Group condensed unaudited interim financial results for the six months ended 31 Dec 2015 Orion Real Estate Limited Incorporated in the Republic of South Africa Registration number: 1997/021085/06 Share code; ORE ISIN: ZAE000075651 (“Orion Real Estate” or “the company” or “the Group”) Group condensed unaudited interim financial results announcement For the six months ended 31 December 2015 Abridged Consolidated Statement of Financial Position Unaudited Unaudited Audited 6 months ended 6 months ended year ended Figures in Rand 31 December 2015 31 December 2014 30 June 2015 ASSETS Non-current assets 779 996 721 783 342 702 773 353 335 Gross investment properties 778 656 632 760 267 668 772 015 611 Straight-line rental income adjustment - (11 161 806) - Net investment properties 778 656 632 749 105 862 772 015 611 Straight-line lease asset - 10 163 755 - Property, plant and equipment 1 340 089 1 136 484 1 337 724 Non current trade & other receivables - 22 936 601 - Current Assets 82 815 262 41 135 850 66 673 264 Loans to related parties 18 920 949 17 773 858 19 923 506 Loans to directors 244 995 998 051 - Trade and other receivables 62 644 071 15 890 873 43 143 467 Cash and cash equivalents 1 005 247 6 473 068 3 606 291 Investment properties held for sale 2 708 762 18 956 018 - Total Assets 865 520 745 843 434 570 840 026 599 EQUITY AND LIABILITIES Capital and reserves Stated Capital/share capital and share premium 114 336 674 74 235 526 114 336 674 Debenture reserve - 10 675 886 - Retained earnings 509 379 722 373 181 030 504 392 314 Total equity attributable to shareholders 623 716 396 458 092 442 618 728 988 Non-controlling interest (286 933) (271 965) (286 933) Total equity 623 429 463 457 820 477 618 442 055 Non-current liabilities 131 551 923 292 170 907 129 210 274 Linked debentures - 54 974 397 - Borrowings 129 695 530 157 483 536 127 353 881 Deferred tax liabilities 1 856 393 79 712 974 1 856 393 Current Liabilities 110 539 359 93 443 186 92 374 270 Current income tax liabilities 8 715 952 11 800 133 8 610 355 Loans from directors 18 248 18 248 18 248 Loans from related parties 159 690 2 855 261 21 012 Tenant deposits 7 006 114 6 714 405 6 961 064 Trade and other payables 64 751 002 51 470 180 47 452 023 Borrowings (ST) 26 723 906 18 370 320 25 758 076 Bank overdraft 3 164 447 2 214 639 3 553 492 Total Liabilities 242 091 282 385 614 093 221 584 544 Total Equity and Liabilities 865 520 745 843 434 570 840 026 599 Abridged Consolidated Statement of Comprehensive Income Unaudited Unaudited Audited 6 months ended 6 months ended year ended Figures in Rand 31 December 2015 31 December 2014 30 June 2015 Revenue 45 398 511 52 272 465 117 120 108 Gross property revenue 42 882 469 51 110 380 99 547 277 Property revenue 42 882 469 51 110 380 101 171 545 Straight-line of lease accrual - - (1 624 268) Other income 86 016 445 072 13 080 160 Other direct property operating costs (19 752 994) (17 898 273) (51 762 226) Administrative and management expenses (10 745 228) (14 451 807) (23 123 829) Repairs and maintenance (2 305 752) (4 098 452) (5 877 678) Fair value adjustment - - 13 372 211 Gross change in fair value of investment property - - 11 747 942 Straight-line lease adjustment - - 1 624 268 Fair value adjustment to trade receivables - (172 577) 446 238 Operating profit before interest 10 164 511 14 934 343 45 682 153 Finance income 2 430 027 717 013 4 492 671 Finance costs (7 231 733) (8 567 238) (17 284 790) Profit before taxation 5 362 805 7 084 118 32 890 034 Taxation (375 396) (2 916 990) 76 924 274 Profit for the period 4 987 408 4 167 128 109 814 308 Profit/(Loss) and total comprehensive income/(loss) for the period attributable to: Shareholders 4 987 408 4 168 966 109 831 114 Non-controlling interest - (1 838) (16 806) 4 987 408 4 167 128 109 814 308 Per share information Basic earnings per share (cents) 0.80 0.66 17.52 Diluted earnings per share (cents) 0.80 0.66 