Wrap Text
Unaudited condensed consolidated financial results for the three months ended 30 June 2016
STENPROP LIMITED
(Incorporated in Bermuda)
(Registration number 47031)
BSX share code: STP.BH JSE share code: STP ISIN: BMG8465Y1093
("Stenprop" or "the Company" or "the Group")
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL RESULTS
for the three months ended 30 June 2016
EUR1.61 2.62 CENTS 2.7%
DILUTED EPRA2 NAV DILUTED ADJUSTED INCREASE ON THE
PER SHARE EPRA EARNINGS DILUTED ADJUSTED
PER SHARE EPRA EPS AT JUNE 2015
Stenprop Limited, a Bermuda company which has dual primary listings on the Johannesburg Stock Exchange ('JSE') and the
Bermuda Stock Exchange ('BSX'), today announces its results for the three months ended 30 June 2016.
The company is required to publish financial results for the three months ended 30 June 2016 in terms of the rules of the BSX.
Accordingly, this announcement presents the unaudited condensed consolidated financial results of the Group in respect of
the financial period from 1 April 2016 to 30 June 2016 in a form compliant with the requirements of the BSX.
FINANCIAL REVIEW
Earnings
The basic earnings attributable to ordinary shareholders for the three month period to 30 June 2016 were EUR6.7 million1
(2015: EUR7.1 million). This equates to a diluted IFRS EPS of 2.35 cents (2015: 2.60 cents). The headline earnings were EUR6.7 million
(2015: EUR8.3 million) equating to a diluted headline EPS of 2.35 cents (2015: 3.04 cents).
Net operating income for the period was EUR8.7 million, 6.7% higher than the same period in the previous financial year
(2015: EUR8.1 million). Income from associates was EUR1.8 million (2015: EUR1.0 million) and income from joint ventures was EUR0.6 million
(2015: EUR0.6 million).
Net finance costs of EUR2.4 million were 11.8% lower than the previous year (2015: EUR2.8 million). Interest swap rates were significantly
lower when compared with the same period last year. The associated fair value adjustment to the Group's interest rate hedges
resulted in an expense of EUR1.2 million (2015: EUR0.6 million credit).
In accordance with reporting standards widely adopted across the real estate industry in Europe, the board of directors feels it is
appropriate and useful, in addition to providing the IFRS disclosed earnings, to also disclose EPRA earnings.
(1)
Average foreign exchange rates in period: GBP1:EUR1.270; CHF1:EUR0.912 (2015: GBP1:EUR1.384; CHF1:EUR0.960).
(2)
European Public Real Estate Association
Adjusted EPRA earnings attributable to shareholders for the three month period were EUR7.4 million (2015: EUR7.0 million), equating to
a diluted adjusted EPRA EPS of 2.62 cents (2015: 2.55 cents).
Net assets
(3)
The basic and diluted IFRS NAV per share at 30 June 2016 was EUR1.55 (2015: EUR1.61 basic; EUR1.60 diluted). The basic and diluted EPRA
NAV per share was EUR1.62 and EUR1.61 respectively (2015: EUR1.66).
REFINANCING
On 26 May 2016, two Stenprop subsidiaries, Davemount Properties Limited ('Davemount') and GGP1 Limited ('GGP1') refinanced
their loan facilities with Santander. Santander has provided a single facility of GBP12.4 million for a five year period, split GBP4.0 million to
Davemount and GBP8.4 million to GGP1. The all-in rate on this facility is 3.46% which compares to 2.7% on the previous Davemount
facility and 3.72% on the previous GGP1 facility.
DIVIDENDS AND SHARE REPURCHASES
On 8 June 2016, the directors declared a final cash dividend of 4.7 cents per share in respect of the year ended 31 March 2016. The
final dividend was paid on 29 July 2016.
Towards the end of June 2016 the Company began a limited programme of share repurchases and during the period to
30 June 2016, the Company repurchased 471,912 shares for an aggregate purchase price of EUR653,000. In July 2016 the Company
repurchased a further 884,655 shares for an aggregate purchase price of EUR1,161,000. The combined average price per share of
the repurchased shares was EUR1.337. The shares were purchased with the benefit of the dividend thereby effectively reducing the
average price per share to EUR1.290. All shares repurchased are held as treasury shares.
PROSPECTS
Stenprop published its 2016 Integrated Annual Report (the 'Report') just over a month ago on 10 August 2016. The Report
considered, inter alia, the potential impact of Brexit on its base case forecast of a minimum growth of 1.5% per annum on EPRA
earnings per share and distributions. This would have resulted in diluted adjusted EPRA earnings per share of at least 10.58 cents
for the year ending 31 March 2017. The Report commented that at an exchange rate of EUR1.20:GBP1 and with all other assumptions
remaining constant, its forecast adjusted annual EPRA EPS for 2017 would drop from 10.58 cents to 10.29 cents per share. At an
exchange rate of EUR1:15:GBP1.00, the number would drop further to 10.15 cents per share. Since the Report was published, Sterling
has continued to come under downward pressure and Stenprop's assumptions will be reviewed over time once markets have been
given time to absorb and react to the new environment.
