Wrap Text
Unaudited results for the six months ended 28 February 2017
REBOSIS PROPERTY FUND LIMITED
(“Rebosis” or the “company” or the “group”)
Registration number 2010/003468/06
(Approved as a REIT by the JSE)
JSE share code: REA - ISIN: ZAE000240552
JSE share code: REB - ISIN: ZAE000201687
UNAUDITED RESULTS for the six months ended 28 February 2017
INVESTMENT HIGHLIGHTS
DIVIDEND GROWTH 7,1% to 60,80 cents per share
VACANCIES (SA) 2,4% from 3,1% at year-end
FIRST REBOSIS A-SHARE DIVIDEND 120,41 cents per share
INVESTMENT PROPERTY INCOME GROWTH 39,5% to R1,180 billion
SA DEBT 100 % hedged
SA Retail
- 6 high growth dominant malls
- 86% national tenant profile
- Average escalation of 7,4%
- Vacancies 1,5%
Office
- 42* predominantly A and B grade well-located properties
- Let primarily to National Department of Public Works
- Average escalation of 8,2%
- Shielded from private sector e.g. tenant cash flow and insolvency related default
- Vacancies 4,1%
*Includes Investment Property Held for Sale
Industrial
- Industrial warehouses
- Weighted average lease expiry of 4,5 years
- Lease underpinned by international listed blue chip parent company and SA Government
- Average escalation of 7,5%
- Vacancies 0,1%
UK Portfolio
- 3 well located dominant retail centres
- Weighted average unexpired lease term (WAULT) 8,3 years
- 85% national tenant profile
- Vacancies 6,4%
STATEMENT OF COMPREHENSIVE INCOME
Group Company
Unaudited for the Unaudited for the Unaudited for the Unaudited for the
six months ended six months ended six months ended six months ended
28 February 2017 29 February 2016 28 February 2017 29 February 2016
R’000 R’000 R’000 R’000
Revenue 1 166 755 852 460 541 782 414 691
Investment property income 1 180 281 845 840 536 885 424 507
Net income from facilities management agreement 10 347 10 577 10 347 10 577
Management fees received - 9 191 8 684 8 276
Straight-line rental income accrual (23 873) (13 148) (14 134) (28 669)
Property expenses (297 833) (162 579) (134 142) (112 846)
Net property income 868 922 689 881 407 640 301 845
Other operating expenses (62 351) (108 217) (34 204) (22 010)
Operating income 806 571 581 664 373 436 279 835
Net interest (441 958) (279 210) (173 666) (161 947)
Received 69 513 2 780 69 384 1 470
Paid (511 471) (281 990) (243 050) (163 417)
Net operating income 364 613 302 454 199 770 117 888
Gain on bargain purchase 97 389 - - -
Other income 2 991 709 - 581
Changes in fair values 766 616 1 084 998 (8 628) 1 217 534
Investment property 697 020 1 154 944 365 624 920 768
Investment in subsidiaries - - (414 421) 271 559
Derivative instruments 69 596 (69 946) 40 169 25 207
Loss on disposal (26 705) - (26 705) -
Investment in subsidiary (26 705) - (26 705) -
Net income before equity-accounted investments 1 204 904 1 388 161 164 437 1 336 003
Dividends received - 46 117 838 85 852
Profit before taxation 1 204 904 1 388 207 282 275 1 421 855
Taxation 1 452 (6 511) - -
Total profit for the year 1 206 356 1 381 696 282 275 1 421 855
Other comprehensive income
Items that may be recycled to profit and loss
Foreign currency translation reserve (346 420) 168 816 - -
Total comprehensive income 859 936 1 550 512 282 275 1 421 855
Total profit attributable to:
Owners of the parent 1 063 682 1 248 968 282 275 1 421 855
Non-controlling interests 142 674 132 728 - -
Profit for the year 1 206 356 1 381 696 282 275 1 421 855
Total comprehensive income attributable to:
Owners of the parent 820 550 1 339 404 282 275 1 421 855
Non-controlling interests 39 386 211 108 - -
Total comprehensive income for the year 859 936 1 550 512 282 275 1 421 855
STATEMENT OF FINANCIAL POSITION
Group Company
Unaudited audited Unaudited audited
as at as at as at as at
