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Preliminary summarised audited consolidated financial statements for the year ended 30 June 2017
Resilient REIT Limited
Incorporated in the Republic of South Africa
Reg no 2002/016851/06
JSE share code RES
ISIN ZAE000209557
("Resilient" or "the group")
(Approved as a REIT by the JSE)
Preliminary summarised audited consolidated financial statements
for the year ended 30 June 2017
Directors' commentary
Nature of the business
Resilient is an internally asset managed Real Estate Investment Trust
("REIT") listed on the JSE Limited. Its strategy is to invest in
dominant regional retail centres with a minimum of three anchor tenants
and let predominantly to national retailers. A core competency is the
successful development of new malls and extensions to existing malls.
Resilient also invests in listed and offshore property-related assets.
Distributable earnings and commentary on results.
The board has declared a dividend of 297,07 cents per share for the
six months ended June 2017. This, together with the 270,22 cents
per share declared for the interim period, results in a total dividend
of 567,29 cents per share for the 2017 financial year. The growth in
dividend per share of 16,1% for the year is within the guidance
previously provided and can be attributed to a pre-gearing performance
of 7,9% on the South African property portfolio and continued
outperformance by the group's listed holdings. The group benefited
from attractive currency rates previously locked-in on its offshore
dividend income from its holdings in Greenbay, Hammerson, Nepi
and Rockcastle. Results from the Nigerian property portfolio,
although relatively small, were disappointing.
Economic conditions in South Africa continue to deteriorate evidenced by
negative GDP growth of 0,3% and 0,7% for the December 2016 and March
2017 quarters, respectively. The economy is technically in recession.
This had a negative impact on retail sales in Resilient's centres which,
on a comparable basis, increased by 5,1% compared to the previous year's
7,7%. The Northern Cape, where retail sales declined by 4,9% in the
previous financial year and by 0,3% during the interim period, achieved
3,5% growth for the full financial year on the back of improvements in
volumes and prices of mineral commodities.
The comparable annual sales growth per province is set out below
(Limpopo Mall and I'langa Mall were excluded as these are being
redeveloped. Mams Mall was excluded as it was only acquired during
the year):
Percentage of
Comparable SA properties
sales growth by value
North West 3,0% 5,6%
Eastern Cape 3,3% 3,8%
Northern Cape 3,5% 6,7%
Mpumalanga 3,8% 9,4%
Limpopo 5,0% 25,9%
KwaZulu-Natal 6,2% 21,9%
Gauteng 6,2% 26,7%
A major differentiator between Resilient and many of its competitors is
that Resilient's retail properties are all relatively new or have been
extensively redeveloped or refurbished in recent years. The centres are
modern, relevant and well positioned to compete in an increasingly
competitive market.
The past financial year was characterised by the departure of a number
of international retail brands including River Island, Mango, Nine West,
Tom Tailor, Lucky and Lipsy. South Africa's oldest department store
chain, Stuttafords, is in the process of closing. The only impact on
Resilient was the closure of the Nine West store in Mall of the North
which was converted to Aldo. Management is anticipating further
withdrawals of international brands and continued consolidation and
"right-sizing" of Edgars stores. This is not anticipated to have a major
impact on Resilient.
Property acquisitions and extensions
South Africa
Resilient took transfer of an additional 4% interest in Highveld Mall
(now 64% owned) in July 2016 and increased its interest in Mafikeng Mall
by 6% to 72% in October 2016.
The extension to Boardwalk Inkwazi to accommodate the expansion of
Woolworths, Truworths and Food Lover's Market was completed. The scope of
work was increased to accommodate an expansion of the entertainment
offering, the relocation of House & Home and an increase in the fashion
offering including the introduction of H&M.
The extension to Diamond Pavilion to accommodate the enlargement of Edgars
and Woolworths and a net additional 187 parking bays was completed.
The redevelopment and refurbishment of Limpopo Mall is progressing well
and is scheduled for completion in April 2018. There is strong demand for
retail space in this mall which continues to trade exceptionally well.
The Pick n Pay store is being "right-sized" from a GLA of 8 824m2 to a GLA
of 5 466m2 and this has facilitated the expansion of Truworths and Jet.
The first two phases of the 17 396m2 GLA expansion of I'langa Mall have
been completed. Game and Pick n Pay are trading in their new stores and
H&M opened on schedule in April 2017. The final phase of the extensions
that will introduce a substantial entertainment offering is scheduled for
completion in September 2017. This will include six Ster Kinekor cinemas,
an ice rink as well as Fun Company with a games arcade, ten pin bowling and
a trampoline park.
A small extension to introduce H&M to Mall of the North and to expand the
entertainment offering was completed.
Resilient took transfer of its 50% interest in Mams Mall in March 2017.
The existing shopping centre with a GLA of 16 616m2 will be extensively
redeveloped and extended with construction anticipated to commence in
September 2017. The new 70 000m2 GLA mall will include at least four
anchors. Resilient will partially finance the co-developer. Management
forecasts a yield of approximately 8% on the group's estimated cost of
R625 million.
Resilient is still awaiting transfer of the last portion of land which
will facilitate the extension of the existing 29 447m2 GLA Irene Village
Mall to an 80 000m2 GLA regional mall. Earthworks have been completed and
the installation of the sewerage and stormwater infrastructure will be
completed by August 2017. The board previously approved the development at
a yield of 7% on the anticipated cost of R1,35 billion.
The extensions to Mafikeng Mall, The Grove and Tzaneen Lifestyle Centre
remain dependent on various approvals, particularly the awarding of rights.
