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Condensed unaudited consolidated financial statements for the quarter ended 31 March 2017
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")
CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
for the quarter ended 31 March 2017
DIRECTORS' COMMENTARY
1 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 is internally asset-
managed and invests in dominant retail centres in Central and Eastern Europe
as well as in listed real estate securities globally.
Shareholders were provided with the option to receive their December 2016
final dividend in shares rather than cash. Over 82% of shareholders elected
to take the scrip dividend resulting in the issue of 17.65 million new shares.
2 DIRECT PROPERTY
The Company's net asset value per share was USD1.63 at
31 March 2017 compared to the USD1.65 per share at 31 December 2016
and following the final dividend of 5.189 USD cents per share paid during
the quarter.
Direct property assets, currently valued at USD1.33 billion, represent 54%
of the total investment assets. Economic conditions in Poland and Czechia
(Czech Republic) continue to improve which supports Rockcastle’s various
asset management initiatives. This has resulted in strong growth in both
footfall and tenant sales. Planning permission was received and a valid
building permit was recently issued for the 16 000 m(2) extension to Platan
Shopping Centre in Zabrze. Construction is scheduled to commence in the
third quarter of 2017. Construction of the Wolomin Retail Park, adjoining
Galeria Wolomin, is on schedule and expected to open in August 2017. The
extension of Solaris Shopping Centre is expected to commence in the third
quarter of 2017.
Capitalisation rates for prime retail assets continue to compress. A number
of international investors with long-term mandates and low costs of capital
remain active in the region. Rockcastle, with its strong retail skills and
development capabilities, remains well positioned in this market and
management is currently evaluating or negotiating several large acquisitions.
The vendor loan provided on the disposal of Kafubu Mall and Mukuba Mall, both
in Zambia, to the Mara Delta Property Holdings Limited ("Mara Delta") was
repaid on 20 April 2017. The sale of Cosmopolitan Mall in Lusaka to Mara Delta
signed in June 2016 became unconditional in March 2017 when the final
competition commission approval was received. Transfer is anticipated in the
next two months.
The Company's strategy of selling listed investments and re-investing the
proceeds in direct properties and developments will continue during 2017.
It is anticipated that direct property will make up approximately 90% of
Rockcastle's assets by December 2017.
3 LISTED SECURITY PORTFOLIO
To facilitate the strategy of moving from listed investments to direct
property, substantial long-term holdings were sold in favour of smaller and
more liquid listed investments.
Despite rising bond yields, US markets were largely stable during the quarter.
Weaker markets for mall REITs were balanced with firmer markets for logistics,
residential and health REITs. European property stocks delivered positive USD
returns aided by a weaker USD and improving economic data from continental
Europe. Leading indicators are now signalling that growth should move to
pre-financial crisis levels. This, together with the abatement of political
risk, should support a broad-based recovery. This bodes well for both
Rockcastle’s direct property assets as well as its listed security portfolio.
4 FUNDING
Rockcastle successfully increased an existing 5-year facility secured by three
properties with Pbb, Helaba and ING to include Zielona Gora that was acquired
in November 2016. The additional EUR67 million was drawn during the quarter and
the combined facility is now fixed at a rate of 1.73% for the 5-year term. A
7-year facility of EUR41 million was secured and is available for utilisation
in the second quarter of 2017. Negotiations on a EUR76 million 7-year facility
available for drawdown in the third quarter of 2017 is well advanced. These
facilities will lengthen the debt maturity profile of the Company, are at
attractive rates and are with a diverse spread of strong counter-parties.
5 MERGER OF ROCKCASTLE AND NEPI
During the first quarter of 2017, Rockcastle and NEPI progressed with the
proposed merger of their respective businesses into an entity newly-incorporated
in the Isle of Man, NEPI Rockcastle PLC (NewCo) which is expected to be
implemented with reference to an effective share swap ratio of 4.7 Rockcastle
shares for one NEPI share (the Swap Ratio). Rockcastle expects to issue its
circular to shareholders regarding the merger, together with a prospectus for
NewCo, by the end of May 2017. The circular would include notice of a general
meeting of Rockcastle shareholders regarding approval of the merger, which is
to be scheduled for late June 2017. Rockcastle understands that NEPI will
follow the same timing in respect of the general meeting of its shareholders,
with the result that, if all conditions to the merger are fulfilled, it will be
implemented during July 2017 and the NewCo will pay the distribution for the
six-month income period to June 2017.