17.51 Headline earnings per share (cents) 0.80 0.75 17.52 Diluted headline earnings per share (cents) 0.80 0.58 17.51 Weighted average shares in issue 627 009 822 627 009 822 627 009 822 Reconciliation of basic earnings and headline earnings: Profit attributable to shareholders 4 987 408 4 168 966 109 831 114 Loss on disposal of investment property - 537 068 - Headline earnings 4 987 408 4 706 033 109 831 114 Statement of Changes in Equity for the six months ended 31 December 2015 Total Share Non- Share Share Capital & Debenture Retained controlling Total Figures in Rand capital premium premium reserve earnings Total Interest equity Balance at 30 June 2014 6 270 098 67 965 428 74 235 526 10 675 886 369 012 064 453 923 476 (270 127) 453 653 349 Total comprehensive income for the period - profit 4 168 966 4 168 966 (1 838) 4 167 128 Balance at 31 December 2014 6 270 098 67 965 428 74 235 526 10 675 886 373 181 030 458 092 442 (271 965) 457 820 477 Total comprehensive income for the period - profit 105 662 149 105 662 149 (14 968) 105 647 181 REIT conversion of debentures reserve - - - (10 675 886) 10 675 886 - - - REIT conversion of debentures valuation premium - - - - 14 873 249 14 873 249 - 14 873 249 REIT conversion of share premium 67 965 428 (67 965 428) - - - - - - REIT conversion of debenture capital & premium 40 101 148 - 40 101 148 - - 40 101 148 - 40 101 148 Balance at 30 June 2015 114 336 674 - 114 336 674 - 504 392 314 618 728 988 (286 933) 618 442 055 Total comprehensive income for the period - profit 4 987 408 4 987 408 - 4 987 408 Balance at 31 Dec 2015 114 336 674 - 114 336 674 - 509 379 722 623 716 396 (286 933) 623 429 463 Consolidated Statements of Cash Flows Unaudited Unaudited Audited 6 months ended 6 months ended year ended Figures in Rand 31 December 2015 31 December 2014 30 June 2015 Cash flows from/(to) operating activities 1 969 334 22 509 289 7 700 193 Cash generated by operations 7 040 840 24 734 283 22 839 234 Interest received 2 430 027 717 013 4 492 671 Interest paid (7 231 733) (626 451) (17 284 790) Taxation paid (269 800) (2 315 556) (2 346 922) Cash flows to/from investing activities (6 049 624) 394 388 28 632 958 Cash flows to/from financing activities 3 446 155 (14 840 959) (32 476 060) Net increase/decrease in cash, cash equivalents and increase in bank overdrafts (634 135) 8 062 718 3 857 091 Cash, cash equivalents and bank overdrafts at the beginning of the period 52 799 (3 804 291) (3 804 291) Cash, cash equivalents and bank overdrafts at the end of the period (2 159 200) 4 258 427 52 800 Segment Reporting for the period ending 31 Dec 2015 Revenue (excluding recoveries) % % Commercial 11 895 449.57 44.3% Gauteng 18 644 897 69.39% Industrial 2 313 828.82 8.6% Western Cape 519 709 1.93% Retail 9 096 606.63 33.9% Mpumalanga 7 447 316 27.72% Hospitality 3 137 004.58 11.7% Kwazulu Natal 256 800 0.96% Residential 425 832.39 1.6% 26 868 722 100% 26 868 722 100% Property Values (including properties held for sale) % % Commercial 340 395 500 43.87% Gauteng 604 883 013 77.96% Industrial 89 515 637 11.54% Western Cape 17 553 655 2.26% Retail 162 766 888 20.98% Mpumalanga 143 061 490 18.44% Hospitality 80 874 438 10.42% Kwazulu Natal 10 400 000 1.34% Residential 48 945 694 6.31% Land 53 400 000 6.88% 775 898 158 100% 775 898 158 100% Gross Lettable area % % Commercial 53 331 43.0% Gauteng 93 495 75.3% Industrial 21 988 17.7% Western Cape 8 784 7.1% Retail 27 576 22.2% Mpumalanga 15 850 12.8% Hospitality 16 029 12.9% Kwazulu Natal 6 000 4.8% Residential 5 205 4.2% 124 129 100% 124 129 100% Borrowings (excluding instalment sales & loans) % % Commercial 66 688 509 51.04% Gauteng 107 463 647 82.2% Industrial 20 204 080 15.46% Western Cape - - Retail 24 860 968 19.03% Mpumalanga 19 957 830 15.3% Hospitality 11 740 651 8.99% Kwazulu Natal 3 239 883 2.5% Residential 7 167 153 5.49% 130 661 360 100% 130 661 360 100% Rating of tenants (rental