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Audited results for the year ended 28 February 2017
Adrenna Property Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/012245/06)
(JSE share code: ANA ISIN: ZAE000163580)
AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2017
Statement of Profit or Loss and Other Comprehensive Income FOR THE YEAR ENDED 28 FEBRUARY 2017
Audited Audited Audited Audited
Group Group Company Company
2017 2016 2017 2016
R’000 R’000 R’000 R’000
REVENUE 26 160 23 232 6 530 3 762
Operating income before interest and revaluations 16 226 14 642 1 410 418
Fair value adjustment on investment properties 19 018 4 736 - -
Investment income 953 55 899 522
Finance costs (6 732) (6 500) (492) (715)
Net income before taxation 29 465 13 429 1 817 225
Taxation (8 368) (5 575) (520) (91)
Income after taxation for the year 21 097 7 854 1 297 134
Non-controlling interest - - - -
Income attributable to ordinary shareholders 21 097 7 854 1 297 134
Other comprehensive income:
Total comprehensive income attributable to:
– Ordinary shareholders 21 097 7 854 1 297 134
– Non-controlling interests - - - -
21 097 7 854 1 297 134
Basic earnings per share (cents) 37,7 14,0 - -
There was no dilution in basic earnings per share during the current or prior year.
Statement of Financial Position AS AT 28 FEBRUARY 2017
Audited Audited Audited Audited
Group Group Company Company
2017 2016 2017 2016
R’000 R’000 R’000 R’000
ASSETS
Non-current assets
Investment properties 229 954 216 877 - -
Investments in subsidiaries - - 11 895 11 895
Loans owing by third parties 5 447 7 276 5 447 7 276
Operating lease assets 6 889 5 235 - -
Deferred taxation 289 2 691 - -
242 579 232 079 17 342 19 171
Current assets
Amounts owing by group companies - - 3 910 10 278
Loans owing by third parties 1 873 1 752 1 873 1 752
Inventory 1 430 1 430 - -
Accounts receivable 3 082 2 126 1 712 24
Operating lease assets 2 871 2 375 - -
Current taxation receivable 40 394 - -
Cash and cash equivalents 263 1 145 - -
9 559 9 222 7 495 12 054
Total assets 252 138 241 301 24 837 31 225
EQUITY AND LIABILITIES
Equity
Stated capital 567 567 567 567
Retained earnings 145 954 124 857 22 789 21 492
146 521 125 424 23 356 22 059
Non-current liabilities
Borrowing 54 606 65 511 - -
Deferred taxation 38 435 33 844 - -
93 041 99 355 - -
Current liabilities
Current portion of borrowings 9 626 7 717 - -
Amounts owing to group companies - - - 1 784
Accounts payable 1 280 1 713 75 290
Current taxation payable 313 69 49 69
Bank overdraft 1 357 7 023 1 357 7 023
12 576 16 522 1 481 9 166
Total equity and liabilities 252 138 241 301 24 837 31 225
Statement of Cash Flows FOR THE YEAR ENDED 28 FEBRUARY 2017
Audited Audited Audited Audited
Group Group Company Company
2017 2016 2017 2016
R’000 R’000 R’000 R’000
Cash generated by operation 12 687 13 128 (493) (555)
Finance costs (6 732) (6 500) (492) (715)
Investment income - bank 953 551 899 522
Taxation refunded 281 - - -
Taxation paid ( 1 058) (42) (540) (254)
6 131 7 137 (626 (1 002)
Cash flows from investing activities
Proceeds from sale of investment property 6 745 - - -
Acquisition of investment property (804) - - -
Net movement of loans owing by third parties 1 708 (9 028) 1 708 (9 028)
7 649 (9 028) 1 708 (9 028)
Cash flows from financing activities
Repayment of loans - (406) - -
Proceeds from raising of additional bond finance - 9 700 - -
Repayment of borrowings (8 996) (6 286) - -
Net movement in amounts held with group companies - - 4 584 10 171
(8 996) 3 008 4 584 10 171
Movement in cash and cash equivalents 4 784 1 117 5 666 141
Cash and cash equivalents at beginning of the year (5 878) (6 995) (7 023) (7 164)
Cash and cash equivalents at end of the year (1 094) (5 878) (1 357) (7 023)
Statement of Changes in Equity for the year ended 28 February 2017
Audited Audited Audited Audited
Group Group Company Company
2017 2016 2017 2016
R’000 R’000 R’000 R’000
STATED CAPITAL
Ordinary stated capital
Balance at beginning of the year 567 567 567 567
Movements during the year - - - -
Balance at end of the year 567 567 567 567
RESERVES
Retained earnings
Balance at beginning of the year 124 857 117 003 21 492 21 358
Comprehensive income attributable to ordinary shareholders 21 097 7 854 1 297 134
Balance at end of the year 145 954 124 857 22 789 21 492
Total equity and reserves attributable to ordinary shareholders 146 521 125 424 23 356 22 059
Non-controlling interests
Balance at beginning of the year - - - -
Balance at end of the year - - - -
Total equity and reserves 146 521 125 424 23 356 22 059
PER SHARE INFORMATION
2017 2016
R’000 R’000
Number of ordinary shares in issue at beginning of the year (000’s) 55 915 55 915
Number of ordinary shares in issue at end of the year (000’s) 55 915 55 915
Weighted average number of shares in issue (000’s) 55 915 55 915
Basic earnings
Net profit per statement of comprehensive income 21 097 7 854
Basic earnings per share (cents) 37,7 14,0
Headline Earnings Reconciliation
Net profit per statement of comprehensive income 21 097 7 854
Profit on disposal of assets (355) -
Revaluation of investment property (net of taxation) (13 417) (1 184)
Headline earnings 7 325 6 670
Headline earnings per share (cents) 13,1 11,9
There was no dilution in basic or headline earnings per share.