By order of the Board
Intercontinental Trust Limited
Company Secretary
Mauritius
12 May 2017
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited as at Audited as at Unaudited as at
31 Mar 2017 31 Dec 2016 31 Mar 2016
ASSETS USD'000 USD'000 USD'000
Non-current assets 1 773 714 1 739 084 2 445 669
Investment property 1 283 397 1 258 786 349 455
Straight-lining of rental revenue adjustment 311 199 -
Investment property under development 6 906 5 611 38 122
Intangible assets 7 451 7 341 -
Goodwill 16 665 17 433 -
Listed security investments 394 323 383 994 2 000 126
Property, plant and equipment 499 499 154
Investment in and loans to joint ventures 37 000 37 000 31 597
Rockcastle management incentive loans 26 972 26 968 26 215
Deferred tax receivable 190 1 253 -
Current assets 375 986 340 218 25 402
Investment income receivable 10 135 2 810 -
Cash and cash equivalents 26 034 24 090 19 114
Trade and other receivables 12 687 50 376 6 288
Equity derivative collateral 244 444 244 524 -
Financial assets at fair value through profit or loss 81 982 18 004 -
Income tax receivable 704 414 -
Total assets 2 149 700 2 079 302 2 471 071
EQUITY AND LIABILITIES
Total equity attributable to equity holders 1 569 888 1 556 106 1 503 968
Stated capital 1 424 074 1 383 676 1 351 387
Retained income 355 330 371 467 330 897
Non-distributable reserves (191 577) (168 723) (171 612)
Currency translation reserve (17 939) (30 314) (6 704)
Non-controlling interest 398 532 5
Total equity 1 570 286 1 556 638 1 503 973
Total liabilities 579 414 522 664 967 098
Non-current liabilities 539 768 450 552 55 066
Interest-bearing borrowings 502 675 425 230 55 066
Other long-term liabilities 2 297 - -
Financial liabilities at fair value through profit or loss 683 - -
Deferred tax payable 34 113 25 322 -
Current liabilities 39 646 72 112 912 032
Trade and other payables 21 898 63 872 22 941
Interest-bearing borrowings 1 330 1 538 888 328
Financial liabilities at fair value through profit or loss 15 379 6 633 -
Income tax payable 1 039 69 763
Total equity and liabilities 2 149 700 2 079 302 2 471 071
Total number of shares in issue 963 155 909 945 502 019 930 994 319
Net asset value per share (USD) 1.63 1.65 1.62
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited for the Unaudited for the
quarter ended quarter ended
31 Mar 2017 31 Mar 2016
USD'000 USD'000
Net rental and related revenue 19 152 5 718
Income from derivatives and listed security investments 13 361 17 268
Income from joint ventures 664
Fair value (loss)/gain on investment property and listed security investments (11 330) 90 895
Foreign exchange (loss)/gain (480) 6 092
Operating expenses (766) (1 001)
Profit before net finance costs 20 601 118 972
Net finance costs (1 480) (20 879)
Finance income 541 612
Finance costs (2 021) (21 491)
Profit before income tax expense 19 121 98 093
Income tax expense (9 192) (491)
Profit for the period 9 929 97 602
OTHER COMPREHENSIVE INCOME NET OF TAX
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations - subsidiaries 12 375 (10 581)
Exchange differences on translation of foreign operations - minorities 9 -
Total comprehensive income for the period 22 313 87 021
Profit for the period attributable to:
Equity holders of the company 10 072 97 609
Non-controlling interest (143) (7)
9 929 97 602
Total comprehensive income for the period attributable to:
Equity holders of the company 22 447 87 042
Non-controlling interest (134) (21)
22 313 87 021
Weighted average number of shares in issue 947 071 254 917 204 356
Basic earnings per share (USD cents) 1.06 10.64
Basic earnings per share and headline earnings per share are based on the weighted average of 947 071 254 shares in issue
for the quarter ended 31 March 2017 (quarter ended 31 March 2016: 917 204 356 shares).
