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Condensed unaudited consolidated interim financial statements for the six months ended 31 December 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)
www.resilient.co.za
Condensed unaudited consolidated interim financial statements
for the six months ended 31 December 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.
Effective from 18 December 2017, Resilient was included in the FTSE/JSE
Top 40 Index. This resulted in an increase in liquidity of its shares
and volatility in the share price.
Distributable earnings and commentary on results
The dividend of 306,46 cents per share declared for the interim period
ended December 2017 represents a 13,4% increase over the 270,22 cents
per share of the comparable prior period. All of Resilient's investments
have performed well.
South Africa
The comparable retail sales growth of 5,3% for the six months ended
December 2017 improved from the weaker performance of the first six
months to June 2017 as the South African economy emerged from a
technical recession. November's performance was particularly pleasing,
partially supported by the Black Friday promotions. The Reserve Bank
forecasts GDP growth of 1,4% for 2018 which is positive for retail
sales growth.
The comparable 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 March 2017):
Comparable Percentage of
sales growth SA properties
% by value
Eastern Cape (2,3) 3,8
Gauteng 2,8 26,2
Mpumalanga 3,7 9,4
Limpopo 4,9 26,3
North West 5,0 5,8
Northern Cape 7,8 6,6
KwaZulu-Natal 10,5 21,9
The board was positively surprised by the strong performance of
KwaZulu-Natal. Both Boardwalk Inkwazi and The Galleria performed well.
Boardwalk Inkwazi benefited from the introduction of H&M, the expansion
of Woolworths and the addition of a family entertainment centre. Both
Diamond Pavilion and Village Mall Kathu continued to benefit from the
recovery in commodity prices. Kumba Iron Ore resumed bonus payments to
its staff. The additional retail introduced in the catchment areas of
The Grove and Irene Village Mall, as well as further delays in town
planning affecting their expansion, negatively impacted on their growth.
Economic conditions in the Eastern Cape remain challenging.
Fashion Freak, Galaxy Jewellers and Lifestyle Furnishers are currently
in business rescue. The financial impact on Resilient is insignificant.
A major concern for Resilient is the financial position of Eskom and the
failure by a number of local authorities to honour their financial
commitments. Eskom has threatened to interrupt electricity supply to
three local authorities that Resilient relies on for electricity.
Resilient has accelerated the introduction of solar power where
appropriate.
Portugal
In December 2017 both S&P and Fitch upgraded Portugal's credit rating
and economic growth prospects are positive. The six months' like-on-like
retail sales growth in Forum Coimbra and Forum Viseu, both 50% owned by
Resilient, was 5,2% and 1,1% respectively. Forum Viseu's growth for the
month of October 2017 was 15% negative as a result of wild fires in the
region. Excluding this month, the growth was 3,4%.
Nigeria
Although retail sales grew strongly in Naira, this was negatively
affected by the strength of the the Rand. The Nigerian economy is
recovering supported by a more stable political environment and a
stronger oil price. In terms of Bloomberg consensus, the economy
is expected to grow by 2,6% in 2018.
Property acquisitions, extensions and developments
South Africa
Resilient further increased its interest in Mahikeng Mall by 13% to 85%
at a yield of 8,25% effective from July 2017.
The expansion of the entertainment offering, the relocation of
House & Home and the introduction of H&M to Boardwalk Inkwazi was
completed on schedule.
The redevelopment and refurbishment of Limpopo Mall remains on schedule
for completion in April 2018. Pick n Pay commenced trading on their
reduced footprint from the beginning of December 2017. Jet took
beneficial occupation of their new premises in January 2018. This store
is scheduled to open in April 2018. Truworths will take occupation of
the first section of their new premises in May 2018 with a final opening
date in November 2018.
The final phase of the extension to I'langa Mall was completed marginally
ahead of budget in September 2017. The five external facing stores are
now nearing completion.
Construction of the enlarged Mams Mall in Mamelodi commenced in November
2017 with completion expected in November 2018. On completion the
70 000m2 GLA mall will be anchored by Edgars, Game, Pick n Pay and
Shoprite and is forecast to yield approximately 8% on the group's 50%
cost of R625 million. Resilient is partially financing its co-developer
until completion of the development.
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 and the installation of
the sewerage and stormwater infrastructure have been completed. The board
previously approved the development at a yield of 7% on the anticipated
cost of R1,35 billion.
The extensions to Mahikeng Mall, The Grove and Tzaneen Lifestyle Centre
remain dependent on various approvals, particularly the awarding of
rights for the former two.
