Wrap Text
Summarised provisional consolidated financial results for the year ended 30 June 2016
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")
SUMMARISED PROVISIONAL CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2016
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
30 June 30 June
2016 2015
R'000 R'000
Assets
Non-current assets
Property, plant and equipment 33 925 10 641
Investment properties 18 043 192 16 187 873
Per valuation 18 644 041 16 670 072
Straight-line lease debtor (600 849) (482 199)
Straight-line lease debtor 600 849 482 199
Deferred initial lease expenditure 6 539 9 154
Intangible assets 312 599 344 523
Goodwill 67 774 67 774
Investment in associates 3 126 328 2 369 884
Other financial assets 222 651 102 993
Other investments 408 339 402 414
Deferred tax assets 24 627 19 829
Total non-current assets 22 846 823 19 997 284
Current assets
Taxation receivable 2 411 408
Trade and other receivables 290 579 223 084
Loans to associates 2 302 472 741 037
Other financial assets 100 266 907 282
Cash and cash equivalents 437 281 747 145
Total current assets 3 133 009 2 618 956
Non-current assets held for sale 1 649 845 684 441
Total assets 27 629 677 23 300 681
Equity and liabilities
Equity
Stated capital 6 442 805 6 439 419
Distributable reserves 5 891 513 4 815 584
Available-for-sale reserve 847 499 682 579
Share-based payment reserve 100 453 90 359
Foreign currency translation reserve 318 734 45 740
Acquisition of non-controlling interests reserve (116 483) (116 483)
Equity attributable to owners of the holding company 13 484 521 11 957 198
Non-controlling interests (13 201) 7 252
Total equity 13 471 320 11 964 450
Non-current liabilities
Long-term borrowings 10 445 221 8 863 852
Deferred tax liabilities 1 892 145 1 365 868
Other financial liabilities 50 705 28 086
Cash settled share-based payments 787 -
Provisions for liabilities relating to associates - 1 579
Finance lease obligation 77 745 71 346
Total non-current liabilities 12 466 603 10 330 731
Current liabilities
Other financial liabilities 109 400 113 258
Finance lease obligation - 1 332
Loans from associates 2 880 70 989
Taxation payable 2 260 10 185
Cash settled share-based payments 5 172 -
Trade and other payables 557 662 462 636
Provisions 2 081 1 422
Bank overdraft - 19 349
Short-term portion of long-term borrowings 265 276 326 329
Total current liabilities 944 731 1 005 500
Liabilities directly associated with non-current assets held for sale 747 023 -
Total liabilities 14 158 357 11 336 231
Total equity and liabilities 27 629 677 23 300 681
The following information does not form part of the statement of financial position:
Net asset value per share (cents) 1 923 1 706
Net asset value per share adjusted for deferred tax (cents) 2 189 1 898
SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
30 June 30 June
2016 2015
R'000 R'000
Gross revenue 1 621 018 1 312 935
Rental income 1 472 656 1 140 335
Straight-line lease income adjustments 148 362 172 600
Property expenses (502 745) (358 885)
Net rental income 1 118 273 954 050
Other income 448 579 205 590
Operating and other expenses (347 315) (305 589)
Operating profit 1 219 537 854 051
Amortisation of intangible asset (19 964) (20 303)
Fair value adjustments 1 041 553 1 114 224
Investment properties 1 074 224 1 110 711
Other financial assets and liabilities (32 452) 68 089
Other investments (219) (64 576)
Gain on available-for-sale financial assets 507 524 -
Net income from associates 35 098 50 568
Investment income 235 785 142 531
Finance costs (839 975) (685 872)
Profit before taxation 2 179 558 1 455 199
Income tax expense (794 559) (471 038)
Profit for the year 1 384 999 984 161
Attributable to:
Owners of the holding company 1 387 828 978 654
Non-controlling interests (2 829) 5 507
Other comprehensive income
Items that will be reclassified subsequently to profit and loss
Gain on available-for-sale financial assets 315 813 661 986
Taxation relating to components of other comprehensive income 93 720 (63 153)
Realisation of available-for-sale financial assets (507 524) -
Other comprehensive (loss) income for the year net of taxation (97 991) 598 833
Total comprehensive income for the year 1 287 008 1 582 994
Attributable to:
Owners of the holding company 1 289 837 1 577 487
Non-controlling interests (2 829) 5 507
Earnings per share
Basic (cents) 197.9 142.4
Diluted (cents) 196.7 142.0
RECONCILIATION BETWEEN EARNINGS and HEADLINE EARNINGS
Audited Audited
30 June 30 June
2016 2015
R'000 R'000
Profit for the year 1 387 828 978 654
Headline earnings adjustments (1 303 490) (964 063)
