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Condensed unaudited consolidated interim results for the six months ended 29 February 2016
Ascension Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2006/026141/06)
JSE share code: AIA
ISIN: ZAE000204566
(Approved as a REIT by the JSE)
(“Ascension” or “the company” or “the group”)
CONDENSED UNAUDITED CONSOLIDATED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 29 FEBRUARY 2016
28 BUILDINGS
at a total value of R4.11 billion
at 29 February 2016
DIVIDEND DECLARATION
21.99750 cents per A share
12.22909 cents per B share
DIVIDEND GROWTH
5.0% on the A share
8.4% on the B share
VACANCIES
Remained unchanged at 5.8%
GEOGRAPHIC SPREAD BY GLA
Gauteng 55.6%
Western Cape 41.6%
Mpumalanga 2.8%
SECTORAL SPREAD BY GLA
Office 83.9%
Retail 7.3%
Industrial 8.8%
TENANT PROFILE GOVERNMENT VS.
NON-GOVERNMENT
Government 60.0%
Non-government 40.0%
Directors’ Commentary
Introduction
Ascension is a REIT focusing on centrally located commercial office buildings in South Africa
with a strong emphasis on government and other empowerment sensitive tenants. The financial
information presented in this report represents the six month period ending 29 February 2016.
The comparative information used was for the six month period ended 31 December 2014 as the
company’s financial year end was changed to be in alignment with Rebosis Property Fund Limited
year-end). This provides a like-for-like comparison for reporting purposes.
The six month period saw a shift in the company’s strategic management following the
appointment of a new management team with Mr K Keshav joining the team as Chief Executive
Officer effective 1 October 2015 and Ms T Mhlanga as Financial Director effective 18 January
2016. The company achieved distributable earnings of R114.0 million for the six months ended
29 February 2016 (31 August 2015: R39.8 million), in line with expectations. This represents
an increase of 8.4% on the B share distribution when compared to the six month period ended 31
December 2014 which is slightly ahead of the minimum value in the forecast range provided of
8% - 10%.
Property portfolio
At 29 February 2016 the portfolio (including investment properties and properties under
development) consisted of 28 properties valued at R4.1 billion, with a total gross lettable
area (“GLA”) of 315 015 m². This translates to an average building value of R146.9 million.
Ascension disposed of one of its smaller properties during the reporting period - 92 Market
Street.
The sectoral profile of the portfolio is 83.9% offices, 7.3% retail and 8.8% industrial. The
group does not own any retail focused properties and the retail components are typically
ground floor areas of office buildings. The total portfolio is 60.0% tenanted by government
in line with our strategic focus on this market. Total vacancies remained unchanged at 5.8%
and are in line with our expectations. The weighted average rental escalation remains healthy
at 8.2%.
Borrowings
The company’s borrowings at 29 February 2016 amounted to R1.577 billion at a weighted average
rate of 9.12% per annum. R500 million of borrowings are subject to a three-month JIBAR
interest rate cap at 6.72%. The interest rate cap expires on 13 January 2017. The company has
concluded an interest rate swap agreement for R700 million which will provide 76% total hedge
cover for the company. The hedge profile is for four years providing sufficient hedge cover on
current debt. Debt expiring in the second half of 2016 is being restructured with the
intention of obtaining a longer repayment term for the debt.
Prospects
Despite the challenging business environment we believe that Ascension has a defensive
portfolio and that the quality of its assets, together with healthy lease and escalation
profiles, should ensure that the group continues to deliver acceptable returns to its
shareholders.
