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Summarised unaudited consolidated financial statements for three months & fifteen months ended 30 September 2016
ROCKCASTLE GLOBAL REAL ESTATE COMPANY LIMITED
Incorporated in the Republic of Mauritius
Reg no 108869 C1/GBL
ISIN MU0364N00003
Primary listing SEM (SEM code Rock.N0000)
And JSE (JSE code ROC)
(�Rockcastle� or �the Company� or �the Group�)
SUMMARISED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS for the three
months and fifteen months ended 30 September 2016
DIRECTORS� COMMENTARY
STRUCTURE AND LISTING
Rockcastle is a Category One Global Business Licence Company registered in
Mauritius. The Company has primary listings on both the Stock Exchange of
Mauritius Ltd (�SEM�) and the JSE Limited (�JSE�). It invests in direct
property in Central and Eastern Europe as well as in listed real estate
securities globally.
Shareholders were provided with the option to receive their June 2016
interim dividend in shares rather than cash. Over 77% of shareholders
elected to take the scrip dividend resulting in the issue of 14 024 700
new shares.
CHANGE IN FINANCIAL YEAR-END
As announced on SENS and on the website of the SEM on 21 December 2015,
Rockcastle has changed its financial year-end from 30 June to 31 December.
The reason for the change is to better align the Company with the
reporting deadlines of investors and the market in which the Company
operates. The change in year-end will not affect Rockcastle�s distribution
period which will continue to be for the six-months ending 30 June and
31 December. Shareholders are referred to the announcement released on
21 December 2015 for further information.
COMMENTARY
Despite rising bond yields, political uncertainty and mixed economic data
Rockcastle managed to record a positive revaluation on its listed
investments. As a result, the Company�s net asset value increased to
USD1.74 per share at 30 September 2016 compared to the USD1.70 per share
at 30 June 2016 and following the interim dividend of 4.782 USD cents per
share paid during the quarter.
Low long term interest rates have provided a strong tailwind to the
performance of the real estate sector over the last few years, however,
the reversal of this trend could affect returns in future as central banks
prepare to gradually reduce monetary stimulus.
In the UK and Europe, the limited economic impact of the Brexit vote, thus
far, resulted in these markets recovering off their Brexit lows.
Uncertainty and volatility remain which is negatively affecting business
confidence and delaying investment decisions. Anxiety over the results of
the US presidential election have weighed on global equity and currency
markets and heightened perceptions of political risk worldwide. Following
the interim period end, the portfolio was defensively positioned.
The Company�s strategy of selling listed investments and re-investing the
proceeds in direct properties and developments resulted in direct property
comprising 35% of total investment assets at 30 September 2016. This
percentage is expected to increase to between 40% and 45% with the
acquisition of the Focus Park shopping centres and Galeria Warminska which
are scheduled to close in the next 3 months. Management�s target of 50%
direct property assets is now expected to be reached during the 2017
financial year.
Listed security portfolio
Management continues to focus the portfolio on core companies with strong
long-term growth prospects. This strategy together with the bias towards
developed markets (US, UK and Europe) will continue to provide protection
from market volatility.
There were no major changes in either the individual counters or the
geographic spread in the portfolio. The focus remains on large, liquid
companies that dominate their markets and consistently outperform their
competitors. Taking advantage of the sharp correction in prices and the
devaluation of the British pound following the unexpected result of the UK
Referendum, the Company increased its exposure to Hammerson and invested
in British Land and Land Securities.
DIRECT PROPERTY
Central and Eastern Europe
The Company concluded its acquisition of Bonarka City Centre in Krakow
increasing its total investment in retail properties in the region to
USD962.5 million. In October 2016, Rockcastle opened its first two
greenfield developments in Poland, Galeria Tomaszow and Galeria Wolomin,
within budget and on schedule. The two shopping centres are over 97% let
and represent an increase of 44 000m2 GLA in the retail portfolio in
Poland. The two Focus Park shopping centres acquired for EUR161 million
will add a further 62 000m2 of GLA to this portfolio.
A preliminary agreement was signed to acquire Galeria Warminska in
Olsztyn, Poland. This shopping centre is the leading retail destination in
the region offering 150 stores with a GLA of 42 711m2. The transaction is
expected to be finalised in the first quarter of 2017 and the purchase
price of EUR150 million will be settled from existing cash resources.
Several potential acquisitions are under negotiation and evaluation by
management.
OUTLOOK
The Board expects growth in dividends per share for the six month period
to 31 December 2016 to be within its guidance of 11% to 13% compared to
the same period in 2015. This guidance is based on the assumptions that a
stable macroeconomic environment prevails, no major corporate failures
occur and planned acquisitions remain on schedule.
