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INGENUITY PROPERTY INVESTMENTS LIMITED - Unaudited condensed consolidated interim results for the six months ended 28 February 2017

Release Date: 02/05/2017 07:05
Code(s): ING     PDF:  
Wrap Text
Unaudited condensed consolidated interim results for the six months ended 28 February 2017

INGENUITY PROPERTY INVESTMENTS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
REGISTRATION NUMBER: 2000/018084/06
JSE SHARE CODE: ING
ISIN: ZAE000127411 
('THE COMPANY' OR 'THE GROUP' OR 'INGENUITY') 

UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS 
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2017

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 
AS AT 28 FEBRUARY 2017
                                                     Unaudited      Unaudited        Audited
                                                      6 months       6 months           year
                                                         ended          ended          ended
                                                   28 Feb 2017    29 Feb 2016    31 Aug 2016
                                                         R'000          R'000          R'000
ASSETS             
Non-current assets                                   4 331 884      3 617 083      4 236 950 
Fair value of investment property                    3 907 122      3 160 153      3 880 831 
Investment properties under development                138 549        202 200        100 548 
Development properties - land                          133 047        115 927        131 095 
Straight-line rental adjustment                        138 450        110 978        107 117 
Fair value of property assets                        4 317 168      3 589 258      4 219 591 
Property and equipment                                  14 716         15 095         14 925 
Derivative assets                                            -         12 730          2 434 
             
Current assets                                         123 241        149 658        244 071 
Trade and other receivables                             35 059         14 647         20 533 
Investment property classified as held for sale         41 200              -        147 000 
Straight-line rental adjustment                              -          6 858         18 782 
Cash and cash equivalents                               46 982        128 153         57 756 
             
Total assets                                         4 455 125      3 766 741      4 481 021 
             
EQUITY AND LIABILITIES             
Shareholders' interest                               1 439 475      1 308 968      1 391 174 
Stated capital                                         747 610        747 610        747 610 
Treasury shares                                        (52 296)       (52 296)       (52 296)
Non-distributable reserve                              540 914        458 920        522 414 
Retained earnings                                      184 494        140 081        156 224 
Total equity attributable to equity holders of 
the parent                                           1 420 722      1 294 315      1 373 952 
Non-controlling interest                                18 753         14 653         17 222 
             
Non-current liabilities                              2 632 693      2 399 413      2 693 716 
Borrowings                                           2 363 557      2 188 117      2 447 409 
Derivative liabilities                                  31 241              -         14 403 
Finance lease liability                                  3 940          3 747          3 840 
Deferred taxation liability                            233 955        207 549        228 064 
             
Current liabilities                                    382 957         58 360        396 131 
Trade and other payables                                44 863         24 480         50 418 
Current portion of borrowings                          305 113         14 128        319 904 
Prepaid rent received                                   17 790         11 386         17 801 
Taxation payable                                            49              -            203 
Share-based incentives valuation                        15 142          8 366          7 805 
             
Total equity and liabilities                         4 455 125      3 766 741      4 481 021 
             
NOTES TO THE CONSOLIDATED STATEMENT 
OF FINANCIAL POSITION             
Net asset value per share                                  123            112            119 
(based on number of shares in issue at end of 
period net of treasury shares)                   1 166 835 524  1 166 835 524  1 166 835 524