Condensed Consolidated Statement of Profit or
Loss and other Comprehensive Income
Unaudited Audited Unaudited
29-Feb-16 31-Aug-15 31-Dec-14
6 months 2 months 6 months
R’000 R’000 R’000
Revenue 219 095 83 369 205 930
Contractual rental income 203 573 67 362 183 707
Straight-line lease income adjustment 15 522 16 007 22 223
Property operating expenses(net of
recoveries) (18 906) (5 341) (17 058)
Net property and related income 200 189 78 028 188 872
Sundry income 127 36 190
Asset management fees (9 192) (3 170) (8 852)
Operating expenses (3 180) (1 568) (1 563)
Operating profit 187 944 73 326 178 647
Fair value adjustments 231 006 (32 675) (29 630)
Fair value adjustment - investment
property 234 176 (32 164) (22 223)
Fair value adjustment - listed securities (2 360) - -
Fair value adjustment - interest rate
derivative (810) (511) (7 407)
Finance income 1 309 664 657
Interest received 1 309 664 657
Finance cost (60 303) (18 395) (51 769)
Interest on non-current borrowings & other
interest (59 764) (18 175) (49 941)
Amortisation of debenture discount - - (364)
Amortisation of bond raising fees (539) (220) (1 464)
Net profit before debenture interest 359 956 22 920 97 905
Debenture interest - - (107 140)
Interest on A-debentures - - (64 699)
Interest on B-debentures - - (42 441)
Net profit before tax for the period 359 956 22 920 (9 235)
Income tax expense - - -
Total comprehensive income for the period 359 956 22 920 (9 235)
Reconciliation between earnings, headline earnings
and distributable earnings
Unaudited Audited Unaudited
29-Feb-16 31-Aug-15 31-Dec-14
6 months 2 months 6 months
R’000 R’000 R’000
Profit for the period attributable to
shareholders 359 956 22 918 (9 235)
Adjusted for:
Amortisation of discount on debentures - - 364
Net fair value gain on revaluation of
investment property net of taxation (234 176) 32 165 22 223
Headline earnings attributable to
shareholders 125 780 55 084 13 352
Adjusted for:
Debenture interest - - 107 140
Headline earnings attributable to 125 780 55 084 120 492
shareholders
Adjusted for:
Straight-line lease income adjustment (15 522) (16 007) (22 223)
Fair value adjustment - listed securities 2 360 - -
Fair value adjustment - interest rate
derivative 810 511 7 407
Amortisation of bond raising fees 539 220 1 464
Distributable earnings attributable to
shareholders 113 967 39 808 107 140
Less: dividend declared - - (107 140)
A shares - - (64 699)
B shares - - (42 441)
Earnings available for distribution 113 967 39 808 -
Basic and diluted / earnings per share
(cents) 52.53 3.34 (1.35)
Basic and diluted headline earnings / per
share (cents) 18.36 8.04 1.95
Basic and diluted earnings per A share
(cents) 52.53 3.34 19.60
Basic and diluted earnings per B share
(cents) 52.53 3.34 9.93
Headline and diluted headline earnings per A
share (cents) 18.36 8.04 22.90
Headline and diluted headline earnings per B
share (cents) 18.36 8.04 13.23
Distribution per A and B share
Distribution per A share 21.99750 7.33250 20.94750
Distribution per B share 12.22909 4.55967 11.27673
Number of A shares in issue 308 860 859 308 860 859 308 860 859
Number of B shares in issue 376 359 014 376 359 014 376 359 014
Weighted average number of A shares in issue 308 860 859 308 860 859 308 860 859
Weighted average number of B shares in issue 376 359 014 376 359 014 376 359 014
Condensed Consolidated Statement
of Financial Position at 29 February 2016
Unaudited Audited Unaudited
29-Feb-16 31-Aug-15 31-Dec-14
R’000 R’000 R’000
Assets
Non-current assets 4 156 106 3 836 497 3 791 278
Investment properties and
properties under development 4 112 200 3 832 400 3 782 496
Investment in listed securities 40 589 - -
Property, plant and equipment 105 76 16
Interest rate derivative 3 212 4 021 8 766
Current assets 96 356 67 333 86 862
Trade and other receivables 69 453 50 953 34 977
Cash and cash equivalents 26 903 16 380 51 885
Total assets 4 252 462 3 903 830 3 878 140
Equity and liabilities
Equity 2 622 054 2 301 906 863 500
Stated capital 1 727 145 1 727 145 322 603
