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INGENUITY PROPERTY INVESTMENTS LIMITED - Provisional condensed consolidated results for the year ended 31 August 2017

Release Date: 30/11/2017 17:14
Code(s): ING     PDF:  
Wrap Text
Provisional condensed consolidated results for the year ended 31 August 2017

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

PROVISIONAL CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 AUGUST 2017

KEY FINANCIAL INDICATORS 
FOR THE YEAR ENDED 31 AUGUST 2017
                                                                         2017           2016
Total contractual rental income                         (R'000)       436 411        358 319
Investment property portfolio fair value                (R'000)     4 132 062      4 006 730
Investment properties under development and inventory   (R'000)       208 398        100 548
Development properties - land                           (R'000)       136 314        131 095
Investment properties held for sale                     (R'000)             -        147 000
Growth of asset base                                        (%)             6             33
Borrowings                                              (R'000)     3 065 144      2 767 313
Loan-to-value ratio*                                        (%)            60             62
Vacancy                                                     (%)           2.1            2.4
Weighted average lease expiry (based on income)         (years)           4.5            4.5
Market capitalisation at year-end                       (R'000)     1 318 796      1 017 357
Number of shares in issue (net of treasury shares)      (R'000) 1 176 835 524  1 166 835 524
Earnings per share                                      (cents)           8.0           13.8 
Headline earnings per share                             (cents)           0.6            3.6 
Net asset value per share                               (cents)           124            119 
Growth in net asset value per share                         (%)             4              8

* Loan-to-value ratio is defined as interest-bearing debt divided by total assets 
(asset value of all properties and investments).

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 
AT 31 AUGUST 2017
                                                                         2017           2016
                                                                        R'000          R'000
ASSETS      
Non-current assets                                                  4 431 768      4 236 950
Investment properties                                               4 004 878      3 880 831
Straight-line lease accrual                                           115 841        107 117
Investment properties under development                               129 683        100 548
Development properties - land                                         136 314        131 095
Other financial assets                                                      -          2 434
Property and equipment                                                 14 552         14 925
Investment in joint venture                                            30 500              -
Current assets                                                        492 360        244 071
Trade and other receivables                                            22 061         20 533
Investment properties held for sale                                         -        147 000
Straight-line lease accrual                                            11 343         18 782
Loan receivable                                                       285 809              -
Inventory                                                              78 715              -
Cash and cash equivalents                                              94 432         57 756
Total assets                                                        4 924 128      4 481 021    
      
EQUITY AND LIABILITIES      
Shareholders' interest                                              1 455 197      1 391 174
Stated capital                                                        747 610        747 610
Treasury shares                                                       (42 161)       (52 296)
Non-distributable reserve                                             556 169        522 414
Retained earnings                                                     178 761        156 224
Total equity attributable to equity holders of the parent           1 440 379      1 373 952
Non-controlling interest                                               14 818         17 222
Non-current liabilities                                             3 093 153      2 693 716
Borrowings                                                          2 778 673      2 447 409
Finance lease                                                           4 821          3 840
Deferred tax                                                          245 909        228 064
Other financial liabilities                                            63 750         14 403
Current liabilities                                                   375 778        396 131
Trade and other payables                                               54 951         50 418
Current portion of borrowings                                         286 471        319 904
Prepaid rent received                                                  18 370         17 801
Taxation                                                                   69            203
Share-based payment                                                    15 917          7 805
Total equity and liabilities                                        4 924 128      4 481 021

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS 
FOR THE YEAR ENDED 31 AUGUST 2017
                                                                        R'000          R'000
Revenue                                                               435 548        379 181
  Contractual                                                         436 411        358 319
  Straight-lining                                                        (863)        20 862
Net operating expenses                                               (154 061)      (118 400)
Operating profit before fair value adjustments                        281 487        260 781
Gains on investment and development properties                        181 676        209 116
Decreases to investment and development properties                    (72 842)       (28 241)
(Decreases)/gains on share-based incentives                            (8 112)         1 130
Total fair value adjustments                                          100 722        182 005
Operating profit                                                      382 209        442 786
Interest received                                                       8 238          4 611
Interest paid                                                        (260 024)      (209 472)
Equity-accounted investment loss                                       (1 450)             -
Profit before taxation                                                128 973        237 925
Taxation                                                              (32 719)       (75 014)
Profit for the year                                                    96 254        162 911
Attributable to:            
Equity holders of the parent                                           93 576        159 939
Non-controlling interest                                                2 678          2 972    
                                                                       96 254        162 911
Basic and diluted earnings per share                   (cents)            8.0           13.8
            