Profit on disposal of associates (116 734) (89 161)
Profit on disposal of other investments (30 862) (956)
Profit on disposal of investment property (836) (29 132)
Impairment of associates and other investments 53 880 3 486
Impairment of goodwill - 109 670
Realisation of other comprehensive income (507 524) -
Impairment of intangible asset 11 960 -
Fair value adjustments (1 041 553) (1 114 224)
Net income from associates (35 099) (50 568)
Loss on disposal of subsidiary 6 033 -
Tax effect of adjustments 369 517 218 169
Non-controlling interests' share (12 272) (11 347)
Headline earnings 84 338 14 591
Number of shares in issue* 701 395 224 700 995 224
Weighted average number of shares in issue* 701 388 667 687 046 081
Diluted weighted average number of shares in issue* 705 418 136 689 256 626
Headline earnings per share
Basic (cents) 12.0 2.1
Diluted (cents) 12.0 2.1
* Adjusted for 46 427 553 treasury shares (2015: 46 427 553)
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
30 June 30 June
2016 2015
R'000 R'000
Cash flow generated from operating activities 140 551 66 575
Cash generated from operations 837 693 650 572
Investment income 336 949 119 673
Finance costs (839 975) (627 902)
Taxation paid (194 116) (75 768)
Cash flow utilised in investing activities (1 166 362) (2 182 147)
Cash flow generated from financing activities 735 296 2 453 684
Total cash movement for the year (290 515) 338 112
Cash at the beginning of the year 727 796 389 294
Cash acquired with subsidiaries - 390
Total cash at the end of the year 437 281 727 796
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Stated Distributable Available- Share-based Foreign Acquisition of Equity Non- Total
capital reserves for-sale- payment currency non-controlling attributable controlling equity
R'000 R'000 reserve reserve translation interests to owners of interests R'000
R'000 R'000 reserve reserve the holding R'000
R'000 R'000 company
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 - 978 654 598 833 - - - 1 577 487 5 507 1 582 994
Profit for the year - 978 654 - - - - 978 654 5 507 984 161
Other comprehensive income - - 598 833 - - - 598 833 - 598 833
Foreign currency translation reserve - - - - (66 189) - (66 189) - (66 189)
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 - - - 7 042 - - 7 042 - 7 042
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 - 1 387 828 (97 991) - - - 1 289 837 (2 829) 1 287 008
Profit for the year - 1 387 828 - - - - 1 387 828 (2 829) 1 384 999
Other comprehensive income - - (97 991) - - - (97 991) - (97 991)
Foreign currency translation reserve - - - - 431 306 - 431 306 - 431 306
Issue of shares 3 386 - - - - - 3 386 - 3 386
Derecognition reserves and non-controlling - (311 899) 262 911 - (158 312) 13 000 (194 300) (17 624) (211 924)
interests due to sale of subsidiaries
Recognition of non-controlling interests reserve - - - - - (13 000) (13 000) - (13 000)
Modification of equity-settled share-based payments - - - (9 035) - - (9 035) - (9 035)
Recognition of share-based payments - - - 19 129 - - 19 129 - 19 129
Audited balance at 30 June 2016 6 442 805 5 891 513 847 499 100 453 318 734 (116 483) 13 484 521 (13 201) 13 471 320
SUMMARISED SEGMENTAL ANALYSIS
Audited 30 June 2016 Audited 30 June 2015
Notes Net Investment Net asset Revenue Net Investment Net asset
Revenue profit properties value R'000 profit properties value
R'000 (loss) R'000 R'000 (loss) R'000 R'000
Business segment R'000 R'000
Brooklyn Bridge Office Park 2 80 683 4 472 636 999 308 217 71 864 11 727 611 581 224 026
Great Westerford* 1 33 904 10 792 - - 34 363 18 982 272 762 204 377
Lynnwood Bridge - Offices 100 565 39 666 825 629 483 448 80 101 55 137 801 408 424 072
Aurecon Building 98 556 26 705 662 560 281 201 97 596 23 867 641 770 176 559
Newtown Junction - Offices 68 852 (1 024) 626 693 196 487 55 592 (7 185) 615 652 144 714
Majestic Offices 21 136 (1 652) 132 510 29 687 12 849 3 905 134 361 27 921
PwC Sunninghill 45 533 (2 154) 345 199 (44 001) 18 961 4 075 351 306 (29 371)
Waterfall - Altech Building* 6 431 4 546 43 944 29 991 8 142 3 225 40 647 25 296
Waterfall - Cell C Campus 135 372 65 671 794 486 396 015 127 696 47 182 778 013 624 091
Waterfall - Group Five 71 570 36 430 562 318 238 546 80 008 50 112 543 093 252 420
Waterfall - Maxwell Office Park - Phase I, II and III* 43 170 37 334 486 240 290 359 26 824 11 060 239 659 121 847
Waterfall - Novartis 25 247 9 443 207 963 63 930 2 190 33 303 194 620 122 126
Office and mixed use 731 019 230 229 5 324 541 2 273 880 616 186 255 390 5 224 872 2 318 078
