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Preliminary consolidated financial results for the year ended 31 March 2017
ACCELERATE PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration No 2005/015057/06)
JSE code: APF ISIN code: ZAE000185815
(REIT status approved)
("Accelerate" or "the company")
PRELIMINARY CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2017
HIGHLIGHTS
Year on year distribution per share growth of 7.3%
Property portfolio value of R 11.6 Billion (38% year on year growth)
Total Portfolio GLA of 633 494 m2
Net asset value growth of 27.4% (year on year)
Total return for the year of 21.5%
KEY INDICATORS
Indicator 2017 2016
Distribution per share 57.57 cents 53.67 cents
Yield * 8.6% 8.6%
Portfolio value R11.6 billion R8.4 billion
GLA 633 494m2 520 226 m2
Number of properties 69 61
Net asset value R7.4 billion R 5.7 billion
Cost to income ratio 16.9% 13.4%
Weighted average lease expiry 5.6 years 5.1 years
Lease escalations (excluding offshore)** 7.8% 8.04%
Vacancies (net of structural vacancies) 6.91% 7.13%
Listed/Large National tenants (by revenue) 65.1% 62.2%
*This is based on an average share price of R 6.70 for the year ended 31 March 2017 (2016: R6.23)
** 6.9% including offshore
ACCELERATE SINCE LISTING
Accelerate listed on 12 December 2013 with a property portfolio of R 5.5 billion at a share price of R 4.88 per share
with a retail focus and a differentiating nodal strategy. Our property portfolio has grown to R 11.6 billion with a
closing share price at 31 March 2017 of R 6.73 per share.
Accelerate has driven improvement in the quality of our portfolio through acquisitions such as the KPMG portfolio,
Portside and Eden Meander in George, our initial offshore acquisition of a portfolio of 9 single tenant net lease
properties in Austria and Slovakia as well as capital spend on existing properties and the sale of non-core properties.
Despite the drive for quality Accelerate has been able to provide continued growth to investors since listing with
average annual distribution growth in excess of 7.5% and total return (income and capital) to investors since listing
of 75%.
MARKET COMMENTARY
The South African commercial property market has shown considerable resilience in a trading environment characterised
by an uncertain political climate and a poorly performing macro-economy. Historically the South African property sector
has however performed well compared to other asset classes. As illustrated in the table below property equities have
outperformed equities and bonds over a three year and 10-year period.
Sector* Period
3 Years 10 Years
Equities 6.9% 10.5%
Property Equities 11.7% 15.8%
Bonds 3.2% 7.1%
Inflation 5.9% 6.2%
Direct Property 12.4% 14.1%
The 2016 returns recorded for the South African commercial property market suggest an underperforming office sector
(especially B and C grade office) with the industrial sector, and the logistics sector, outperforming the market.
Sector* Total Returns (Capital and Yield) 2016
Retail 12.6%
Office 7.6%
Industrial 13.6%
Total 11.1%
*Source MSCI 2016
While in 2016 income yields remained largely stable at the 8% mark, the deterioration in domestic economic conditions
placed downward pressure on rental and capital growth and has reduced inflationary pressures, it is expected that the
inflation rate will remain within the 3%-6% target range of the South African Reserve Bank.
The medium-term performance of the South African property market will continue to be influenced by the uncertain
trajectory of the South African economy and global economic conditions. With South African property investors having a
growing exposure to European property markets the performance of these markets will become increasingly important to
local investors. Forecasts for European economies suggest that GDP growth is expected to be approximately 1.6% in
2017, rising to 1.8% in 2018 which should underpin a strong demand for space.
Professor F Viruly (non-executive director)
KEY PRIORITIES FOR ACCELERATE
Improved quality
As particularly evidenced by the growing divide between A-grade and B&C grade office space quality has become
increasingly important. Accelerate remains focused on continually improving the quality of our portfolio and the
strength of our tenant mix through acquisitions such as the KPMG portfolio and Portside as well as the sale of some of
our non- core properties and reinvestment into our core through ongoing capex and redevelopment.
Reduced vacancies
As rental growth and escalations have come under increased pressure, the reduction of vacancies play a vital role in
bolstering rental income growth of our properties.
Managing costs
At APF we strive to be as cost effective as possible focusing on more efficient ways to operate and manage our
properties as well as using our scale (especially in our nodes) to achieve better costing from suppliers and service
providers.
Offshore diversification (backed by quality)
The lack of economic growth is a key driver for offshore Geographic diversification. Accelerate continued our drive for
quality with the completion of our first single tenant long term lease acquisition of the OBI portfolio in Austria and
Slovakia.
Maximising on the nodal strategy
Accelerates' nodal strategy has proven a key differentiating factor. Our ability to move tenants between different
properties in a node enhances our ability to:
1. Achieve the optimal tenant mix per building.
2. Assist tenants during trying economic times.
3. Provide bespoke development for new tenants due to available bulk.
4. Provide long term benefits to ourselves, our tenants and consumers by increased investment in the node.
FINANCIAL PERFORMANCE
Accelerate remained focused on maximising rental income and tenant recoveries, reducing vacancies, managing costs and
enhancing the quality of our property portfolio.
Accelerate earned a gross rental income (excluding straight line rental revenue adjustment) of R1.06 billion for the
period (2016: R 819 million).
