Wrap Text
Reviewed provisional condensed consolidated results for the year ended 31 August 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”)
Reviewed provisional condensed consolidated results for the year ended 31 August 2016
28 BUILDINGS
at a total value of R4.21 billion
at 31 August 2016
DIVIDEND GROWTH
5.9% on the A share
8.8% on the B share
SECTORAL SPREAD BY GLA
Office 82.4%
Retail 9.9%
Other 7.7%
TENANT PROFILE GOVERNMENT VS. NON-GOVERNMENT (BY GLA)
Government 60.3%
Non-Government 39.7%
DIVIDEND DECLARATION
22.36413 cents per A share
14.77447 cents per B share
VACANCIES
Reduced to 4.6%
GEOGRAPHIC SPREAD BY GLA
Gauteng 52.7%
Western Cape 42.3%
Mpumalanga 5.0%
Directors’ commentary
Introduction
Ascension is a REIT focusing on centrally located commercial office buildings in South Africa with a strong focus towards government and other
empowerment sensitive tenants. The financial information presented in this report represents the results for the financial year ended 31 August 2016.
The comparative information provided is the audited two-month period ended 31 August 2015. The company’s financial year end was changed in 2015 to
align with the holding company, Rebosis Property Fund Limited (“Rebosis”).
The company achieved distributable earnings of R238.6 million for the year ended 31 August 2016 (two months-ended 31 August 2015: R39.8 million). An
8.8% increase on the full year B share distribution was achieved when compared to the twelve months ended 30 June 2015, which is ahead of the minimum
value in the forecast range provided of 8% - 10% by management.
Property portfolio
At 31 August 2016 the portfolio consisted of 28 properties valued at R4.2 billion, with a total gross lettable area (“GLA”) of 315 015 m². This
translates to an average building value of R150,3 million. Ascension disposed of one of its smaller properties during the financial year under review
- 90 & 92 Market Street.
The sectoral profile of the portfolio is 82.4% offices, 9.9% retail and 7.7% industrial. The group does not own any retail focused properties and the
retail components are typically the ground floor areas within office buildings. The total portfolio by GLA is 60.3% tenanted by government in line
with our strategic focus on this market. Total vacancies have decreased to 4.6% during the course of the financial year under review (31 August 2015:
5.8%). The weighted average rental escalation remains robust at 8.5% amidst a challenging macroeconomic environment.
Borrowings
The company’s borrowings at 31 August 2016 amounted to R1,592 billion at a weighted average rate of 9.39% per annum. R500 million of borrowings is
subject to a three-month JIBAR interest rate cap at 6.72%. The interest rate cap expires on 13 January 2017. Management have already embarked on the
process of reviewing hedging options to replace this expiring hedge for another 4 year term. The company further concluded an interest rate swap
agreement for R700 million earlier in the financial year. This now provides 75,4% total hedge cover for the company.
Changes in the management team
Ms Tsundzukani Mhlanga has resigned as the financial director of the company with effect from 31 October 2016. The board of directors wish to thank
her for her valued contributions during her tenure as the financial director of the company.
Mr Sanjay Chiboo has been appointed as the new financial director of the company with effect from 31 October 2016.
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.
Ascension and Rebosis have concluded an agreement in terms of which Rebosis has given notice of its firm intention to offer to acquire all of the
Ascension A ordinary shares that Rebosis does not already own in exchange for Rebosis A ordinary shares, by scheme of arrangement (the “scheme”), on
a swap ratio of 19.34236 Rebosis A ordinary consideration shares for every 100 Ascension A shares held.
The proposed transaction will result in an enlarged market capitalisation for Rebosis, with economies of scale and enhanced liquidity. The terms of
the Rebosis A ordinary shares effectively mirror the terms of the Ascension A ordinary shares. In addition, the cash-cover ratio applicable to the
Rebosis A ordinary shares will be significantly higher than the cash-cover ratio applicable to Ascension A shares.
Ascension uses distribution per share as the key measure of financial performance for trading statement purposes.
Pursuant to the change of the company’s financial year end from 30 June to 31 August, the distribution payment periods were amended to the two months
ending 31 August 2016 and thereafter in respect of the six month periods ending 28 February and 31 August. The comparative information for the
company is for the audited twelve-month period ended 30 June 2015 and the audited two-month period ended 31 August 2015.
Accordingly, for trading statement purposes, the company confirms that the distribution per A share and the distribution per B share for the previous
corresponding period, being for the twelve-month period ended 31 August 2015 does not differ by 15% or more from the distribution per A share and
distribution per B share for the year ended 31 August 2016.
