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Consolidated results of the group for the six months ended 31 December 2016
ORION REAL ESTATE LIMITED
Approved as a REIT by the JSE
(Incorporated in the Republic of South Africa)
(Registration number: 1997/021085/06)
Share Code: ORE ISIN: ZAE000201695
("Orion Real Estate" or “the Company”)
CONSOLIDATED RESULTS OF THE GROUP FOR THE SIX MONTHS ENDED 31 DECEMBER 2016
Condensed Consolidated Statement Of Financial Position
Unaudited Unaudited
6 months ended 6 months ended Audited
31-Dec-16 31-Dec-15 year end
Figures in Rand 30-Jun-16
ASSETS
Investment property 802,883,351 778,656,632 802,883,351
Fair value of property portfolio 797,701,052 778,656,632 797,701,052
Straight-line lease income adjustment 5,182,299 - 5,182,299
Property, plant and equipment 5,707,100 1,340,089 5,394,586
Total Non-current assets 808,590,451 779,996,721 808,277,937
Loans to related parties 18,178,337 18,920,949 12,271,910
Loans to shareholders - - 10,147,464
Loans to directors - 244,995 -
Stock on hand 149,488 - 102,035
Trade and other receivables 58,314,305 62,644,071 60,271,664
Cash and cash equivalents 21,000 1,005,247 10,684,674
Total Current Assets 76,663,130 82,815,262 93,477,747
Investment property held for sale - 2,708,762 4,500,000
Total Assets 885,253,581 865,520,745 906,255,684
EQUITY AND LIABILITIES
Capital and reserves
Share capital and share premium 114,336,674 114,336,674 114,336,674
Retained earnings 488 732 918 509,379,722 506,466,861
Total equity attributable to owners of the
parent 603 069 592 623,716,396 620,803,535
Non-controlling interest (283 175) (286,933) (287,431)
Total equity 602 786 417 623,429,463 620,516,104
Borrowings 143,099,409 129,695,530 151,148,521
Deferred tax liabilities 1,006,350 1,856,393 1,006,350
Total Non-current liabilities 144,105,759 131,551,923 152,154,871
Current income tax liabilities 8,902,296 8,715,952 8,269,251
Loans from directors 2,015,561 18,248 403,529
Loans from related parties 522,010 159,690 21,264
Loans from group companies 103 - -
Loans from shareholders 6,126,864 - -
Tenant deposits 6,848,762 7,006,114 6,994,110
Trade and other payables 96,190,017 64,751,002 100,101,583
Borrowings 14,764,174 26,723,906 14,764,174
Bank overdraft 2,991,618 3,164,447 3,030,798
Current Liabilities 138,361,405 110,539,359 133,584,709
Total Liabilities 282,467,164 242,091,282 285,739,580
Total Equity and Liabilities 885 253 581 865,520,745 906,255,684
Condensed Consolidated Statement of Comprehensive Income
Unaudited Unaudited
6 months 6 months Audited
Ended ended year end
Figures in Rand 31-Dec-16 31-Dec-15 30-Jun-16
Revenue 47,679,767 42,882,469 81,995,484
Property revenue 47,679,767 42,882,469 86,234,799
Straight-line lease income accrual - - (4,239,315)
Other income 190,248 86,016 2,472,052
Other direct property operating costs (27,287,500) (19,752,994) (82,984,066)
Administrative and management
expenses (8,988,726) (10,745,228) (454,923)
Repairs and maintenance (1,174,137) (2,305,752) (2,996,586)
Profit distribution from controlled trust - - -
Fair value adjustment - - -
Gross change in fair value of
investment property - - 18,705,591
Straight-line lease adjustment - - 4,239,315
Operating profit before interest 10,419,652 10,164,511 20,976,867
Finance income 5,520,421 2,430,027 5,973,367
Finance costs (12,454,525) (7,231,733) (25,192,635)
Profit before taxation 3,485,548 5,362,805 1,757,599
Taxation (837,416) (375,396) 316,450
Profit for the year 2,648,132 4,987,408 2,074,049
Other comprehensive income - - -
Total comprehensive income for the year 2,648,132 4,987,408 2,074,049
Profit and total comprehensive income for
the year attributable to:
Shareholders 2,643,876 4,988,606 2,074,547
Non-controlling interest 4,256 (1,198) (498)
2,648,132 4,987,408 2,074,049
Condensed Consolidated Statement of Cash Flows
Unaudited Unaudited
6 months 6 months Audited
ended Ended year end
31-Dec-16 31-Dec-15 30-Jun-16
Figures in Rand
Cash flows generated from operating
activities (19,000,474) 3,100,230 17,356,379
Cash generated by operations 8,672,030 8,171,735 38,334,464
Interest received 5,520,421 2,430,027 5,973,367
Interest paid (12,454,525) (7,231,733) (25,192,635)
Taxation paid (360,581) (269,799) (1,758,817)
Dividends paid (20,377,819) -
Cash (outflow) to / inflow from investing
activities 8,185,347 (8,513,390) (22,941,573)
Loans (advanced to)/repaid by
related parties (5,906,427) 1,002,557 7,651,596
Loans (advanced to)/repaid by
shareholders 10,147,464 (10,147,464)
Additions to investment property - (9,349,783) (22,870,911)