Portugal
The acquisition of the 50% indirect interests in Forum Coimbra and Forum
Viseu was effected on 31 May 2017. Forum Coimbra is the dominant regional
mall in the Centro Region of Portugal and has a GLA of 51 489m2, inclusive
of a 17 700m2 hypermarket that is separately owned. Forum Viseu is a
19 145m2 GLA shopping centre in the city centre of Viseu, Portugal.
Resilient's interests were acquired for EUR109,625 million at a property
yield of 6%. Greenbay is Resilient's joint venture partner.
Resilient Africa
Resilient owns 60,94% of this initiative for the development of malls in
Nigeria in partnership with Shoprite Checkers.
The Nigerian economy has returned to growth supported by an improvement
in the oil price and relaxation of currency controls. In terms of
Bloomberg consensus, the economy is expected to grow by 1,5% in 2017 and
by 3,3% in 2018.
Progress has been made with letting vacant space and vacancies are
anticipated to decline to less than 5% by the end of the 2018 financial
year. Rentals on expiry of leases have, however, declined sharply
reflecting poor trading conditions over the past two years. This in turn
resulted in a significant reduction in property valuations. Resilient's
share of the devaluation of the properties in Nigeria amounted to
USD19,9 million.
Resilient's exposure to Nigeria remains relatively small at R638 million
and no new developments will be considered until there is a substantial
improvement in the economy and the returns that can be achieved.
Listed portfolio
Jun 2017 Jun 2016
Number of Fair value Number of Fair value
Counter shares R'000 shares R'000
Fortress A (FFA) - 27 670 000 436 909
Fortress B (FFB) 172 930 000 6 000 671 165 400 000 5 927 936
Greenbay (GRP)* * 671 300 000 926 394
Nepi (NEP)& 29 270 000 4 843 014 28 290 000 4 752 720
10 843 685 12 043 959
Greenbay
(GRP)* 1 550 975 000 2 993 382 *
Hammerson
(HMN)** 9 381 225 914 951 16 000 000 1 688 356
Rockcastle
(ROC)^& 200 400 000 7 150 272 191 450 000 6 606 940
21 902 290 20 339 255
* At Jun 2017 Greenbay was treated as an associate (equity accounted)
and was thus not fair valued in the financial statements. At Jun 2016 it
was accounted for as an investment and was fair valued.
** The Hammerson position is held through equity derivatives.
^ Rockcastle was treated as an associate (equity accounted) and was thus
not fair valued in the financial statements.
& In July 2017 Nepi and Rockcastle merged into a new company, Nepi
Rockcastle plc, which is listed on the JSE Limited and Euronext in
Amsterdam. Resilient owns 13,3% of this new company.
Broad-Based Black Economic Empowerment (BBBEE)
In line with shareholders' approval, Resilient provided R500 million of
financial assistance to The Siyakha 2 Education Trust to enable it to
acquire 4 629 629 Resilient shares at a price of R108 per share on
15 December 2016. The Trust is a charitable trust established for the
promotion of black education. Resilient has supported the establishment
of the Katlego Business Trust which has as its objective the provision
of financial support to black-owned businesses associated with the group.
Following the maturing of the Eagle's Eye BBBEE scheme, Resilient plans
to issue additional shares to increase its BEE shareholding. Funding of
BEE shareholding has numerous challenges including BEE partners having
limited equity to contribute and financial institutions having limited
appetite for loans against listed shares without recourse, directly or
indirectly, to Resilient's balance sheet. Resilient has not provided
recourse to its balance sheet to financiers of BEE holdings and has
elected to provide subsidised mezzanine finance (ranging between prime
and prime +2%) with no equity participation to facilitate these
transactions. These mezzanine loans by Resilient are earnings accretive
in the first year yet offer no growth in subsequent years.
In future Resilient intends financing the acquisition of shares by BEE
partners at rates equal to the income produced by the Resilient shares
in exchange for a 49% equity participation in the investment.
Vacancies
Vacancies increased marginally from 1,8% at June 2016 to 1,9% at June
2017. Vacancies at Arbour Crossing remain a concern and negotiations are
in progress to introduce a gym which will absorb most of the vacant space.
Facilities
South Africa
A total of R1,995 billion (3-year notes: R974 million; 3,5-year notes:
R650 million; 5-year notes: R371 million) was raised under the Domestic
Medium Term Note ("DMTN") Programme and R724 million of notes were
repaid during the year. Resilient accepted 5-, 6- and 7-year facilities
from LibFin of R270 million each and a 5-year facility of R750 million
from Nedbank. The group repaid a R110 million facility from Nedbank and
a R392,5 million facility from Standard Bank. Expiring facilities from
Standard Bank were renegotiated and in total R1,415 billion of 3-year
facilities were accepted.
Average
Amount Margin
Facility expiry R'million over Jibar
Jun 2018 2 129 1,48%
Jun 2019 2 500 1,50%
Jun 2020 4 149 1,70%
Jun 2021 1 850 1,75%
Jun 2022 1 391 1,85%
Jun 2023 270 1,70%
Jun 2024 270 1,80%
12 559 1,65%
Nigeria
Funding of USD45 million was raised by Resilient Africa with the three
operating malls as security. The 7-year facility attracts interest at
90-day US Libor plus 6,25% with no recourse to Resilient's South African
balance sheet. The facility was drawn in March 2017.
Portugal
A 5-year facility of EUR102,7 million at 2,40%, fixed for five years,
was accepted and is secured by the Portuguese assets. There is no
recourse to Resilient's South African balance sheet. Resilient
initially funded its 50% of the purchase price and the facility was
drawn on 27 June 2017. Due to the timing of international settlements,
the funds were applied to Resilient's South African facilities post
year end, resulting in a significant cash balance being reflected
on the statement of financial position at 30 June 2017.