28 February 2017 31 August 2016 28 February 2017 31 August 2016
R’000 R’000 R’000 R’000
ASSETS
Non-current assets 22 234 642 17 383 410 14 064 080 11 937 055
Investment property 21 282 118 16 996 072 8 097 097 7 747 500
Investment in subsidiaries - - 3 264 344 2 076 785
Loans to group companies - - 2 524 544 1 946 001
Goodwill 856 496 315 906 95 703 95 703
Derivative instruments 82 135 70 852 82 135 70 852
Property, plant and equipment 13 893 580 257 214
Current assets 1 707 939 561 798 1 064 009 278 718
Short-term portion of derivatives 50 708 23 486 50 708 21 822
Trade and other receivables 652 010 309 233 196 499 125 53
Cash and cash equivalents 1 005 221 229 079 816 802 131 356
Investment property held for sale 1 311 233 1 156 698 1 023 233 997 498
25 253 814 19 101 906 16 151 322 13 213 271
EQUITY AND LIABILITIES
Equity 11 284 303 9 462 284 9 679 460 8 539 748
Stated capital 6 788 304 5 590 410 6 813 567 5 165 055
Reserves 2 903 187 2 179 569 2 865 893 2 924 693
Foreign currency translation reserve (316 936) (73 508) - -
Total equity attributable to equity owners of the parent entity 9 374 555 7 696 174 9 679 460 8 539 748
Non-controlling interests 1 909 748 1 766 110 - -
Non-current liabilities 9 632 954 8 170 604 3 088 934 3 907 273
Interest-bearing borrowings 8 827 784 8 052 484 2 356 684 3 907 273
Deferred payment liability 732 250 - 732 250 -
Derivative instruments 72 920 118 120 - -
Current liabilities 4 336 557 1 469 018 3 382 928 766 250
Short-term portion of interest-bearing borrowings 3 784 950 1 223 203 3 231 988 670 241
Trade and other payables 551 607 244 347 150 940 96 009
Current tax payable - 1 468 - -
Total equity and liabilities 25 253 814 19 101 906 16 151 322 13 213 271
Loan to value (%)* 51.4% 50,0% 32.0% 35,0%
*Calculated in terms of the REIT Best Practice Recommendations
The loan-to-value ratio equates to net debt divided by the total property assets
Net debt 11 607 514 9 046 608 4 771 870 4 446 158
Interest bearing borrowings (excluding derivatives) 12 612 735 9 275 687 5 588 672 4 577 514
Less: cash and cash equivalents (1 005 221) (229 079) (816 802) (131 356)
Property assets 22 593 351 18 152 770 14 909 218 12 767 784
Investment property 21 282 118 16 996 072 8 097 097 7 747 500
Listed REIT securities - - 3 264 344 2 076 785
Investment property held for sale 1 311 233 1 156 698 1 023 233 997 498
Loans receivable - - 2 524 544 1 946 001
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Group Company
Unaudited for the Unaudited for the Unaudited for the Unaudited for the
six months ended six months ended six months ended six months ended
28 February 2017 29 February 2016 28 February 2017 29 February 2016
R’000 R’000 R’000 R’000
Balance at 31 August 9 462 284 7 541 124 8 539 748 6 400 083
Issue of shares 1 198 391 243 891 1 198 512 243 891
Treasury shares (held by subsidiary) (500) (40 371) - -
Profit for the year 1 063 682 1 248 968 282 275 1 421 855
Dividend paid (340 061) (103 424) (341 075) (103 424)
Foreign currency translation reserve (243 131) 90 436 - -
Non-controlling interest 143 638 354 748 - -
Balance at 28 February 11 284 303 9 335 372 9 679 460 7 962 405
STATEMENT OF CASH FLOWS
Group Company
for the for the for the for the
six months ended six months ended six months ended six months ended
28 February 2017 29 February 2016 28 February 2017 29 February 2016
R’000 R’000 R’000 R’000
Cash flows from operating activities (158 546) 40 629 (132 333) 88 080
Cash generated from operations 593 613 455 961 262 887 266 434
Dividend paid (454 786) (155 151) (341 075) (103 114)
Dividend received - - 117 838 85 852
Net finance charges paid (297 373) (260 181) (171 983) (161 092)
Cash outflows from investing activities (1 022 355) (1 060 681) (990 985) (794 613)