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND 
OTHER COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2017
                                                     Unaudited      Unaudited        Audited
                                                      6 months       6 months           year
                                                         ended          ended          ended
                                                   28 Feb 2017    29 Feb 2016    31 Aug 2016
                                                         R'000          R'000          R'000
Revenue, excluding straight-line rental 
revenue adjustment                                     220 229        159 418        358 319 
Straight-line rental revenue adjustment                 12 287         10 650         20 862 
Revenue                                                232 516        170 068        379 181 
Property expenses                                      (69 390)       (42 877)      (103 349)
Net property income                                    163 126        127 191        275 832 
Other operating expenses                                (8 057)       (7 525)        (15 051)
Operating profit before fair value adjustments 
and net finance costs                                  155 069        119 666        260 781 
Fair value adjustments                                  46 044         75 503        182 005 
Gains on investment and development properties         102 981        101 765        209 116 
Decreases to investment and development properties     (49 599)       (26 830)       (28 241)
(Decreases)/gains on share-based incentives             (7 338)           568          1 130 
Finance income                                           2 014          1 763          4 611 
Finance costs                                         (129 662)       (87 061)      (209 472)
Profit before taxation                                  73 465        109 871        237 925 
Taxation                                               (11 288)       (46 949)       (75 014)
Profit after taxation                                    62 177         62 922        162 911 
Profit attributable to:                
Equity holders of the parent                            60 646         62 519        159 939 
Non-controlling interest                                 1 531            403          2 972 
                                                        62 177         62 922        162 911 
Profit after taxation                                   62 177         62 922        162 911 
Other comprehensive income:                
To be reclassified subsequently to profit or loss:                
Cash flow hedges                                       (19 273)        12 730        (11 968)
Income tax relating to components of other 
comprehensive income                                     5 397         (3 564)         3 351 
Other comprehensive income net of tax                  (13 876)         9 166         (8 617)
Total comprehensive income                              48 301         72 088        154 294 
Attributable to:                
Equity holders of the parent                            46 770         71 685        151 322 
Non-controlling interest                                 1 531            403          2 972 
                                                        48 301         72 088        154 294 
                
NOTES TO THE CONSOLIDATED STATEMENT OF PROFIT 
OR LOSS AND OTHER COMPREHENSIVE INCOME                
Earnings per share                 
Basic and diluted earnings per share (cents)               5.2            5.4           13.8 

Headline and diluted headline earnings 
per share (cents)                                          1.5            2.2            3.6 
                
Total shares in issue                            1 255 995 859  1 255 995 859  1 255 995 859 
Number of shares in issue, net of 
treasury shares                                  1 166 835 524  1 166 835 524  1 166 835 524 
Weighted average number of shares                1 166 835 524  1 165 899 852  1 156 304 319 
                
Headline earnings are calculated as follows:                
Earnings attributable to equity holders                 60 646         62 519        159 939 
Net fair value adjustment to investment properties     (53 382)       (74 935)      (180 875)
Deferred tax on net fair value adjustment                9 657         17 829         42 492 
Deferred tax on change in capital gains tax rate             -         19 955         19 955 
Adjusted earnings for HEPS                              16 921         25 368         41 511
                      
CONSOLIDATED STATEMENT OF CASH FLOWS 
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2017

                                                     Unaudited      Unaudited        Audited
                                                      6 months       6 months           year
                                                         ended          ended          ended
                                                   28 Feb 2017    29 Feb 2016    31 Aug 2016
                                                         R'000          R'000          R'000
Cash generated from operations                         130 939        108 403        265 112 
Finance income received                                  2 014          1 763          4 611 
Finance costs paid                                    (132 815)       (86 406)      (204 657)
Taxation paid                                             (154)          (308)          (740)
Dividends paid to shareholders                               -        (41 434)       (41 434)
Net cash (outflow)/inflow from operating activities        (16)       (17 982)        22 892 
Cash flows from investing activities     
Additions to property and equipment                       (305)          (918)          (997)
Proceeds from disposal of operations                       100              -              -
Acquisitions/additions to investment properties        (19 217)       (92 448)      (743 937)
Acquisitions/additions to investment properties 
under development                                      (35 223)       (35 530)       (56 985)
Interest capitalised to investment properties 
and investment properties under development             (2 878)        (4 668)        (7 428)
Proceeds from disposal of investment properties        147 000              -              -
Prepayments for investment property acquired 
after period-end                                             -         (1 056)             -
Net cash inflow/(outflow) from investing activities     89 477       (134 620)      (809 347)
Cash flows from financing activities     
Finance lease payments                                    (129)          (129)          (259)
Proceeds from the issue of shares                            -         41 955         41 955 
Financial liabilities raised                            27 861        272 076        836 640 
Financial liabilities repaid                          (127 967)       (61 956)       (62 934)
Net cash (outflow)/inflow from financing activities   (100 235)       251 946        815 402 
Net (decrease)/increase in cash and cash equivalents   (10 774)        99 344         28 947 
Cash and cash equivalents at beginning of period        57 756         28 809         28 809 
Cash and cash equivalents at end of period              46 982        128 153         57 756