Interest rate derivatives
At year end the following interest rate derivatives were in place in
mitigation of South African interest rate risk:
Amount Average
Interest rate swap expiry R'million swap rate
Jun 2019 500 7,33%
Jun 2020 880 6,31%
Jun 2021 820 7,88%
Jun 2022 500 8,09%
Jun 2023 - -
Jun 2024 - -
Jun 2025 100 7,78%
2 800 7,32%
Amount Average
Interest rate cap expiry R'million cap rate
Jun 2020 300 7,54%
Jun 2021 300 7,92%
Jun 2022 - -
Jun 2023 500 7,77%
Jun 2024 1 100 7,98%
Jun 2025 - -
Jun 2026 - -
Jun 2027 500 8,22%
2 700 7,93%
Amount
Variable rate instruments R'000
Interest-bearing borrowings 13 220 174
Currency derivatives (3 192 586)
Foreign denominated debt (1 126 492)
Loans to BEE vehicles (3 577 228)
Loans to co-owners (212 205)
Cash and cash equivalents (970 271)
Capital commitments contracted for 533 517
4 674 909
Total interest rate derivatives 5 500 000
Percentage hedged 117,6%
Capital expenditure approved by the board 1 512 605
Percentage hedged inclusive of approved capital
expenditure 88,9%
Information based on Resilient's management accounts.
The all-in weighted average cost of funding of Resilient was 8,90% at
June 2017 and the average hedge term was 4,5 years.
In addition to having fixed rate funding against the Portuguese assets,
the following interest rate derivatives were in place in mitigation of
the group's exposure to foreign interest rate risk:
Amount Average Amount Average
Interest rate cap expiry EUR'000 cap rate UDS'000 cap rate
Jun 2022 67 500 0,39%
Jun 2023 67 500 0,52% 22 000 2,42%
Jun 2024 22 500 0,36%
Jun 2025 22 500 0,48%
180 000 0,45% 22 000 2,42%
In total 84,7% and 84,3% of the exposure to Euro and US Dollar base
rates, respectively, are hedged.
Currency derivatives
Balance sheet hedging
The board's policy is to use cross-currency swaps as a means of
obtaining funding in currencies similar to that of the foreign
investments but only to achieve a neutral effect on the first year's
distribution. At June 2017 cross-currency swaps totalled EUR225 million
at an exchange rate of R14,20 against investments of EUR1 003 million
(Greenbay, Nepi and Rockcastle).
Income hedging
Foreign income is hedged in line with the following policy:
- Hedge 100% of the income projected to be received in the following
12 months;
- Hedge 67% of the income projected to be received in months 13 to 24;
and
- Hedge 33% of the income projected to be received in months 25 to 36.
In line with this policy the following hedges are currently in place:
Nepi
Forward rate Greenbay Hammerson Rockcastle Nigeria Portugal
against ZAR: EUR GBP EUR USD EUR
Dec 2017 R16,81 R19,35 R17,17 R13,51 R15,17
Jun 2018 R17,32 R19,99 R17,67 R13,78 R15,88
Dec 2018 R17,55 R20,85 R18,03 R14,23 R16,35
Jun 2019 R18,43 R21,53 R18,72 R14,46 R17,18
Dec 2019 R18,34 - R18,52 R15,00 R17,63
Jun 2020 R19,28 - R18,97 R15,11 R18,72
Summary of financial performance
Jun 2017 Dec 2016 Jun 2016 Dec 2015
Dividend (cents per
share) 297,07 270,22 256,27 232,46
Shares in issue and
used for dividend
per share
calculation 401 260 209 401 260 209 393 970 580 385 443 448
Management
account
information
Net asset value per
share R89,44 R84,16 R84,47 R83,75
Loan-to-value ratio* 24,8% 23,8% 21,0% 21,1%
Net property expense
ratio 15,4% 16,9% 15,9% 17,3%
Gross property
expense ratio 35,6% 36,3% 36,1% 37,1%
Net total expense
ratio 13,4% 14,6% 14,9% 15,7%
Gross total expense
ratio 27,5% 28,5% 29,9% 30,8%
IFRS accounting
Net asset value per
share R80,03 R77,45 R77,31 R75,16
* The loan-to-value ratio is calculated by dividing total interest-
bearing borrowings adjusted for cash on hand by the total of investments
in property, listed securities and loans advanced.
Prospects
Net income from Resilient's South African property portfolio has and will
continue to grow faster than the portfolio's retail sales growth
reflecting in-force leases and reversions of expiring leases from below
market levels to market.
After taxation and in-country gearing, the investment in the two
Portuguese malls is forecast to achieve a net return of 8,1% against
Resilient's average cost of funding of 8,9%. Resilient did not enter
into a cross-currency hedge to neutralise the first year's
distribution shortfall. Even though this is not in terms of the currency
hedging policy, Resilient wishes to increase its unhedged offshore
exposure. The dilution will be offset by the listed offshore portfolio's
performance that is expected to perform better than initially anticipated.
Nepi Rockcastle and Greenbay are projected to grow their Euro
distributions by 15% and 25% respectively. Management has interrogated
the growth prospects of these companies and their investments and
is confident that they will continue their strong performance in
the future.
Resilient's distributions are forecast to increase by approximately 13%
for the 2018 financial year and by at least 12% for the 2019 financial
year. The growth is based on the assumptions that there is no further
deterioration of the macro-economic environment, that no major corporate
failures will occur and that tenants will be able to absorb the recovery
of rising utility costs and municipal rates. Budgeted rental income was
based on contractual escalations and market-related renewals. This
forecast has not been audited or reviewed by Resilient's auditors.
The board's intention is to have up to 60% of total direct and indirect
property assets as offshore assets. As at June 2017, 40,8% of the group's
total direct and indirect property assets were offshore assets
(based on fair value). Resilient is currently engaged in a process
aimed at acquiring prime retail assets in a European market.