RECONCILIATION OF PROFIT FOR THE PERIOD TO HEADLINE EARNINGS
Unaudited Unaudited
for the for the
quarter ended quarter ended
31 March 2017 31 March 2016
USD '000 USD '000
Basic earnings - profit for the period attributable to equity holders 10 072 97 609
Adjusted for:
- fair value gain on investment property (net of tax effect) (2 926) -
Headline earnings 7 146 97 609
Headline earnings per share (USD cents) 0.75 10.64
Rockcastle has no dilutionary instruments in issue.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Currency
Stated Retained Non-controlling Non-distributable translation
capital income interest reserves reserve Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Balance at 31 December 2015 1 312 080 251 232 - (147 414) 3 877 1 419 775
Profit for the period 97 609 (7) 97 602
Dividend paid 39 307 (42 142) (2 835)
Equity contributed 12 12
Transfer to non-distributable reserves 24 198 (24 198) -
Exchange differences on translation
of foreign operations (10 581) (10 581)
Balance at 31 March 2016 1 351 387 330 897 5 (171 612) (6 704) 1 503 973
Profit for the period 87 809 648 88 457
Dividends declared 32 289 (44 350) (12 061)
Transfer to non-distributable reserves (2 889) 2 889 -
Exchange differences on translation
of foreign operations (121) (23 610) (23 731)
Balance at 31 December 2016 1 383 676 371 467 532 (168 723) (30 314) 1 556 638
Profit for the period 10 072 (143) 9 929
Shares issued and cum distribution
portion on issue during the period 40 398 (49 063) (8 665)
Transfer to non-distributable reserves 22 854 (22 854) -
Exchange differences on translation of
foreign operations 9 12 375 12 384
Balance at 31 March 2017 1 424 074 355 330 398 (191 577) (17 939) 1 570 286
CONSOLIDATED STATEMENT OF CASH FLOWS Unaudited for the Unaudited for the
quarter ended quarter ended
31 Mar 2017 31 Mar 2016
USD'000 USD'000
Cash generated from operations 24 191 83 416
Distributions received from joint ventures 664 -
Interest received 1 141 -
Interest paid on borrowings (2 373) (3 637)
Income tax paid (541) (7)
Cash inflow from operating activities 23 082 79 772
Investing activities
Rockcastle management incentive loan repayments 731 20
Rockcastle management incentive loan advances - 7 773
Development partner loans advanced - (6 581)
Issue of financial assets at fair value through profit or loss (80 122) -
Acquisition and development of investment property (9 320) (4 602)
Acquisition of property, plant and equipment (25) (154)
Outflows on listed security portfolio accounts (1 003) (32 794)
Cash outflow from investing activities (89 739) (36 338)
Financing activities
Increase/(decrease) in interest-bearing borrowings 77 237 (27 595)
Dividends paid to shareholders (8 636) (2 835)
Cash inflow/(outflow) from financing activities 68 601 (30 430)
Increase in cash and cash equivalents 1 944 13 004
Cash and cash equivalents at beginning of period 24 090 6 110
Cash and cash equivalents at end of period 26 034 19 114
Cash and cash equivalents consist of:
Current accounts 26 034 19 114
NOTES
1. PREPARATION, ACCOUNTING POLICIES AND AUDIT OPINION
The Group is required to publish financial results for the quarter ended 31 March 2017 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 3 month period from 1 January 2017 to
31 March 2017 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 31 December 2016.
The condensed unaudited consolidated financial statements ("financial statements") for the quarter ended 31 March 2017 have been
prepared in accordance with the measurement and recognition requirements of International Financial Reporting Standards ("IFRS"),
the requirements of IAS 34: Interim Financial Reporting, the JSE Listings Requirements, the SEM Listing Rules and the Securities
Act of Mauritius 2005.
The financial statements have not been reviewed or reported on by the Group's external auditors.
Copies of the financial statements and the statement of direct and indirect interests of each officer of the company, pursuant to
rule 8(2)(m) of the Securities (Disclosure Obligations of Reporting Issuers) Rules 2007, are available free of charge, upon request
at Rockcastle's registered address.
Contact person: Mrs Smitha Algoo
This communiqué 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 31 March 2017 that require any additional disclosure or adjustment
to the financial statements. These financial statements were approved by the board on 12 May 2017.
2. SEGMENTAL ANALYSIS
Unaudited for the Unaudited for the
quarter ended quarter ended
31 Mar 2017 31 Mar 2016
USD'000 USD'000
Profit before income tax expense
Direct property 21 551 6 221
Listed securities (2 001) 92 260
Corporate (429) (879)
19 121 97 602
Unaudited for the Audited for the Unaudited for the
quarter ended year ended quarter ended
31 Mar 2017 31 Dec 2016 31 Mar 2016
USD'000 USD'000 USD'000
Total assets
Direct property 1 390 882 1 399 644 441 296
Listed securities 651 270 649 821 2 000 126
Corporate 107 548 29 837 29 649
2 149 700 2 079 302 2 471 071
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 Limited, 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: 15/05/2017 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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