Capex and tenant installations (58 265) (75 253) (26 894) (44 612)
Acquisition of listed securities and investments (964 091) (990 090) (964 091) (750 001)
Acquisition of property, plant and equipment - (338) - -
Proceeds from disposal of investment property - 5 000 - -
Cash inflows from financing activities 1 969 818 1 015 221 1 808 764 725 239
Proceeds from issue of shares 879 544 359 211 798 194 246 468
Increase in financial liabilities 1 090 274 656 010 1 010 570 478 771
Net movement in cash and cash equivalents 788 917 (4 831) 685 446 18 706
Effect of translation (12 775) 49 575 - -
Cash and cash equivalents at the beginning of the year 229 079 174 823 131 356 56 271
Cash and cash equivalents at the end of the year 1 005 221 219 567 816 802 74 977
COMMENTARY
INTRODUCTION
Rebosis is retail-focused real estate investment trust (REIT), with a high quality government-tenanted commercial portfolio.
Rebosis owns very large regional malls in Port Elizabeth (Baywest Mall), East London (Hemingways) and Centurion (Forest Hill City) as well as regional
malls in Pretoria (Sunnypark & Bloed Street) and Mdantsane (Mdantsane City).
The group’s commercial portfolio includes 42 buildings, most of which are let to national government. These enjoy a sovereign underpin, shielded from
political or economic volatility.
Rebosis holds 67,5% in New Frontier Properties which owns the dominant shopping centers in the English towns of Blackpool, Middleborough and Burton-on-
Trent.
FINANCIAL RESULTS
Despite a tough domestic economic environment, we are pleased to announce an exciting set of results. Rebosis has declared a dividend of 60,80 cents per
share for the six months ended 28 February 2017. This amounts to a 7,1% growth year-on-year which is within the 7% to 9% guidance expected for the
financial year.
The South African portfolio was revauled by independent valuers, LDM Valuation Solutions for the commercial and industrial portfolios and Mills Fitchet for
retail. The growth in the portfolio of 40,3% year-on-year to R18,181 billion for the group (excluding New Frontier) is as a result of the acquisitions of
Baywest Mall and Forest Hill City shopping centres.
Property expenses have increased year on year with the net cost to income ratio increasing from 13,0% to 15,0%.
PROPERTY PORTFOLIO
The consolidated property portfolio of Rebosis is illustrated in the following graphs in terms of sectoral and geographical splits.
Our South African retail portfolio consists of six high-quality, dominant shopping malls with strong anchor national tenants delivering income streams
escalating at 7,4%. The office portfolio consists of 42 buildings in nodes attractive to government tenants. These buildings are mainly single-tenanted
buildings let to the National Department of Public Works, providing for average escalations of 8,2%. The office portfolio represents a defensive sovereign
underpin, shielding the group from private sector risks such as tenant insolvency and default which are material risks in the context of sluggish economic
growth and constrained consumer spend.
The group’s industrial properties are predominantly single-tenanted industrial warehouses with leases escalating at an average of 7,5%.
FUNDING
At 28 February 2017, Rebosis’ group’s borrowings increased to R12,6 billion as a result of the acquisition of the two shopping centres and the asset
management and the property services businesses. The weighted average net cost of borrowings increased from 7,2% to 7,9% for the period under review –
largely due to the additional debt taken out and the higher interest rates. There are currently swap/fixed arrangements in place for 100,0% of the debt.