By order of the board
Des de Beer Nick Hanekom
Managing director Financial director
Johannesburg
3 August 2017
Summarised consolidated statement of financial position
Audited Audited
Jun 2017 Jun 2016
R'000 R'000
Assets
Non-current assets 45 022 688 40 051 411
Investment property 21 395 097 19 499 061
Straight-lining of rental
revenue adjustment 353 248 378 036
Investment property under
development 798 785 955 803
Investment in and loans to
associates and joint venture 7 234 270 3 788 851
Investments 10 843 685 12 043 959
Resilient Share Purchase
Trust loans 607 879 466 510
Loans to BEE vehicles 3 577 228 2 750 986
Loans to co-owners 212 496 168 205
Current assets 1 518 126 1 054 725
Resilient Share Purchase
Trust loans 19 970 13 100
Loans to co-owners - 178 647
Trade and other receivables 490 573 493 724
Hammerson equity derivative 151 760 324 128
Cash and cash equivalents 855 823 45 126
Total assets 46 540 814 41 106 136
Equity and liabilities
Total equity attributable to
equity holders 32 111 834 30 458 776
Stated capital 13 521 054 12 712 894
Currency translation reserve 59 380 193 838
Reserves 18 531 400 17 552 044
Non-controlling interests 120 311 386 354
Total equity 32 232 145 30 845 130
Total liabilities 14 308 669 10 261 006
Non-current liabilities 12 304 047 8 308 255
Interest-bearing borrowings 10 445 033 6 235 994
Deferred tax 911 727 918 215
Amounts owing to non-controlling
shareholders 947 287 1 154 046
Current liabilities 2 004 622 1 952 751
Trade and other payables 649 855 396 681
Income tax payable - 839
Interest-bearing borrowings 1 354 767 1 555 231
Total equity and liabilities 46 540 814 41 106 136
Summarised consolidated statement of comprehensive income
Audited Audited
for the for the
year ended year ended
Jun 2017 Jun 2016
Income statement R'000 R'000
Net rental and related revenue 1 509 199 1 448 858
Recoveries and contractual
rental revenue 2 402 628 2 185 226
Straight-lining of rental revenue
adjustment (23 618) 58 263
Rental revenue 2 379 010 2 243 489
Property operating expenses (869 811) (794 631)
Income from investments 540 653 364 619
Fair value gain on investment
property,investments and currency
derivatives 793 529 2 321 652
Fair value gain on investment
property 413 514 566 290
Adjustment resulting from
straight-lining of rental revenue 23 618 (58 263)
Fair value (loss)/gain on investments (28 482) 2 484 186
Fair value gain/(loss) on currency
derivatives 384 879 (670 561)
Administrative expenses (116 161) (104 575)
Foreign exchange gains/(losses) 132 089 (27 995)
Profit on sale of interest
in associates 3 231 105 365
Income from associates and
joint venture 356 825 60 448
- distributable 366 768 253 632
- non-distributable (9 943) (193 184)
Profit before net finance costs 3 219 365 4 168 372
Net finance costs (233 072) (121 237)
Finance income 704 239 528 490
Interest received 704 239 525 493
Fair value adjustment on interest
rate derivatives - 2 997
Finance costs (937 311) (649 727)
Interest on borrowings (983 377) (730 505)
Capitalised interest 92 709 80 778
Fair value adjustment on interest
rate derivatives (46 643) -
Profit before income tax 2 986 293 4 047 135
Income tax 7 327 (59 827)
Profit for the year 2 993 620 3 987 308
Other comprehensive (loss)/income
net of tax
Items that may subsequently be
reclassified to profit or loss
Exchange differences on translation
of foreign operations (367 063) 256 463
Total comprehensive income for
the year 2 626 557 4 243 771
Profit for the year attributable to:
Equity holders of the company 3 160 841 3 923 090
Non-controlling interests (167 221) 64 218
2 993 620 3 987 308
Total comprehensive income for the
year attributable to:
Equity holders of the company 2 941 470 4 093 875
Non-controlling interests (314 913) 149 896
2 626 557 4 243 771
Basic earnings per share (cents) 792,81 1 023,61
Summarised consolidated statement of cash flows
Audited Audited
for the for the
year ended year ended
Jun 2017 Jun 2016
R'000 R'000
Operating activities
Cash generated from operations 2 046 373 1 622 010
Interest received 704 239 525 493
Interest paid (983 377) (730 505)
Dividends paid (2 140 407) (1 711 614)
Cash outflow from operating
activities (373 172) (294 616)
Investing activities
Development and improvement
of investment property (1 417 681) (751 931)
Acquisition of investment property (273 000) (101 953)
Disposal of investment property - 164 483
Increase of interest in associates (1 266 074) (436 009)
Loans to joint venture advanced (301 585) -
Acquisition of interest in
joint venture (566 215) -
Proceeds on disposal of investment
in associate 37 254 156 012
Share purchase trust loans advanced (308 533) -
Share purchase trust loans repaid 160 294 179 782
Loans advanced to BEE vehicles (826 242) (1 036 435)
Co-owner loans repaid/(advanced) 134 356 (78 230)
Acquisition of investments (324 395) (1 712 167)
Cash flow on currency derivatives 534 496 (741 979)
Proceeds on disposal of investments 466 061 1 169 900
Cash flow on Hammerson equity
derivative 334 270 (496 774)
Cash outflow from investing
activities (3 616 994) (3 685 301)
Financing activities
Increase in interest-bearing
borrowings 4 008 575 1 883 858
Acquisition of additional interest
in subsidiaries (15 872) -
Raising of stated capital 808 160 2 096 019
Cash inflow from financing activities 4 800 863 3 979 877
Increase/(decrease) in cash and
cash equivalents 810 697 (40)
Cash and cash equivalents at
beginning of year 45 126 45 166
Cash and cash equivalents at
end of year 855 823 45 126
Cash and cash equivalents consist of:
Current accounts 855 823 45 126
The net cash outflow from operating activities results mainly from the
group distributing scrip dividends received, the antecedent dividend
adjustment, dividends accrued for but not yet received and foreign
exchange gains/losses not distributed.