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2017

                                                   Non- 
                                               distrib-                      Non-          
                           Stated   Treasury     utable   Retained    controlling     
                          capital     shares    reserve   earnings       interest      Total
                            R'000      R'000      R'000      R'000          R'000      R'000
Balance at 
1 September 2015          705 655    (52 296)   412 603    156 147         14 250  1 236 359 
Total comprehensive 
income for the period           -          -      9 166     62 519            403     72 088 
Profit for the period           -          -          -     62 519            403     62 922 
Other comprehensive income      -          -      9 166          -              -      9 166 
Net change in fair value of 
cash flow hedge recognised 
directly in other 
comprehensive income            -          -      9 166          -              -      9 166 
Issue of 44 526 316 
shares                     41 955          -          -          -              -     41 955 
Transfer from 
non-distributable reserve                              
-deferred tax on change in 
capital gains tax rate          -          -    (19 955)    19 955              -          -
Transfer to 
non-distributable reserve                              
- fair value adjustments 
to investment properties        -          -     57 106    (57 106)             -          -
Dividend paid - 3.5 cents 
per share                       -          -          -    (41 434)             -     (41 434)
Balance at 
29 February 2016          747 610    (52 296)   458 920    140 081         14 653   1 308 968 
Total comprehensive 
income for the period           -          -    (17 783)    97 420          2 569      82 206 
Profit for the period           -          -          -     97 420          2 569      99 989 
Other comprehensive income      -          -    (17 783)         -              -     (17 783)
Net change in fair value 
of cash flow hedge 
recognised directly in 
other comprehensive income      -          -    (17 783)         -              -     (17 783)
Transfer to 
non-distributable reserve                              
- fair value adjustments 
to investment properties        -          -     81 277    (81 277)             -           -
Balance at 
31 August 2016            747 610    (52 296)   522 414    156 224         17 222   1 391 174 
Total comprehensive income 
for the period                  -          -   (13 876)     60 646          1 531      48 301 
Profit for the period           -          -         -      60 646          1 531      62 177 
Other comprehensive income      -          -   (13 876)          -              -     (13 876)
Net change in fair value 
of cash flow hedge 
recognised directly 
in other comprehensive 
income                          -          -    (13 876)         -              -     (13 876)
Transfer from 
non-distributable 
reserve                              
- fair value gain 
realised on investment 
properties sold                 -          -   (11 349)     11 349              -           -
Transfer to 
non-distributable reserve                              
- fair value adjustments 
to investment properties        -          -     43 725    (43 725)             -           -
Balance at 
28 February 2017          747 610    (52 296)   540 914    184 494         18 753   1 439 475

CONSOLIDATED SEGMENTAL INFORMATION
                                    Develop-
                                        ment              Light                                
                                     proper-             indus-          Straight-                 
                  Office    Retail      ties   Parking    trial     Other   lining      Total
                   R'000     R'000     R'000     R'000    R'000     R'000    R'000      R'000
Unaudited six 
months ended 
28 February 2017
Net additions 
to non-current 
assets          (118 913)   (9 071)   38 100   (14 215)    (435)   32 594        -    (71 940)
Total assets   2 591 373   835 765   271 596   510 463   82 895   163 033        -  4 455 125 
Revenue          145 335    42 977       233    26 232      467     4 985   12 287    232 516 
Profit/(loss) 
before fair 
value adjustment  98 413    30 216      (781)   19 154      336    (4 556)  12 287    155 069 
Fair value 
adjustment        27 602    24 931     1 853    (1 755)      58    (6 645)       -     46 044 
Profit/(loss) 
before interest 
and taxation     126 015    55 147     1 072    17 399      394   (11 201)  12 287    201 113 
Finance income         -         -         -         -        -     2 014        -      2 014 
Finance costs          -         -         -         -        -  (129 662)       -   (129 662)
Profit/(loss) 
before taxation  126 015    55 147     1 072    17 399      394  (138 849)  12 287     73 465 
                                        