Furthermore, the Board projects that 21% growth in distributable earnings
per share for 2017 is achievable based on the following assumptions: a) no
further equity is raised and an LTV level of approximately 42% is reached
in completing currently committed and signed acquisitions based on the
composition and valuation of the listed security portfolio in place as of
11 November 2016; b) any potential corporate-level transaction is ignored;
and c) a stable macroeconomic environment prevails and no major corporate
failures occur.
These forecasts have not been audited or reviewed by Rockcastle�s auditors
and are the responsibility of the Board.
CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the joint cautionary announcement issued by
Rockcastle and New Europe Property Investments PLC (�Nepi�), a property
investment company incorporated and registered in the Isle of Man and
listed on the JSE and Bucharest Stock Exchange (�BVB�), on 20 October 2016
whereby shareholders were advised that the companies have entered into
negotiations to explore a potential transaction between them. The
discussions have progressed to a co-operative evaluation of a merger
entailing an all-share transaction, with each party�s relative value to be
expressed in a share-swap ratio, subject to all required shareholder and
regulatory approvals. Various legal, regulatory and tax aspects are being
analysed in several jurisdictions.
A transaction between Rockcastle and Nepi would result in a substantially
enlarged market capitalisation, with all shareholders expected to benefit
from enhanced liquidity. A transaction will also see the
integration of two complimentary management teams, positioned to unlock
synergies and create further value for Rockcastle shareholders.
Rockcastle shareholders will be kept updated on progress towards
finalisation of the details of a transaction. Pending further
announcements Rockcastle shareholders are advised to exercise caution when
dealing in their shares.
By order of the Board
Intercontinental Trust Limited
Company Secretary
Mauritius
14 November 2016
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
as at as at as at
30 Sep 2016 30 Sep 2015 30 Jun 2015
USD�000 USD�000 USD�000
Assets
Non-current assets 2 860 662 2 046 117 2 295 139
Investment property 895 104 59 730 58 708
Straight-lining of rental
revenue adjustment 80 86 415
Investment property under development 70 846 26 018 7 436
Intangible asset 2 518 - -
Listed security investments 1 832 949 1 880 756 2 161 724
Property, plant and equipment 329 - -
Investment in and loans to joint ventures 31 635 41 688 41 727
Rockcastle management incentive loans 27 201 37 839 25 129
Current assets 37 535 50 540 31 366
Investment income receivable - - 7 589
Cash and cash equivalents 21 949 36 386 3 035
Trade and other receivables 15 586 2 674 15 410
Loans to development partners - 11 480 5 332
Total assets 2 898 197 2 096 657 2 326 505
EQUITY AND LIABILITIES
Total equity attributable to
equity holders 1 646 070 1 350 747 1 241 128
Stated capital 1 384 042 1 313 346 1 180 670
Retained income 451 209 177 729 183 601
Non-distributable reserves (194 895) (140 471) (123 947)
Currency translation reserve 5 714 143 804
Minority interest (249) - -
Total equity 1 645 821 1 350 747 1 241 128
Total liabilities 1 252 376 745 910 1 085 377
Non-current liabilities 451 503 16 618 16 614
Interest-bearing borrowings 451 503 16 618 16 614
Current liabilities 800 873 729 292 1 068 763
Trade and other payables 49 238 6 496 4 966
Interest-bearing borrowings 751 141 722 601 1 063 777
Income tax payable 494 195 20
Total equity and liabilities 2 898 197 2 096 657 2 326 505
Total number of shares in issue 945 502 019 912 540 104 847 862 018
Net asset value per share (USD) 1,74 1,48 1,46
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Audited Unaudited Unaudited
for the for the for the for the
fifteen twelve three three
months ended months ended months ended months ended
30 Sep 2016 30 Jun 2015 30 Sep 2016 30 Sep 2015
USD�000 USD�000 USD�000 USD�000
Net rental and
related revenue 24 614 1 992 8 022 1 369
Recoveries and
contractual
rental revenue 31 996 2 240 10 393 1 887
Straight-lining of
rental revenue adjustment 80 415 41 86
Rental revenue 32 076 2 655 10 434 1 973
Property operating
expenses (7 462) (663) (2 412) (604)
Dividends received
from listed security
investments and
related income 90 279 77 931 10 030 13 912
Income from joint
ventures 2 145 5 892 781 814
Fair value gain on
investment
property and listed
security investments 244 032 20 727 55 397 6 618
Adjustment resulting
from straight
lining of rental revenue (80) (415) (41) (86)
Fair value gain on
investment property 27 386 - 22 564 -
Fair value gain on
listed security
investments 216 726 21 142 32 874 6 704
Foreign exchange
gain/(loss) 19 806 (77 935) 6 837 7 212
Operating expenses (4 248) (2 994) (1 536) (652)
Profit before net
finance costs 376 628 25 613 79 531 29 273
