will raise the capital gains tax rate for companies from 18.6% to 22.4% effective for years of assessment beginning on or after 1 March 2016.
The deferred taxation balances for these interim results have not been adjusted for the new capital gains tax rate in accordance with SAICA Financial Reporting Guide on
substantively enacted tax rates and tax laws issued in December 2012. The increased rate will be taken into account when reporting the results for the year ending 30 June 2016.
Prospects
In South Africa, in addition to optimising its growing R12.4 billion portfolio of operational buildings and delivering on its Waterfall pipeline, Attacq remains on the lookout
for further growth opportunities. The Waterfall node continues to strengthen with six new buildings completed during the period under review, adding 23 398 m2 GLA to Attacq's
portfolio. The super-regional Mall of Africa is on track to open on 28 April 2016 and is expected to act as a strong catalyst for demand for premises in the surrounding
Waterfall City, which has a further 663 815 m2 of bulk available for development. Waterfall City is seen as one of the most significant South African commercial developments of
the decade and continues to attract local and international attention as the new corporate headquarters destination.
Internationally, Attacq has invested into new markets in Cyprus and Serbia which complement its existing Western European exposure via MAS. The Cyprus assets provide expansion
opportunities and further developments will be undertaken in Serbia. In sub-Saharan Africa, the short to medium-term outlook has weakened significantly with the challenges of a
strong dollar and depressed commodity prices. Attacq's focus in Africa will be on delivering Kumasi City Mall and active asset management of existing assets through the cycle.
Basis of preparation
The condensed unaudited consolidated interim financial statements for the six months ended 31 December 2015 have been prepared in accordance with IAS 34: Interim Financial
Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting
Standards Council, the JSE Limited Listings Requirements and the requirements of the Companies Act of South Africa. This report was compiled under the supervision of M Hamman
CA(SA), Chief Financial Officer of Attacq.
The accounting policies applied in the preparation of the condensed consolidated interim financial statements are in terms of IFRS and are consistent with the accounting
policies applied in the preparation of the previous consolidated financial statements, with the exception of the adoption of new and revised standards which became effective
during the period.
The Group's investment properties are valued internally by the directors at interim reporting periods and externally by independent valuers for year-end reporting. In terms of
IAS 40: Investment Property and IFRS 7: Financial Instruments: Disclosure, the Group's investment properties are measured at fair value and are categorised as level 3
investments. In terms of IAS 39: Financial Instruments: Recognition and Measurement and IFRS 7, the Group's currency and interest rate derivatives as well as the equity
derivative are measured at fair value through profit or loss and are categorised as level 2 investments. In terms of IAS 39, listed investments are measured at fair value being
the quoted closing price at the reporting date and are categorised as level 1 investments. Unlisted investments are categorised as level 3. There were no transfers between
levels 1, 2 and 3 during the period. The valuation methods applied are consistent with those applied in preparing the previous consolidated financial statements.
The directors are not aware of any matters or circumstances arising subsequent to 31 December 2015 that require any additional disclosure or adjustment to the financial
statements. The interim financial statements have not been audited or reviewed by Attacq's auditors.
On behalf of the Board
P Tredoux MC Wilken
Chairman CEO
8 March 2016
Directors
P Tredoux#* (Chairman)
MC Wilken (CEO)
M Hamman (CFO)
LLS van der Watt*
AW Nauta#*
JHP van der Merwe#*
S Shaw-Taylor#*
HR El Haimer#*
PH Faure#*
MM du Toit#*
KR Moloko#*
BT 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
Date: 08/03/2016 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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