STATEMENT OF COMPREHENSIVE INCOME            
Profit for the year                                                    96 254        162 911
Other comprehensive income:            
To be reclassified subsequently to profit or loss:            
Cash flow hedges                                                      (51 782)       (11 968)
Income tax relating to components of other comprehensive 
income                                                                 14 499          3 351
Other comprehensive income for the year, net of tax                   (37 283)        (8 617)
Total comprehensive income for the year                                58 971        154 294
Total comprehensive income attributable to:            
Equity holders of the parent                                           56 293        151 322
Non-controlling interest                                                2 678          2 972
                                                                       58 971        154 294
NOTES TO THE CONDENSED CONSOLIDATED STATEMENT OF 
PROFIT OR LOSS AND COMPREHENSIVE INCOME            
1. Headline and diluted headline earnings per share    (cents)            0.6            3.6
            
2. The calculation of earnings per share is based on 
earnings attributable to equity holders of the parent 
of R93.57 million (2016: R159.9 million) and a weighted 
average number of 1 169 904 017 (2016: 1 156 304 319) 
shares (net of treasury shares) in issue during the year.            
            
Headline earnings are calculated as follows:            
Earnings attributable to equity holders                                93 576        159 939
Fair value adjustments to investment properties                      (108 834)      (180 875)
Total tax effects of adjustments                                       21 902         42 492
Change in CGT rate - tax effects                                            -         19 955
Headline earnings                                                       6 644         41 511

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 
FOR THE YEAR ENDED 31 AUGUST 2017
                                                                         2017           2016
                                                                        R'000          R'000
Cash flows from operating activities        
Cash generated from operations                                        295 490        265 112
Interest received                                                       8 238          4 611
Interest paid                                                        (257 652)      (204 657)
Taxation paid                                                            (508)          (740)
Dividends paid                                                         (5 082)       (41 434)
Net cash inflow from operating activities                              40 486         22 892
Cash flows from investing activities        
Additions to property, plant and equipment                               (413)          (997)
Proceeds from disposal of property, plant and equipment                   100              -
Interest capitalised to investment properties                         (13 165)        (7 428)
Additions to equity accounted interest                                (31 950)             -
Net cash (outflow) from investing activities                          (45 428)        (8 425)
Cash flows from financing activities        
Proceeds from disposal of treasury shares                               9 965              -
Proceeds from the issue of shares                                           -         41 955
Financial liabilities raised                                          112 162         35 718
Financial liabilities repaid                                          (80 204)       (62 934)
Repayments of finance lease                                              (305)          (259)
Net cash inflow from financing activities                              41 618         14 480
Net increase in cash and cash equivalents                              36 676         28 947
Cash and cash equivalents at the beginning of the year                 57 756         28 809
Cash and cash equivalents at the end of the year                       94 432         57 756
        
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
FOR THE YEAR ENDED 31 AUGUST 2017
                                                      Non-                 Non-
                  Share and                       distrib-             control-          
                     stated     Share  Treasury     utable   Retained      ling        Total
                    capital   premium    shares    reserve   earnings  interest       equity
                      R'000     R'000     R'000      R'000      R'000     R'000        R'000
Balance at 
1 September 2015     12 115   693 540   (52 296)   412 603    156 147    14 250    1 236 359
Conversion to no 
par value shares    693 540  (693 540)        -          -          -         -            -
Total comprehensive 
income for the year       -         -         -     (8 617)   159 939     2 972      154 294
Profit for the year       -         -         -          -    159 939     2 972      162 911
Other comprehensive 
income - Cash flow 
hedges                    -         -         -     (8 617)         -         -       (8 617)
Issue of 44 526 316 
shares               41 955         -         -          -          -         -       41 955
Transfer to/from 
non-distributable 
reserve:                            
Deferred tax - Change 
in Capital Gains 
Tax rate                  -         -         -    (19 955)    19 955         -            -
Fair value adjustments 
to properties             -         -         -    138 383   (138 383)        -            -
Dividend paid - 
3.5 cents per share       -         -         -          -    (41 434)        -      (41 434)
Balance at 
31 August 2016      747 610         -   (52 296)   522 414    156 224    17 222    1 391 174
Comprising: Fair 
value reserve             -         -         -    531 031          -         -            -
Cash flow hedge           -         -         -     (8 617)         -         -            -