Retained income 894 909 574 761 540 897
Non-current liabilities -
Debentures - - 1 404 179
Total shareholders’ interest 2 622 054 2 301 906 2 267 679
Liabilities
Other non-current liabilities 1 439 779 1 426 655 1 011 280
Interest bearing liabilities 1 439 779 1 426 655 1 011 280
Current liabilities 190 629 175 268 599 181
Current portion of interest
bearing liabilities 136 519 136 548 448 654
Trade and other payables 54 110 38 720 43 245
Shareholders for distribution - - 107 282
Total liabilities 1 630 408 1 601 923 1 610 461
Total equity and liabilities 4 252 462 3 903 830 3 878 140
TNAV and NAV per A share
(cents) 442.3 545.0 526,7
TNAV and NAV per B share
(cents) 333.7 164.3 198,8
Condensed Consolidated Statement of Cash Flows
for the year ended 29 February 2016
Unaudited Audited Unaudited
29-Feb-16 31-Aug-15 31-Dec-14
6 months 2 months 6 months
R’000 R’000 R’000
Cash flow from operating
activities
Cash generated from operations 169 315 52 470 164 165
Finance income 1 309 664 657
Finance costs (59 764) (18 175) (49 941)
Net cash inflow from operating
activities 110 860 34 959 114 881
Cash flow from investing
activities
Purchase of investment
properties and cost of
improvements (35 102) (16 158) (75 796)
Purchase of property, plant and
equipment (34) (64) -
Proceeds from disposal of
investment property held for
sale 5 000 - -
Purchase of other financial
assets (42 949) - -
Net cash outflow from investing
activities (73 085) (16 222) (75 796)
Cash generated from financing
activities
Proceeds from issue of shares - - -
Proceeds from other financial
liabilities 12 556 63 003 81 210
Distributions paid (39 808) (115 636) (107 572)
Net cash (outflow)/ inflow from
financing activities (27 252) (52 633) (26 362)
Net increase in cash and cash 10 523 (33 896) 12 723
equivalents for the period
Cash and cash equivalents at the
beginning of the period 16 380 50 276 39 163
Cash and cash equivalents at the
end of the period 26 903 16 380 51 886
Condensed Consolidated Statement of Changes in Equity for the year ended 29 February 2016
Stated Retained Total
Capital income Equity
R’000 R’000 R’000
Balance at 1 July 2014 - Audited 322 603 550 131 872 734
Total comprehensive income for the
period - 1 710 1 710
Balance at 30 June 2015 - Audited 322 603 551 841 874 444
Capital conversion 1 404 542 - 1 404 543
Total comprehensive income for the
period - 22 920 22 920
Balance at 31 August 2015 - Audited 1 727 145 574 761 2 301 906
Total comprehensive income for the
period - 359 956 362 316
Dividend declaration - (39 808) (39 808)
Balance at 29 February 2016 -
Unaudited 1 727 145 894 909 2 622 054
Notes
1. Basis of preparation and accounting policies
The condensed unaudited consolidated interim financial statements for the six months ended 29
February 2016 have been prepared in accordance with the measurement and recognition
requirements of International Financial Reporting Standards and its interpretations adopted by
the International Accounting Standards Board, the financial reporting pronouncements as issued
by the Financial Reporting Standards Council, the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee, the requirement contained in IAS34 - Interim Financial
Reporting, JSE Listings Requirements and the requirements of the South African Companies Act,
2008. These results have been prepared under the supervision of the financial director,
Tsundzukani Mhlanga CA(SA). All accounting policies applied in the preparation of these
condensed unaudited consolidated interim financial statements are consistent with those
applied in the prior year. There were no new standards adopted in the six months ended 29
February 2016.
The directors are not aware of any matters or circumstances arising subsequent to 29 February
2016 that require any additional disclosure or adjustment to the financial statements, other
than as disclosed in this announcement.
Grant Thornton Johannesburg Partnership, the company’s external auditor, has not reviewed or
audited the financial information set out in this report.