The group's major expenses were largely recovered in terms of leases and consisted of: utility charges of R205.8
million (2016: R 155.3 million), security of R28.5 million (2016: R 25.7 million), and cleaning costs of R10.9 million
(2016: R 10.2 million).
The net property expenses of R65.8 million (2016: R 47.6 million), in conjunction with R74.0 million in other operating
costs (2016: R38.7 million), resulted in Accelerate reporting a 16.9% cost-to-income ratio (2016: 13.40%)
During the year, the group took out further interest rate swaps, resulting in 77.9% (2016: 86.9%) of Accelerates debt
being hedged.
Our distribution per share for the year of 57.57 cents (2016: 53.67 cents) shows a distribution growth of 7.3%. Refer
to the distribution analysis for more detail as well as comparatives.
Distributions per share is used as a performance measure for trading statement purposes.
FINANCIAL POSITION
Accelerate continues to create value through selective acquisitions and careful debt management.
As at 31 March 2017, Accelerate's investment property portfolio had a value of R11.6 billion, excluding the effects of
straight lining. The increase in the portfolio is largely due to Accelerates initial offshore investment of R 1.25
billion, the acquisition of approximately 50% of the iconic Portside tower in Cape town for R755 million, fair value
adjustments of R 505 million, as well as some smaller acquisitions and capital expenditure.
Long-term debt allocation
31 March 31 March
Bank funding - SA portfolio 2017 (Rm) % 2016 (Rm) %
Debt capital markets 1 226 25.1% 1 001 33,5%
Bank funding 3 654 74.9% 1 991 66,5%
Total 4 880 100,0% 2 992 100,0%
Weighted average debt term (years) 2.3 2,7
Short-term portion of debt 992.0 20.3% 422,3 14,3%
Debt hedged 3 805 77.9% 2 600 86,9%
Weighted average swap term (years) 2.4 2,4
Blended interest rate* 8.4% 8,24%
Interest cover ratio (x) 2.6 2,8
Loan to value 41.9% 35,6%
31 March 2017 31 March 2016
Consolidated Statement of financial position (R'000) (R'000)
ASSETS
Non-current assets 11 900 199 8 496 381
Investment property 11 860 689 8 422 776
Derivative financial assets 2 38 134 73 086
Property plant and Equipment 1 376 519
Current assets 483 688 278 605
Current tax receivable 9 881 9 269
Trade and other receivables 2 340 189 197 908
Cash and cash equivalents 2 133 618 71 428
Investment property held for sale - 130 726
Non-current assets held for sale - 130 726
Total assets 12 383 887 8 905 712
EQUITY AND LIABILITIES
Equity 7 352 992 5 771 966
Ordinary share capital 5 156 011 4 105 211
Other reserves 52 944 20 045
Non - controlling interest 12 421
Retained income 2 131 616 1 646 710
Total equity 7 352 992 5 771 966
Non-current liabilities 3 887 257 2 597 181
Borrowings 2 3 887 257 2 569 905
Contingent compensation to vendor 1 - 27 276
Current liabilities 1 143 638 536 565
Trade and other payables 2 151 619 114 209
Borrowings 2 992 019 422 356
Total equity and liabilities 12 383 887 8 905 712
31 March 2017 31 March 2016
Consolidated Statement of comprehensive income (R'000) (R'000)
Revenue, excluding straight-line rental revenue adjustment 1 062 999 818 700
Straight-line rental revenue adjustment 36 958 68 059
Revenue 1 099 957 886 759
Property expenses (286 314) (225 114)
Net property income 813 643 661 645
Operating expenses (74 022) (38 694)
Operating profit 739 621 622 951
Fair value adjustments 5 469 463 383 746
Unrealised foreign exchange gains/(losses) (47 367)
Other income/(expenses) (1 509) (142)
Gain on sale of investment property 7 038 -
Finance income 34 094 14 247
Profit before long-term debt interest and taxation 1 201 340 1 020 802
Finance costs (299 032) (215 770)
Profit before taxation 902 308 805 032
Taxation (423)
Profit/(loss) for the year 901 885 805 032
Other comprehensive income that may be reclassified
to profit and loss in subsequent periods -
Exchange differences on translation of foreign operations
(1 439)
Total comprehensive income 900 446 805 032
Profit attributable to:
Shareholders of the parent 898 372 805 032
Non-controlling interest 3 513 -
901 885 805 032
EARNINGS PER SHARE
Basic earnings per share (cents) 101.47 107.53
Diluted earnings per share (cents) 99.96 105.92
DISTRIBUTABLE EARNINGS
Profit after taxation attributable to equity holders 898 372 805 032
Less: straight-line rental revenue adjustment (36 958) (68 059)
Less: fair value adjustments (466 398) (383 746)
Add: Unrealised gains/(losses) 55 804
Add: Year end - distribution from reserves 36 999 25 758
Less: profit on sale of property (1 107) -
Distributable earnings 486 712 378 985
Foreign
currency Non-
Other translation Share Retained controlling Total
Reserves reserve Capital Income interest Equity
Consolidated Statement of changes in equity (R'000) (R'000) (R'000) (R'000) (R'000) (R'000)
Balance at 1 April 2015 7 223 - 3 422 723 1 174 197 - 4 604 143
Total Comprehensive income attributable to equity holders - - - 805 032 - 805 032
Issue of shares - - 682 488 - - 682 488
Distribution paid (4 200) - - (332 519) - (336 719)
Conditional share plan reserve 3 098 - - - - 3 098
Antecedant distribution reserve* 13 924 - - - - 13 924
Total contributions by and distributions to owners of company
recognised directly in equity 12 822 - 682 488 (332 519) - 362 791
Balance at 1 April 2016 20 045 4 105 211 1 646 710 5 771 966
Total Comprehensive income attributable to equity holders - - - 898 372 3 513 901 885
Other comprehensive income - (1 439) - - - (1 439)
Issue of shares - - 1 050 800 - - 1 050 800
Distribution paid (22 353) - - (413 466) - (435 819)
Conditional share plan reserve 11 264 - - - - 11 264
Antecedant distribution reserve* 45 427 - - - - 45 427
Non - controlling interest - - - - 8 908 8 908
Total contributions by and distributions to owners of company
recognised directly in equity 34 338 1 050 800 (413 466) 8 908 680 580
Balance at 31 March 2017 54 383 (1 439) 5 156 011 2 131 616 12 421 7 352 992
* This reserve relates to the antecendant distribution portion of the capital raised.