Portugal
Resilient, together with its joint venture partner, Greenbay, is
exploring expansion opportunities at Forum Coimbra to extend the mall,
right-size the international fashion retailers and to improve the
entertainment offering.
Nigeria
Resilient owns 60,94% of Resilient Africa, the initiative for the
development of malls in Nigeria, in partnership with Shoprite Checkers.
Subject to an acceptable return being achieved, the board has in
principle agreed to proceed with Rivers Mall in Port Harcourt.
Resilient's exposure to Nigeria remains relatively small at R663 million.
Listed portfolio
Dec 2017 Jun 2017
Number of Fair value Number of Fair value
Counter shares R'000 shares R'000
Fortress B (FFB) 172 930 000 7 297 646 172 930 000 6 000 671
NEPI (NEP) & 29 270 000 4 843 014
NEPI Rockcastle
(NRP) & 75 000 000 16 017 750
23 315 396 10 843 685
Greenbay
(GRP) * 1 981 300 000 5 052 315 1 550 975 000 2 993 382
Hammerson
(HMN) # 6 260 000 567 657 9 381 225 914 951
Rockcastle
(ROC) * & 200 400 000 7 150 272
28 935 368 21 902 290
& 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.
* The interests in Greenbay and Rockcastle were treated as associates
(equity accounted). The interests were not fair valued in the financial
statements. In July 2017 the investment in Rockcastle, equity accounted
at the time, was sold as a consequence of the merger resulting in a
profit on sale of interest in associate of R3,5 billion being recorded.
# The Hammerson position is held through equity derivatives.
The group elected to receive scrip dividends on its investments in
Greenbay and NEPI Rockcastle during the period. Resilient transferred its
investments in Greenbay and NEPI Rockcastle to separate wholly-owned
subsidiaries. This will facilitate ring-fenced funding against these
inwardly-listed holdings in future.
Broad-based Black Economic Empowerment ("BBBEE")
Following the maturing of the Eagle's Eye BBBEE scheme, Resilient issued
shares to the value of R250 million to The Siyakha 2 Education Trust to
enable it to acquire 1 879 000 Resilient shares at a price of R133,00 per
share in terms of the approval granted by shareholders on 31 October 2016.
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 plus 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. During the period, The Siyakha 2 Education Trust
raised R781 million from third party financiers. Without prejudicing
its charitable objectives, Resilient has requested the trustees of The
Siyakha Trusts to accelerate the repayment of the loans to Resilient.
In addition to their other activities, the trustees have advised that
they have granted well in excess of 100 bursaries for tertiary
education to previously disadvantaged students for the 2018
calendar year.
Shareholders approved that future acquisitions of shares by BEE
partners in Resilient be funded at rates equal to the income produced
by the Resilient shares in exchange for a 49% equity participation
in the investment.
Vacancies
The vacancy in Resilient's South African portfolio decreased from
1,9% at June 2017 to 1,7% at December 2017. The largest vacancy in the
portfolio at Arbour Crossing improved to 12,5% from 17,2% at June 2017.
Negotiations are in progress to introduce a gym which will absorb most
of the remaining vacant space.
Vacancies in the Portuguese property portfolio increased from 2,8%
at June 2017 to 3,1% at December 2017. Forum Coimbra remains fully let.
Vacancies in the Nigerian property portfolio declined to 8,1%
at December 2017 from 13,5% at June 2017 and are forecast to decline
further to 5% at year end.
Funding and facilities
South Africa
The joint venture in Portugal made an offer to acquire a substantial
portfolio of European assets in September 2017. In anticipation of
this transaction, and taking into account market conditions at the
time, Resilient approached the market to raise R750 million by way
of a bookbuild. The bookbuild was well supported and Resilient was
able to raise a total of R2,75 billion by issuing 21 814 791 new
shares at a price of R126,00 per share.During the due diligence
process for the acquisition, risks were identified, particularly
relating to taxation, and the joint venture did not proceed with
the acquisition. Resilient was unable to deploy all the funds
raised to its current access facilities which has resulted in
it placing funds on call. At the interim period end, Resilient
still had R495 million on deposit.
Average
Margin
Amount over Jibar
Facility expiry R'million %
Jun 2018 840 1,53
Jun 2019 2 500 1,48
Jun 2020 4 663 1,67
Jun 2021 1 850 1,75
Jun 2022 1 391 1,85
Jun 2023 741 1,69
Jun 2024 270 1,80
12 255 1,66
Portugal
The Portuguese joint venture has a five-year facility of
EUR102,7 million that expires in June 2022. The interest rate on the
facility was fixed at 2,40% until expiry. The funding is secured by
the Portuguese assets and there is no recourse to Resilient's
South African balance sheet.