The loan to value for the company has decreased from 35,0% to 32,0%. For the group it has increased from 50,0% to 51,4% as a result of New Frontier’s net
asset value falling after the UK’s vote to with draw from the EU.
ACQUISITIONS
With effect from 1 September 2016, Rebosis aqcuired 100% of Billion Property Developments (Pty) Ltd (“BPD” which owns Forest Hill City Mall in Centurion),
Baywest City Mall (Pty) Ltd (“Baywest” which owns Baywest City Mall in Port Elizabeth), Billion Asset Managers (Pty) Ltd (“BAM”, the asset management
business) and Billion Property Services (Pty) Ltd (“BPS”, the property services business for a total consideration of R4,9 billion. Based on management’s
judgement, the group has determined that this acquisition was a business combination. The costs of acqusition which have been recognised in the
consolidated statement of profit or loss and other comprehensive income amounts to R22,6 million (included in other operating expenses).
The following summarises the amounts of assets acquired and liabilities assumed at the acquisition date:
Acquiree’s Acquiree’s Acquiree’s Acquiree’s Fair value of
carrying amount carrying amount carrying amount carrying amount assets acquired
BPD Baywest BAM BPS Total
R R R R R
Investment property 2 147 163 495 2 348 745 462 - - 4 495 908 957
Property, plant and equipment 2 063 953 2 967 484 - 479 910 5 511 347
Borrowings - (775 843) - - (775 843)
Total identifiable net assets 2 149 227 448 2 350 937 103 - 479 910 4 500 644 461
Total consideration paid 2 121 945 794 2 280 830 056 363 215 682 211 152 718 4 977 144 249
Gain on bargain purchase
arising on acquisition (27 281 654) (70 107 047) - - (97 388 701)
Goodwill arising on acquisition - - 363 215 682 210 672 808 573 888 489
Total consideration 4 977 144 249
Interest-bearing borrowings acquired (3 711 100 000)
Shares issued (533 793 854)
Less: Cash and cash equivalents acquired -
Deferred payment on acquisition 732 250 395
The acquired businesses contributed revenues of R188,1 million and profit after tax of R62,3 million to the group for the six months ended 28 February
2017.
The transactions will be accounted for in terms of IFRS 3 Business Combinations and a full purchase price allocation will be performed within twelve months
as allowed by this standard. All figures presented are provisional.
BASIC AND HEADLINE EARNINGS PER SHARE Group
for the for the
six months ended six months ended
28 February 2017 29 February 2016
Number of shares in issue at period end 639 908 002 516 391 250
Weighted average number of shares in issue used for the calculation of earnings and headline
earnings per share 563 345 824 424 011 545
Profit attributable to ordinary equity holders
of the parent entity 1 063 682 1 248 968
Adjusted for:
Change in fair value of investment properties (766 616) (1 154 944)
Gain on bargain purchase (97 389) -
Headline profit attributable to shareholders 199 677 94 024
Basic and diluted earnings per share (cents) 188,82 294,56
Basic and diluted headline earnings per share (cents) 35,44 22,17
SEGMENT REPORT
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 three reporting segments as set out below. Some of
the buildings do have a small retail component (normally at street level), but seldom exceed 10% of the total GLA per building.
These operating segments are managed separately based on the nature of the operations. For each of the segments, the group’s CEO (the group’s chief
operating decision-maker) reviews internal management reports monthly. The CEO considers earnings before taxation to be an appropriate measure of each
segment’s performance.