Glenfair Boulevard Shopping Centre 56 849 27 256 419 044 222 217 50 208 62 529 388 900 157 480
Lynnwood Bridge - Retail 44 858 21 616 335 267 175 244 43 806 27 005 311 313 160 844
Newtown Junction - Retail 83 465 (40 331) 637 826 (56 580) 61 662 (14 711) 653 051 72 649
Garden Route Mall 139 701 56 848 1 247 711 502 504 122 846 74 004 1 186 014 452 361
Brooklyn Mall# 75 601 49 971 740 972 330 398 71 999 36 919 677 335 260 397
MooiRivier Mall 119 751 51 998 1 106 356 459 450 113 591 56 078 1 042 802 398 427
Andringa Walk 3 26 554 10 714 182 908 80 143 24 864 711 169 323 65 922
Eikestad Mall^ 68 918 41 277 573 031 253 604 65 200 26 021 529 416 202 783
Mill Square^ 8 681 11 521 96 044 47 210 7 596 1 778 78 975 30 161
Waterfall - Mall of Africa^ 79 675 528 840 3 730 216 2 125 461 - - - -
Waterfall - Waterfall Corner 29 268 18 503 204 741 136 623 28 758 10 447 185 440 88 943
Waterfall - Waterfall Lifestyle 21 142 464 116 153 40 125 14 751 10 324 112 371 28 172
Retail 754 463 778 677 9 390 269 4 316 399 605 281 291 105 5 334 940 1 918 139
Waterfall - Angel Shack 2 2 587 3 546 36 692 27 505 4 728 5 629 32 931 23 631
Waterfall - Medtronic 2 9 434 11 741 137 800 55 670 8 911 18 589 108 442 20 949
Waterfall - Cummins* 2 9 074 9 187 94 740 34 339 1 105 14 357 78 008 76 814
Waterfall - Drager 2 5 663 1 626 75 294 31 073 6 829 12 601 71 250 32 118
Waterfall - Massbuild 39 793 16 486 256 380 87 619 32 939 16 073 243 439 40 028
Waterfall - Westcon 2 8 718 2 990 106 068 39 501 9 977 9 209 99 176 88 324
Waterfall - Hilti 2 4 591 3 148 59 276 28 978 - - - -
Waterfall - Servest 2 11 999 12 581 157 013 69 180 - - - -
Waterfall - Stryker 2 4 511 2 820 61 314 24 896 - - - -
Light industrial 96 370 64 125 984 577 398 761 64 489 76 458 633 246 281 864
Newtown Junction - City Lodge 5 298 11 894 109 484 23 015 - - - -
Lynnwood Bridge - City Lodge 21 042 14 089 180 838 91 234 20 428 14 134 170 481 88 127
Waterfall - City Lodge 12 897 (1 858) 94 526 44 980 5 812 (468) 99 904 46 361
Hotel 39 237 24 125 384 848 159 229 26 240 13 666 270 385 134 488
Le Chateau - (12 004) 5 000 2 753 - (4) 17 000 14 755
Waterfall - Development rights 3 - (178 510) 1 174 018 1 174 022 - 68 751 1 467 422 1 467 387
Waterfall - Infrastructure and services 3 - (24 502) 1 115 750 832 447 25 (7 751) 615 991 207 744
Vacant land - (215 016) 2 294 768 2 009 222 25 60 996 2 100 413 1 689 886
Newtown Junction - City Lodge - - - - - 4 656 73 018 25 425
Newtown - Carr Street - - 27 577 27 418 - - 8 569 8 569
Waterfall - Allandale Building - 52 542 322 095 242 397 - 3 627 69 848 52 023
Waterfall - Hilti - - - - - 9 963 38 981 28 575
Waterfall - Mall of Africa^ - - - - - 339 686 2 010 139 624 601
Waterfall - Maxwell Office Park - Phase IV* - - - - - 15 795 101 658 12 456
Waterfall - PwC Tower and PwC Annex** - 13 106 463 401 170 114 - 27 895 152 688 187 564
Waterfall - Servest - - - - - 28 073 127 134 40 125
Waterfall - Stryker - - - - - 11 662 41 982 18 898
Waterfall - Torre Industries - 7 003 78 301 50 108 - - - -
Waterfall - Amrod - 12 490 261 942 131 537 - - - -
Waterfall - Dimension Data - 4 879 59 345 34 868 - - - -
Developments under construction - 90 020 1 212 661 656 442 - 441 357 2 624 017 998 236
MAS Real Estate Inc. - 192 968 - 2 722 460 - 163 935 - 2 537 711
Atterbury Cyprus Limited - 124 060 - 891 980 - - - -
Atterbury Africa Limited - (1 685) - 13 380 - 6 059 - 18 256
Stenham European Shopping Centre Fund Limited - 43 747 - 380 803 - (29 177) - 344 256
Atterbury Serbia BV - (557) - 34 237 - - - -
Gruppo Investment Limited (Ikeja Mall) - (23 396) - 324 751 - - - -
The Grove Mall of Namibia - 36 521 - 163 049 - 54 842 - 143 486
Mall of Mauritius at Bagatelle Limited - - - - - 3 013 - 188 394
Bagaprop Limited - - - - - 7 484 - 468 020
Other international - 5 633 - 104 369 - 925 - 72 793
International - 377 291 - 4 635 029 - 207 081 - 3 772 916
Head office/other (71) (62 443) - (977 642) 714 236 941 - 850 843
Total 1 621 018 1 287 008 19 591 664 13 471 320 1 312 935 1 582 994 16 187 873 11 964 450
Notes:
1. Sold during the year
2. Held for sale at 30 June 2016
3. Portion held for sale at 30 June 2016
Represents Attacq's undivided share in the property: *50%; #25%; ^80%; **75%
COMMENTARY
Introduction
Attacq is a South African capital growth property company listed on the Johannesburg Stock Exchange. Attacq's vision is to be the premier property fund in
South Africa. Attacq pursues this vision through its strategic drivers of Invest, Develop 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 R27.6 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 ("CEE").