Nigeria
Resilient Africa has seven-year funding of USD45 million in place
with the three operating malls as security. The funding attracts
interest at 90-day US Libor plus 6,25% with no recourse to
Resilient's South African balance sheet.
Interest rate derivatives
The following interest rate derivatives are in place in mitigation
of South African interest rate risk:
Average
Amount swap rate
Interest rate swap expiry R'million %
Jun 2020 300 6,15
Jun 2021 820 7,88
Jun 2022 500 8,09
Jun 2025 100 7,78
1 720 7,63
Average
Amount cap rate
Interest rate cap expiry R'million %
Jun 2020 300 7,54
Jun 2021 300 7,92
Jun 2023 500 7,77
Jun 2024 1 100 7,98
Jun 2027 500 8,22
Jun 2028 500 7,92
3 200 7,93
The all-in weighted average cost of funding of Resilient was 8,87%
at December 2017 and the average hedge term was 5,2 years.
In addition to having fixed rate funding against the Portuguese assets,
the following interest rate derivatives are in place in mitigation of
foreign interest rate risk:
Average Average
Amount cap rate Amount cap rate
Interest rate cap expiry EUR'000 % USD'000 %
Jun 2022 67 500 0,39
Jun 2023 67 500 0,52 22 000 2,42
Jun 2024 42 500 0,39
Jun 2025 22 500 0,48
200 000 0,44 22 000 2,42
Offshore
listed in
Exposure to South South
variable interest Africa Africa Portugal Nigeria
rates '000 '000 '000 '000
Interest-bearing
borrowings R12 007 819
Currency
derivatives (R4 272 613) R4 272 613
Foreign
denominated
debt (R1 092 338) R752 116 R340 222
Loans to BEE
vehicles (R3 526 150)
Loans to co-owners (R249 065)
Cash and cash
equivalents (R564 055) (R60 632) (R7 571)
Capital commitments
contracted for R666 050
Capital commitments
approved R1 223 605
R4 193 253 R4 272 613 R691 484 R332 651
Spot rate R16,25 R14,85 R12,38
Exposure R4 193 253 EUR262 930 EUR46 565 USD26 870
Interest rate
derivatives
- fixed rate
funding EUR51 350
- swaps/caps R4 920 000 EUR200 000 USD22 000
Percentage
hedged 117,3% (R) 81,2% (EUR) 81,9% (USD)
Information based on Resilient's management accounts.
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 underlying
foreign investments but only to achieve a neutral effect on the first
year's distribution. At December 2017 cross-currency swaps totalled
EUR263 million at an exchange rate of R16,25 against investments of
EUR1 418 million (Greenbay and NEPI 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 R: EUR GBP EUR USD EUR
Jun 2018 R17,27 R20,38 R17,58 R13,78 R15,88
Dec 2018 R17,28 R20,85 R17,47 R13,79 R16,29
Jun 2019 R18,43 R21,91 R18,68 R14,46 R17,18
Dec 2019 R18,22 - R18,10 R14,26 R17,53
Jun 2020 R19,39 - R18,97 R15,11 R18,72
Dec 2020 R19,35 - R19,05 R14,23 R18,80
Included in trade and other receivables at December 2017 was an amount
of R608 million relating to the positive fair value adjustments on
currency derivatives.
Summary of financial performance
Dec 2017 Jun 2017 Dec 2016 Jun 2016
Dividend (cents
per share) 306,46 297,07 270,22 256,27
Shares in issue
and used for
dividend per share
calculation 424 954 000 401 260 209 401 260 209 393 970 580
Management
account
information
Net asset
value per
share R105,35 R89,44 R84,16 R84,47
Loan-to-value
ratio (%)* 20,1 24,8 23,8 21,0
Net property
expense
ratio (%) 18,5 15,4 16,9 15,9
Gross property
expense
ratio (%) 36,1 35,6 36,3 36,1
Net total expense
ratio (%) 15,7 13,4 14,6 14,9
Gross total expense
ratio (%) 28,3 27,5 28,5 29,9
IFRS accounting
Net asset value
per share R100,75 R80,03 R77,45 R77,31
* 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. The loan-to-value ratio for the group's Euro debt was
20,2% and for its US Dollar debt 46,0% at December 2017.