Property portfolio Admin and
corporate
For the six months ended 28 February 2017 Retail Office Industrial Total costs Total
R000 R000 R000 R000 R000 R000
Property portfolio 613 461 538 953 14 341 1 166 755 - 1 166 755
Investment property income 614 027 551 625 14 629 1 180 281 - 1 180 281
Net income from facilities management - 10 347 - 10 347 - 10 347
Straight line rental income accrual (566) (23 019) (288) (23 873) - (23 873)
Property expenses (162 987) (133 104) (1 742) (297 833) - (297 833)
Net property income 450 474 405 849 12 599 868 922 - 868 922
Other operating expenses - - - - (62 351) (62 351)
Operating income 450 474 405 849 12 599 868 922 (62 351) 806 571
Net interest - - - - (441 958) (441 958)
Net operating income 450 474 405 849 12 599 868 922 (504 309) 364 613
Other income 984 (28) 27 983 2 008 2 991
Changes in fair values 311 071 385 183 - 696 254 70 362 766 616
Gain on bargain purchase - - - - 97 389 97 389
Loss on sale of listed securities - - - - (26 705) (26 705)
Segment profit before taxation 762 529 791 004 12 626 1 566 159 (361 255) 1 204 904
Investment property 12 993 983 8 288 135 - 21 282 118 - 21 282 118
Investment property held for sale - 1 046 233 265 000 1 311 233 - 1 311 233
Other assets 828 030 180 479 - 1 008 509 1 651 955 2 660 464
Total assets 13 822 013 9 454 847 265 000 23 601 860 1 651 953 25 253 814
Total liabilities 229 062 332 416 11 106 572 584 13 396 927 13 969 511
For the six months ended
29 February 2016
Property portfolio 404 932 422 946 15 391 843 269 9 237 852 506
Investment property income 411 120 421 312 13 408 845 840 - 845 840
Listed property securities income - - - - 46 46
Net income from facilities management - 10 577 - 10 577 - 10 577
Straight line rental income accrual (6 188) (8 943) 1 983 (13 148) - (13 148)
Property expenses (98 695) (62 276) (1 608) (162 579) - (162 579)
Net property income 306 237 360 670 13 783 680 690 9 237 689 927
Other operating expenses - - - - (108 217) (108 217)
Operating income 306 237 360 670 13 783 680 690 (98 980) 581 710
Net interest - - - - (279 210) (279 210)
Net operating income 306 237 360 670 13 783 680 690 (378 190) 302 500
Other income 573 8 - 581 128 709
Changes in fair values 517 972 403 278 (483) 920 767 164 231 1 084 998
Segment profit before taxation 824 782 763 956 13 300 1 602 038 (213 831) 1 388 207
Investment property 9 844 961 8 232 200 256 00 18 333 161 18 333 161 -
Other assets 237 117 194 435 - 431 552 185 141 616 693
Total assets 10 082 078 8 426 635 256 00 18 764 713 185 141 18 949 854
Total liabilities 16 904 30 668 - 47 572 9 566 910 9 614 511
2017 2016
Non-IFRS information R000 R000
Reconciliation of profit before tax to distributable earnings:
Total segment profit before taxation (as per above) 1 204 904 1 388 207
Taxation 1 452 (6 511)
Profit for the year 1 206 356 1 381 696
Less: Portion attributable to non-controlling interests (142 674) (132 728)
Adjusted for:
Changes in fair value (699 140) (1 085 966)
Gain on bargain purchase (97 389) -
Straight line rental accrual 23 873 13 148
Amortisation of structuring fees 1 683 5 562
Corporate transaction costs 22 644 58 645
Antecedent interest 53 051 -
Loss on sale of listed securities 26 705 -
Dividend income distributed in previous periods (117 838) (67 651)
Anticipated distribution from listed REIT subsidiaries 115 444 124 480
Consolidation adjustments between group entities: (3 630) (3 918)
Distributable earnings attributable to shareholders/owners of the parent 389 085 293 268
Dividend per share (cents) 60.80 56.79
Year-on-year distribution growth (%) 7,06 8,26
* In terms of the South African REIT Association Best Practice Recommendations, Rebosis has become entitled at period-end to the anticipated
distributions of its listed REIT subsidiaries. Accordingly an adjustment is made at period-end to match the anticipated income of the distribution with the period
to which the distribution relates.