Highlights
- Net asset value per share adjusted for deferred tax ("Adjusted NAVPS") increased by 15.3% to R21.89
- Total assets increased by 18.6% to R27.6 billion
- International investments increased by 34.0% to R5.8 billion
- Net rental income increased by 17.2% to R1.1 billion
- Vacancies reduced from 4.0% to 2.4%
- Attacq's super-regional mall, the Mall of Africa ("the Mall"), successfully opened on 28 April 2016
- South African Council of Shopping Centres ("SACSC") Spectrum Award for the best retail development
- MSCI award for the best performing property fund in the office sector
Adjusted NAVPS and net asset value per share ("NAVPS")
Adjusted NAVPS increased by 15.3% from R18.98 to R21.89 and NAVPS increased by 12.7% from R17.06 to R19.23.
Acquisitions
Investment in Cyprus
On 24 July 2015, the Group acquired an effective 48.6% interest in ITTL Trade & Tourist Leisure Park Plc, the 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 the 20 000 m2 Ikea store, and 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 are trading well with low vacancies and provide expansion opportunities. Attacq's share of the acquisition consideration was R670.6 million and the
total investment, both equity and loan accounts, is valued at R892.0 million as at 30 June 2016.
Investment in Serbia
Effective 1 December 2015, the Group, jointly with Atterbury Europe, acquired a 33.0% shareholding in BreAtt B.V. ("BreAtt"), the owner of a portfolio of
five operational Serbian retail properties with a gross value of R3.1 billion. The seller, Balkans Real Estate B.V. ("BRE"), retained a 67.0% shareholding
in BreAtt. Subsequent to the acquisition, BreAtt acquired an operational property with a further property planned to be acquired during the course of the
2016 calendar year. The portfolio was acquired at a euro yield in excess of 8.0% and Attacq's total investment is valued at R367.1 million as at
30 June 2016. Attacq's effective shareholding in BreAtt increased from 8.3% to 12.5% post year end as detailed under subsequent events below.
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 is to
undertake retail developments in Serbia and neighbouring countries. BreAtt is in the advanced stages of selecting development opportunities for the
investment of these funds.
Investment in Nigeria
The Group acquired a 25.0% shareholding in Ikeja City Mall located in Lagos, Nigeria with the balance of 75.0% held by Hyprop Investments Limited
("Hyprop"). The effective date of the transaction was 17 November 2015, at a purchase consideration equivalent to R325.6 million. As at 30 June 2016, the
total investment was valued at R326.7 million.
The 22 349 m2 Ikeja City Mall receives in excess of seven and a half million shoppers per annum and was acquired at a US dollar yield in excess of 8.0%.
Ikeja City 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 and a 49.9% interest in Mall of Mauritius at Bagatelle Limited.
The two entities were the owners of the Bagatelle Mall in Mauritius and 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 Proprietary Limited ("AMC"). Attacq completed the exit from
its Mauritius assets by disposing of its shareholding in AMC to Atterbury Property Holdings Proprietary Limited ("Atterbury"). Total cash funds received by
Attacq from the exit of these assets amounted to R676.4 million, realising a profit of R145.0 million, which is included in other income.
The Club Retail Park Proprietary Limited ("The Club")
Atterbury Property Fund Proprietary Limited acquired Attacq's 32.0% interest in The Club for a purchase consideration of R11.6 million plus settlement of
the Attacq loan accounts. The effective date of the transaction was 30 June 2016. The total proceeds were received during July 2016.
50.0% undivided share in Great Westerford
Attacq's 50.0% undivided share in the Great Westerford property was sold to The Leaf Property Fund Trust for an amount of R292.0 million. The property was
transferred on 25 April 2016.
Atterbury
Effective 30 June 2016, Attacq disposed of its remaining 10.0% shareholding in Atterbury for a purchase consideration of R90.0 million. A profit of
R33.3 million was realised which is included in other income.
MAS Real Estate Inc. ("MAS") shares
On 8 April 2016, Attacq disposed of over nine million MAS shares at R22.00 per share, resulting in proceeds of R200.0 million. As a result of this disposal
and Attacq electing not to participate in a capital raise undertaken by MAS, Attacq's shareholding in MAS at 30 June 2016, decreased to 41.4% (2015: 45.3%).
Less significant 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, for
R34.9 million.
Amendment of contractual arrangements
Waterfall
Attacq has taken the strategic decision to accelerate the internalisation of the Waterfall development management function to enable Attacq to take full
control of the strategic planning, marketing and roll-out of the Waterfall development. As such, Attacq and Atterbury have agreed to amend the development
management agreement to enable Attacq to undertake the Waterfall developments internally and not to await the expiry of Atterbury's exclusivity as
developer on 31 January 2018. Attacq made a prepayment of R39.5 million to Atterbury relating to current projects that Atterbury will continue to manage
until finalisation of the developments.
Financial position
Investment properties
As per the table below, investment properties increased by 11.5% to R18.0 billion which represents 65.3% (2015: 69.5%) of the total assets of the Group.
The amount excludes investment properties currently disclosed as non-current assets held for sale.