                                                      Non-                 Non-
                                                  distrib-             control-          
                     Stated     Share  Treasury     utable   Retained      ling        Total
                    capital   premium    shares    reserve   earnings  interest       equity
                      R'000     R'000     R'000      R'000      R'000     R'000        R'000
Balance at 
1 September 2016    747 610         -   (52 296)   522 414    156 224    17 222    1 391 174
Total comprehensive 
income for the year       -         -         -    (37 283)    93 576     2 678       58 971
Profit for the year       -         -         -          -     93 576     2 678       96 254
Other comprehensive 
income - Cash flow 
hedges                    -         -         -    (37 283)         -         -      (37 283)
Transfer to/from 
non-distributable 
reserve:                            
Fair value gains 
realised on properties 
sold                      -         -         -    (15 894)    15 894         -            -
Fair value adjustments 
to properties             -         -         -     86 932    (86 932)        -            -
Disposal of treasury 
shares                    -         -    10 135          -          -         -       10 135
Dividend paid             -         -         -          -          -    (5 082)      (5 082)
Balance at 
31 August 2017      747 610         -   (42 161)   556 169    178 761    14 818    1 455 197
Comprising: Fair 
value reserve             -         -         -    602 069          -         -            -
Cash flow hedge           -         -         -    (45 900)         -         -            -

CONDENSED CONSOLIDATED SEGMENTAL INFORMATION
AT 31 AUGUST 2017
                                    Develop-
                                        ment              Light                                
                                     proper-             indus-          Straight-                 
2017              Office    Retail      ties   Parking    trial     Other   lining      Total
                   R'000     R'000     R'000     R'000    R'000     R'000    R'000      R'000
Additions to 
non-current 
assets           (68 323)     (666)   47 589    (4 277) (47 558)   42 975        -    (30 260)
Total assets   2 618 118   846 894   296 497   531 660   85 323   545 636        -  4 924 128
Revenue          285 325    86 304       559    53 033    3 652     7 538     (863)   435 548
Operating 
profit/(loss) 
before fair 
value 
adjustments      190 978    60 706    (1 090)   38 399    2 780    (9 423)    (863)   281 487
Fair value 
adjustments       52 970    27 610    17 265     9 504      395    (7 022)       -    100 722
Operating 
profit/(loss)    243 948    88 316    16 175    47 903    3 175   (16 445)    (863)   382 209
Interest 
received               -         -         -         -        -     8 238        -      8 238
Interest paid          -         -         -         -        -  (260 024)       -   (260 024)
Equity-
accounted 
investment loss        -         -         -         -        -    (1 450)       -     (1 450)
Profit/(Loss) 
before taxation  243 948    88 316    16 175    47 903    3 175  (269 681)    (863)   128 973
                                        
                                    Develop-
                                        ment              Light                                
                                     proper-             indus-          Straight-                 
2016              Office    Retail      ties   Parking    trial     Other   lining      Total
                   R'000     R'000     R'000     R'000    R'000     R'000    R'000      R'000
Additions to 
non-current 
assets 
(Includes
transfers 
between 
segments)        795 107     8 623   (18 346)  107 811   12 366   (27 971)       -    877 590
Total assets   2 682 684   819 905   231 643   526 433   83 272   137 084        -  4 481 021
Revenue          223 095    79 187       493    42 238    7 955     5 351   20 862    379 181
Operating 
profit/(loss) 
before fair 
value
adjustments      156 531    58 051    (1 964)   32 043    6 376   (11 118)  20 862    260 781
Fair value 
adjustments      124 899     9 160    17 665    22 948    4 832     2 501        -    182 005
Operating 
profit/(loss)    281 430    67 211    15 701    54 991   11 208    (8 617)  20 862    442 786 
Interest 
received               -         -         -         -        -     4 611        -      4 611
Interest paid          -         -         -         -        -  (209 472)       -   (209 472)
Profit/(Loss) 
before taxation  281 430    67 211    15 701    54 991   11 208  (213 478)  20 862    237 925
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2017

PRESENTATION OF PROVISIONAL CONDENSED CONSOLIDATED FINANCIAL RESULTS
The provisional condensed consolidated financial results ('the financial statements')
for the year ended 31 August 2017 have been prepared in accordance with the framework
concepts, the measurement and recognition requirements of International Financial Reporting 
Standards ('IFRS') and the information required by IAS 34: Interim Financial Reporting, 
the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, 
the JSE Listings Requirements and in the manner required by the Companies Act of South 
Africa. The accounting policies and methods of computation applied in the preparation 
of the financial statements are in accordance with IFRS and are consistent with those 
applied in the audited annual financial statements for the year ended 31 August 2016.