Net finance costs (55 654) (15 461) (4 063) (15 284)
Finance income 2 878 2 363 454 588
Interest received 2 878 2 363 454 588
Finance costs (58 532) (17 824) (4 517) (15 872)
Interest on
borrowings (23 913) (11 913) (4 193) (2 870)
Capitalised interest 1 955 179 482 -
Unrealised fair value
(loss)/gain on
interest rate
derivatives (36 574) 5 331 (806) (13 002)
Unrealised fair value
loss on bond shorts - (11 421) - -
Profit before income
tax expense 320 974 10 152 75 468 13 989
Income tax expense (499) (20) (123) (175)
Profit for the period
attributable
to equity holders
of the company 320 475 10 132 75 345 13 814
OTHER COMPREHENSIVE INCOME NET OF TAX
Items that may be reclassified subsequently to profit or loss
Exchange differences
on translation of
foreign operations 4 910 804 3 238 (661)
Total comprehensive
income for the period 325 385 10 936 78 583 13 153
Profit for the period attributable to:
Equity holders of
the company 321 019 10 132 75 710 13 814
Minority interest (544) - (365) -
320 475 10 132 75 345 13 814
Total comprehensive
Income for the period
attributable to:
Equity holders of
the company 326 065 10 936 78 962 13 153
Minority interest (680) - (379) -
325 385 10 936 78 583 13 153
Weighted average number
of shares
in issue 910 589 477 772 800 853 933 590 897 850 647 067
Basic earnings per
share* from
continuing operations
(USD cents) 35,25 1,31 8,11 1,62
Headline earnings per
share* from
continuing operations
(USD cents) 32,32 0,69 5,69 1,62
*Rockcastle has no dilutionary instruments in issue.
RECONCILIATION OF PROFIT FOR THE PERIOD TO HEADLINE EARNINGS
Unaudited Audited Unaudited Unaudited
for the for the for the for the
fifteen twelve three three
months ended months ended months ended months ended
30 Sep 2016 30 Jun 2015 30 Sep 2016 30 Sep 2015
USD�000 USD�000 USD�000 USD�000
Basic earnings �
profit for the period
attributable to
equity holders 321 019 10 132 75 710 13 814
Adjusted for:
- fair value gain on
investment property (27 386) - (22 564) -
- fair value
loss/(gain) on
investment property
of joint ventures 706 (4 814) - -
Headline earnings 294 339 5 318 53 146 13 814
Headline earnings per share
(USD cents) 32,32 0,69 5,69 1,62
Rockcastle has no dilutionary instruments in issue.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non- Currency
distri- trans-
Stated Retained Minority butable lation
Capital income interest reserves reserve Total
USD�000 USD�000 USD�000 USD�000 USD�000 USD�000
Audited for
The twelve
months
ended
30 June
2015
Opening
balance 871 154 131 714 - (19 684) - 983 184
Issue of
shares 277 242 277 242
Dividends
declared 32 274 (62 508) (30 234)
Exchange
differences
on translation
of foreign
operations 804 804
Profit for the
period 10 132 10 132
Transfer to
non-distri-
butable
reserves 104 263 (104 263) -
Balance at
30 June
2015 1 180 670 183 601 - (123 947) 804 1 241 128
Unaudited
for the three
months
ended 30
September 2015
Opening
balance 1 180 670 183 601 - (123 947) 804 1 241 128
Issue of
shares 96 049 3 378 99 427
Dividends
declared 36 627 (39 588) (2 961)
Exchange
differences
on translation
of foreign
operations (661) (661)
Profit for
the period 13 814 13 814
Transfer to
non-distri-
butable
reserves 16 524 (16 524) -
Balance at
30 September
2015 1 313 346 177 729 - (140 471) 143 1 350 747
Unaudited
for the
twelve months
ended
30 September
2016
Opening
balance 1 313 346 177 729 - (140 471) 143 1 350 747
Shares
issued and
cum distri-
bution portion
on issue
during the
period 31 389 (44 350) (12 961)
Dividends
declared 39 307 (42 142) (2 835)
Reclassifi-
cation of
exchange
differences
on joint
ventures
on sale of
investments (1 657) (1 657)
Exchange
differences
on translation
of foreign
operations 5 571 5 571
Profit for the
period 307 205 (544) 306 661
Equity contributed
by minorities 295 295
Transfer to non-
distributable
reserves 54 424 (54 424) -
Balance at
30 September
2016 1 384 042 451 209 (249) (194 895) 5 714 1 645 821
https://protect-za.mimecast.com/s/medYB7ivm5iL
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited for the Audited for the
fifteen months ended twelve months ended
30 Sep 2016 30 Jun 2015
USD�000 USD�000
Cash inflow from operating activities 138 349 53 759
Cash outflow from investing activities (323 719) (751 235)
Cash inflow from financing activities 204 284 700 025
Increase in cash and cash equivalents 18 914 2 549
Cash and cash equivalents at beginning
of period 3 035 486
Cash and cash equivalents at end of period 21 949 3 035
Current accounts 21 949 3 035
NOTES
1 PREPARATION, ACCOUNTING POLICIES AND AUDIT OPINION
The Group is required to publish financial results for the three months
and fifteen months ended 30 September 2016 in terms of the Listing Rule
12.19 of the SEM. Accordingly, this announcement presents the financial
results of the Group in respect of the period from 1 July 2016 to
30 September 2016, the period from 1 July 2015 to 30 September 2016, as
well as the comparative results from the prior period.