Prospects
Resilient's results from its South African operations will be positively
impacted by a recovery in the local economy as well as continued
strength in commodity prices. Anticipated increases in interest rates
are expected to have a negative impact on the group's European-based
investments, however, European economies are forecast to achieve strong
growth in 2018.
The board is comfortable that the forecast dividends to be received from
the counters that Resilient is invested in remain achievable as the
recent volatility in the share prices does not affect the income from
the investments. 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 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, reviewed
or reported on 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 December 2017,
46,0% of the group's total direct and indirect property assets were
offshore assets.
By order of the board
Des de Beer Nick Hanekom
Managing director Financial director
Johannesburg
26 January 2018
Condensed consolidated statement of financial position
Unaudited Audited Unaudited
Dec 2017 Jun 2017 Dec 2016
R'000 R'000 R'000
Assets
Non-current assets 54 490 520 45 022 688 42 501 790
Investment property 21 719 718 21 395 097 20 560 078
Straight-lining of
rental revenue
adjustment 379 515 353 248 371 750
Investment property
under development 761 508 798 785 716 834
Investment in and
loans to
associates and
joint venture 3 980 363 7 234 270 6 189 584
Investments 23 315 396 10 843 685 10 282 449
Resilient Share
Purchase Trust
loans 557 373 607 879 765 567
Loans to BEE vehicles 3 526 150 3 577 228 3 460 291
Loans to co-owners 250 497 212 496 155 237
Current assets 1 654 617 1 518 126 1 185 851
Resilient Share
Purchase Trust
loans 16 297 19 970 21 868
Loans to co-owners - - 139 771
Trade and other
receivables 1 058 845 490 573 579 783
Hammerson equity
derivative 68 860 151 760 405 527
Cash and cash
equivalents 510 615 855 823 38 902
Total assets 56 145 137 46 540 814 43 687 641
Equity and liabilities
Total equity attributable
to equity holders 42 814 771 32 111 834 31 078 974
Stated capital 16 504 668 13 521 054 13 521 054
Currency translation
reserve 44 624 59 380 76 907
Reserves 26 265 479 18 531 400 17 481 013
Non-controlling
interests 54 873 120 311 408 447
Total equity 42 869 644 32 232 145 31 487 421
Total liabilities 13 275 493 14 308 669 12 200 220
Non-current liabilities 11 120 186 12 304 047 10 119 474
Interest-bearing
borrowings 9 219 251 10 445 033 8 037 951
Deferred tax 939 508 911 727 968 487
Amounts owing to
non-controlling
shareholders 961 427 947 287 1 113 036
Current liabilities 2 155 307 2 004 622 2 080 746
Trade and other payables 451 500 649 855 375 854
Interest-bearing
borrowings 1 703 807 1 354 767 1 704 892
Total equity and
liabilities 56 145 137 46 540 814 43 687 641
Condensed consolidated statement of comprehensive income
Unaudited Audited Unaudited
for the for the for the
six months year six months
ended ended ended
Dec 2017 Jun 2017 Dec 2016
Income statement R'000 R'000 R'000
Net rental and related
revenue 846 204 1 509 199 736 793
Recoveries and
contractual rental
revenue 1 292 063 2 402 628 1 176 266
Straight-lining of
rental revenue
adjustment 26 684 (23 618) (5 473)
Rental revenue 1 318 747 2 379 010 1 170 793
Property operating
expenses (472 543) (869 811) (434 000)
Income from investments 517 219 540 653 240 952
Fair value gain/(loss)
on investment property,
investments
and currency derivatives 4 264 044 793 529 (275 160)
Fair value gain
on investment
property - 413 514 13 018
Adjustment resulting
from straight-lining of
rental revenue (26 684) 23 618 5 473
Fair value gain/(loss)
on investments 4 308 043 (28 482) (661 070)
Fair value (loss)/gain
on currency derivatives (17 315) 384 879 367 419
Administrative expenses (53 099) (116 161) (57 220)
Foreign exchange
(loss)/gain (36 558) 132 089 (17 703)
Profit on sale of
interest in
associates 3 538 393 3 231 3 180
(Loss)/income from
associates and