Statement of cash flows 31 March 2017 31 March 2016
(R'000) (R'000)
Cash flows from operating activities
Cash generated from operations 560 720 556 567
Finance income 34 094 14 247
Distribution paid (413 466) (332 519)
Tax received/(paid) (1 035) (9 254)
Net cash from operating activities 180 313 229 041
Cash flows from investing activities
Purchase of property, plant and equipment (1 066) (385)
Purchase of investment property (2 951 540) (1 300 193)
Contingent purchase (27 276) (18 960)
Proceeds from disposal of investment property 144 902 28 420
Proceeds of non-current assets held for sale 55 000 -
Net cash from investing activities (2 779 980) (1 291 118)
Cash flows from financing activities
Proceeds on share issue 1 050 800 682 488
Long-term borrowings raised 2 414 371 1 335 500
Long-term borrowings repaid (527 356) (737 253)
Finance cost (299 032) (215 770)
Antecedent distribution 23 074 9 723
Net cash from financing activities 2 661 857 1 074 688
Total Cash movement for the year 62 190 12 611
Cash at the beginning of the year 71 428 58 817
Total cash at end of the year 133 618 71 428
Year ended 31 March 2017 Year ended 31 March 2016
Distribution Analysis R'000 R'000
Distributable earnings 486 712 378 985
Less: Interim distribution from profits
(excludes interim distribution from reserves) 217 301 175 255
Final distribution 269 411 203 730
Shares qualifying for distribution
Number of shares at year end 986 372 706 801 344 008
Less: Bulk ceded shares to Accelerate# (51 070 184) (51 070 184)
Less: Ceded shares with regard to Noor properties acquired* - (13 290 135)
Add: Shares issued after year end - 16 100 000
Shares qualifying for distribution 935 302 522 753 083 689
Distribution per share
Final distribution per share (cents) 28.80469 27.05277
Interim distribution per share made (cents) 28.76627 26.61692
Total distribution per share for the year (cents) 57.57096 53.66969
# The cession on these shares relate to bulk in the Fourways area acquired by Accelerate at listing, these shares will
only be eligible for distributions at the earlier of the development of the bulk or December 2021.
* The vendor has ceded distribution on a portion of the shares issued with regard to Accelerate's acquisition of
properties in December 2015.
Year ended 31 March 2017 Year ended 31 March 2016
Earnings per share R'000 R'000
Basic earnings per share (EPS) amounts are calculated by dividing profit
for the year attributable to ordinary equity holders of Accelerate by the
weighted average number of ordinary shares outstanding during the year.
Reconciliation of basic/diluted earnings to headline earnings
Profit attributable to shareholders of the parent 898 372 805 032
Fair value adjustments (501 350) (383 746)
Capital gains on sale investment property (7 038) -
Headline profit attributable to shareholders of the parent 389 984 421 286
Basic earnings per share (cents) 101.47 107.53
Diluted earnings per share (cents) 99.96 105.92
Headline earnings per share (cents) 44.05 56.27
Diluted headline earnings per share (cents) 43.39 55.43
Shares in issue at the end of the year 986 372 706 801 344 008
Weighted average number of shares 885 350 951 748 651 001
shares in issue
Shares subject to the deferred acquisition costs - 4 538 397
Shares subject to the conditional share plan 13 377 341 6 851 733
Weighted average number of deferred shares 13 377 341 11 390 130
Total diluted weighted average number of shares in issue 898 728 292 760 041 131
SEGMENTAL ANALYSIS
The individual properties are aggregated into segments with similar economic characteristics such as nature of the
property and the occupier market it serves. Management considers that this is best achieved by aggregating properties
into office, industrial and retail and European retail.
Consequently, the company is considered to have four reportable operating segments, as follows:
- Office segment: acquires, develops and leases offices;
- Industrial segment: acquires, develops and leases warehouses and factories;
- Retail segment: acquires, develops and leases shopping malls, community centres as well as retail centres.
- European single tenant segment: acquires, develops and leases single tenant space backed by long term leases.
Group administrative costs, finance revenue, finance costs, income
taxes and liabilities are not reported to the members of executive management on a segmented basis.
There are no sales between segments.