RECLASSIFICATIONS AND ADJUSTMENTS
1. In previous reporting periods, the company reported 'Investment properties under 
development' and 'Development properties - land' as a single line item under 
'Investment properties under development' on the face of the statement of 
financial position. 

In the most recent results, the presentation has been split into more detail than 
previously reported to present more meaningful information.

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

2. In previous reporting periods, the company included the 'Decreases/(gains) on 
share-based incentives' as part of the 'Operating profit before fair value adjustments' 
line item, on the face of the statement of profit or loss. In the current reporting 
period, this has been presented as a separate line item under the 'Total fair value 
adjustments' heading in the statement of profit or loss to present more meaningful 
disclosure of the nature of the adjustment.

The effect of this reclassification on Ingenuity's statement of profit or loss for 
the year ended 31 August 2016 is that the operating profit before fair value 
adjustments reduces from R261.9 million to R260.8 million and a new line item, 
(Decreases)/gains on share-based incentives, is disclosed at R1.1 million. 
The reclassification totals R1.1 million and has no impact on the profit 
before taxation.

3. In the statement of cash flows, the acquisition of investment properties in 2016 
has been reduced by R800.92 million to the extent financed by assuming directly 
related liabilities. 'Financial liabilities raised' were reduced by the same amount. 
These were previously unsuitably disclosed as cash flows and have now been corrected.

Mazars, the group's independent auditor, has audited the annual financial statements
for the year ended 31 August 2017 and has expressed an unqualified audit opinion thereon.
These provisional financial statements have been extracted from the audited annual 
financial statements, but are not themselves audited. The audited annual financial
statements and audit report are available for inspection at the Company’s registered
office. The audit was conducted in accordance with International Standards on Auditing
and the applicable requirements of the Companies Act of South Africa. The auditor’s report
does not necessarily report on all information contained in this report. 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 the auditor’s report together
with the accompanying financial information from the registered office.

The directors take full responsibility for the preparation of the provisional financial
statements and for ensuring that the financial and other information has been correctly
extracted from the underlying audited financial statements for the year ended 31 August 2017.


These provisional financial statements have been prepared by Ms. M Hassan, BCom (Acc) 
(Hons), CA(SA) under the supervision of Mr. M Wagenheim, BCom (Hons), CTA, CA(SA) 
in his capacity as Financial Director. The directors are not aware of any matters or 
circumstances arising after 31 August 2017 that require additional disclosure or 
adjustment to the financial statements, other than as disclosed in this announcement.

COMMENTARY
JOINT CHAIRMAN'S AND CHIEF EXECUTIVE OFFICER'S REPORT 
Ingenuity is pleased to announce its results for the year ended 31 August 2017. 
The past year has been a challenging one. Poor economic conditions, prevailing 
political turmoil and low business confidence all played a material role in a 
somewhat subdued local property market. Despite these factors, Ingenuity made some 
significant strides in its portfolio management. 

During the year, we took certain strategic decisions to create a solid platform 
from which to grow the business, protect ourselves against any external shocks 
and to maintain and grow shareholder value. We could do this due to the quality 
of the property portfolio and the strength of our underlying tenants.

The major impacting items are discussed below.

We fixed R2 billion or 72% of our debt by entering into interest rate swap 
transactions for periods of five years at an average all-inclusive rate of 9.85% 
as at 31 August 2017. 

Consequently, only 28% of our borrowings are floating and we know with relative 
certainty the cost of our borrowings for the next four to five years. We intend 
to maintain this profile for the next few years.

We did not issue any equity during the period. While our share price trades at 
a discount to net asset value ('NAV') of around 20%, we do not intend to issue 
equity. New equity will only be issued should circumstances warrant it.

Despite the negative effect of higher gearing on the portfolio and gross property 
sales of R188.2 million, the core investment portfolio remained steady at 
R4.132 billion (2016: R4.007 billion, which excludes property held for sale 
of R147 million), while investment property under development, inventory and 
land holdings increased to R344.7 million (2016: R231.6 million). This represents a 
total increase in the asset base of R238.4 million or 6%, which is significant 
considering this was funded by debt and internally generated funds. 

The resultant effect of the above has been growth in NAV per share by 4% from 
119 cents to 124 cents. 