Summarised consolidated statement of changes in equity
Currency
Stated translation
capital reserve Reserves
Audited R'000 R'000 R'000
Balance at Jun 2015 10 616 875 40 113 15 280 417
Issue of shares 2 096 019
Equity contributed by non-
controlling shareholders
Exchange differences on
translation of foreign
operations 170 785
Profit for the year 3 923 090
Dividends paid (1 668 523)
Transfer to currency
translation reserve (17 060) 17 060
Balance at Jun 2016 12 712 894 193 838 17 552 044
Issue of shares 808 160
- Issue of 2 660 000 shares
on 1 Sep 2016 308 367
- Issue of 4 629 629 shares
on 15 Dec 2016 499 793
Equity contributed by non-
controlling shareholders
Acquisition of additional
interest in subsidiaries (2 659)
Exchange differences on
translation of foreign
operations (219 371)
Profit for the year 3 160 841
Dividends paid (2 093 913)
Transfer to currency
translation reserve 84 913 (84 913)
Balance at Jun 2017 13 521 054 59 380 18 531 400
Equity
attributable Non-
to equity controlling Total
holders interests equity
Audited R'000 R'000 R'000
Balance at Jun 2015 25 937 405 279 340 26 216 745
Issue of shares 2 096 019 2 096 019
Equity contributed by non-
controlling shareholders 209 209
Exchange differences on
translation of foreign
operations 170 785 85 678 256 463
Profit for the year 3 923 090 64 218 3 987 308
Dividends paid (1 668 523) (43 091) (1 711 614)
Transfer to currency
translation reserve - -
Balance at Jun 2016 30 458 776 386 354 30 845 130
Issue of shares 808 160 808 160
- Issue of 2 660 000 shares
on 1 Sep 2016 308 367 308 367
- Issue of 4 629 629 shares
on 15 Dec 2016 499 793 499 793
Equity contributed by non-
controlling shareholders 108 577 108 577
Acquisition of additional
interest in subsidiaries (2 659) (13 213) (15 872)
Exchange differences on
translation of foreign
operations (219 371) (147 692) (367 063)
Profit for the year 3 160 841 (167 221) 2 993 620
Dividends paid (2 093 913) (46 494) (2 140 407)
Transfer to currency
translation reserve - -
Balance at Jun 2017 32 111 834 120 311 32 232 145
Notes
1. Preparation, accounting policies and audit opinion
The preliminary summarised audited consolidated financial statements
have been prepared in accordance with the requirements of the JSE
Listings Requirements for preliminary reports and the requirements
of the Companies Act of South Africa applicable to summary
financial statements.
The JSE Listings Requirements require preliminary reports to be
prepared in accordance with the framework concepts and the measurement
and recognition requirements of International Financial Reporting
Standards ("IFRS"), the SAICA Financial Reporting Guides as issued by
the Accounting Practices Committee and Financial Pronouncements as
issued by the Financial Reporting Standards Council, and to also, as a
minimum, contain the information required by IAS 34: Interim Financial
Reporting. This report complies with the SA REIT Association Best
Practice Recommendations. This report was compiled under the
supervision of Nick Hanekom CA(SA), the financial director.
The accounting policies applied in the preparation of the consolidated
financial statements, from which the summarised consolidated financial
statements were derived, are in terms of IFRS and are consistent with
the accounting policies applied in the preparation of the previous
consolidated financial statements, with the exception of the adoption
of new and revised standards which became effective during the year.
The group's investment properties were externally valued by an
independent valuer. In terms of IAS 40: Investment Property and
IFRS 7: Financial Instruments: Disclosure, investment properties
are measured at fair value and are categorised as level 3 investments.
The revaluation of investment property requires judgement in the
determination of future cash flows from leases and an appropriate
capitalisation rate which varies between 7,50% and 8,75%
(Jun 2016: 7,50% and 8,75%).
Changes in the capitalisation rate attributable to changes in
market conditions can have a significant impact on property
valuations. A 25 basis points increase in the capitalisation rate
will decrease the value of investment property by R693,9 million
(Jun 2016: R645,8 million). A 25 basis points decrease in the
capitalisation rate will increase the value of investment property
by R739,6 million (Jun 2016: R688,2 million). In terms of IAS 39:
Financial Instruments: Recognition and Measurement and IFRS 7, the
group's currency and interest rate derivatives as well as the
Hammerson equity derivate are measured at fair value through profit
or loss and are categorised as level 2 investments. In terms of
IAS 39, investments are measured at fair value being the quoted
closing price at the reporting date and are categorised as
level 1 investments.
There were no transfers between levels 1, 2 and 3 during the year.
The valuation methods applied are consistent with those applied in
preparing the previous consolidated financial statements.
As a result of the Nepi and Rockcastle merger, a total of
R787 million of the deferred tax liability at June 2017, being the
deferred tax on the fair value adjustment on the Nepi investment,
was reversed in July 2017. Other than this, the directors
are not aware of any other events subsequent to June 2017, not
arising in the normal course of business, that require any
additional disclosure or adjustment to the financial statements.
The auditors, Deloitte & Touche, have issued an unmodified audit
opinion on the consolidated financial statements for the year ended
June 2017. The audit was conducted in accordance with International
Standards on Auditing.
These preliminary summarised consolidated financial statements have
been derived from the consolidated financial statements and are
consistent, in all material respects, with the consolidated
financial statements.