30 June 30 June
2016 2015
R'000 R'000
Completed buildings 15 282 887 11 945 642
Developments under construction 1 185 084 2 624 017
Development rights 1 059 298 1 467 422
Infrastructure and services 1 111 772 615 991
Vacant land 5 000 17 000
Per valuation 18 644 041 16 670 072
Straight-line lease debtor (600 849) (482 199)
Total 18 043 192 16 187 873
Buildings completed during the year
During the year the following eight buildings were completed, with seven of them in Waterfall. Attacq's attributable share of the total of 160 742 m2
primary gross leasable area ("GLA") of these properties is 127 198 m2:
Property Sector Completion GLA Occupancy %
date (m2)*
Waterfall
Mall of Africa# Retail April 2016 123 348** 99
Hilti Industrial October 2015 3 948 100
Servest Industrial August 2015 6 650 100
Stryker Industrial September 2015 3 220 100
Maxwell Office Park - Colgate^ Office August 2015 4 242 100
Maxwell Office Park - Mac Mac House^ Office October 2015 6 288 100
Maxwell Office Park - Magwa House^ Office June 2016 7 218 100
Other
City Lodge Newtown Hotel November 2015 5 828 100
Total 160 742 100
* 100% of the GLA is reflected above
Attacq has an undivided share in the property: ^50%; #80%
** Previously shown as 131 038 m2, which is total GLA versus primary GLA shown above, subject to final measurement
The Mall of Africa, which is centrally located in Gauteng, opened on 28 April 2016. The success of the Mall is evident in the 3.5 million shoppers who have
visited in the three months ended July 2016. National retail tenants have indicated that their Mall of Africa branch trades in the top five of their South
African portfolio. At the SACSC 20th Annual Congress, the Mall won the Spectrum Award for the best retail development in the category of new regional and
super-regional shopping centres above 20 000 m2.
Developments under construction
The following properties were under development at 30 June 2016. Attacq's attributable share of the total of 115 666 m2 GLA of these properties is 104 360 m2:
Property Sector Anticipated GLA % pre-let
completion date (m2)*
Waterfall
Allandale Building Office August 2016 14 848 >70
PwC Tower and Annex** Office January 2018 45 223 100
Amrod Industrial November 2016 38 455 100
Dimension Data warehouse Industrial August 2016 8 230 100
Torre Industries Industrial August 2016 8 910 100
Total 115 666 >96
* Estimated GLA for 100% of development. Subject to change upon final re-measurement post completion
** Attacq has a 75% undivided share in the property
Development rights
Development rights relate to the contractual rights held by Attacq Waterfall Investment Company Proprietary Limited ("AWIC") to develop certain land
parcels in Waterfall. These rights form a material element of the overall land valuation. As at 30 June 2016, 1.3 million m2 (2015: 1.4 million m2) of
Waterfall's total bulk of 1.9 million m2 (2015: 1.8 million m2) remains available for development.
The reasons for the reduction in value of development rights from R1.5 billion to R1.1 billion relate to a more conservative outlook on the future roll-out
period of potential developments and the reclassification of land parcels 3 and 24 to non-current assets held for sale. In the current financial year, the
two land parcels had a combined value of R114.7 million (2015: R106.0 million).
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 developments. Although this asset generated no cash return, it creates the platform for future economic benefits from top
structure developments. At June 2016, Attacq held 783 000 m2 of serviced land which can be rolled out without any further infrastructure spend.
Newly secured developments
Attacq has taken the initiative to develop a speculative office building, named Gateway Building West, linked to The Mall of Africa in Waterfall City.
The anticipated date of completion is August 2017, with a primary GLA of 13 891 m2.
Best performing property fund in the office sector
Attacq won the MSCI award for the best performing office portfolio for their three-year annualised total return to December 2015. The Group's three-year
return was 16.5% versus a benchmark 12.9%. The out-performance is mainly attributable to excellent capital growth of the assets.
Investments in and loans to associates
MAS
Attacq's equity accounted investment in MAS increased from R2.2 billion as at 30 June 2015, to R2.7 billion as at 30 June 2016.
In March 2016, 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
realised R479.8 million (EUR28.1 million). Attacq's shareholding increased by 2.0% at the time, with 21.3 million new MAS shares being issued to Attacq in
consideration for the agterskot. In the prior year, the agterskot was included under other financial assets, but has now been reclassified under investment
in associates.
Subsequent to the receipt of the agterskot shares, Attacq sold over nine million MAS shares and MAS undertook a R500.0 million capital raising in which
Attacq did not participate, resulting in Attacq's shareholding in MAS decreasing to 41.4% as at year end (2015: 45.3%).
In March 2016, MAS invested EUR20.0 million for a 40.0% stake in a joint venture with Prime Kapital Limited ("Prime Kapital"), 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 joint venture
will provide MAS with access to high growth in 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.
MAS' adjusted NAVPS decreased by 5.0% from 121.2 euro cents as at 30 June 2015 to 115.1 euro cents as at 30 June 2016. Foreign exchange losses of
EUR25.3 million, or 7.3 euro cents per share, largely attributable to the impact of the Brexit outcome were recognised by MAS in the current year.
From a development perspective, phase one of MAS' New Waverley development has progressed well and the Adagio Hotel and its related retail component is
expected to be completed at the end of this calendar year. Phase two is in the final stages of design preparation. The CEE portfolio is expected to
commence with development in the new calendar year.