joint venture (5 036) 356 825 475 897
- distributable 108 569 366 768 159 519
- non-distributable (113 605) (9 943) 316 378
Profit before net
finance costs 9 071 167 3 219 365 1 106 739
Net finance costs (71 269) (233 072) (121 837)
Finance income 413 200 704 239 313 289
Interest received: cross-
currency swaps 142 717 248 852 115 284
Interest received: loans 259 793 455 387 198 005
Fair value adjustment
on interest
rate derivatives 10 690 - -
Finance costs (484 469) (937 311) (435 126)
Interest on borrowings (513 150) (983 377) (453 679)
Capitalised interest 28 681 92 709 51 343
Fair value adjustment
on interest
rate derivatives - (46 643) (32 790)
Profit before income tax 8 999 898 2 986 293 984 902
Income tax (27 781) 7 327 (49 433)
Profit for the period 8 972 117 2 993 620 935 469
Other comprehensive
loss net of tax
Items that may
subsequently be
reclassified to profit
or loss
Exchange differences
on translation of
foreign operations (9 789) (367 063) (163 107)
Total comprehensive
income for the period 8 962 328 2 626 557 772 362
Profit for the period
attributable to:
Equity holders of
the company 8 972 369 3 160 841 930 468
Non-controlling
interests (252) (167 221) 5 001
8 972 117 2 993 620 935 469
Total comprehensive
income for the period
attributable to:
Equity holders of
the company 8 969 814 2 941 470 824 325
Non-controlling
interests (7 486) (314 913) (51 963)
8 962 328 2 626 557 772 362
Basic earnings
per share (cents) 2 153,18 792,81 234,87
Condensed consolidated statement of cash flows
Unaudited Audited Unaudited
for the for the for the
six months year six months
ended ended ended
Dec 2017 Jun 2017 Dec 2016
R'000 R'000 R'000
Operating activities
Cash generated
from operations 864 213 2 046 373 952 771
Interest received 402 510 704 239 313 289
Interest paid (513 150) (983 377) (453 679)
Dividends paid (1 280 433) (2 140 407) (1 030 936)
Cash outflow from
operating
activities (526 860) (373 172) (218 555)
Investing activities
Development and
improvement of
investment property (289 092) (1 417 681) (741 994)
Acquisition of
investment property - (273 000) (73 000)
Increase of interest in
associates (788 035) (1 266 074) (974 212)
Loans to joint venture
repaid/(advanced) 1 701 (301 585) -
Acquisition of interest
in joint venture - (566 215) -
Proceeds on disposal of
investment in associate - 37 254 37 118
Share purchase trust loans
advanced - (308 533) (320 132)
Share purchase trust
loans repaid 54 179 160 294 12 307
Loans repaid by/
(advanced to) BEE
vehicles 51 078 (826 242) (709 305)
Co-owner loans
(advanced)/repaid (38 001) 134 356 51 844
Acquisition of investments (276 941) (324 395) (378 075)
Cash flow on currency
derivatives (652 148) 534 496 172 854
Proceeds on disposal of
investments 948 466 061 322 499
Cash flow on Hammerson
equity derivative 45 447 334 270 68 521
Cash outflow from
investing activities (1 890 864) (3 616 994) (2 531 575)
Financing activities
(Decrease)/increase
in interest-bearing
borrowings (876 742) 4 008 575 1 951 618
Acquisition of additional
interest in subsidiaries (34 356) (15 872) (15 872)
Raising of stated
capital 2 983 614 808 160 808 160
Cash inflow from
financing activities 2 072 516 4 800 863 2 743 906
(Decrease)/increase
in cash and
cash equivalents (345 208) 810 697 (6 224)
Cash and cash equivalents
at beginning of the period 855 823 45 126 45 126
Cash and cash equivalents
at end of the period 510 615 855 823 38 902
Cash and cash equivalents
consist of:
Current accounts 510 615 855 823 38 902
The net cash outflow from operating activities at December 2017 results
mainly from the group distributing scrip dividends received
(R360,432 million), the antecedent dividend adjustment (R25,449 million),
dividends accrued for but not yet received (R20,531 million negative),
foreign exchange losses not distributed (R30,212 million), interest rate
cap premiums (R55,917 million), as well as arrears of R49,6 million
collected after the early close-off by property managers in December 2017.