                                    Develop-
                                        ment              Light                                
                                     proper-             indus-          Straight-                 
                  Office    Retail     ties    Parking    trial     Other   lining      Total
                   R'000     R'000     R'000     R'000    R'000     R'000    R'000      R'000
Unaudited six 
months ended 
29 February 2016     
Net additions 
to non-current 
assets           123 903    33 830    71 759     1 376    4 705    18 915        -    254 488 
Total assets   1 937 087   830 473   488 752   408 367   72 653    29 409        -  3 766 741 
Revenue           94 704    39 889     1 057    18 511    3 493     1 764   10 650    170 068 
Profit/loss 
before fair 
value adjustment  68 850    29 357      (175)   14 362    2 794    (6 172)  10 650    119 666 
Fair value 
adjustment        25 448    10 180    25 892    11 301    1 874       808        -     75 503 
Profit/loss 
before interest 
and taxation      94 298    39 537    25 717    25 663    4 668    (5 364)  10 650    195 169 
Finance income         -         -         -         -        -     1 763        -      1 763 
Finance costs          -         -         -         -        -   (87 061)       -    (87 061)
Profit/loss 
before taxation   94 298    39 537    25 717    25 663    4 668   (90 662)  10 650    109 871 
                                        
                                    Develop-
                                        ment              Light                                
                                     proper-             indus-          Straight-                 
                  Office    Retail     ties    Parking    trial     Other   lining      Total
                   R'000     R'000     R'000     R'000    R'000     R'000    R'000      R'000
Audited year ended 
31 August 2016
Net additions to 
non-current 
assets           795 107     8 623   (18 346)  107 811   12 366   (27 971)       -    877 590 
Total assets   2 682 684   819 905   231 643   526 433   83 272   137 084        -  4 481 021 
Revenue          223 095    79 187       493    42 238    7 955     5 351   20 862    379 181 
Profit/loss 
before fair 
value 
adjustment       156 531    58 051    (1 964)   32 043    6 376   (11 118)  20 862    260 781 
Fair value 
adjustment       124 899     9 160    17 665    22 948    4 832     2 501        -    182 005 
Profit/loss 
before interest 
and taxation     281 430    67 211    15 701    54 991   11 208    (8 617)  20 862    442 786 
Finance income         -         -         -         -        -     4 611        -      4 611 
Finance costs          -         -         -         -        -  (209 472)       -   (209 472)
Profit/loss 
before taxation  281 430    67 211    15 701    54 991   11 208  (213 478)  20 862    237 925

Note:
Restatements of information at 29 February 2016
To present more meaningful information, 'Development Properties', which were previously 
reported under 'Other' and 'Unsegmental', are now reported as a separate segment. 
'Special' (gym) is no longer reported as a separate segment and is now included 
in the 'Retail' segment.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2017

BASIS OF PREPARATION
The unaudited condensed consolidated interim financial results ('the financial 
statements') have been prepared in accordance with and containing the information 
required by IAS 34: Interim Financial Reporting and have been prepared in accordance 
with the SAICA Financial Reporting Guides as issued by the Accounting Practices 
Committee, the JSE Listings Requirements and in the manner required by the Companies 
Act of South Africa (as amended). 

The accounting policies and methods of computation applied in the preparation of the 
financial statements are in accordance with International Financial Reporting 
Standards ('IFRS') and are consistent with those applied in the audited annual 
financial statements for the year ended 31 August 2016.

To present more meaningful information, as disclosed in the audited annual 
financial statements for the year ended 31 August 2016, changes were made to 
the reporting of certain segments in the schedule of segmental information. 
These changes have now also been included in the comparative period figures. 

Reclassifications
- In previous reporting periods, the Company reported 'Investment properties under 
development' and 'Development properties - land' as a single line item under 
'Investment properties under development' on the face of the Statement of 
Financial Position. In the most recent results, the presentation has been 
split into more detail than previously reported to present more meaningful 
information. 

The effect of this reclassification on Ingenuity's Statement of Financial 
Position as at 29 February 2016 is that 'Investment properties under development' 
reduces from R318.1 million to R202.2 million and the new line item, 'Development 
properties - land' is disclosed at R115.9 million. The reclassification totals 
R115.9 million and has no impact on the total fair value of property assets.

Similarly, the effect of this reclassification on Ingenuity's Statement of 
Financial Position as at 31 August 2016 is that 'Investment properties under 
development' reduces from R231.6 million to R100.5 million and the new line item, 
'Development properties - land' is disclosed at R131.1 million. The reclassification 
totals R131.1 million and has no impact on the total fair value of property assets.