This preliminary report has been audited by Deloitte & Touche and
an unmodified audit opinion has been issued. Copies of their audit
reports and the consolidated financial statements are available
for inspection at Resilient's registered address.
The auditor's report does not necessarily report on all of the
information contained in this announcement. Shareholders are
therefore advised that in order to obtain a full understanding of
the nature of the auditor's engagement, they should obtain a copy
of that report together with the accompanying financial information
from Resilient's registered address.
2. Lease expiry profile
Based on
contractual
Based on rental
Lease expiry: South Africa rentable area revenue
Vacant 1,9%
Jun 2018 19,6% 18,9%
Jun 2019 13,9% 15,8%
Jun 2020 15,4% 17,3%
Jun 2021 17,7% 19,1%
Jun 2022 10,9% 13,4%
> Jun 2022 20,6% 15,5%
100,0% 100,0%
3. Segmental analysis
Audited Audited
for the for the
year ended year ended
Jun 2017 Jun 2016
R'000 R'000
Total assets
Retail: South Africa 21 285 029 18 986 266
Retail: Nigeria 1 312 804 1 880 638
Retail: Portugal 867 800 -
Corporate: South Africa 23 024 111 20 131 192
Corporate: Nigeria 51 070 108 040
46 540 814 41 106 136
Rental revenue
Retail: South Africa 2 271 907 2 162 237
Retail: Nigeria 107 103 81 252
Profit/(loss) for the year
Retail: South Africa 2 397 488 1 765 566
Retail: Nigeria (469 203) 171 886
Retail: Portugal 6 097 -
Corporate: South Africa 1 055 617 2 141 904
Corporate: Nigeria 3 621 (92 048)
2 993 620 3 987 308
Reconciliation of profit for
the year to dividend declared
Profit for the year 2 993 620 3 987 308
Fair value gain on investment
property (413 514) (566 290)
Fair value loss/(gain)
on investments 28 482 (2 484 186)
Fair value (gain)/loss on
currency derivatives (384 879) 670 561
Foreign exchange (gains)/losses (132 089) 27 995
Profit on sale of interest
in associates (3 231) (105 365)
Non-distributable loss from
associates 9 943 193 184
Fair value adjustment on
interest rate derivatives 46 643 (2 997)
Income tax (7 327) 59 827
Non-controlling interests (19 175) (32 048)
Antecedent dividend 13 836 31 497
Dividends accrued 144 000 126 144
Amount available for distribution
under best practice 2 276 309 1 905 630
Dividend declared - interim (1 084 285) (896 002)
Dividend declared - final (1 192 024) (1 009 628)
- -
The methodology applied in calculating the dividend is consistent
with that of the prior year.
4. Headline earnings
Audited Audited
for the for the
year ended year ended
Jun 2017 Jun 2016
R'000 R'000
Reconciliation of profit for
the year to headline earnings
Basic earnings - profit for the
year attributable to equity
holders 3 160 841 3 923 090
Adjusted for: (422 317) (590 034)
- fair value gain on investment
property (437 132) (508 027)
- profit on sale of interest
in associates (3 231) (105 365)
- income tax effect 18 046 23 358
Headline earnings 2 738 524 3 333 056
Headline earnings per
share (cents) 686,88 869,66
Basic earnings per share and headline earnings per share are based on
the weighted average of 398 690 160 (Jun 2016: 383 261 155) shares in
issue during the year.
Resilient has no dilutionary instruments in issue.
5. Payment of final dividend
The board has approved and notice is hereby given of a final dividend
of 297,07 cents per share for the six months ended 30 June 2017.
The dividend is payable to Resilient shareholders in accordance with
the timetable set out below:
Last date to trade cum dividend Tuesday, 29 August 2017
Shares trade ex dividend Wednesday, 30 August 2017
Record date Friday, 1 September 2017
Payment date Monday, 4 September 2017
Share certificates may not be dematerialised or rematerialised
between Wednesday, 30 August 2017 and Friday, 1 September 2017,
both days inclusive.
In respect of dematerialised shareholders, the dividend will be
transferred to the CSDP accounts/broker accounts on Monday, 4 September
2017. Certificated shareholders' dividend payments will be posted on or
about Monday, 4 September 2017.
An announcement informing shareholders of the tax treatment of the
dividend will be released separately on SENS.
Directors
Thembi Chagonda (chairperson); Des de Beer*; Andries de Lange*;
Nick Hanekom*; Bryan Hopkins; Johann Kriek*; Dawn Marole; Protas Phili;
Umsha Reddy; Barry Stuhler^; Barry van Wyk
(*executive director; ^non-independent)
http://www.resilient.co.za
Changes to the board of directors
There were no changes to the board of directors since 2 February 2017,
the date of the previous results announcement.
Company secretary
Monica Muller
Registered address
4th Floor Rivonia Village, Rivonia Boulevard, Rivonia, 2191
Transfer secretaries
Link Market Services South Africa Proprietary Limited, 13th Floor,
Rennie House, 19 Ameshoff Street, Braamfontein, 2001
Sponsor
Java Capital
Management accounts
Basis of preparation
In order to provide information of relevance to investors these
management accounts, which comprise financial information extracted
from the audited annual financial statements for the year ended
June 2017, have been prepared and are presented below to provide users
with the position:
- Had the equity investment in Hammerson held through derivative
products been accounted for on a grossed-up basis instead of only
accounting for the margin;
- Had the group's listed investments in Greenbay and Rockcastle that
were accounted for on the equity method for IFRS, been fair valued;
- Had the group's interest in Locaviseu, the joint venture in Portugal
accounted for on the equity method for IFRS, been proportionately
consolidated; and
- Had the group accounted for its share of the assets, liabilities and
results of partially owned subsidiaries (Resilient Africa and the
indirect investments in Arbour Crossing, The Galleria and Mafikeng Mall)
on a proportionately consolidated basis instead of consolidating it.