Dividends per share
No dividends were declared during the current or prior years.
Net asset value per share
Number of ordinary shares in issue at end of the year (000’s) 55 915 55 915
Net asset value per share (cents) 262,0 224,3
Net tangible asset value per share (cents) 262,0 224,3
BASIS OF PREPARATION
These audited condensed consolidated financial statements have been prepared in accordance with IAS 34: Interim Financial Reporting, the requirements of the Companies Act of South Africa
and the Listings Requirements of the Johannesburg Stock Exchange Limited. The audited condensed consolidated results have been prepared on the going concern basis as the directors are of
the view that the group has adequate resources in place to continue in operation for the foreseeable future. The accounting policies applied are in compliance with International Financial
Reporting Standards, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting
Standards Council and are consistent with those applied in the most recent annual financial statements.
This abridged report is extracted from audited information, but is not itself audited. The directors take full responsibility for the preparation of the abridged report and that the financial
information has been correctly extracted from the underlying annual financial statements.
The Financial Director, Hartmann Beukes CA(SA), was responsible for the preparation of the audited financial results.
AUDIT OPINION
The consolidated annual financial statements have been audited by our auditors, RSM South Africa Incorporated.
In their opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the group as at 28 February 2017, and its consolidated
financial performance and consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South
Africa.
A copy of their unmodified audit report is available for inspection at the company's registered office.
ACQUISITIONS AND DISPOSALS DURING THE PERIOD
During the year under review, additions totaling R0,8 million were effected to the existing investment property. These additions comprise warehouse conversions within the Consani Industrial
Park.
The properties disposed of during the year under review comprise the following:
- Section 8 of Red Sails, Hout Bay being a retail outlet measuring 134 square meters in extent which was sold for a consideration of R2 680 000, exclusive of VAT
- Section 6 of Red Sails, Hout Bay being a retail outlet measuring 149 square meters in extent which was sold for a consideration of R2 880 000, exclusive of VAT
- Section 5 of Red Sails, Hout Bay being a retail outlet measuring 77 square meters in extent which was sold for a consideration of R1 540 000, exclusive of VAT
CHANGES TO THE BOARD
There were no changes effected to the Board during the year under review.
GENERAL REVIEW, FINANCIAL RESULTS AND PROSPECTS
The environment within which the group operates remained static during the year under review. While market conditions have stabilised,
the directors do not anticipate substantial growth within the real estate sector.
The group achieved operating income before interest and fair value adjustments of R16,2 million, an expected increase from the prior year’s
operating profit of R14,6 million. Rental income generated during the year reflected a 10% increase in comparison with the prior year, a
result attained through the signing of additional long-term leases where vacancies existed in the prior period. Due to the extension of a
number of significant long-term leases, the group experienced a beneficial effect in the current year arising from straight-lining of rental
income (R2,1 million credited to revenue in the current year as opposed to R0,3 million debited in the prior year). Fair value adjustments
to investment property held amounted to R19 million in the current year, as opposed to R4,7 million reflected in the prior year. The group
decreased the percentage of borrowings directly related to fixed properties to 27,9% (2016: 33,8%), well within its target maximum of 60%.
Basic earnings per share increased from 14,0 cents per share in 2016 to 37,7 cents per share in 2017, an improvement of 169,3%. Headline
earnings per share increased from 11,9 cents per share in 2016 to 13,1 cents per share in 2017, an increase of 10,1%. Net asset value per
share and net tangible asset value per share both increased from 224,3 cents in 2016 to 262,0 cents per share in 2017, an increase of 16,8%.
The improvement in the above key performance and valuation indicators translates to a consistent growth in shareholder wealth.
The directors continue to make every effort to reduce borrowing costs and succeeded in this endeavour by lowering secured borrowings
and the bank overdraft from a cumulative balance of R80 million in 2016 to R65,5 million in 2017. This was achieved through the gradual
diminishment of the overdraft facility with First National Bank Limited and consistent monthly capital repayments made to ABSA Bank
Limited. In anticipation of rising interest rates, and while the directors assess potential expansion projects, the capital raised from the second
covering bond was advanced to RMS Corporate Solutions Proprietary Limited at a beneficial interest rate, thus creating an effective hedge
against interest rate fluctuations.