AttAfrica
Africa continues to experience challenging economic conditions given the continued strength of the US dollar, depressed commodity and oil prices and lack
of stability in power supply. The dominant malls in the portfolio, notably Manda Hill Mall, Zambia and Accra Mall, Ghana, have defensive qualities and
continue to trade relatively well given the challenging operating environment. Overall portfolio vacancies at 30 June 2016 were 4.0%.
At year end, the Group's investment in AttAfrica, being the shareholder loan to AttAfrica, amounted to R877.4 million (2015: R599.4 million). Achimota Mall
in Accra, Ghana was completed in November 2015, and Kumasi City Mall, Ghana, the only remaining development under construction, has an expected completion
date of April 2017. During the year under review, the Group recognised an impairment on the loan account of R58.3 million which is included in operating and
other expenses. The impairment is due to the lower in-country investment properties valuations.
At 30 June 2016, AttAfrica's underlying assets were as follows:
Property Location GLA (m2) AttAfrica Attacq's
ownership effective
% interest
%
Completed buildings
Accra Mall Accra, Ghana 21 240 47 14.7
Achimota Mall Accra, Ghana 15 170 75 23.4
West Hills Mall Accra, Ghana 28 466 45 14.1
Manda Hill Mall Lusaka, Zambia 40 561 50 15.6
Development under construction
Kumasi City Mall Kumasi, Ghana 18 000* 75 23.4
* Proposed size
Other financial assets
The decrease in other financial assets is as a result of the settlement of the Karoo agterskot as well as the settlement of the loan account to 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 was settled after the
completion of the Mall, with the balance of 1.2% to be settled based on the 30 June 2017 fair market value of the Mall, as determined by an external
independent valuer.
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 at a value of R380.8 million (2015: R344.3 million).
On 30 June 2016, Attacq disposed of its 10.0% interest in Atterbury for a consideration of R90.0 million.
Non-current assets held for sale
Waterfall industrial properties
At year end, the following eight completed industrial properties were classified as non-current assets held for sale: Angel Shack, Cummins (50.0% undivided
share), Drager, Hilti, Medtronic, Servest, Stryker and Westcon. Equites Property Fund Limited ("Equites") and Attacq have established a joint venture in
respect of a portfolio of industrial properties at Waterfall with effect from 1 July 2016. Equites have subscribed for an 80.0% shareholding in EA
Waterfall Logistics JV Proprietary Limited ("EAJV") the acquirer of the portfolio, for a subscription consideration of R292.7 million payable on the
transfer of the portfolio into EAJV. Attacq will hold the remaining 20.0% of EAJV.
Waterfall land parcel 24 and land parcel 3
Attacq has entered into an agreement for the disposal of its development rights in respect of land parcel 24, Waterfall, on loan account for R86.4 million
to a new joint venture company, Winter Robin Investments 26 Proprietary Limited ("WRI"). The shareholding in WRI is 20.0% held by Attacq and 80.0% held by
Sanlam Properties (a division of Sanlam Life Insurance Limited) ("Sanlam Properties"). Attacq has the right to increase its shareholding in WRI to 50.0%.
As part of the transaction, WRI acquired additional light industrial development rights from one of the Mia affiliate companies for R371.6 million. Attacq
advanced R16.9 million on loan account to WRI to fund the acquisition and the balance of the acquisition was funded by Sanlam Properties on loan account.
After conclusion of the transaction, the total development rights in WRI equate to approximately 114.0 hectares.
Attacq, in addition, has contracted to dispose of its 15 000 m2 retail development rights on land parcel 3 to a separate joint venture company with Sanlam
Properties titled AWIC Pocket 3 JVCO Proprietary Limited ("P3JV"). Attacq disposed of the retail rights for R28.3 million and the amount remains
outstanding on loan account. P3JV also acquired the remaining retail development rights on the same land parcel from the Mia affiliate company for
R28.3 million. Attacq and Sanlam Properties each hold 50.0% in P3JV.
Brooklyn Bridge Office Park
Attacq management considers Brooklyn Bridge Office Park to no longer be a core asset. At year end, this property is classified as a non-current asset held
for sale.
Sale of 20.0% undivided share in Andringa Walk
Attacq entered into a sale agreement with the existing co-owner of Eikestad Mall and Mill Square, Key Capital Holdings Proprietary Limited, in which it
intends to sell a 20.0% undivided share in Andringa Walk for an amount of R37.0 million. The effective date of the sale transaction is 1 July 2016. The
sale transaction was entered into to create alignment on the whole Eikestad precinct in which Attacq Retail Fund Proprietary Limited ("ARF") currently
holds 80.0% in Eikestad Mall and Mill Square and 100.0% in Andringa Walk. ARF is a wholly-owned subsidiary of Attacq Ltd.
Borrowings
Total net interest-bearing borrowings increased by 30.2% 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 39.9% as
at 30 June 2016. In order to mitigate interest rate risk, approximately R11.0 billion or 79.5% of total committed facilities as at 30 June 2016
(2015: R8.9 billion or 74.7%) were hedged by way of fixed interest rate loans and interest rate swaps. This is well within the 70.0% minimum interest hedge
policy set by the Attacq board. The weighted average cost of funding increased marginally over the last 12 months to 9.2% (2015: 9.0%).