The pro forma financial information (management accounts) has been prepared
in terms of the JSE Listings Requirements and the SAICA Guide on
pro forma financial information.
Directors' responsibility statement
The preparation of the management accounts is the sole responsibility
of the directors and have been prepared on the basis stated, for
illustrative purposes only, to show the impact on the summarised
consolidated statement of financial position and the summarised
consolidated statement of comprehensive income. Due to their nature
the management accounts may not fairly present the financial position
and results of the group in terms of IFRS.
Reporting accountant's opinion
The pro forma financial information has been reviewed by
Deloitte & Touche and their unmodified assurance report is available
for inspection at Resilient's registered address.
Summarised consolidated statement of financial position
Adj 2
Fair value
Adj 1 accounting
Hammerson for
equity investments
derivative in
IFRS gross-up associates
Jun 2017 Jun 2017 Jun 2017
R'000 R'000 R'000
Assets
Non-current assets 45 022 688 914 951 3 777 184
Investment property 21 395 097
Straight-lining of
rental revenue
adjustment 353 248
Investment property
under development 798 785
Investment in and loans
to associates and joint
venture 7 234 270 (6 366 470)
Investments 10 843 685 914 951 10 143 654
Goodwill -
Resilient Share
Purchase Trust loans 607 879
Loans to BEE vehicles 3 577 228
Loans to co-owners 212 496
Current assets 1 518 126 - -
Resilient Share Purchase
Trust loans 19 970
Trade and other
receivables 490 573
Hammerson equity
derivative 151 760 (151 760)
Cash and cash
equivalents 855 823 151 760
Total assets 46 540 814 914 951 3 777 184
Equity and liabilities
Total equity
attributable
to equity holders 32 111 834 - 3 777 184
Stated capital 13 521 054
Currency translation
reserve 59 380
Reserves 18 531 400 3 777 184
Non-controlling
interests 120 311
Total equity 32 232 145 - 3 777 184
Total liabilities 14 308 669 914 951 -
Non-current
liabilities 12 304 047 914 951 -
Interest-bearing
borrowings 10 445 033 914 951
Deferred tax 911 727
Amounts owing to non-
controlling
shareholders 947 287
Current liabilities 2 004 622 - -
Trade and other payables 649 855
Interest-bearing
borrowings 1 354 767
Total equity and
liabilities 46 540 814 914 951 3 777 184
Adj 3 Adj 4
Proportionate Proportionate
consolidation consolidation
of investment of partially
in joint owned Management
venture subsidiaries accounts
Jun 2017 Jun 2017 Jun 2017
R'000 R'000 R'000
Assets
Non-current assets 966 298 (1 318 594) 49 362 527
Investment property 1 688 502 (1 386 029) 21 697 570
Straight-lining of
rental revenue
adjustment (15 529) 337 719
Investment property
under development (10 335) 788 450
Investment in and loans
to associates and joint
venture (867 800) -
Investments 21 902 290
Goodwill 145 596 145 596
Resilient Share
Purchase
Trust loans 607 879
Loans to BEE vehicles 3 577 228
Loans to co-owners 93 299 305 795
Current assets 61 345 (31 929) 1 547 542
Resilient Share Purchase
Trust loans 19 970
Trade and other
receivables 16 288 (12 607) 494 254
Hammerson equity
derivative -
Cash and cash
equivalents 45 057 (19 322) 1 033 318
Total assets 1 027 643 (1 350 523) 50 910 069
Equity and liabilities
Total equity attributable
to equity holders - - 35 889 018
Stated capital 13 521 054
Currency translation
reserve 59 380
Reserves 22 308 584
Non-controlling interests (120 311) -
Total equity - (120 311) 35 889 018
Total liabilities 1 027 643 (1 230 212) 15 021 051
Non-current liabilities 977 868 (1 209 136) 12 987 730
Interest-bearing
borrowings 767 297 (261 874) 11 865 407
Deferred tax 210 571 25 1 122 323
Amounts owing to non-
controlling shareholders (947 287) -
Current liabilities 49 775 (21 076) 2 033 321
Trade and other payables 49 775 (21 076) 678 554
Interest-bearing
borrowings 1 354 767
Total equity and
liabilities 1 027 643 (1 350 523) 50 910 069
Summarised consolidated statement of comprehensive income
Adj 2
Fair value
Adj 1 accounting
Hammerson for
equity investments
derivative in
IFRS gross-up associates
for the for the for the
year ended year ended year ended
Jun 2017 Jun 2017 Jun 2017
R'000 R'000 R'000
Income statement
Net rental and related
revenue 1 509 199 - -
Recoveries and
contractual
rental revenue 2 402 628
Straight-lining
of rental
revenue adjustment (23 618)
Rental revenue 2 379 010 - -
Property operating
expenses (869 811)
Income from investments 540 653 360 671
Fair value gain on
investment property,
investments and currency
derivatives 793 529 - 952 383
Fair value gain on
investment property 413 514
Adjustment resulting
from straight-lining of
rental revenue 23 618
Fair value (loss)/gain
on investments (28 482) 952 383
Fair value gain on
currency derivatives 384 879
Administrative expenses (116 161)
Foreign exchange gains 132 089
Profit on sale of interest
in associates 3 231 (3 231)
Income from associates
and joint venture 356 825 - (350 728)
- distributable 366 768 (360 671)
- non-distributable (9 943) 9 943
Profit before net
finance costs 3 219 365 - 959 095
Net finance costs (233 072) - -
Finance income 704 239 - -
Interest received 704 239
Finance costs (937 311) - -
Interest on borrowings (983 377)
Capitalised interest 92 709
Fair value adjustment on
interest rate derivatives (46 643)
Interest to linked
debenture holders -
Profit before income tax 2 986 293 - 959 095