The accounting policies which have been applied are consistent with those
used in the preparation of the audited financial statements for the year
ended 30 June 2015. Non-distributable reserves arise from any accumulated
losses pertaining to changes in the fair value of the assets and
liabilities in the Group on a US Dollar basis. The Group does not consider
such reserves to be distributable.
The summarised unaudited consolidated financial statements (�financial
statements�) for the three months and the fifteen months ended
30 September 2016 have been prepared in accordance with the measurement
and recognition requirements of IFRS, the requirements of IAS 34: Interim
Financial Reporting, the JSE Listings Requirements, the SEM Listing Rules
and the Securities Act of Mauritius 2005.
These financial statements have not been reviewed or reported on by the
Group�s external auditor. These financial statements were approved by the
Board on 11 November 2016. Copies of the financial statements and the
statement of direct and indirect interests of each officer of the
Group, pursuant to rule 8(2)(m) of the Securities (Disclosure Obligations
of Reporting Issuers) Rules of Mauritius 2007, are available free of
charge, upon request at Rockcastle�s registered address.
Contact person: Mrs Smitha Algoo.
This communiqu� is issued pursuant to SEM Listing Rule 12.20 and section
88 of the Securities Act of Mauritius 2005. The Board accepts full
responsibility for the accuracy of the information contained in these
financial statements. The directors are not aware of any matters or
circumstances arising subsequent to the period ended 30 September 2016
that require any additional disclosure or adjustment to the financial
statements.
2 SEGMENTAL ANALYSIS
Unaudited Audited Unaudited Unaudited
for the for the for the for the
fifteen twelve three three
months ended months ended months ended months ended
30 Sep 2016 30 Jun 2015 30 Sep 2016 30 Sep 2015
USD�000 USD�000 USD�000 USD�000
Profit before
income tax expense
Australia 9 050 28 843 (1 564) 6 923
Canada (3 263) 1 940 - (3 404)
Europe (includes
Direct property
related items) 64 554 20 976 40 083 5 646
Hong Kong (3 793) 10 221 - (3 887)
Singapore (8 528) 27 339 735 (17 215)
UK (21 399) 11 944 37 328 (575)
USA 260 554 (19 242) (10 406) 18 424
Zambia 2 146 5 892 3 510 814
Corporate 21 653 (77 761) 5 782 7 263
320 974 10 152 75 468 13 989
Unaudited Unaudited Audited
as at as at as at
30 Sep 2016 30 Sep 2015 30 Jun 2015
USD�000 USD�000 USD�000
Total assets
Australia 38 407 56 351 69 835
Canada - - 105 231
Europe 1 275 713 288 105 276 235
UK 512 710 376 925 376 507
Hong Kong - 6 581 91 756
Singapore 23 076 112 458 199 308
USA 986 857 1 158 202 1 135 445
Zambia 31 635 41 688 41 727
Corporate 29 799 56 347 30 461
2 898 197 2 096 657 2 326 505
Directors Mark Olivier (chairman); Spiro Noussis (CEO)*; Nick Matulovich*;
Barry Stuhler; Rory Kirk; Andre van der Veer; Yan Ng; Karen Bodenstein*,
Marek Noetzel* (*executive director)
Company secretary Intercontinental Trust Limited
Registered address c/o Intercontinental Trust, Level 3, Alexander House,
35 Cybercity, Ebene,72201, Mauritius
Transfer secretary in South Africa Link Market Services South Africa
Proprietary Limited
JSE sponsor Java Capital
SEM authorised representative and sponsor Perigeum Capital Ltd
Date: 14/11/2016 01:15:00 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.
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