Stenprop expects to declare an interim dividend in November 2016, which maintains the historic payout ratio of 85% of diluted
adjusted EPRA EPS.
This general forecast has been based on the Group's forecasts and has not been reported on by the external auditors.
3
Quarter end foreign exchange rates: GBP1:EUR1.206; CHF1:EUR0.920 (2015: GBP1:EUR1.417; CHF1:EUR0.965).
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited
for the for the
three months three months
ended ended
30 June 30 June
2016 2015
Note EUR'000 EUR'000
Net rental income 9,656 9,768
Management fee income 737 1,192
Operating costs (1,706) (2,821)
Net operating income 8,687 8,139
Income from associates 1,829 1,035
Income from joint ventures 586 599
Profit from operations 11,102 9,773
Net (loss)/gain from fair value of financial liabilities (1,228) 564
Net finance costs (2,433) (2,757)
Net foreign exchange gains 72 68
Profit for the period before taxation 7,513 7,648
Taxation (782) (502)
Profit for the period after taxation 6,731 7,146
Profit attributable to:
Equity holders 6,694 7,099
Non-controlling interest 37 47
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Fair value movement on interest rate swaps – 853
Foreign currency translation reserve (9,579) 8,525
Total comprehensive (loss)/profit for the period (2,848) 16,524
Total comprehensive (loss)/profit attributable to:
Equity holders (2,885) 16,476
Non-controlling interest 37 48
Earnings per share
IFRS EPS (cents) 2 2.36 2.61
Diluted IFRS EPS (cents) 2 2.35 2.60
Results derive from continuing operations
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
as at as at as at
30 June 30 June 31 March
2016 2015 2016
Note EUR'000 EUR'000 EUR'000
ASSETS
Investment properties 715,891 708,988 729,782
Investment in associates 41,125 40,952 39,298
Investment in joint ventures 36,243 35,887 37,620
Other debtors 12,677 – 7,403
Property, plant and equipment 3 1 3
Derivative financial instruments – 496 –
Total non-current assets 805,939 786,324 814,106
Cash and cash equivalents 41,392 64,420 36,811
Trade and other receivables 6,387 13,320 6,367
Total current assets 47,779 77,740 43,178
Total assets 853,718 864,064 857,284
Equity and liabilities
Capital and reserves
Share capital and share premium 4 395,141 381,601 389,927
Equity reserve 23 303 480
Retained earnings 56,710 33,008 63,426
Foreign currency translation reserve (7,915) 30,668 1,664
Cash flow hedge reserve – 334 –
Total equity attributable to equity shareholders 443,959 445,914 455,497
Non-controlling interest 2,169 1,862 2,132
Total equity 446,128 447,776 457,629
Non-current liabilities
Bank loans 187,741 362,586 178,708
Derivative financial instruments 5,566 3,959 4,173
Other loan and interest 12 25 12
Deferred tax 9,855 7,627 9,705
Total non-current liabilities 203,174 374,197 192,598
Current liabilities
Bank loans 172,457 11,447 188,785
Derivative financial instruments 1,201 1,030 1,769
Accounts payable and accruals 30,758 29,614 16,503
Total current liabilities 204,416 42,091 207,057
Total liabilities 407,590 416,288 399,655
Total equity and liabilities 853,718 864,064 857,284
IFRS net asset value per share 3 1.55 1.61 1.61
EPRA net asset value per share 3 1.62 1.66 1.67
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Attri-
capital Foreign Cash butable
and currency flow to equity Non-
share Equity Retained translation hedge share- controlling Total
premium reserve earnings reserve reserve holders interest equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at 1 April 2016 389,927 480 63,426 1,664 – 455,497 2,132 457,629
Issue of share capital 5,214 (72) – – – 5,142 – 5,142
Credit to equity for
equity-settled share
based payments – 268 – – – 268 – 268
Purchase of
treasury shares – (653) – – – (653) – (653)
Total comprehensive
profit/(loss) for
the period – – 6,694 (9,579) – (2,885) 37 (2,848)
Ordinary dividends – – (13,410) – – (13,410) – (13,410)
Balance at 30 June 2016 395,141 23 56,710 (7,915) – 443,959 2,169 446,128
Balance at 1 April 2015 374,127 – 37,561 22,143 (519) 433,312 1,815 435,127
Issue of share capital 7,474 (25) – – – 7,449 – 7,449
Credit to equity for
equity-settled share
based payments – 328 – – – 328 – 328
Total comprehensive
profit for the period – – 7,099 8,525 853 16,477 47 16,524
Ordinary dividends – – (11,652) – – (11,652) – (11,652)
Balance at 30 June 2015 381,601 303 33,008 30,668 334 445,914 1,862 447,776
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited
for the for the
three months three months
ended ended