Condensed consolidated statement of changes in equity
Currency
Stated translation
capital reserve Reserves
Unaudited R'000 R'000 R'000
Balance at Jun 2016 12 712 894 193 838 17 552 044
Issue of shares 808 160
Equity contributed by
non-controlling shareholders
Acquisition of additional (2 659)
interest in subsidiaries
Exchange differences on
translation of foreign
operations (106 143)
Profit for the period 930 468
Dividends paid (1 009 628)
Transfer to currency
translation reserve (10 788) 10 788
Balance at Dec 2016 13 521 054 76 907 17 481 013
Exchange differences on
translation of foreign
operations (113 228)
Profit for the period 2 230 373
Dividends paid (1 084 285)
Transfer to currency
translation reserve 95 701 (95 701)
Balance at Jun 2017 13 521 054 59 380 18 531 400
Issue of shares 2 983 614
– issue of 21 814 791 shares
on 29 Aug 2017 2 733 841
– issue of 1 879 000 shares
on 1 Nov 2017 249 773
Acquisition of additional
interest in subsidiaries (8)
Exchange differences realised
on disposal of associate 6 346
Exchange differences on
translation of foreign
operations (2 555)
Profit for the period 8 972 369
Dividends paid (1 256 829)
Transfer to currency
translation
reserve (18 547) 18 547
Balance at Dec 2017 16 504 668 44 624 26 265 479
Equity
attributable Non-
to equity controlling Total
holders interests equity
Unaudited R'000 R'000 R'000
Balance at Jun 2016 30 458 776 386 354 30 845 130
Issue of shares 808 160 808 160
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 (106 143) (56 964) (163 107)
Profit for the period 930 468 5 001 935 469
Dividends paid (1 009 628) (21 308) (1 030 936)
Transfer to currency
translation reserve - -
Balance at Dec 2016 31 078 974 408 447 31 487 421
Exchange differences on
translation of foreign
operations (113 228) (90 728) (203 956)
Profit for the period 2 230 373 (172 222) 2 058 151
Dividends paid (1 084 285) (25 186) (1 109 471)
Transfer to currency
translation reserve - -
Balance at Jun 2017 32 111 834 120 311 32 232 145
Issue of shares 2 983 614 2 983 614
- issue of 21 814 791 shares
on 29 Aug 2017 2 733 841 2 733 841
- issue of 1 879 000 shares
on 1 Nov 2017 249 773 249 773
Acquisition of additional
interest in subsidiaries (8) (34 348) (34 356)
Exchange differences realised
on disposal of associate 6 346 6 346
Exchange differences on
translation of foreign
operations (2 555) (7 234) (9 789)
Profit for the period 8 972 369 (252) 8 972 117
Dividends paid (1 256 829) (23 604) (1 280 433)
Transfer to currency
translation reserve - -
Balance at Dec 2017 42 814 771 54 873 42 869 644
NOTES
1 Preparation and accounting policies
The condensed unaudited consolidated interim financial statements have
been prepared in accordance with and contains the information required
by IAS 34: Interim Financial Reporting, the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial
Reporting Pronouncements as issued by the Financial Reporting Standards
Council, the JSE Limited Listings Requirements and the requirements of
the Companies Act of South Africa. 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 condensed
interim financial statements 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 period.
The group's investment properties are valued internally by the directors
at interim reporting periods and externally by an independent valuer for
year-end reporting. 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%.
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 R694 million. A 25 basis points decrease
in the capitalisation rate will increase the value of investment property
by R740 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 derivative 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 period.
The valuation methods applied are consistent with those applied in
preparing the previous consolidated financial statements.
The directors are not aware of any matters or circumstances arising
subsequent to December 2017 that require any additional disclosure or
adjustment to the financial statements. At the date of this announcement,
having revalued the listed portfolio to current market prices and
without making adjustments to investment property, the net asset value
of Resilient is R92,41 and the loan-to-value ratio is 22,5%.
The condensed interim financial statements have not been audited or
reviewed by Resilient's auditors.