2017 (R’000) 2016 (R’000)
Investment Property- Property Head Investment Property- Property Head
Property related Held for Office Property related Held for Office
Holding Services Resale Admin Total Holding Services Resale Admin Total
SEGMENTAL RESULTS
Revenue 26 160 - - - 26 160 23 232 - - - 23 232
Cost of sales - - - - - - - - - -
Gross profit 26 160 - - - 26 160 23 232 - - - 23 232
Operating income/(loss) before interest and revaluations 21 35 - - (5 126) 16 226 4 055 - - 10 587 14 642
Fair value adjustments 19 018 - - - 19 018 4 736 - - - 4 736
Investment income 54 - - 899 953 29 - - 522 551
Finance costs (6 240) - - (492) (6 732) (5 785) - - (715) (6 500)
Net income/(loss) before taxation 34 184 - - (4 719) 29 465 3 035 - - 10 394 13 429
Taxation (7 848) - - (520) (8 368 (5 484) - - (91) (5 575)
Profit/(loss) for the year 26 336 - - (5 239) 21 097 (2 449) - - 10 303 7 854
Other comprehensive income
Total comprehensive income attributable to:
Ordinary shareholders 26 336 - - (5 239) 21 097 (2 449) - - 10 303 7 854
Non-controlling interests - - - - - - - - - -
26 336 - - (5 239) 21 097 (2 449) - - 10 303 7 854
Other information
Segment assets 241 677 - 1 430 9 031 252 138 230 819 - 1 430 9 052 241 301
Segment liabilities 104 137 - - 1 480 105 617 108 510 - - 7 367 115 877
A geographical segmental report is not presented as the entirety of the group’s continuing operations are carried out in the Western Cape.
Segmental aggregation is based on the main sources of activity, namely Investment Property Holding, Property-related Services, Property Sales and Head Office Administration.
Inter-segment transactions are measured based on arm’s length prices.
Major customers
Customers yielding revenues in excess of 10% of the group revenue are considered to be major.
The table below illustrates the major customers exceeding the 10% threshold:
2017 2016
R’000 R’000
Investment Property Holding
Customer A 7 659 7 158
Customer B 5 809 5 480
Customer C 2 804 -
Group Group
2017 2016
R’000 R’000
RELATED PARTIES
Group
The following related parties have been identified in terms of their
association with the group:
Islandsite Investments Twenty Three Proprietary Limited and Kwabahathi
Eiendomme cc (entities controlled by a director, Mr RP Fertig)
Propconsult Proprietary Limited (entity controlled by the Company
Secretary, Mr BW Kaiser)
JNF Investment Trust (entity in which a director, Mr WP Alcock, is
both a beneficiary and a trustee)
Phoenix Accounting Solutions – Chartered Accountants (SA) (entity in
which the financial director, Mr H Beukes, holds an interest)
RMS Corporate Solutions Proprietary Limited (entity with common
directorship)
RMS Property and Facilities Management Proprietary Limited (an
operating subsidiary within the RMS Corporate Solutions Group)
During the year the group had the following related party
transactions:
– Consultancy fees paid to Islandsite Investments Twenty Three
Proprietary Limited and Kwabahathi Eiendomme cc 875 553
– Consultancy fees paid to Propconsult Proprietary Limited 465 420
– Consultancy fees paid to JNF Investment Trust 210 180
– Accounting fees paid to Phoenix Accounting Solutions –
Chartered Accountants (SA) 482 134
– Asset management fees paid to RMS Corporate Solutions
Proprietary Limited 3 289 1 602
– Administration fees paid to RMS Corporate Solutions Proprietary
Limited - -
– Rental paid to RMS Corporate Solutions Proprietary Limited 221 164
– Operating costs paid to RMS Corporate Solutions Proprietary
Limited 71 67
– Property management fees, facilities management fees and
collection commission paid to RMS Property and Facilities
Management Proprietary Limited 1 507 1 745
– Interest received from RMS Corporate Solutions Proprietary (897) (522)
– Professional fees paid to RMS Property and Facilities Management
Proprietary Limited 200 -
At year-end the group had the following related party balances:
– Loan owing (to)/by RMS Corporate Solutions Proprietary Limited 7 320 9 028
– Included in trade payables and relating to RMS Corporate
Solutions Proprietary Limited - (180)
By Order of the Board
Johannesburg
19 May 2017
DIRECTORS: R P Fertig (Chief Executive Officer), W P Alcock† (Chairman), H Beukes CA(SA) (Financial Director),
B Mothelesi*, M Moela*, R Watson* (†Non-executive) (*Independent non-executive)
COMPANY SECRETARY: B W Kaiser
TRANSFER SECRETARIES: Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg, 2001
REGISTERED OFFICE: 2969 William Nicol Drive, Wedgewood Link, Bryanston, 2021
SPONSOR: Arbor Capital Sponsors (Pty) Limited
Date: 19/05/2017 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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