Approximately 8.8% (R1.0 billion) of the Group's debt is due for repayment over the next 12 months, which includes R747.0 million relating to non-current
assets held for sale. Similarly, 5.6% 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 17.2% compared to the prior year. The net rental income was
positively impacted by the completion of eight buildings in the current reporting period (2015: 13 buildings). The weighted average lease expiry profile is
6.7 years as at 30 June 2016 (2015: 7.3 years). The 2016 rental income includes two months' income for the Mall which opened on 28 April 2016.
Property expenses as a percentage of gross rental income increased due to an increase in municipal charges which were not fully recovered from tenants as
well as once-off costs relating to the Mall. Municipal charges of R345.7 million are included in the total property expenses of R502.8 million.
Vacancies
Overall portfolio vacancies, measured in terms of GLA, decreased by 6 501 m2 compared to 30 June 2015. This decrease relates primarily to Newtown Junction,
Lynnwood Bridge Phase III (Kaaimans and Bloukrans Offices) and Waterfall Lifestyle, all of which were completed during the 2015 financial year. Current
vacant space is 16 273 m2, which equates to 2.4% of the GLA.
30 June 30 June 30 June 30 June
Sector 2016 2016 2015 2015
Vacancy Vacant Vacancy Vacant
% GLA (m2) % GLA (m2)
Retail 1.0 7 070 1.8 10 387
Office 1.4 9 203 2.2 12 387
Industrial - - - -
Hotel - - - -
Portfolio vacancy 2.4 16 273 4.0 22 774
Other income
Other income of R448.6 million includes unrealised foreign exchange gains of R211.6 million (2015: R65.6 million) and a profit of R145.0 million on the
disposal of the Mauritius assets.
Operating and other expenses
The increase of 13.7% in operating and other expenses is primarily attributed to the increase in marketing, rates and taxes and security expenses relating
to Waterfall which are not capitalised against the developments under construction. Other once-off expenses which are included are a R58.3 million
impairment on the AttAfrica investment, a R22.4 million impairment on the investment in Ikeja Mall and a R12.0 million impairment of intangible assets.
Fair value adjustments
Compared to the prior year, fair value adjustments on investment properties decreased by 3.3% to R1.1 billion and are made up as follows:
30 June 30 June
2016 2015
R'000 R'000
Completed buildings 557 949 434 677
Developments under construction 758 314 591 562
Development rights (230 039) 84 472
Vacant land (12 000) -
Total 1 074 224 1 110 711
Property valuations as at 30 June 2016 are based on external valuations performed by Jones Lang LaSalle Proprietary Limited, Old Mutual Investment Group:
South Africa and Mills Fitchet Magnus Penny & Wolffs. The directors have made adjustments for straight-lining and cost to complete.
The valuation in respect of Waterfall's development rights is based on an external valuation performed on a freehold basis. The valuation is then adjusted
downward 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 tenant activity have caused the directors to take a more conservative view of the roll-out of the
development activity, resulting in a further reduction in value.
At 30 June 2016, a loss of R32.5 million was recorded on the valuation of the interest rate swap (2015: profit of R68.1 million).
Investment income
Included in investment income in the current year is interest income of R182.9 million (2015: R113.9 million) and dividend income of
R52.8 million (2015: R28.6 million). Interest income from international investments, via loan accounts, amounted to R146.5 million (2015: R39.4 million).
Attacq received a dividend of R101.2 million (2015: R42.5 million) from MAS which was applied to reduce the investment in associate upon consolidation due
to equity accounting principles.
Finance costs
The increase in finance costs of 22.5% compared with the prior year is mainly attributable to the eight buildings (2015: 13 buildings) completed during the
financial year, resulting in the finance costs post completion being expensed and no longer capitalised to the specific development as well as to the
impact of interest rate increases.
Change in directors
Effective 1 July 2015, BT Nagle was appointed to the board as a non-executive director and LLS van der Watt's designation was changed from executive to
non-executive. Following a review of his independence by the board, AW Nauta's designation was changed from non-executive to independent non-executive.
TJA Reilly, an alternate director to JHP van der Merwe, a 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 decided to retain them in an independent non-executive capacity with effect from 1 February 2016.
AW Nauta and PH Faure resigned as directors with effect from 30 April 2016.
Subsequent events
Waterfall industrial properties - joint venture with Equites
As indicated in the paragraph on non-current assets held for sale, Equites and Attacq have established a joint venture in respect of a portfolio of
industrial properties at Waterfall with effect from 1 July 2016. The transfer date of the leasehold properties took place on 31 August 2016.
Waterfall land parcel 3 and 24 - joint ventures with Sanlam Properties
As indicated in the paragraph on non-current assets held for sale, Attacq has entered into joint venture arrangements with Sanlam Properties, whereby
Attacq has agreed to dispose of some Waterfall development rights for an interest in two joint ventures. The effective date of these transactions is
1 July 2016.
Sale of 20.0% undivided share in Andringa Walk
Attacq entered into a sale agreement with Key Capital Holdings Proprietary Limited, in which it sells a 20.0% undivided share in Andringa Walk for an
amount of R37.0 million. The effective date of the sale transaction is 1 July 2016. Further details are included under non-current assets held for sale.