Condensed Consolidated Statement of Profit or Loss and other Comprehensive Income
Reviewed Audited
31-Aug-16 31-Aug-15
12 months 2 months
R’000 R’000
Revenue 533 595 98 049
Contractual rental income 420 408 67 362
Recoveries from tenants 108 848 14 680
Straight-line lease income adjustment 4 339 16 007
Property operating expenses (144 947) (20 021)
Net property and related income 388 648 78 028
Other income 110 36
Asset management fees (17 691) (3 170)
Operating expenses (4 151) (1 568)
Operating profit 366 916 73 326
Profit on sale of listed securities 60 -
Fair value adjustments 274 278 (32 675)
Investment property 286 845 (32 164)
Listed securities 806 -
Interest rate derivative (13 373) (511)
Finance income 1 945 664
Interest received 1 945 664
Finance cost (127 999) (18 395)
Interest on non-current borrowings & other interest (126 932) (18 175)
Amortisation of bond raising fees (1 067) (220)
Net profit before tax for the year/period 515 200 22 920
Income tax expense - -
Deferred taxation 0 0
Net profit after tax for the period year/period 515 200 22 920
Other comprehensive income - -
Total comprehensive income for the year/period 515 200 22 920
Reconciliation between earnings, headline earnings and distributable earnings
Reviewed Audited
31-Aug-16 31-Aug-15
6 months 2 months
R’000 R’000
Profit for the period attributable to shareholders 515 200 22 920
Adjusted for:
Net fair value gain on revaluation of investment
property net of taxation (286 845) 32 165
Taxation 0 0
Headline earnings attributable to shareholders 228 355 55 084
Adjusted for:
Straight-line lease income adjustment (4 339) (16 007)
Fair value adjustment - listed securities (806) -
Anticipated distribution 996 -
Fair value adjustment - interest rate derivative 13 373 511
Amortisation of bond raising fees 1 067 220
Distributable earnings attributable to shareholders 238 646 39 808
Less: dividend declared (113 967) -
A shares (67 942) -
B shares (46 025) -
Earnings available for distribution 124 679 39 808
Basic and diluted / earnings per share (cents) 75.19 3.34
Basic and diluted headline earnings / per share (cents) 33.33 8.04
Basic and diluted earnings per A share (cents) 33.89 1.51
Basic and diluted earnings per B share (cents) 41.30 1.83
Headline and diluted headline earnings per A share (cents) 15.02 3.62
Headline and diluted headline earnings per B share (cents) 18.31 4.42
Dividend per A and B share
Dividend per A share 44.362 7.333
Dividend per B share 27.004 4.560
Number of A shares in issue 308 860 859 308 860 859
Number of B shares in issue 376 359 014 376 359 014
Weighted average number of A shares in issue 308 860 859 308 860 859
Weighted average number of B shares in issue 376 359 014 376 359 014
- The calculation of basic and fully diluted earnings per share is based on earnings of R515,2 million (31 August 2015: R22,9 million) and a weighted
average number of 685 219 873 shares (31 August 2015: 685 219 873) in issue throughout the financial period.
- The calculation of headline earnings and diluted headline earnings per share is based on a headline earnings of R228,4 million (31 August 2015:
R55,1 million) and a weighted average number of 685 219 873 shares (31 August 2015: 685 219 873) in issue throughout the financial period.