- In previous reporting periods, the company included the '(Decreases)/gains 
on share-based incentives' as part of the 'Operating profit before fair value 
adjustments and net finance costs' line item, on the face of the Statement of 
Profit or Loss and Other Comprehensive Income. In the current reporting period, 
this has been presented as a separate line item under the 'Fair value adjustments' 
heading in the Statement of Profit or Loss and Other Comprehensive Income to present 
more meaningful disclosure of the nature of the adjustment.

The effect of this reclassification on Ingenuity's Statement of Profit or Loss and 
Other Comprehensive Income for the six-month period ending 29 February 2016 is that 
the 'Operating profit before fair value adjustments and net finance costs' reduces from 
R120.2 million to R119.7 million and a new line item '(Decreases)/gains on share-based 
incentives' is disclosed. The reclassification totals R0.5 million and has no impact on 
the profit before taxation.

Similarly, the effect of this reclassification on Ingenuity's Statement of Profit or Loss 
and Other Comprehensive Income for the year ending 31 August 2016 is that the 'Operating 
profit before fair value adjustments and net finance costs' reduces from R261.9 million 
to R260.8 million and a new line item '(Decreases)/gains on share-based incentives' is 
disclosed at R1.1 million. The reclassification totals R1.1 million and has no impact 
on the profit before taxation.

There were no new and amended standards and interpretations of IFRS which were 
effective for the first time and applicable to Ingenuity's results for the period 
ended 28 February 2017.

These financial statements were prepared under the supervision of Mr M Wagenheim CA (SA) 
in his capacity as Group Financial Director. These financial statements have not been 
audited or reviewed by the group's independent external auditors.

The directors are not aware of any matters or circumstances arising after 
28 February 2017 that require any additional disclosure or adjustment to the 
financial statements, other than as disclosed in the financial statements.

DIRECTORS' COMMENTARY

GENERAL REVIEW 
Despite volatile market conditions and prevailing uncertainty, Ingenuity continues 
to perform well. The business remains focused and is well positioned to take 
advantage of opportunities inherent in the business.

The fair value of the property assets has grown 20% over the comparative period. 
The total property portfolio fair value now amounts to R4.3 billion, comprising:
- 32 investment properties with a value of R4.04 billion;
- One property currently under development which comprises the 117 on Strand 
development at a current cost of R138.5 million; and
- Two properties held for future development, comprising 'The Modern' project 
- and the 'Tyger Valley' project with a combined value of R133 million.

The net asset value per share (based on shares in issue, net of total treasury 
shares) increased by 9.8% to 123 cents from 112 cents in the comparative period, 
due to acquisitions made and growth in the value of the portfolio.

OPERATIONS
Net property income, which comprises gross rental income less property expenses, 
has increased by 28% to R163 million (2016: R127 million) mainly due to properties 
acquired after the previous reporting period and rental escalations from existing 
leases. Property expenses and other operating expenses were within budget and 
are well controlled.

Headline earnings per share ('HEPS') is 1.5 cents (2016: 2.2 cents) and earnings per 
share ('EPS') is 5.2 cents (2016: 5.4 cents). The decreases in HEPS and EPS are due to 
increases in net borrowings, an increase in interest rates and the additional interest 
costs of the long-term interest rate swap contracts, compared to the comparative period. 
EPS has also reduced, compared to the comparative period, due to a decrease in the fair 
value adjustments to cater for higher market yield expectations in a higher interest 
rate environment.

The total cash on hand amounted to R46.9 million compared to R128.1 million on hand 
at the end of the comparative half-year period. R100 million of the comparative figure 
was used to fund a portion of the Great Westerford transaction. When available, 
surplus cash is used to reduce borrowings on an access facility basis.

NET PROPERTY INCOME
Gross revenue increased by 38% for the half-year 2017 compared to the half-year 
2016 due to rental escalations, a reduction in vacancies and rentals earned on 
investments acquired after the comparative reporting period.

The ratio of property expenses to revenue increased to 31.5% for the half-year 
2017 (2016: 26.9%) due to increased once-off maintenance items incurred to enhance 
and maintain the quality of the properties.

FAIR VALUE ADJUSTMENTS
Valuations of all properties were performed by either the directors or an 
independent external valuer, and have resulted in a net upward revaluation 
adjustment of R53.4 million (2016: R74.9 million). Independent external valuations 
are carried out on a rotational basis to ensure each property is valued independently 
at least every three years. Conservative valuation assumptions have been applied to 
take account of deteriorating market conditions. The valuations are based on either 
the discounted cash flow method or the capitalisation of net income method or a 
combination of these methods, which is consistent with the basis used in prior periods. 