Ingenuity's business remains geographically focused in the Western Cape region 
with an emphasis to grow the business through quality property deals and value-add 
development or redevelopment propositions.

This is our unique offering, differentiating Ingenuity from many of its REIT 
peers in the sector.

The increase in size of the asset base has also increased our earnings capacity 
with contractual rental income from investment property growing to R436.4 million 
(2016: R358.3 million) or by 22%.

Our portfolio remains very well managed with virtually all rentals collected 
timeously. We have strong cash flows with only R67 000 being written off in bad 
debts during the past year. Our vacancy ratio at year-end is 2.1% and we have a 
very strong WALE (weighted average lease expiry) based on income of 4.5 years.

Milestones achieved during the year under review are as follows:

PROPERTY TRANSACTIONS CONCLUDED
Acquisitions
Ingenuity holds a 50% share in a company which acquired the property previously 
known as City Park Hospital for R300 million from Netcare Property Holdings 
Proprietary Limited. The building was home to the old City Park Hospital for 
many years and has been acquired for its redevelopment potential. It is 
strategically located in the heart of Bree Street, Cape Town.

The remaining 50% was acquired by the Rabie Property Group Proprietary Limited 
('Rabie'). Ingenuity has entered into a joint venture with Rabie and is currently 
investigating the most suitable scenario for the property. This exciting scheme 
coupled with the joint development skills of Ingenuity and Rabie should create value 
for shareholders. 

Sales
* The property known as 142 Edward Street (situated in Tyger Valley) was sold on 
1 March 2017. It was originally acquired for R32.4 million and was sold for 
R41.2 million. 

Transactions previously reported and transferred during the year under review:
* The property known as Loerie Centre was sold on 8 December 2016. It was originally 
acquired for R39.5 million and was sold for R47 million. 
* The property known as Estuaries No 1 was sold on 6 February 2017. It was originally 
acquired for R92.6 million and was sold for R100 million. 

We will continue to realise properties when mature and apply proceeds to 
higher growth opportunities.

DEVELOPMENT INITIATIVES
* Construction of the building to be known as 20 Vineyard Road has been delayed 
and is now due to commence in January 2018 with a targeted completion in mid-December 2018. 
This scheme will comprise 2 300m2 of premium grade offices and retail directly opposite 
Cavendish Square. Anticipated total capital expenditure is R86 million with a targeted 
9% initial yield.
* The refurbishment of the Santam Head Office is also nearing completion. This will 
be completed by December 2017. The total capital value of this project is expected 
to be R122 million. The project is set to create substantial value to the precinct 
investment and is underpinned by a long 12-year lease with Santam commencing 
1 January 2018. 
* The construction of our 117 on Strand building is proceeding very well. Costs are 
well contained, and we are confident this substantial project will deliver solid 
returns to our shareholders. Sales of the 117 residential units have gone extremely 
well with all but four of the apartments still available for sale. The commercial 
component's major leases have been concluded. Virgin Active, Pick n Pay and Avior 
Financial Services have all committed to long leases ranging from seven to 
15 years. This development will produce trading profits as well as generating 
premium quality investment stock with long-term income.

DIVIDEND
The group announces that no dividend is to be paid to shareholders this 
financial year. With our extensive development activities underway, it is 
unlikely dividends will be paid in the near term. 

The decision to retain earnings to reinvest in growth opportunities will allow 
shareholders to reap enhanced benefits on completion of the various schemes. 

GENERAL
Ingenuity remains focused on its strategy. Our commitment is to create enduring, 
increased wealth for shareholders focusing on underlying quality assets. 
Our asset base is well positioned to do this.

Our sincere thanks go to the directors and staff of Ingenuity for their 
dedication and commitment to the success of the group, and to the shareholders 
for their continued support and encouragement.

GENERAL REVIEW 
During the year under review the total property asset base, including development 
assets, increased in value by R238.4 million or 6%. Contractual rental revenues 
increased by 22% to R436.4 million due to rental escalations and revenues from a 
property acquired during the previous year, now contributing revenue for a full year. 

The vacancy percentage of gross lettable area ('GLA') as at year-end improved to 
2.1% (a decrease from 2.4% in the comparative year), which is well below the 
current industry norm, and is attributable to proactive asset management and strong 
tenants with long leases. 

Due to the sale of three properties and the re-negotiation of certain long-term 
leases, the straight-lining rental adjustment for the current year is a charge 
to the income statement of R863 000 compared to the prior year comparative income 
recognised of R20.862 million, representing 1.86 cents per share before tax. 