Income tax 7 327
Profit for the year 2 993 620 - 959 095
Profit for the year
attributable to:
Equity holders of
the company 3 160 841 - 959 095
Non-controlling
interests (167 221)
2 993 620 - 959 095
Adj 3 Adj 4
Proportionate Proportionate
consolidation consolidation
of investment of partially
in joint owned Management
venture subsidiaries accounts
for the for the for the
year ended year ended year ended
Jun 2017 Jun 2017 Jun 2017
R'000 R'000 R'000
Income statement
Net rental and
related revenue 8 493 (76 360) 1 441 332
Recoveries and
contractual
rental revenue 11 412 (143 208) 2 270 832
Straight-lining of rental
revenue adjustment 2 185 (21 433)
Rental revenue 11 412 (141 023) 2 249 399
Property operating
expenses (2 919) 64 663 (808 067)
Income from investments 901 324
Fair value gain on
investment property,
investments and
currency derivatives - 232 109 1 978 021
Fair value gain on
investment property 234 294 647 808
Adjustment resulting
from straight-lining
of rental revenue (2 185) 21 433
Fair value (loss)/gain
on investments 923 901
Fair value gain on
currency derivatives 384 879
Administrative expenses 11 451 (104 710)
Foreign exchange gains (47 840) 84 249
Profit on sale of
interest in associates -
Income from associates
and joint venture (6 097) - -
- distributable (6 097) -
- non-distributable -
Profit before net
finance costs 2 396 119 360 4 300 216
Net finance costs (1 136) 47 861 (186 347)
Finance income - 50 757 754 996
Interest received 50 757 754 996
Finance costs (1 136) (2 896) (941 343)
Interest on borrowings (1 136) 2 916 (981 597)
Capitalised interest (5 812) 86 897
Fair value adjustment on
interest rate derivatives (46 643)
Interest to linked
debenture holders -
Profit before income tax 1 260 167 221 4 113 869
Income tax (1 260) - 6 067
Profit for the year - 167 221 4 119 936
Profit for the year
attributable to:
Equity holders of
the company - - 4 119 936
Non-controlling interests 167 221 -
- 167 221 4 119 936
Adj 1: The Hammerson equity derivative is grossed-up by multiplying
the 9 381 225 shares held by the quoted closing price of Hammerson
shares at June 2017. This more accurately reflects the group's
loan-to-value ratio.
Adj 2: The investments in Greenbay and Rockcastle are reflected
at their respective fair values by multiplying the 1 550 975 000 and
200 400 000 shares held respectively by their quoted closing prices
at June 2017. All entries recorded to account for these investments
using the equity method are reversed. This more accurately reflects
the group's loan-to-value ratio and net asset value.
Adj 3: This adjustment proportionately consolidates the indirect
investments in Forum Coimbra and Forum Viseu that are held through
Locaviseu, previously accounted for on the equity method. It
effectively discloses the group's interest in the assets, liabilities
and results of operations from these investments by disclosing the
consolidated management accounts for the month of June 2017 on a
line-by-line basis. Resilient is satisfied with the quality of
the financial information contained in the management accounts
of Locaviseu.
Adj 4: This adjustment proportionately consolidates the indirect
investments in partially owned subsidiaries (Resilient Africa and
the indirect investments in Arbour Crossing, The Galleria and
Mafikeng Mall) previously consolidated. It uses the audited
financials for the year ended June 2017 of Resilient Africa,
Resilient Africa Managers, Arbour Town and Southern Palace
Investments 19 to reverse the non-controlling interests to
reflect the group's interest in the assets, liabilities and
results of operations from these investments.
Shareholder analysis
Shareholder spread
At 30 June 2017 as defined in terms of the JSE Listings Requirements
Number Percentage
Number Percentage of of
of of shares issued
shareholders shareholders held shares
Public 7 927 98,37% 342 806 042 85,43%
Directors and
employees 131 1,63% 58 454 167 14,57%
8 058 100,00% 401 260 209 100,00%
Percentage Number Percentage
Number of of of
Size of of issued shares issued
holding shareholders shares held shares
1 to 2 500 shares 6 012 74,61% 4 256 483 1,06%
2 501 to
10 000 shares 1 061 13,17% 5 107 314 1,27%
10 001 to
100 000 shares 642 7,97% 22 445 384 5,59%
100 001 to
1 000 000 shares 261 3,24% 82 083 383 20,46%
1 000 001 to
3 500 000 shares 60 0,74% 107 259 521 26,73%
More than
3 500 000 shares 22 0,27% 180 108 124 44,89%
8 058 100,00% 401 260 209 100,00%
Percentage
Registered shareholders of
owning 5% or more of Number of issued
issued shares shares held shares
The Siyakha Education Trust 39 886 513 9,94%
Government Employees Pension Fund 37 399 379 9,32%
Hollyrood Investments Proprietary Limited 22 506 664 5,61%
Capital Propfund Proprietary Limited 20 645 688 5,15%
120 438 244 30,02%
Percentage
Number of of
Control of more than shares issued
5% of issued shares controlled shares
Public Investment Corporation SOC Limited 43 366 245 10,81%
The Siyakha Education Trust 39 886 513 9,94%
Fortress Income Fund Limited 39 456 000 9,83%
Des de Beer* 28 610 252 7,13%
151 319 010 37,71%
* Includes his personal holding and the indirect holdings through
Hollyrood Investments Proprietary Limited and Optimprops 3
Proprietary Limited (50% non-beneficial).
Date: 03/08/2017 05:09:00 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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