2. Lease expiry profile
Based on
contractual
Based on rental
rentable area revenue
Lease expiry: South Africa % %
Vacant 1,7
Jun 2018 12,4 12,0
Jun 2019 13,9 15,1
Jun 2020 15,3 17,1
Jun 2021 18,2 19,7
Jun 2022 11,5 14,1
> Jun 2022 27,0 22,0
100,0 100,0
3. Segmental analysis
Unaudited Audited Unaudited
for the for the for the
six months year six months
ended ended ended
Dec 2017 June 2017 Dec 2016
R'000 R'000 R'000
Total assets
Retail: South Africa 21 672 845 21 285 029 19 797 457
Retail: Nigeria 1 287 291 1 312 804 1 923 320
Retail: Portugal 882 283 867 800 -
Corporate: South Africa 32 290 493 23 024 111 21 935 518
Corporate: Nigeria 12 225 51 070 31 346
56 145 137 46 540 814 43 687 641
Rental revenue
Retail: South Africa 1 251 170 2 271 907 1 123 657
Retail: Nigeria 67 577 107 103 47 136
Profit for the period
Retail: South Africa 794 679 2 397 488 728 818
Retail: Nigeria 33 253 (469 203) 23 029
Retail: Portugal 27 549 6 097 -
Corporate: South Africa 8 208 439 1 055 617 255 591
Corporate: Nigeria (91 803) 3 621 (71 969)
8 972 117 2 993 620 935 469
Unaudited Audited Unaudited
for the for the for the
six months year six months
ended ended ended
Dec 2017 June 2017 Dec 2016
R'000 R'000 R'000
Reconciliation of profit
for the period to
dividend declared
Profit for the period 8 972 117 2 993 620 935 469
Fair value gain on
investment
property - (413 514) (13 018)
Fair value (gain)/loss
on investments (4 308 043) 28 482 661 070
Fair value loss/(gain)
on currency derivatives 17 315 (384 879) (367 419)
Foreign exchange
loss/(gain) 36 558 (132 089) 17 703
Profit on sale of
interest
in associates (3 538 393) (3 231) (3 180)
Non-distributable
loss/(gain)
from associates 113 605 9 943 (316 378)
Fair value adjustment
on interest rate
derivatives (10 690) 46 643 32 790
Income tax 27 781 (7 327) 49 433
Non-controlling
interests (11 865) (19 175) (7 697)
Antecedent dividend 25 449 13 836 13 836
Income hedging adjustment
of Nigeria and Portugal
performance (989) - -
Dividends accrued (20 531) 144 000 81 676
Amount available for
distribution under best
practice 1 302 314 2 276 309 1 084 285
Dividend declared
- interim (1 302 314) (1 084 285) (1 084 285)
Dividend declared
- final (1 192 024)
- - -
The methodology applied in calculating the dividend is consistent with
that of the prior periods.
Unaudited Audited Unaudited
for the for the for the
six months year six months
ended ended ended
Dec 2017 June 2017 Dec 2016
R'000 R'000 R'000
Reconciliation of profit for
the period to headline
earnings
Basic earnings - profit for
the period attributable to
equity holders 8 972 369 3 160 841 930 468
Adjusted for: (3 520 121) (422 317) (18 234)
- fair value
loss/(gain) on
investment property 26 684 (437 132) (18 491)
- profit on sale of interest
in associates (3 538 393) (3 231) (3 180)
- income tax effect (8 412) 18 046 3 437
Headline earnings 5 452 248 2 738 524 912 234
Headline earnings
per share (cents) 1 308,43 686,88 230,27
Basic earnings per share and headline earnings per share are based
on the weighted average of 416 702 969 (Jun 2017: 398 690 160;
Dec 2016: 396 162 013) shares in issue during the period.
Resilient has no dilutionary instruments in issue.
4. Payment of interim dividend
The board has approved and notice is hereby given of an interim
dividend of 306,46000 cents per share for the six months ended
31 December 2017.
The dividend is payable to Resilient shareholders in accordance
with the timetable set out below:
Last date to trade cum dividend Tuesday, 27 February 2018
Shares trade ex dividend Wednesday, 28 February 2018
Record date Friday, 2 March 2018
Payment date Monday, 5 March 2018
Share certificates may not be dematerialised or rematerialised between
Wednesday, 28 February 2018 and Friday, 2 March 2018, both days inclusive.
In respect of dematerialised shareholders, the dividend will be
transferred to the CSDP accounts/broker accounts on Monday,
5 March 2018. Certificated shareholders' dividend payments will
be posted on or about Monday, 5 March 2018.
An announcement informing shareholders of the tax treatment of
the dividend will be released separately on SENS.
Management accounts
Basis of preparation
In order to provide information of relevance to investors these management
accounts, which comprise financial information extracted from the unaudited
interim financial statements for the six months ended 31 December 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 investment in Greenbay that was accounted
for using the equity method for IFRS, been fair valued;
- Had the group's interest in Locaviseu, the joint venture in
Portugal, accounted for using 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
Mahikeng 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.
This pro forma financial information has not been reviewed or
reported on by Resilient's auditors.
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 condensed consolidated statement of financial position and the
condensed 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.
Management account adjustments
Adjustment 1
The Hammerson equity derivative is grossed-up by multiplying the
6 260 000 shares held by the quoted closing price of Hammerson
shares at December 2017. This more accurately reflects the group's
assets and liabilities.
Adjustment 2
The investment in Greenbay is reflected at its fair value by
multiplying the 1 981 300 000 shares held by the quoted closing
price of Greenbay shares at December 2017. All entries recorded
to account for this investment using the equity method are reversed.