Condensed Consolidated Statement of Financial Position at 31 August 2016
Reviewed Audited
31-Aug-16 31-Aug-15
R’000 R’000
Assets
Non-current assets 4 069 818 3 836 497
Investment properties and properties under development 4 050 700 3 832 400
Investment in listed securities 17 450 -
Property, plant and equipment 4 76
Interest rate derivative 1 664 4 021
Current assets 102 760 67 333
Trade and other receivables 75 486 50 953
Cash and cash equivalents 27 274 16 380
Investment properties held for sale 159 200 -
Total assets 4 331 778 3 903 830
Equity and liabilities
Equity 2 663 331 2 301 907
Stated capital 1 727 146 1 727 146
Retained income 936 185 574 761
Total shareholders’ interest 2 663 331 2 301 907
Liabilities
Other non-current liabilities 1 049 337 1 426 656
Interest bearing borrowings 1 038 268 1 426 656
Interest rate derivative 11 069 -
Current liabilities 619 109 175 267
Current portion of interest bearing borrowings 552 962 136 548
Trade and other payables 66 147 38 719
Total liabilities 1 668 446 1 601 923
Total equity and liabilities 4 331 778 3 903 830
NAV per A and B share (cents) 389 336
LTV 37.8% 40.8%
Condensed Consolidated Statement of Cash Flows for the year ended 31 August 2016
Reviewed Audited
31-Aug-16 31-Aug-15
12 months 2 months
R’000 R’000
Cash flow from operating activities
Cash generated from operations 365 591 52 471
Finance income 1 945 664
Finance costs (126 932) (18 175)
Net cash inflow from operating activities 240 604 34 960
Cash flow from investing activities
Purchase of investment properties and cost of improvements (91 251) (16 158)
Proceeds from disposal of investment property held for sale 5 000 (65)
Purchase of other financial assets (16 644) -
Net cash outflow from investing activities (102 895) (16 223)
Cash generated from financing activities
Proceeds from other financial liabilities 26 960 63 003
Distributions paid (153 775) (115 636)
Net cash outflow from financing activities (126 815) (52 633)
Net increase in cash and cash equivalents 10 894 (33 896)
Cash and cash equivalents at the beginning of the period 16 380 50 276
Cash and cash equivalents at the end of the year/period 27 274 16 380
Condensed Consolidated Statement of Changes in Equity for the year ended 31 August 2016
Stated Capital Retained income Total Equity
R’000 R’000 R’000
Balance at 30 June 2015 – Audited 322 603 551 841 874 444
Capital conversion 1 404 543 - 1 404 543
Total comprehensive income for the period - 22 920 22 920
Balance at 31 August 2015 - Audited 1 727 146 574 761 2 301 907
Total comprehensive income for the year - 515 200 515 200
Dividend declaration - (153 775) (153 775)
Balance at 31 August 2016 – Reviewed 1 727 146 936 186 2 663 332
Notes
1. Basis of preparation and accounting policies
The reviewed condensed consolidated financial statements for the twelve months ended 31 August 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 SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the requirement contained in IAS34
- Interim Financial Reporting, the JSE Listings Requirements and the requirements of the South African Companies Act, 2008. These reviewed results
have been prepared under the supervision of Sanjay Chiboo CA(SA).
All accounting policies applied in the preparation of these reviewed condensed consolidated financial statements are in terms of IFRS and are
consistent with those applied in the prior year. There were no new standards adopted in the twelve months ended 31 August 2016.
The directors are not aware of any matters or circumstances arising subsequent to 31 August 2016 that require any additional disclosure or adjustment
to the financial statements, other than as disclosed in this announcement.
These reviewed condensed consolidated financial results for the twelve months ended 31 August 2016 have been reviewed by the company’s auditors Grant
Thornton, JHB, who expressed an unmodified review conclusion thereon. A copy of the auditor’s review report is available for inspection at the
company’s registered office together with the financial statements identified in the auditor’s review report. The auditor’s review report does not
necessarily report on all the information contained in these financial statements.
Shareholder are therefore advised that in order to obtain a full understanding of the nature of the auditor’s report engagement they should obtain a
copy of the auditor’s report together with the accompanying financial information from the issuer’s registered office. The directors take full
responsibility for the preparation of these results and confirm that the financial information has been correctly extracted from the underlying
financial statements.
2. Debt facilities
Funder Nominal amount Maturity date Interest rate
(R million)
Investec 553 13-Mar-18 Prime - 0.5%
Standard Bank 393 31-Aug-17 3-month JIBAR + 1.8%
Standard Bank 160 31-Aug-17 Prime - 1.5%
Nedbank 153 7-Mar-19 Prime - 1.5%
Nedbank 151 12-Sep-18 Prime - 1.5%
Nedbank 26 17-Jul-18 1-month JIBAR + 2.1%
Nedbank 45 23-Apr-18 Prime - 0.85%
Nedbank 51 29-Jun-18 1-month JIBAR + 2.1%
Nedbank 34 31-Aug-18 Prime - 1.5%
Nedbank 26 30-Aug-18 Prime - 1.5%
The weighted average cost of debt at 31 August 2016 is 9.39% (31 August 2015: 8.08%).
3. Interest rate derivatives
Rate Facility Expiry date
(R million)
Interest rate cap 3-month JIBAR 6,72% 500 13-Jan-17
Interest rate swap 3-month JIBAR 8,35% 700 12-Apr-20
4. Trade and other receivables
Reviewed Audited
31-Aug-16 31-Aug-15
12 months 2 months
R’000 R’000
Trade receivables (net of impairment provisions) 42 200 23 412
Debtor accruals (including consumption
charges not yet invoiced) 16 823 11 416
Adjustment accounts 833 885
Deposits 1 600 1 471
Sundry debtors, prepayments and VAT 14 030 13 769
Total 75 486 50 953
5. Lease expiry profile (Based on GLA)
Total Office Retail Other
Vacant 4.6% 5.5% 0.3% 1.0%
Monthly 2.2% 2.5% 0.7% 0.3%
August 2016 18.5% 17.6% 9.2% 20.0%
August 2017 11.4% 12.4% 2.5% 4.0%
August 2018 19.1% 20.8% 11.5% 4.3%
August 2019 14.9% 16.7% 4.3% 44.5%
August 2020 14.1% 12.2% 8.5% 18.2%
> August 2020 15.2% 12.3% 63.0% 7.7%
Total 100.0% 100.0% 100.0% 100.0%
6. Tenants: Government vs. non-government
Based on GLA Based on monthly
contracted revenue
Government 60.3% 56.8%
Non-Government 39.7% 43.2%
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 only has two reporting segments, namely office and industrial. The predominant use of all properties in the portfolio (save
one – Island Centre) 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.