income) % % Commercial A 1 384 067 5.2% Gauteng 1 878 903 7.0% B 4 468 584 16.6% 8 045 584 29.9% C 6 042 798 22.5% 8 720 409 32.5% Industrial B 1 836 023 6.8% Western Cape 8 123 0.0% C 477 806 1.8% 450 325 1.7% Retail A 1 335 417 5.0% 61 262 0.2% B 4 005 199 14.9% Mpumalanga 1 546 308 5.8% C 3 755 990 14.0% 1 563 170 5.8% Hospitality B 3 137 005 11.7% 4 337 838 16.1% Residential C 425 832 2% Kwazulu Natal 256 800 1.0% 26 868 721 100% 26 868 722 100% A: Represents major listed companies. B: Represents smaller listed companies and big unlisted companies. C: Represents smaller unlisted companies and private businesses. Commentary on the December 2015 Interim Financial Statements 1. Operating performance The Group revenue decreased from R52.2 million in December 2014 to R45.4 million in December 2015. The decrease of 13.5% is mainly attributable to a decrease in the number of buildings in the Group’s portfolio, in the current period. Other direct operating, administrative and management costs decreased from R32.4 million to R30.5 million. This represents a decrease of 5.9%. The operating profit decreased with 31.9% from R15 million to R10.2 million. The total comprehensive income for the period improved from a profit of R4 167 128 to a profit of R4 987 408 constituting an increase of 19.7%. 2. Basis of preparation The condensed unaudited consolidated results have been prepared in accordance with the framework concepts and the measurement and recognition requirements of the International Financial Reporting Standards, containing information required by the IAS 34 Interim Financial Reporting, the AC 500 standards as issued by the Accounting Practices Board and in the manner required by the Companies Act and the JSE Listing Requirements. The accounting policies applied, are consistent with those applied in the annual financial statements for the year ended 30 June 2015. These results were prepared by Anthony Old CA (SA). 3. Contingent liabilities The company has signed surety for the obligations of its subsidiaries in respect of mortgage bond finance and has guaranteed debts of a wholly owned subsidiary company until the company’s assets, fairly valued, exceeds its liabilities, and whilst it remains a wholly owned subsidiary. The Body Corporate of Erf 195 Elma Park has initiated liquidation proceedings for arrear levies which are being contested due to questions regarding the levies raised as well as the expense allocation basis used. The Group has instituted a counter claim for damages incurred as a result of the Body Corporate’s actions. The legal process is currently being undertaken in the High Court. 4. Investment property acquired and disposed No properties were acquired or disposed in the current period. 5. Subsequent events The directors are not aware of any reportable matter or circumstances arising since the end of the financial period, not reported on SENS, which would significantly affect the operations of the Group or the financial results of those operations. 6. Dividends No dividends were paid or declared during the financial period under review. 7. Future prospects The trading conditions remained tight during the reporting period, the drop in revenue were partially offset by cost savings which have continued to be a major emphasis for the Group in the current period. Johannesburg 30 March 2016 Directors: R S Wilkinson * M D K Mthembu * A C Gmeiner ** F Gmeiner (MD) # A B Old # T F J Oosthuizen * * Independent non-executive ** Non-executive # Executive Company Secretary: Corporate Governance Facilitators cc Registered Office: 16th Floor, Orion House, 49 Jorrison Street Braamfontein, Johannesburg, 2017 Sponsor: Arbor Capital Sponsors Proprietary Limited Transfer office: Computershare Investor Services Proprietary Limited Income Tax nr: 9769196719 Date: 30/03/2016 05:35:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 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