30 June 30 June
2016 2015
EUR'000 EUR'000
Operating activities
Profit from operations 11,102 9,773
Share of profit in associates (1,829) (1,035)
Increase in fair value of joint ventures (586) (599)
Exchange rate gains 72 68
(Increase)/decrease in trade and other receivables (20) 783
Increase in trade and other payables 546 502
Interest paid (2,494) (2,713)
Interest received 580 8
Net tax (paid)/received (172) 48
Net cash from operating activities 7,199 6,835
Investing activities
Dividends received from associates 2 617
Dividends received from joint ventures 100 –
Purchases of investment property (216) –
Acquisition of investment in joint venture – (26,782)
Net cash used in investing activities (114) (26,165)
Financing activities
New bank loans raised – 39,019
Repayment of borrowings (1,453) (35,401)
Purchase of treasury shares (653) –
Financing fees paid (192) (740)
SWAP break fee (63) (571)
Net cash (used in)/from financing activities (2,361) 2,307
Net increase/(decrease) in cash and cash equivalents 4,724 (17,023)
Effect of foreign exchange rate changes (143) 1,013
Cash and cash equivalents at beginning of the period 36,811 80,430
Cash and cash equivalents at end of the period 41,392 64,420
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
These unaudited condensed consolidated financial results (the 'IFRS Statements') for the three months ended 30 June
2016 have been prepared in accordance with the recognition and measurements principles of the International Financial
Reporting Standards ('IFRS') and its interpretations adopted by the International Accounting Standards Board ('IASB'),
specifically IAS 34 'Interim Financial Reporting' and the JSE Listings Requirements and the BSX Listing Regulations
as applicable.
The accounting policies and methods of computation are consistent with those applied in the preparation of the annual
financial statements for the year ended 31 March 2016 which were audited and reported on by the Group's external
auditors, except for the new standards adopted during the period.
These financial results have not been audited or reviewed by the Company's external auditors. They have been prepared
by, and are the responsibility of, the directors of Stenprop.
2. EARNINGS PER ORDINARY SHARE
Reconciliation of profit for the period to adjusted EPRA1 earnings
Unaudited Unaudited
for the for the
three months three months
ended ended
30 June 30 June
2016 2015
EUR'000 EUR'000
Earnings per IFRS income statement attributable to shareholders 6,694 7,099
Adjustments to calculate EPRA earnings, exclude:
Changes in fair value of financial instruments 1,228 (564)
Deferred tax in respect of EPRA adjustments 122 355
Adjustments above in respect of joint ventures and associates
Changes in fair value (1,039) (503)
Deferred tax in respect of EPRA adjustments 142 75
EPRA earnings attributable to shareholders 7,147 6,462
Further adjustments to arrive at adjusted EPRA earnings
Straight-line unwind of purchased swaps 300 505
Adjusted EPRA earnings attributable to shareholders 7,447 6,967
Weighted average number of shares in issue (excluding treasury2 shares) 283,625,775 272,236,146
Share-based payment award 920,287 649,829
Diluted weighted average number of shares in issue 284,546,062 272,885,975
Earnings per share
IFRS EPS (cents) 2.36 2.61
Diluted IFRS EPS (cents) 2.35 2.60
EPRA EPS (cents) 2.52 2.37
Diluted EPRA EPS (cents) 2.51 2.37
Adjusted EPRA EPS (cents) 2.63 2.56
Diluted adjusted EPRA EPS (cents) 2.62 2.55
1 The European Public Real Estate Association (EPRA) issued Best Practices Policy Recommendations in December 2014, which provide
guidelines for performance measures relevant to real estate companies. Their recommended reporting standards are widely applied
across this market, aiming to bring consistency and transparency to the sector. The EPRA earnings measure is intended to show the level
of recurring earnings from core operational activities with the purpose of highlighting the Group's underlying operating results from its
property rental business and an indication of the extent to which current dividend payments are supported by earnings. The measure
excludes unrealised changes in the value of investment properties, gains or losses on the disposal of properties and other items that do not
provide an accurate picture of the Group's underlying operational performance. The measure is considered to accurately capture the long
term strategy of the Group, and is an indication of the sustainability of dividend payments.