2. Debt facilities
Nominal Maturity
Funder Interest rate amount date
(R million)
Investec Private Bank Prime - 0.50% 539 13-Mar-18
3 - Month JIBAR +
Standard Bank 1.80% 393 31-Aug-17
Standard Bank Prime - 1.50% 160 31-Aug-17
Nedbank - loan 1 Prime - 1.50% 153 7-Mar-19
Nedbank - loan 2 Prime - 1.50% 151 12-Sep-16
Nedbank - loan 3 Prime - 1.50% 26 18-Jul-16
Nedbank - loan 4 Prime - 0.85% 45 23-Apr-18
Nedbank - loan 5 Prime - 1.50% 50 28-Jun-16
Nedbank - loan 6 Prime - 1.50% 34 30-Aug-16
Nedbank - loan 7 Prime - 1.50% 26 30-Aug-16
The weighted average cost of debt at 29 February 2016 is 9.12%
(31 August 2015: 8.08%).
3. Interest rate derivatives
Facility Expiry
Rate (R million) date
3-month
Interest rate cap JIBAR 6.72% 500 13-Jan-17
4. Trade and other receivables
Unaudited Audited Unaudited
29-Feb-16 31-Aug-15 31-Dec-14
6 months 2 months 6 months
R’000 R’000 R’000
Trade receivables (net of
impairment provisions) 35 697 23 412 4 387
Debtor accruals (including
consumption charges
not yet invoiced) 7 467 11 416 21 909
Amounts due on acquisition
adjustment accounts 833 885 4 572
Deposits 1 522 1 471 1 582
Sundry debtors, prepayments
and VAT 23 934 13 769 2 527
69 453 50 953 34 977
5. Lease expiry profile (Based on GLA)
Total Office Retail Industrial
Vacant 5.8% 6.6% 0.0% 2.1%
Monthly 0.7% 0.8% 0.1% 0.7%
February 2017 25.8% 26.2% 4.5% 39.8%
February 2018 10.5% 11.3% 3.8% 8.1%
February 2019 18.4% 19.6% 16.3% 8.6%
February 2020 14.0% 15.6% 2.7% 4.2%
February 2021 12.7% 10.8% 9.1% 36.3%
> February 2021 12.2% 9.2% 63.6% 0.0%
Total 100.0% 100.0% 100.0% 100.0%
6. Tenants: Government vs. non-government
Based on
Based monthly
on contracted
GLA revenue
Government 60.0% 56.3%
Non-Government 40.0% 43.7%
Total 100.0% 100.0%
7. Operating segments
The group classifies segments based on the type of property i.e. Commercial, Retail,
Industrial and Other. Properties can be mixed-use properties. In this instance the property
will be classified according to its principle use.
Accordingly, the group has only one primary reporting segment, namely commercial property, as
the principle use of all properties in the portfolio is for commercial office space. Most of
the buildings do have a small retail component (normally at street level), but this seldom
exceeds 10% of the total GLA per building.
8. Dividend declaration
The board has approved and notice is hereby given of final dividends (dividends no 6) of
21.99750 cents per A share and 12.22909 cents per
B share in respect of the six months ended 29 February 2016.
Date
Last date to trade cum dividend Thursday, 28 April 2016
Shares trade ex dividend Friday, 29 April 2016
Record date Friday, 6 May 2016
Payment date Monday, 9 May 2016
Share certificates may not be dematerialised or rematerialised between Friday, 29 April 2016
and Friday, 6 May 2016, both days inclusive.
The dividend will be transferred to dematerialised shareholders’ CSDP/broker accounts on
Monday, 9 May 2016. Certificated shareholders’ dividend payments will be posted on or paid to
certificated shareholders’ bank accounts on or about, Monday, 9 May 2016.
An announcement informing shareholders of the tax treatment of the dividends will be released
separately on SENS.
Directors
SM Ngebulana (chairperson) - K Keshav * - T Mhlanga * - M Burton
-H Takolia - M Renene - N Gugushe
*(executive director)
Company secretary M Ndema
Business address 3rd Floor, Palazzo Towers West,
Montecasino Boulevard,
Fourways,
2191
Transfer secretaries Computershare
Investor Services Proprietary
Limited,
70 Marshall Street,
Johannesburg,
2001
Sponsor Java Capital,
6A Sandown Valley Crescent,
Sandton,
2196
By order of the board
Johannesburg
13 April 2016
Date: 13/04/2016 08:57:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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