Admin and
corporate
GROUP Office Industrial Total costs Total
2016 R’000 R’000 R’000 R’000 R’000
Property portfolio 520 185 13 410 533 595 - 533 595
Contractual rental income 409 205 11 203 420 408 - 420 408
Recoveries from tenants 107 628 1 220 108 848 - 108 848
Straight line rental income accrual 3 352 987 4 339 - 4 339
Finance income 622 45 667 1 278 1 945
Other income 26 - 26 144 170
Total revenue 520 833 13 455 534 288 1 422 535 710
Operating costs (141 967) (2 980) (144 947) - (144 947)
Administration and corporate costs - - - (21 842) (21 842)
Changes in fair values 250 645 36 200 286 845 (12 567) 274 278
Finance charges - - - (127 999) (127 999)
Segment profit before taxation 629 511 46 675 676 186 (160 986) 515 200
Investment property 3 941 700 109 000 4 050 700 - 4 050 700
Other assets 167 639 29 940 197 579 83 499 281 078
Total assets 4 109 339 138 940 4 248 279 83 499 4 331 778
Total liabilities 76 487 5 278 81 765 1 586 681 1 668 446
2015
Property portfolio 95 882 2 167 98 049 - 98 049
Contractual rental income 65 578 1 784 67 362 - 67 362
Recoveries from tenants 14 452 228 14 680 - 14 680
Straight line rental income accrual 15 852 155 16 007 - 16 007
Finance income 102 - 102 562 664
Other income 36 - 36 - 36
Total revenue 96 020 2 167 98 187 562 98 749
Operating costs (19 498) (523) (20 021) - (20 021)
Administration and corporate costs - - - (4 738) (4 738)
Changes in fair values (29 233) (2 932) (32 165) (510) (32 675)
Finance charges - - - (18 395) (18 395)
Segment profit before taxation 47 289 (1 288) 46 001 (23 081) 22 920
Investment property 3 759 600 72 800 3 832 400 - 3 832 400
Other assets (944) 1 870 926 70 504 71 430
Total assets 3 758 656 74 670 3 833 326 70 504 3 903 830
Total liabilities 42 692 933 43 625 1 558 298 1 601 923
8. Related Parties
Parties are considered related if one party has the ability to exercise control or significant influence over the party in making financial or
operational decisions. Related parties with whom the company transacted during the period were:
Group
R’000 12 months 2 months
ended ended
31 August 31 August
Amounts included in Trade Payables
Ascension Property Management Company (Pty) Ltd 4 837
Amounts included under Non-Current Liabilities
Rebosis Property Fund Limited 8 000 -
Related party transactions
Asset Management fees paid 17 691 3 170
Billion Property Services
Property management fee 8 243
Lease commission fee 989
9. Dividend declaration
The board has approved and notice is hereby given of a dividend [dividend no.10] of 22.36413 cents per A share and 14.77447 cents per B share for the
six months ended 31 August 2016
The dividends are payable to Ascension shareholders in accordance with the timetable set out below.
The last date to trade cum dividend Tuesday, 22 November 2016
Share trade ex dividend Wednesday, 23 November 2016
Record date Friday, 25 November 2016
Payment date Monday, 28 November 2016
Share certificates may not be dematerialised or rematerialised between Wednesday, 23 November 2016 and Friday, 25 November 2016, both days inclusive.
In respect of dematerialised shareholders, the dividend will be transferred to the CSDP/broker accounts on Monday, 28 November 2016. Certificated
shareholders’ dividend payments will be paid to certificated shareholders’ bank accounts on or about Monday, 28 November 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 * ^ / S Chiboo * ^ / M Burton / H Takolia / M Renene / N Gugushe
* (executive director)
^ S Chiboo was appointed as a director as at 31 October 2016 and T Mhlanga resigned as a director as at 31 October 2016
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
3 November 2016
Date: 03/11/2016 05:49:00 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
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