For the year ended 31 March 2016
R'000 Office Industrial Retail European - retail Total
Statement of comprehensive income 2016
Revenue, excluding straight-line rental revenue adjustment 173,262 36,108 609,330 - 818,700
Straight-line rental adjustment 35,655 2,217 30,187 - 68,059
Property expenses (49,426) (4,743) (170,944) - (225,114)
Segment operating profit 159,491 33,582 468,572 - 661,645
Fair value adjustments on investment property 71,155 45,591 265,066 - 381,812
Segment profit 230,646 79,173 733,638 - 1,043,457
Other operating expenses (38,694)
Other income (142)
Fair value gain on financial instruments 1,934
Finance income 14,247
Long term debt interest (215,770)
Profit before tax 805,032
For the year ended 31 March 2017
R'000 Office Industrial Retail European - retail Total
Statement of comprehensive income 2017
Revenue, excluding straight-line rental revenue adjustment 280,523 65,124 688,509 28,843 1,062,999
Straight-line rental adjustment 21,685 3,043 12,230 - 36,958
Property expenses (70,333) (6,761) (206,417) (2,803) (286,314)
Segment operating profit 231,875 61,406 494,322 26,040 813,643
Fair value adjustments on investment property 86,143 3,585 372,233 42,454 504,415
Segment profit 318,018 64,991 866,555 68,494 1,318,058
Other operating expenses (74,022)
Other income 5,529
Fair value gain on financial instruments (34,952)
Foreign exchange gains/(losses) (47 367)
Finance income 34,094
Long term debt interest (299,032)
Profit before tax 902,308
For the year ended 31 March 2016
R'000 Office Industrial Retail European - retail Total
Statement of financial position extracts at 31 March 2016
Assets
Investment property balance 1 April 2015 921,328 282,874 5,627,655 - 6,831,857
Acquisitions 850,000 295,221 - 1,145,221
Capitalised costs 92,559 12,093 50,321 - 154,973
Disposals/ classified as held for sale (28,420) (130,726) - (159,146)
Investment property held for sale 130,726 - 130,726
Straight-line rental revenue adjustment 35,655 2,217 30,187 - 68,059
Fair value adjustments 71,155 45,591 265,066 - 381,812
Segment assets at 31 March 2016 1,942,277 637,996 5,973,229 - 8,553,502
Other assets not managed on a segmental basis
Derivative financial instruments 73,086
Equipment 519
Current Assets 278,605
Total Assets 8,905,712
For the year ended 31 March 2017
R'000 Office Industrial Retail European - retail Total
Statement of financial position extracts at 31 March 2017
Assets
Investment property balance 1 April 2016 1,942,277 637,996 5,973,229 - 8,553,502
Acquisitions 1,180,000 365,000 1,166,560 2,711,560
Capitalised costs 46,445 5,917 144,922 42,696 239,980
Disposals/ classified as held for sale (185,726) (185,726)
Investment property held for sale -
Straight-line rental revenue adjustment 21,685 3,043 12,230 - 36,958
Fair value adjustments 86,143 3,585 372,233 42,454 504,415
Segment assets at 31 March 2017 3,276,550 650,541 6,681,888 1,251,710 11,860,689
Other assets not managed on a segmental basis
Derivative financial instruments 38,134
Equipment 1,376
Current Assets 483,688
Total Assets 12,383,887
For the year ended 31 March 2016
R'000 Gauteng Western Cape KwaZulu-Natal Limpopo Eastern Cape Mpumalanga Europe Total
Statement of comprehensive income 2016
Revenue, excluding straight-line rental revenue adjustment 693,565 98,556 8,981 13,866 2,550 1,181 - 818,700
Straight-line rental adjustment 53,951 5,752 3 6,435 1,126 792 - 68,059
Property expenses (193,067) (25,880) (2,210) (3,957) - - - (225,114)
Segment operating profit 554,450 78,428 6,774 16,344 3,676 1,973 - 661,645
Fair value adjustments on investment property 327,363 48,297 3,622 2,530 - - - 381,812
Segment profit 881,813 126,725 10,396 18,874 3,676 1,973 - 1,043,457
Other operating expenses (38,694)
Other income (142)
Fair value gain on financial instruments 1,934
Finance income 14,247
Long term debt interest (215,770)
Profit before tax 805,032
For the year ended 31 March 2017
R'000 Gauteng Western Cape KwaZulu-Natal Limpopo Eastern Cape Mpumalanga Europe Total
Statement of comprehensive income 2017
Revenue, excluding straight-line rental revenue adjustment 792,025 198,742 13,642 20,408 7,991 1,348 28,843 1,062,999
Straight-line rental adjustment 34,553 (547) (216) 1,636 994 538 - 36,958
Property expenses (215,559) (55,401) (5,926) (4,614) (2,004) (7) (2,803) (286,314)
Segment operating profit 611,019 142,794 7,500 17,430 6,981 1,879 26,040 813,643
Fair value adjustments on investment property 278,039 162,878 3,812 4,463 6,800 5,969 42,454 504,415
Segment profit 889,058 305,672 11,312 21,893 13,781 7,848 68,494 1,318,058
Other operating expenses (74,022)
Other income 5 529
Fair value gain on financial instruments (34,952)
Foreign exchange gains/(losses) (47 367)
Finance income 34,094
Long term debt interest (299,032)
Profit before tax 902 308
For the year ended 31 March 2016
R'000 Gauteng Western Cape KwaZulu-Natal Limpopo Eastern Cape Mpumalanga Europe Total
Statement of financial position extracts at 31 March 2016
Investment property balance 1 April 2014 5,871,524 855,102 60,492 44,739 - - - 6,831,857
Acquisitions 1,003,221 70,000 64,500 7,500 - 1,145,221
Capitalised costs 100,157 25,492 2,549 24,649 1,225 901 - 154,973
Disposals/ classified as held for sale (130,726) (28,420) - (159,146)
Investment property held for sale 130,726 - 130,726