2 As at 30 June 2016, the Company held 471,912 treasury shares (June 2015: nil).
Straight-line unwind of purchased swaps
A further adjustment was made to the EPRA earnings attributable to shareholders relating to the straight line unwind of
the value as at 1 April 2014 of the swap contracts in the property companies acquired. When the property companies
were acquired by Stenprop with effect from 1 April 2014, it also acquired the bank loans and swap contracts which were in
place within these property companies. As a result, Stenprop took over loans with higher swap interest rates than would
have been the case had new loans and swaps been put in place at 1 April 2014. To compensate for this, the value of the
swap break costs was calculated at 1 April 2014 and the purchase consideration for the property companies was reduced
accordingly to reflect this liability.
Reconciliation of profit for the period to headline earnings
Unaudited Unaudited
for the for the
three months three months
ended ended
30 June 30 June
2016 2015
EUR'000 EUR'000
Earnings per IFRS income statement attributable to shareholders 6,694 7,099
Adjustments to calculate headline earnings, exclude:
Changes in fair value of financial instruments – 853
Deferred tax in respect of headline earnings adjustments – 355
Headline earnings attributable to shareholders 6,694 8,307
Earnings per share
Headline EPS (cents) 2.36 3.05
Diluted headline EPS (cents) 2.35 3.04
3. NET ASSET VALUE PER SHARE
Unaudited Unaudited Audited
as at as at as at
30 June 30 June 31 March
2016 2015 2016
EUR'000 EUR'000 EUR'000
Net assets attributable to equity shareholders 443,959 445,914 455,497
Adjustments to arrive at EPRA net asset value:
Derivative financial instruments 6,767 4,493 5,942
Deferred tax 9,855 7,627 9,705
Adjustments above in respect of non-controlling interests 3,110 2,401 2,838
EPRA net assets attributable to shareholders 463,691 460,435 473,982
Number of shares in issue (excluding treasury shares) 286,209,968 277,463,048 282,984,626
Share-based payment award 920,287 649,829 647,806
Diluted number of shares in issue 287,130,255 278,112,877 283,632,432
Net asset value per share (basic and diluted)1
IFRS net asset value per share (cents) 1.55 1.61 1.61
Diluted IFRS net asset value per share (cents) 1.55 1.60 1.61
EPRA net asset value per share (cents) 1.62 1.66 1.67
Diluted EPRA net asset value per share (cents) 1.61 1.66 1.67
1 As at 30 June 2016, the Company held 471,912 treasury shares (June 2015 and March 2016: nil).
Unaudited Unaudited Audited
as at as at as at
30 June 30 June 31 March
2016 2015 2016
EUR'000 EUR'000 EUR'000
4. SHARE CAPITAL
Authorised
1,000,000,000 ordinary shares with a par value of EUR0.000001258 each 1 1 1
Unaudited Unaudited Audited
as at as at as at
30 June 30 June 31 March
2016 2015 2016
Issued share capital
Opening balance 282,984,626 272,236,146 272,236,146
Issue of new shares 3,697,254 5,226,902 10,748,480
Closing number of shares issued 286,681,880 277,463,048 282,984,626
Share capital
Share premium (EUR'000) 397,999 384,459 392,785
Less: Acquisition/transaction costs (EUR'000) (2,858) (2,858) (2,858)
Total share premium (EUR'000) 395,141 381,601 389,927
There were no changes made to the number of authorised shares of the Company during the period under review.
Stenprop Limited has one class of share; all shares rank equally and are fully paid.
The Company had 286,681,880 (March 2016: 282,984,626) ordinary shares in issue at the reporting date. On 9 June 2016,
3,687,191 and 10,063 new ordinary shares were issued on the JSE and the BSX at an issue price of EUR1.41 per share in respect
of the Share Purchase Plan and Deferred Share Bonus Plan respectively.
As at 30 June 2016, the Company held 471,912 treasury shares (June 2015 and March 2016: nil).
5.EVENTS AFTER THE REPORTING PERIOD
On 8 June 2016, the directors declared a final cash dividend of 4.7 cents per share in respect of the year ended
31 March 2016. The final dividend was paid on 29 July 2016.
The Company began a limited programme of share repurchases towards the end of June 2016 and, during the period to
30 June 2016, the Company repurchased 471,912 shares for an aggregate purchase price of EUR653,000. In July 2016 the
Company repurchased a further 884,655 shares for an aggregate purchase price of EUR1,161,000. The combined average
price per share of the repurchased shares was EUR1.337. The shares were purchased with the benefit of the dividend thereby
effectively reducing the average price per share to EUR1.290. All shares repurchased are held as treasury shares.
On 4 April 2016 David Brown resigned from the Board as non-executive director. On the same date Peter Hughes was appointed
as a non-executive director.
Stenprop has dual primary listings on the BSX and the JSE.
Date: 15 September 2016
JSE sponsor
Java Capital
BSX sponsor
Estera Securities (Bermuda) Limited
www.stenprop.com
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