# Net of treasury shares of 2 618 326 (2016: 1 778 146).
SIGNIFICANT RELATED PARTY TRANSACTIONS
Parties are considered related if one party has the ability to exercise control or significant influence over the party making financial or operational
decisions. Related parties with whom the Group transacted with during the period were:
2017 2016
R000 R000
Related party transactions
Billion Asset Managers (Pty) Ltd
Asset management fees paid - 16 473
Billion Property Services (Pty) Ltd
Property management fee paid - 13 828
Billion Group (Pty) Ltd
Rental warranty income 16 844 -
Related party balances
Billion Group (Pty) Ltd
Included in trade and other payables 87 588 -
PAYMENT OF DIVIDEND
Dividend number 13 of 60,80334 cents per share for the six months ended 28 February 2017 will be paid to the shareholders in accordance with the
abbreviated timetable set out below:
2017
Last day to trade (cum dividend) Tuesday, 16 May
Securities trade (ex dividend) Wednesday, 17 May
Record date Friday, 19 May
Payment date Monday, 22 May
Share certificates may not be dematerialised or rematerialised between Wednesday, 17 May 2017 and Friday, 19 May 2017, both days inclusive.
The dividend will be transferred to dematerialised shareholders’ CSDP/broker accounts on Monday, 22 May 2017. Certificated shareholders’ dividend payments
will be posted on or paid to certificated shareholders’ bank accounts on or about, Monday, 22 May 2017.
An announcement informing shareholders of the tax treatment of the dividends will be released separately on SENS.
BASIS OF PREPARATION
The unaudited results for the six months ended 28 February 2017 have not been reviewed or reported on by the company’s independent auditors, Grant Thornton
Johannesburg Partnership. These results have been prepared in accordance with International Financial Reporting Standards (IFRS), IAS 34, Interim Financial
Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the
Financial Reporting Standards Council, JSE Listings Requirements and the requirements of the Companies Act of South Africa.
All amendments to standards that are applicable to Rebosis for its financial year beginning 1 September 2016 have been considered. Based on management’s
assessment, the amendments do not have a material impact on the group’s condensed consolidated interim financial statements.
The accounting policies are consistent with those applied in the previous consolidated annual financial statements. These financial results have been
prepared under the supervision of the Chief Financial Officer, M de Lange, CA(SA).
The directors are not aware of any matters or circumstances arising subsequent to 28 February 2017 that require any additional disclosure or adjustment to
the financial statements, other than as disclosed in this announcement.
On 8 February 2017, Mr. F Froneman and Mr. M Mdlolo were appointed as independent non-executive directors and
Mr. A Mazwai formely an independent non-executive director was appointed as the Chief Operating Officer (an executive director) to the board. On 1 March
2017, Ms. M de Lange was appointed as the Chief Financial Officer (an executive director) and on
31 March Mr. K Keshav resigned as the Chief Financial Officer.
COMPANY SECRETARY: M Ndema
REGISTERED OFFICE: 3rd Floor, Palazzo Towers West, Montecasino Boulevard, Fourways, 2191
PO Box 2972, Northriding, 2162
DIRECTORS: ATM Mokgokong*† (Chairperson), SM Ngebulana (CEO), M de Lange (CFO), AM Mazwai (COO),
WJ Odendaal*†, NV Qangule*\, TSM Seopa*†, M Mdlolo*†, F Froneman*†
*Non-executive † Independent
TRANSFER SECRETARIES: Computershare Investor Services Proprietary Limited
SPONSOR: Java Capital
PROSPECTS
The Rebosis Board is of the view that the dividend per share will grow by between 7% and 9% for the full year to 31 August 2017. This expectation rests on
the following assumptions:
- Performance on contractual rental income
- Renewals of leases at market rates
- Savings from the internalisation of the management businesses
- Earnings from New Frontier to be flat year-on-year (in Pound Sterling)
- The muted growth in domestic retail sales and no further material deterioration of the economic environment
- No default by the state or national retailers
This forecast is issued by the Board, and has not been reviewed or reported on by the company’s auditors.
Rebosis uses distribution per share as the key measure of financial performance for trading statement purposes.
By order of the Board
24 April 2017
Date: 24/04/2017 08:19:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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