Straight-line rental revenue adjustment 53,951 5,752 3 6,435 1,126 792 - 68,059
Fair value adjustments 327,363 48,297 3,622 2,530 - - - 381,812
Investment property at 31 March 2016 7,356,216 906,223 66,666 148,353 66,851 9,193 - 8,553,502
Other assets not managed on a segmental basis
Derivative financial instruments 73,086
Equipment 519
Current Assets 278,605
Total Assets 8,905,712
For the year ended 31 March 2017
R'000 Gauteng Western Cape KwaZulu-Natal Limpopo Eastern Cape Mpumalanga Europe Total
Statement of financial position extracts at 31 March 2017
Investment property balance 1 April 2014 7,356,216 906,223 66,666 148,353 66,851 9,193 8,553,502
Acquisitions 260,000 1,285,000 1,166,560 2,711,560
Capitalised costs 132,750 51,641 438 12,455 42,696 239,980
Disposals/ classified as held for sale (185,726) (185,726)
Investment property held for sale -
Straight-line rental revenue adjustment 34,553 (547) (216) 1,636 994 538 - 36,958
Fair value adjustments 278,039 162,878 3,812 4,463 6,800 5,969 42,454 504,415
Investment property at 31 March 2017 7,875,832 2,405,195 70,700 166,907 74,645 15,700 1,251,710 11,860,689
Other assets not managed on a segmental basis
Derivative financial instruments 38,134
Equipment 1,376
Current Assets 483,688
Total Assets 12,383,887
NOTES TO THE FINANCIAL STATEMENTS
CORPORATE INFORMATION
The condensed financial statements of Accelerate for the year ended 31 March 2017 were authorised for issue in
accordance with a resolution of the directors passed on 13 June 2017. Accelerate is a public company incorporated and
domiciled in South Africa and its shares are publicly traded on the JSE. The registered office is located at Cedar
Square Shopping Centre, corner Cedar Road and Willow Avenue Fourways. The principal activities of Accelerate are acquisition,
development and leasing of properties. The functional and presentation currency of Accelerate is South African rand.
All figures are rounded off to R'000 except where otherwise stated.
BASIS OF PREPARATION
These condensed financial statements for the year ended 31 March 2017 are prepared in accordance with the framework
concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS),
contains the minimum information required by IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides
as issued by the Accounting Practices Committee, the Financial Reporting Pronouncements as issued by Financial
Reporting Standards Council, the requirements of the Companies Act, 71 of 2008, as amended and the JSE Listings
Requirements.
The accounting policies applied in the preparation of these condensed financial statements are in terms of IFRS and are
consistent with those applied in the previous financial period, except for the new and amended IFRSs that became
effective during the 31 March 2017 reporting period. None of which had any material impact on Accelerate's financial
results.
These condensed financial statements have been prepared under the historical cost convention except for investment
properties which are measured at fair value.
The fair value of investment properties is determined by directors with reference to market-related information while
other financial liabilities are valued with reference to market-related information and valuations as appropriate. All
investment properties are valued by independent external valuers on a 3-year rolling cycle.
These condensed financial statements were prepared under the supervision of Mr Dimitri Kyriakides (CA)SA in his
capacity as Chief Financial Officer.
1. CONTINGENT COMPENSATION TO VENDOR
As part of the sale and purchase agreement for properties acquired by Accelerate at listing, an amount of contingent
purchase consideration has been agreed with the vendor in accordance with the conditional deferred payment agreement.
In accordance with this agreement, Accelerate will provide the vendor with additional purchase consideration for any
lettable vacant space excluded from the original purchase consideration which is let within the first three years. This
payment will be settled by Accelerate through the issue of additional shares in Accelerate in future when certain
conditions have been met. As at the acquisition date, the fair value of the contingent purchase consideration was
estimated at R209 784 554. During the year ended 31 March 2015 a portion of the vacant lettable space has been let in
compliance with the conditions laid down in the agreement. As a result of this an amount of R163 548 205 in shares was
issued in terms of the contingent purchase consideration. The remaining contingent purchase consideration at 31 March
2016 was R27 275 766. The deferred payment agreement expired in December 2016, no further issuances were done since 31
March 2016.
A reconciliation of the movement of the contingent purchase consideration liability is provided below:
Year ended 31 March 2017 Year ended 31 March 2016
Contingent purchase consideration R'000 R'000
Opening balance 27 276 46 236
Expiry of agreement/reduction due to vacancies filled (27 276) (18 960)
- 27 276
The contingent purchase consideration is a mechanism used to shift the risk of vacant space from purchaser (Accelerate)
to the vendor. The additional shares issued throughout the agterskot period have been yield enhancing.
2. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
31 MARCH 2017
Financial assets Carried at fair value Amortised cost# Total
R'000 R'000 R'000
Derivative financial assets* 38 134 38 134
Trade and other receivables 340 189 340 189
Cash and cash equivalents 133 618 133 618
Total financial assets 38 134 473 807 511 941
Financial liabilities
Long-term interest-bearing borrowings (3 887 257) (3 887 257)
Trade and other payables (137 324) (137 324)
Current portion of long-term debt (992 019) (992 019)
Total liabilities (5 016 600) (5 016 600)
31 MARCH 2016
Financial assets Carried at fair value Amortised cost# Total
R'000 R'000 R'000
Derivative financial assets* 73 086 - 73 086
Trade and other receivables - 197 908 197 908
Cash and cash equivalents - 71 428 71 428
Total financial assets 73 086 269 336 342 422
Financial liabilities
Long-term interest-bearing borrowings - (2 569 905) (2 569 905)
Trade and other payables - (100 021) (100 021)
Current portion of long-term debt - (422 356) (422 356)
Total liabilities (3 092 282) (3 092 282)
* The values of the derivative financial asset shown at fair value are based on inputs other than quoted prices that
are observable in the market for the assets and liabilities, either directly (i.e. as prices) or indirectly (i.e.
derived from prices) - level 2. The value of the swaps is determined as the discounted value of the future cash flows
to be received from the swap assets. For the valuation current JIBAR was used as an indication of future JIBAR.
# The carrying value of financial assets and liabilities carried at amortised cost is considered to approximate the
fair value of those financial assets and liabilities. There have been no significant changes in valuation techniques or
transfers between fair value hierarchy levels.
3. DIRECTORS REMUNERATION
Year ended 31 March 2017 Year ended 31 March 2016
R'000 R'000
Total guaranteed package
M Georgiou Nil Nil
A Costa 3 534 2 901
D Kyriakides 2 206 1 957
JRJ Paterson 2 553 2 100
Short term incentive payment
M Georgiou Nil Nil
A Costa 4 600 1 698
D Kyriakides 1 200 1 158
JRJ Paterson 3 000 1 415
Share options exercised
M Georgiou Nil Nil
A Costa 3 059 Nil
D Kyriakides 1 527 Nil
JRJ Paterson 4 085 Nil
Non - executive directors fees
TT Mboweni 1 131 1 633
GC Cruywagen 439 536
TJ Fearnhead 400 379
JRP Doidge 350 329
K Madikizela 350 329
F Viruly 350 329
4. RELATED-PARTY TRANSACTION
Relationships
M Georgiou and A Costa are directors of both Accelerate Property Fund Ltd and Accelerate Property Management Company
(Pty) Ltd. Both directors' total remuneration is paid by Accelerate Property Fund. M Georgiou owns 100% of Fourways
Precinct (Pty) Ltd through The Michael Family Trust and also owns 100% of Accelerate Property Management Company.
Year ended 31 March 2017 Year ended 31 March 2016
Related party transactions and balances R'000 R'000
Related party balances
Vendor loans
Fourways Precinct (Pty) Ltd 11 458
The Michael Family Trust 55 602 50 040
Contingent purchase
Fourways Precinct (Pty) Ltd - (27 276)
Related party transactions
Vacancy guarantee
The Michael family trust 11 563
Fourways Precinct (Pty) Ltd 15 921 -
Development guarantee
Fourways Precinct (Pty) Ltd 39 288
The Michael family trust 6 887
Related party transactions
Vacancy guarantee
Fourways Precinct (Pty) Ltd 7 502 -
The Michael family trust - 11 563
Development guarantee
Fourways Precinct (Pty) Ltd 28 101 -
The Michael family trust - 1 452
Interest charged
Interest charged on outstanding amounts:
Fourways Precinct (Pty) Ltd 2 001 -
The Michael Family trust 3 472 2 711
Accelerate Property Management costs
Fourways Precinct (Pty) Ltd (4 396) (3 647)
Accelerate Property Management Company (Pty) Ltd (4 857) (2 766)
Letting commission paid
Fourways Precinct (Pty) Ltd (25 886) -
Financial Guarentee (8 438)
5. FAIR VALUE ADJUSTMENTS
Year ended 31 March 2017 Year ended 31 March 2016
Fair value adjustments R'000 R'000
Investment property (Fair value model) 504 415 381 812
Mark to market movement on swap (34 952) 1 934
469 463 383 746
CAPITAL COMMITMENTS
In terms of Accelerate's budgeting process, R77.5 million was allocated to Accelerate's planned capital expenditure.
As such, Accelerate views this amount as authorised and not contracted.
FINANCIAL GUARANTEE
During December 2016 an executive buy in structure was initiated in order to ensure that the executive directors
of Accelerate are adequately incentivised and aligned with interests of the company and its shareholders in the long
term. SPV's funded through bank debt from RMB can acquire shares up to a maximum of R 205 million in Accelerate at
market related share prices. The interest on bank debt in the SPV's will be serviced by the distributions received
from APF. RMB will have cession over these shares and the directors will only have an unconditional right to the shares
in the SPV's once the bank debt has been settled. Accelerate guarantees to RMB the performance of each SPV of its
obligation. The maximum liability Accelerate may have under the guarantees is the equivalent of 65.0% of the total
drawn commitment to the extent that losses incurred by RMB are not settled by the sale of the shares RMB has cession
over. At 31 March 2017 R 125 million of the RMB facility has been drawn down. At 31 March 2017 a liability of R 8 437
500 was recognised for this guarantee provided.
SUBSEQUENT EVENTS
There were no adjusting or non-adjusting subsequent events from year end until the signing of this SENS.
AUDITOR'S REVIEW
Ernst & Young Inc, Accelerate's independent auditors, have reviewed these condensed consolidated financial statements
and have expressed an unmodified review conclusion on these condensed consolidated financial statements, which are
available for inspection at the company's registered office.