FINANCE CHARGES
Finance charges increased by 49% to R129.7 million from R87.1 million in the 
comparative half-year 2016, due to the growth of the portfolio through development, 
investment properties acquired, an increase in interest rates and additional interest 
costs on interest rate swap contracts. The weighted average rate of interest on borrowings 
as at 28 February 2017 was 9.6% compared to 9.1% for the comparative half-year 2016 due 
to the increase in the prime lending rate and the fixing of interest rates on a portion 
of the borrowings. 

DISPOSALS AND HELD-FOR-SALE PROPERTIES
During the period under review, the Company sold the following investment properties:
- 'Loerie Centre', situated in George, for R47 million, which realised a profit on cost 
of R7.4 million. Transfer was registered on 8 December 2016; and
- 'The Estuaries', situated in Century City, for R100 million, which realised a 
profit on cost of R7.4 million. Transfer was registered on 6 February 2017. 

At the reporting date, the following investment property was classified as held 
for sale:
- '142 Edward Street', situated in Tyger Valley, and sold for R41.2 million, realising 
a profit on cost of R8.8 million. Transfer was registered on 1 March 2017.

ACQUISITIONS AND COMMITMENTS
In February 2017, the Company (through a wholly-owned subsidiary) announced an 
agreement to acquire 100% of a property for future development, known as 'City Park', 
comprising office space and parking with a total GLA of 32 333 m2, situated in Bree and 
Longmarket Streets in central Cape Town, at a cost of R300 million. Transfer is expected 
during June 2017 and it will be settled through a combination of debt and cash resources.

Subsequent to the announcement, the Company entered into a transaction to dispose of a 
50% interest in the subsidiary to the Rabie Property Group Proprietary Limited to co-develop 
and market the property, through a joint venture.

The total value of the property portfolio increases to R4.5 billion with the acquisition 
of the City Park property.

Development and capital expenditure, not yet incurred but authorised and contracted for, 
amounts to R605.3 million as at the end of the reporting period. It comprises R494.5 million 
for the 117 on Strand development, which is scheduled for completion in September 2019, and 
the Santam Head Office upgrade of R110.8 million scheduled for completion in December 2017. 
These projects are being funded by a combination of debt and existing cash resources. 

ARREARS
Rentals continue to be collected timeously. The Company maintains a track record of 
very low write-offs and a debtors' book which is collected within 30 days. There are 
no concerns regarding the recoverability of any debtors.

VACANCY LEVELS
At the reporting date, the group's core portfolio vacancy ratio was 1.8% on a portfolio 
of 196 242 m2. For the 2016 comparative figures, the vacancy ratio was 2.8% on a portfolio 
of 174 564 m2. This ratio has improved due to management's focus on concluding lettings and 
pro-active engagement with tenants where leases are due for renewal. The operating vacancy 
is well below current market norms and is attributable to pro-active management and the quality 
of the asset base which continues to attract high quality tenants. The lease expiry profile 
of the portfolio at the reporting date comprises 64% of rentals expiring beyond February 2020. 

DERIVATIVE LIABILITIES
These comprise interest-rate swap contracts which qualify for special hedge accounting. 
The company has classified them as cash flow hedges stated at fair value based on broker 
quotes. The profile comprises five-year interest rate swaps with notional amounts totalling 
R1.5 billion, at an average all-in cost of 9.9%, maturing as follows:
- R500 million in November 2020;
- R500 million in May 2021; and
- R500 million in July 2021.

These contracts are considered to be level 2 financial liabilities and are measured 
using a discounted cash flow valuation technique which utilises risk-free interest 
rate inputs, observable for the liability either directly (as prices) or indirectly 
(derived from prices). 

STATED CAPITAL
During the period, the Company did not issue any shares, nor were there any repurchases 
of shares. 

BORROWINGS
At the reporting date, total borrowings amounted to R2.7 billion (2016: R2.2 billion) 
with a loan-to-value ratio of 60% (2016: 58%), which is the measure of dividing interest-
bearing debt net of cash holdings by the fair value of all property assets. All short-term 
facilities falling due have been extended. Borrowings of 56% (2016: 23%) are fixed with the 
balance at floating rates. The all-in weighted average interest rate, inclusive of the 
interest rate swaps, amounts to 9.6% as at 28 February 2017 (2016: 9.1%). The proceeds on 
the sale of properties referred to above have been applied to reduce borrowings.