Proceeds on sale of investment
property 4,500,000 - 3,500,000
Purchases of property, plant and
equipment (555,690) (166,164) (1,074,794)
Cash inflow from / (outflow) to financing
activities (5,936,334) 3,201,162 13,186,271
Loans advanced by related parties 500,746 138,678 252
Loans advanced by to directors 1,612,032 (244,995) 385,281
(Decrease)/Increase in interest
bearing borrowings (8,049,112) 3,307,479 12,800,738
(Decrease)/increase in net cash, cash
equivalents and bank overdrafts (16,751,461) (2,211,999) 7,601,077
Cash, cash equivalents and bank
overdrafts at the beginning of the year 7,653,876 52,799 52,799
Cash, cash equivalents and bank
overdrafts at the end of the year (9,097,585) (2,159,200) 7,653,876
Condensed Consolidated Statements of Changes in Equity
Total Share
Share Capital and Retained Controlling Total
Figures in Rand Capital Premium Earnings Total Interest Equity
Balance at
30 June 2015 114,336,674 114,336,674 504,392,314 618,728,988 (286,933) 618,442,055
Total
comprehensive
income for the
year - - 2,074,547 2,074,547 (498) 2,074,049
Balance at
30 June 2016 114,336,674 114,336,674 506,466,861 620,803,535 (287,431) 620,516,104
Total
comprehensive
income for the
year - - 2,648,132 2,643 876 (636) 2,643 240
Dividends paid - - (20,377,819) (20,377,819) 4,892 (20,372,927)
Balance at
31 December
2016 114,336,674 114,336,674 488,737,174 603,069,592 (283,175) 602,786,417
Calculation of headline earnings and distributable earnings reconciliation
Unaudited Unaudited
6 months 6 months Audited
Ended ended year end
31-Dec-16 31-Dec-15 30-Jun-16
Figures in Rand
Profit attributable to ordinary equity holders 2 648 132 4 987 408 2 047 049
Adjusted for:
Change in fair value of investment properties net of
non- controlling interests - - (18 705 591)
Profit/(loss) on sale of investment property - - (791 238)
Headline earnings 2 648 132 4 987 408 (17 422 780)
Adjusted for:
Straight line lease accrual - - (4 239 315)
Profit/(loss) on sale of investment property - - 18 705 591
Distributable earnings 2 648 132 4 987 408 (2 956 504)
Net asset value 603 069 592 623 716 396 620 803 535
Taxable dividend declared on 13 October 2016 in
relation to the year ended 30 June 2015 14,734,731 - -
Taxable dividend declared on 16 November 2016 in
relation to the year ended 30 June 2016 5,643,088 - -
Distribution per share (cents)
Year ended 30 June 2015 (paid on 7 November 2016) 2.35 - -
Year ended 30 June 2016 (paid on 19 December 2016) 0.90 - -
Basic earnings per share (cents) 0.42 0.80 0.33
Headline and diluted headline earnings per share (cents) 0.42 0.80 (2.78)
Net asset value per share (cents) 96.18 99.47 99.01
Notes:
Weighted average shares in issue („000) 630 699 630 699 630 699
Number of shares in issue at period end (including
treasury shares) (“000) 630 699 630 699 630 699
Number of shares in issue at period end (excluding
treasury shares) (“000) 627 010 627 010 627 010
Segment Report for the six months ended 31 December 2016
31 Dec 2016 31 Dec 2015
R % R %
Revenue (excluding recoveries)
Commercial 13 542 341 38 11 895 450 44
Industrial 4 202 728 12 2 313 829 9
Retail 16 185 160 45 9 096 607 34
Hospitality 1 348 968 4 3 137 005 12
Residential 243 671 1 425 832 1
35 522 868 100 26 868 722 100
Profit before taxation
Commercial 1 669 577 48 2 374 246 43
Industrial 599 514 17 461 824 9
Retail 742 422 21 1 815 618 34
Hospitality 456 607 13 626 124 12
Residential 20 913 1 84 993 2
3 489 033 100 5 362 805 100
Property values (including properties held for
sale, before adjustment for straight-lining of
leases)
Commercial 417 343 659 52 340 395 500 44
Industrial 82 229 907 10 89 515 637 12
Retail 158 183 376 19 162 766 888 21
Hospitality 90 876 169 11 80 874 438 10
Residential 4 350 240 1 48 945 694 6
Land 53 400 000 7 53 400 000 7
806 383 351 100 775 898 158 100
Borrowings (excluding instalment sales and
loans)
Commercial 126 319 879 80 66 688 509 51
Industrial 22 285 317 14 20 204 080 16
Retail 6 530 380 4 24 860 968 19
Hospitality 2 606 293 2 11 740 651 9
Residential 0 0 7 167 153 5
157 741 868 100 130 661 360 100
Rating of tenants (rental income)
Commercial A 3 868 362 11 A 1 384 067 5
B 321 714 1 B 4 468 584 16
C 9 352 265 26 C 6 042 798 22
Industrial A - - A 0 -
B 2 150 953 6 B 1 836 023 7
C 2 051 775 6 C 477 806 2
Retail A 5 774 914 16 A 1 335 417 5
B 552 056 2 B 4 005 199 15
C 9 858 190 27 C 3 755 990 14
Hospitality B 1 348 968 4 B 3 137 005 12
Residential C 243 671 1 C 425 832 2
35 522 868 100 26 868 721 100
A: Represents major listed companies.