The review report does not necessarily report on all the information contained in these condensed consolidated
financial statements. Shareholders are therefore advised that, to obtain a full understanding of the nature of the
auditor's engagement, they should obtain a copy of the auditor's report together with the accompanying financial
information from the company's registered office.
DIRECTORS' RESPONSIBILITY STATEMENT
The directors of Accelerate assume full responsibility for the preparation of the condensed financial statements, and
has been correctly extracted from the underlying annual financial statements.
FINAL DISTRIBUTION WITH AN ELECTION TO REINVEST CASH DISTRIBUTION FOR SHARES
The board of Accelerate has declared a final cash distribution (number 7) ("Cash Distribution") of 28.80469 cents per
ordinary share (2016: 27.05277 cents per ordinary share) for the year ended 31 March 2017.
Shareholders will be entitled to elect to reinvest the Cash Distribution of 28.80469 cents per share after the
deduction of the applicable dividend tax, in return for shares ("Share Re-investment Alternative"), failing which they
will receive the net Cash Distribution in respect of all or part of their shareholding.
Shareholders who have dematerialised their shares are required to notify their duly appointed Central Securities
Depository Participant ("CSDP") or broker of their election in the manner and time stipulated in the custody agreement
governing the relationship between the shareholder and their CSDP or broker.
The source of the distribution comprises net income from property rentals earned from the company's property
investments as well as interest earned on excess cash on deposit. Please refer to the condensed statement of
comprehensive income for further details.
A dividend withholding tax of 20% will be applicable on the dividend portion to all shareholders who are not exempt.
The issued share capital at the declaration date is 986 372 706 (2016: 817 444 008) ordinary shares. The company's
income tax reference number is: 9868626145
Tax implications for South African resident shareholders
Accelerate was granted REIT status by the JSE with effect from 12 December 2013 in line with the REIT structure as
provided for in the Income Tax Act, No. 58 of 1962, as amended (the Income Tax Act) and section 13 of the JSE Listings
Requirements.
The REIT structure is a tax regime that allows a REIT to deduct qualifying distributions paid to investors in
determining its taxable income.
The Cash Distribution of 28.80469 (2016: 27.05277) cents per ordinary share meets the requirements of a "qualifying
distribution" for the purposes of section 25BB of the Income Tax Act (a qualifying distribution). Accordingly,
qualifying distributions received by local tax resident shareholders must be included in the gross income of such
shareholders (as a non-exempt dividend in terms of section 10(1)(k)(aa) of the Income Tax Act), with the effect that
the qualifying distribution is taxable as income in the hands of the Accelerate shareholder. These qualifying
distributions are, however, exempt from dividend withholding tax in the hands of South African tax resident
shareholders, provided that the South African resident shareholders have provided the following forms to their CSDP or
broker, as the case may be, in respect of uncertificated ordinary shares, or the transfer secretaries, in respect of
certificated ordinary shares:
- a declaration that the distribution is exempt from dividends tax; and
- a written undertaking to inform the CSDP, broker or transfer secretaries, as the case may be, should the circumstances
affecting the exemption change or the beneficial owner ceases to be the beneficial owner, both in the form prescribed
by the Commissioner for the South African Revenue Service. Shareholders are advised to contact their CSDP, broker or
the transfer secretaries, as the case may be, to arrange for the abovementioned documents to be submitted prior to
payment of the distribution, if such documents have not already been submitted.
Tax implications for non-resident shareholders
Qualifying distributions received by non-resident shareholders will not be taxable as income and instead will be
treated as ordinary dividends, but which are exempt in terms of the usual dividend exemptions per section 10(1)(k) of
the Income Tax Act. It should be noted that until 31 December 2013, qualifying distributions received by non-residents
were not subject to dividend withholding tax. From 1 January 2014, any qualifying distribution received by a non-
resident from a REIT will be subject to dividend withholding tax at 20% (2016:15%), unless the rate is reduced in terms
of any applicable agreement for the avoidance of double taxation (DTA) between South Africa and the country of
residence of the shareholder. Assuming dividend withholding tax will be withheld at a rate of 20%, the net amount due
to non-resident shareholders will be 23.04375 (2016: 22.99485 ) cents per ordinary share. A reduced dividend
withholding tax rate in terms of the applicable DTA, may only be relied on if the non-resident shareholders have
provided the following forms to their CSDP or broker, as the case may be, in respect of the uncertificated ordinary
shares, or the transfer secretaries, in respect of certificated ordinary shares:
- a declaration that the dividend is subject to a reduced rate as a result of the application of a DTA; and
- a written undertaking to inform their CSDP, broker or the transfer secretaries, as the case may be, should the
circumstances affecting the reduced rate change or the beneficial owner ceases to be the beneficial owner, both in the
form prescribed by the Commissioner for the South African Revenue Service. Non-resident shareholders are advised to
contact their CSDP, broker or the transfer secretaries, as the case may be, to arrange for the abovementioned documents
to be submitted prior to payment of the distribution if such documents have not already been submitted, if applicable.