The group remains focused to unlock land value and timeously deliver property 
under development.

The group achieved a weighted average borrowing cost of 9.62% (2016: 9.02%), 
which has increased due to interest rate swap contracts entered into during the 
year. Total borrowings at year-end amounted to R2.779 billion (2016: R2.767 billion) 
of which R2 billion or 72% is fixed and the balance floating at rates linked to prime. 
These borrowings exclude a current portion of borrowings amounting to R285.8 million, 
which is offset by a corresponding loan receivable utilised to fund the acquisition 
of the City Park property by the joint venture with Rabie. This loan will be 
settled after this financial year-end. 

Total cash on hand at year-end amounted to R94.4 million (2016: R57.8 million). 
Excess cash is applied to reduce borrowings or to grow the asset base where 
appropriate. 

The group's loan-to-value ratio (excluding the City Park joint venture) is 60% 
(2016: 62%) at year-end. This ratio is considered acceptable due to the development 
nature of the group and the fact that we seek to maximise the growth of the business 
through leverage of the group's own core asset base.

FAIR VALUE ADJUSTMENTS ON INVESTMENT AND DEVELOPMENT PROPERTIES
The directors have considered the current economic uncertainty in the market place 
in their approach to the valuations of the property portfolio. The lower total net 
valuations of R108.8 million (2016: R180.9 million) have also been impacted by fewer 
properties compared to last year, as well as development property being measured 
initially at cost.

INVENTORY
This amount comprises the proportion of residential units of the 117 on Strand 
mixed used development for which agreements of sale have been signed as at year-end, 
and has been transferred out of investment properties under development. Construction 
of the development commenced during the year under review.

BORROWINGS
During the year under review, the group's borrowings were refinanced by The 
Standard Bank of South Africa Limited as certain loan facilities were expiring. 
Additional development funding required, provided by them on improved terms and 
conditions, will enable the group to continue to grow its asset base. 

FAIR VALUE OF FINANCIAL INSTRUMENTS RECOGNISED IN THE STATEMENT OF FINANCIAL POSITION
Interest rate swap agreements
The fair value of interest rate swap agreements is determined by using a valuation 
technique that discounts future cash flows using risk-free rates and yield curves 
derived from quoted rates. Interest rate swaps are classified as level 2 financial 
instruments.

At year-end, the group's interest rate swap contracts with notional amounts 
totalled R2 billion, with the fair value amounting to R63.75 million (liability). 
After the year-end, this liability has reduced substantially to R19.3 million as 
at 31 October 2017 as long-term interest rate expectations have moved upwards due 
to the current adverse political and economic outlook.

RELATED PARTY TRANSACTIONS
During the year the group paid executive directors' remuneration of R9.0 million 
(2016: R7.597 million) and non-executive directors' remuneration of R842 000 
(2016: R768 000).

CAPITAL COMMITMENTS
Authorised and committed
Authorised and contracted for commitments amount to R572.5 million 
(2016: R145.6 million) at year-end. The commitments comprise costs for the 
construction and development of the 117 on Strand project (R478.1 million), 
the Santam 1 upgrade (R49.4 million) and the acquisition of Erf 211 Roggebaai 
(R45 million), all of which will be financed from existing cash resources and 
finance facilities.

Authorised
The development of a commercial building situated at 20 Vineyard Road, Claremont, 
estimated to cost R86.2 million, has been approved by the directors but has not been 
committed to yet.

SHARE CAPITAL
During the year under review:
* no new shares were issued (2016: 44 526 316 shares were issued);
* the Company disposed of 10 million treasury shares at a selling price of 100 cents 
per share.

EVENTS AFTER THE REPORTING PERIOD 
Other than as mentioned above, there are no other material reportable events 
after the reporting period which have occurred since the end of the financial 
year being reported on and the date of this report.

For and on behalf of the Board

ARNOLD AARON MARESKY
Chief Executive Officer 

MARK WAGENHEIM
Chief Financial Officer

Cape Town
30 November 2017

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

COMPANY SECRETARY    
M Wagenheim

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

CONTACT DETAILS      
Tel: 021 674 5130
Fax: 021 674 5135
E-mail: info@ingenuityproperty.com
www.ingenuityproperty.com

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

COMMERCIAL BANK
Absa Bank Limited
3rd Floor, Bridge Park East, Bridge Way, Century City, 7446

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

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

Date: 30/11/2017 05:14:00 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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