During the reporting period, the Company renegotiated its borrowings to move all 
facilities to The Standard Bank of South Africa Limited. The new facilities comprise 
medium-term and development facilities at reduced interest rates and covenants. These 
facilities, which will operate through a special purpose vehicle ('SPV'), are expected 
to be registered and implemented during May 2017. 

PROSPECTS 
Ingenuity remains focused on its strategy. The Company is unique in its geographic 
location, being the Western Cape, and comprises a blend of superb quality long-term 
income-producing assets coupled together with exciting development initiatives.
The development of 117 on Strand commenced during this reporting period and is expected 
to contribute towards meaningful returns to shareholders. The total development 
cost is approximately R633 million and will be completed by September 2019. The 
project will deliver trading profits from residential sales as well as high-yielding 
premium-grade investment stock.

During this reporting period, we also commenced the upgrade of the Santam Head 
Office building and surrounding site precinct. This project is expected to be completed 
by December 2017 at a total capital cost of R125.3 million. As part of the transaction, 
Santam has committed to a further 12-year lease commencing on 1 January 2018. This lease 
will add significant value to the current portfolio's already strong income stream.

In addition to the 117 on Strand project and the Santam Head Office upgrade, progress is
 being made on our other development opportunities. We expect to make further 
announcements on these by the time we report on our year-end results.

The Company announced on SENS in January 2017 that Investec Property Fund Limited 
('Investec') acquired a beneficial interest of 7.4% in the Company. The board of 
directors view this as a positive step in securing a strategic relationship with a 
strong partner.

Our commitment is to create enduring increased wealth for shareholders, focusing 
on underlying quality assets with a strong emphasis on growing Net Asset Value.
The above information has not been reviewed or reported on by the Company's auditors.

SUBSEQUENT EVENTS
Other than as reported above, there are no other material subsequent events which 
have occurred between the end of this interim period being reported on and the date of 
this report.

CHANGE TO THE BOARD OF DIRECTORS
Shareholders were advised that Samuel Ronald Leon was appointed as an independent 
non-executive director with effect from 2 February 2017. Sam has over 35 years of 
experience across all sectors of the property industry.

On behalf of the Board

AA Maresky                 RC Squire-Howe      M Wagenheim
Chief Executive Officer    Chairman            Financial Director and Company Secretary

2 May 2017
Cape Town

INGENUITY PROPERTY INVESTMENTS LIMITED
('the Company' or 'the group' or 'Ingenuity') 
(Incorporated in the Republic of South Africa)
Registration number: 2000/018084/06
JSE share code: ING
ISIN: ZAE000127411 

DIRECTORS
RC Squire-Howe*+ (Chairman), AA Maresky (CEO), M Wagenheim (Financial), 
J Bielich, AJ Branch*+ (British), LH Cohen*, DB Fabian*+, SR Leon*+, 
RS Schur*+, J Solms

*Non-executive     +Independent

REGISTERED OFFICE AND POSTAL ADDRESS
Suite 102, 1st Floor, Intaba, 25 Protea Road, Claremont, 7708, Cape Town

COMPANY SECRETARY 
M Wagenheim

CONTACT DETAILS 
Tel: 021 674 5170
Fax: 021 674 5135
E-mail: info@ingenuityproperty.com
www.ingenuityproperty.com

TRANSFER SECRETARIES
Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
PO Box 61051, Marshalltown, 2107
Tel: 011 370 5000

SPONSOR 
Nedbank Corporate and Investment Banking
3rd Floor, Corporate Place, Nedbank Sandton,
135 Rivonia Road, Sandton, 2196
(PO Box 1144, Johannesburg, 2000)

AUDITORS
Mazars, Mazars House, Rialto Road, Grand Moorings Precinct, 
Century City, Cape Town, 7441
(PO Box 2785, Cape Town, 8000)

BANKERS
ABSA Bank Limited, Nedbank Limited and The Standard Bank 
of South Africa Limited
ydav.co.za

Date: 02/05/2017 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
 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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