Summary of the salient dates relating to the Cash Distribution and Share Re-investment Alternative are as follows:
2017
Circular and form of election posted to shareholders Thursday, 22 June
Announcement of Share re-investment Alternative issue price and finalisation information Tuesday, 4 July
Last day to trade ("LDT") cum dividend Tuesday, 11 July
Shares to trade ex-dividend Wednesday, 12 July
Listing of maximum possible number of Share Re-investment Alternative shares commences on the JSE Friday, 14 July
Last day to elect to receive the Share Re-investment Alternative (no late forms of election will be accepted) by 12:00
(South African time) Friday, 14 July
Record date Friday, 14 July
Announcement of results of Cash Distribution and Share Re-investment Alternative on SENS Monday, 17 July
Cheques posted to certificated shareholders and accounts credited by CSDP or broker to dematerialised shareholders
electing the Cash Distribution on or about Monday, 17 July
Announcement of results of Cash on SENS Monday, 17 July
Share certificates posted to certificated shareholders and accounts credited by CSDP or broker to dematerialised
shareholders electing the Share Re-investment Alternative on or about Wednesday, 19 July
Adjustment to shares listed on or about Friday, 21 July
Notes:
1. Shareholders electing the Share Re-investment Alternative are alerted to the fact that the new shares will be listed on
LDT + 3 and that these new shares can only be traded on LDT + 3, due to the fact that settlement of the shares will be
three days after record date, which differs from the conventional one day after record date settlement process.
2. Share certificates may not be dematerialised or rematerialised between Wednesday, 12 July 2017 and Friday, 14 July
2017, both days inclusive.
3. The above dates and times are subject to change. Any changes will be released on SENS and published in the press.
The Cash Dividend or Share Re-investment Alternative may have tax implications for resident and non-resident
shareholders. Shareholders are therefore encouraged to consult their professional advisors should they be in any doubt
as to the appropriate action to take.
DISTRIBUTION GUIDANCE
Distribution growth is expected to be flat for the year ending 31 March 2018 mainly due to the expected negative income
effects of the Fourways Mall redevelopment, anticipated rental assistance and tenant installations that will be
required.
For the year ended 31 March 2019 the negative income effects of the development are expected to continue, coupled with
the dilutive effect of the equalisation at completion of the development will result in flat to marginal growth.
For the year ended 31 March 2020 distribution growth is expected to normalise to historical growth delivered.
The completed Fourways super regional mall will anchor the Fourways Node, attracting top quality tenants in the retail and
office segment.
This trend is already evident given the increased interest in the bulk owned by Accelerate, the head office development for international
DIY retailer Leroy Merlin and the infrastructure spend by a number of parties including the municipality.
This guidance has not been reviewed or reported on by the group's auditors.
ANNUAL GENERAL MEETING
The company's annual general meeting ("AGM") will be held at Accelerate's registered office, in the main boardroom,
Cedar Square Shopping Centre, Management Office, 1st Floor, Cnr Willow Avenue and Cedar Road, Fourways, Johannesburg on
Friday, 21 July 2017 at 10h00. Further details on the company's AGM will be included in Accelerate's integrated annual
report to be posted to shareholders on or before 19 June 2017. A PDF of the integrated annual report and notice of AGM
will be available to download at www.acceleratepf.co.za on the same day of distribution.
On behalf of the board
Mr TT Mboweni
(Non-executive chairman)
Mr M Georgiou
(Chief executive officer)
Mr D Kyriakides
(Chief financial officer)
14 June 2017
Corporate information
DIRECTORS
Mr TT Mboweni (non-executive chairman)
Mr A Costa (chief operating officer)
Dr GC Cruywagen (lead independent, non-executive director)
Mr JRP Doidge (independent non-executive director)
Mr TJ Fearnhead (independent non-executive director)
Mr M Georgiou (chief executive officer)
Mr D Kyriakides (chief financial officer)
Ms K Madikizela (independent non-executive director)
Mr JRJ Paterson (executive director)
Prof F Viruly (independent non-executive director)
Registered office and business address
Cedar Square Shopping Centre, Management Office, 1st Floor, Cnr Willow Ave and Cedar Rd,
Fourways, Johannesburg, 2055
Tel: 010 001 0790
Web: www.acceleratepf.co.za
Investor relations
Instinctif Partners: Lizelle du Toit
Tel: 011 447 3030
Email: lizelle.dutoit@instinctif.com
Company secretary
TMF Corporate Services (South Africa) Proprietary Limited
Represented by:
Ms Joanne Matisonn
3rd Floor, 200 on Main, Cnr Main and Bowwood Roads
Claremont
7708
Transfer secretaries
Computershare Investor Services (Pty) Ltd
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196 PO Box 61051, Marshalltown, 2107, South Africa
Tel: 011 370 5000
Email: proxy@computershare.co.za
Fax: 011 688 2238
Sponsor
The Standard Bank of South Africa Limited
(Registration number 1962/000738/06)
Baker Street, Rosebank, 2196
PO Box, 61344, Marshalltown, 2107
Auditors
Ernst & Young Incorporated
102 Rivonia Road, Sandton, Johannesburg, 2149
Tel: 011 772 3000
Internal Auditors
LateganMashego Audit and Advisory (Pty)Ltd
Registration number 2001/107847/07
Registered address: 11 Boca Walk, Highveld, Centurion, 0157
Email: lindie@lateganmashego.co.za
Tel: 0828987644/0836091159
Attorneys
Glyn Marais Inc.
(Registration number 1990/000849/21)
2nd Floor, The Place
1 Sandton Drive
Sandton
2196
(PO Box 652361, Benmore, 2010)
Date: 14/06/2017 08:00:00 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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