Further investment into Atterbury Serbia
On 12 August 2016, Attacq invested a further EUR6.6 million (R100.3 million) into Atterbury Serbia in order for Atterbury Serbia to increase its shareholding
in BreAtt from 33.0% to 50.0%. Further details are included under acquisitions.
The directors are not aware of any matters or circumstances arising subsequent to 30 June 2016 that require any additional disclosure or adjustment to the
financial statements.
Prospects
In South Africa, in addition to optimising its growing R15.3 billion portfolio of operational buildings and delivering on its Waterfall pipeline, Attacq is
actively pursuing further investment opportunities. The Waterfall node continues to strengthen, with seven new buildings completed during the year under
review, adding 121 370 m2 GLA to Attacq's portfolio. The super-regional Mall of Africa opened 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 640 665 m2 of bulk available for development. Waterfall City is seen as one
of the most significant South African commercial developments of the decade and is expected to continue 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 MAS joint
venture with Prime Kapital is expected to start bearing fruit with land having been acquired and an exclusive pipeline is in place. The Cyprus assets
provide expansion opportunities and in Serbia, development opportunities have been identified for the deployment of BreAtt's EUR40.0 million development
fund. In sub-Saharan Africa, the challenging environment caused by the strong dollar and depressed commodity prices is expected to continue and Attacq's
focus in Africa will be on completing Kumasi City Mall, Ghana and active asset management of existing assets through the cycle.
Basis of preparation and accounting policies
The Summarised Provisional Consolidated Financial Statements for the year ended 30 June 2016 have been prepared in accordance with the requirements of the
JSE Listings Requirements applicable to summarised provisional reports and the requirements of the Companies Act of South Africa, No. 71 of 2008, as
amended, applicable to summarised financial statements. The JSE Listings Requirements require provisional reports to be prepared in accordance with the
framework concepts and the measurement and recognition requirements of International Financial Reporting Standards ("IFRS"), the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council, and to also, as
a minimum, contain the information required by IAS 34: Interim Financial Reporting.
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 Summarised Provisional Consolidated 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 year. These standards did not have any impact on the financial statements.
Fair value disclosure
The Group's investment properties were externally valued by independent valuers. 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. The valuation of investment properties
requires judgement in the determination of future cash flows from leases and an appropriate capitalisation rate which varies between 6.3% and 9.5%
(2015: 6.3% and 9.5%). Changes in the capitalisation rate attributable to changes in market conditions can have a significant impact on property valuations.
A 50 basis points weakening in the capitalisation rate will decrease the value of investment properties by R603.3 million (2015: R572.1 million). A 50 basis
points improvement in the capitalisation rate will increase the value of investment properties by R690.6 million (2015: R648.6 million). Changes in the
discount rate attributable to changes in the underlying risk profile associated with the property portfolio can have a significant impact on property
valuations. A 50 basis points weakening in the discount rate will decrease the value of investment properties by R462.8 million (2015: R450.3 million).
A 50 basis points improvement in the discount rate will increase the value of investment properties by R480.9 million (2015: R464.0 million). 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. Unlisted investments are categorised as level 3. There were no
transfers between levels 2 and 3 during the year. The valuation methods applied are consistent with those applied in preparing the previous consolidated
financial statements. This announcement does not include the information required pursuant to paragraph 16A(j) of IAS 34. The financial statements are
available on the issuer's website, at the issuer's registered offices and upon request.
Audit report
The auditor, Deloitte & Touche, has issued its opinion on Attacq's Consolidated and Separate Financial Statements for the year ended 30 June 2016. The
audit was conducted in accordance with International Standards on Auditing. Deloitte & Touche has issued an unmodified opinion. A copy of the auditor's
report together with a copy of the audited consolidated and separate financial statements is available for inspection at the Company's registered office
and on the Company's website.
These Summarised Provisional Consolidated Financial Statements have been derived from the Group's consolidated financial statements and are consistent in
all material respects with the Group's Consolidated Financial Statements for the year ended 30 June 2016, but is not itself audited. The directors take
full responsibility for the preparation of these summarised provisional consolidated financial results and confirm that the financial information has been
correctly extracted from the underlying audited Consolidated Financial Statements. Any reference to future financial information included in this
announcement has not been reviewed or reported on by the auditor. Shareholders are advised that, in order to obtain a full understanding of the nature of
the auditor's engagement, they should obtain a copy of that report together with the audited Consolidated Financial Statements as at 30 June 2016 from the
Company's registered office or from the Company's website.
On behalf of the board
P Tredoux MC Wilken
Chairman Chief executive officer
9 September 2016
Directors
P Tredoux#* (Chairman)
MC Wilken (CEO)
M Hamman (CFO)
MM du Toit#*
HR El Haimer#*
KR Moloko#*
BT Nagle#*
S Shaw-Taylor#*
JHP van der Merwe#*
LLS van der Watt*
# 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 016
Private Bag X81
Halfway House
1685
Transfer Secretaries
Computershare Investor Services (Pty) Ltd
Ground Floor, 70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Sponsor
Java Capital
13 September 2016
Date: 13/09/2016 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