B: Represents smaller listed companies and
big unlisted companies.
C: Represents smaller unlisted companies and
private businesses.
1. Operating performance
The Group revenue increased from R42.8 million in December 2015 to R47.7 million in December
2016. This is as a result of the normal lease escalations as well as a marginally better occupancy rate
within the properties. In the prior year the Gross revenue line included finance income from interest
on overdue debtor accounts, while in the current year interest on overdue accounts is shown in the
finance income line on the face of the income statement.
Other direct, operating and management costs increased from R30.5 million to R36.3 million. This
represents an increase of 18.9%. The majority of the increase in the Other direct, operating and
management costs is as a result of an increase in utilities of R5.5 million where disputes have been
logged with council along with an increase in levies of R1.3 million. The decrease in Administrative
and management is due to a reduction in Salaries for the same period year on year as well as a
reduction in the bad debts written of for the corresponding period.
Repairs and Maintenance decreased from R2.3 million to R1.2 million. This is due to better efficiencies
and cost control.
The major increase in the Finance income relates to a R2.2 million interest accrued on money paid
to council on behalf of Elma Park body corporate and directly to the body corporate. The major
increase in the finance cost is as a result of the increase in the interest rate of 1% between the
previous reporting period and current, accrued interest for Elma Park which was not accrued in the
previous reporting period and interest on a new bond for Virgin Active development costs.
The operating profit decreased by 65.7% from R10.2 million to R3.5 million. The total comprehensive
income for the period decreased from R5 million to R2.6 million constituting a decrease of R46.9%.
2. Basis of preparation
The condensed unaudited consolidated results have been prepared in accordance with the
framework concepts and the measurement and recognition requirements of the International
Financial Reporting Standards, containing information required by the IAS 34 Interim Financial
Reporting, the AC 500 standards as issued by the Accounting Practices Board and in the manner
required by the Companies Act and the JSE Listing Requirements. The accounting policies applied,
are consistent with those applied in the annual financial statements for the year ended 30 June
2015.
These Results were prepared by JFC Connaway CA (SA) and, pursuant to his resignation, by
F Gmeiner (CA) (SA)
3. Contingent liabilities
The Body Corporate of Erf 195 Elma Park has initiated liquidation proceedings for arrear levies which
are being contested due to questions regarding the levies raised as well as the expense allocation
basis used. The Group has instituted a counter claim for damages incurred as a result of the Body
Corporate?s actions. The Elma Park body corporate was granted a provisional liquidation order
against Erf 195 Elma Park, however, an application by ERF 195 Elma park for arbitration was
approved by the court which should take place before year end.
4. Investment property disposed
There was a disposal of a building owned by SBD Investments for R4.5 million.
5. Subsequent events
The directors are not aware of any reportable matter or circumstances arising since the end of the
financial period, not reported on SENS, which would significantly affect the operations of the Group
or the financial results of those operations.
6. Dividends
A dividend relating to the 2015 financial year was paid on the 7th of November 2016 (R14 821 419.17).
On the 19th of December 2016, a dividend was paid relating to the 2016 financial year (R5 676 288.19).
Although the headline earnings for the group showed a loss, this is due to one company within the group,
being Erf 195 Elma Park, that had made a loss for the period. All other companies had made a profit and
being a real estate investment trust (REIT), dividends are required to be declared and paid based on the
individual company's distributable earnings and not that of the group as a whole.
7. Future prospects
While trading conditions remained tight during the reporting period, the future prospects has
improved since the prior period with an increase in revenue over the prior period due to
increase in occupancy and improved controls being implemented. This is set to continue in the
second half of the year
Johannesburg
03 April 2017
Directors:
R S Wilkinson* D K Mthembu* C Gmeiner** F Gmeiner (MD)# JFC Connaway*** T F J Oosthuizen**
Independent non-executive ** Non-executive # Executive ***Executive, JFC Connaway
Connaway appointed on 14 September 2016 has resigned as at 28 February 2017.
Company secretary and registered office Transfer office
Corporate Governance Facilitators CC Computershare Investor Services Proprietary Limited
Registered office Sponsor
Registered office and business address Arbor Capital Sponsors Proprietary Limited
16th Floor, Orion House
49 Jorissen Street
Braamfontein
Johannesburg, 2017
Date: 04/04/2017 07:05:00 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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