This more accurately reflects the group’s assets and liabilities.
Adjustment 3
This adjustment proportionately consolidates the indirect
investments in Forum Coimbra and Forum Viseu that are held
through Locaviseu, accounted for using 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 six
months ended December 2017 on a line-by-line basis. Resilient is
satisfied with the quality of the financial information contained
in the management accounts of Locaviseu.
Adjustment 4
This adjustment proportionately consolidates the indirect investments
in partially-owned subsidiaries (Resilient Africa and the indirect
investments in Arbour Crossing, The Galleria and Mahikeng Mall)
previously consolidated. It uses the management accounts for the
six months ended December 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.
Condensed consolidated statement of financial position
Adjustment 2
Fair value
Adjustment 1 accounting
Hammerson for
equity investment
derivative in
IFRS gross-up Greenbay
Dec 2017 Dec 2017 Dec 2017
R'000 R'000 R'000
Assets
Non-current assets 54 490 520 567 657 1 954 235
Investment property 21 719 718
Straight-lining of
rental revenue adjustment 379 515
Investment property
under development 761 508
Investment in and
loans to associates
and joint venture 3 980 363 (3 098 080)
Investments 23 315 396 567 657 5 052 315
Goodwill -
Resilient Share
Purchase Trust loans 557 373
Loans to BEE vehicles 3 526 150
Loans to co-owners 250 497
Current assets 1 654 617 - -
Resilient Share
Purchase Trust loans 16 297
Trade and other
receivables 1 058 845
Hammerson equity
derivative 68 860 (68 860)
Cash and cash
equivalents 510 615 68 860
Total assets 56 145 137 567 657 1 954 235
Equity and liabilities
Total equity attributable
to equity holders 42 814 771 - 1 954 235
Stated capital 16 504 668
Currency translation
reserve 44 624
Reserves 26 265 479 1 954 235
Non-controlling
interests 54 873
Total equity 42 869 644 - 1 954 235
Total liabilities 13 275 493 567 657 -
Non-current liabilities 11 120 186 567 657 -
Interest-bearing
borrowings 9 219 251 567 657
Deferred tax 939 508
Amounts owing to
non-controlling
shareholders 961 427
Current liabilities 2 155 307 - -
Trade and other
payables 451 500
Interest-bearing
borrowings 1 703 807
Total equity and
liabilities 56 145 137 567 657 1 954 235
Adjustment 3 Adjustment 4
Proportionate Proportionate
Consolidation consolidation
of investment of partially-
in Portuguese owned Management
joint venture subsidiaries accounts
Dec 2017 Dec 2017 Dec 2017
R'000 R'000 R'000
Assets
Non-current assets 941 014 (1 256 180) 56 697 246
Investment property 1 678 558 (1 315 563) 22 082 713
Straight-lining of
rental revenue
adjustment (16 926) 362 589
Investment property
under development 761 508
Investment in and
loans to associates
and joint venture (882 283) -
Investments 28 935 368
Goodwill 144 739 144 739
Resilient Share
Purchase Trust loans 557 373
Loans to BEE vehicles 3 526 150
Loans to co-owners 76 309 326 806
Current assets 87 302 (16 125) 1 725 794
Resilient Share
Purchase Trust loans 16 297
Trade and other
receivables 26 670 (8 276) 1 077 239
Hammerson equity
derivative -
Cash and cash
equivalents 60 632 (7 849) 632 258
Total assets 1 028 316 (1 272 305) 58 423 040
Equity and liabilities
Total equity
attributable to
equity holders - - 44 769 006
Stated capital 16 504 668
Currency translation
reserve 44 624
Reserves 28 219 714
Non-controlling interests (54 873) –
Total equity - (54 873) 44 769 006
Total liabilities 1 028 316 (1 217 432) 13 654 034
Non-current
liabilities 967 925 (1 196 426) 11 459 342
Interest-bearing
borrowings 752 116 (235 012) 10 304 012
Deferred tax 215 809 13 1 155 330
Amounts owing to
non-controlling
shareholders (961 427) -
Current liabilities 60 391 (21 006) 2 194 692
Trade and other payables 60 391 (21 006) 490 885
Interest-bearing
borrowings 1 703 807
Total equity and
liabilities 1 028 316 (1 272 305) 58 423 040
Condensed consolidated statement of comprehensive income
Adjustment 2
Fair value
Adjustment 1 accounting
Hammerson for
equity investment
derivative in
IFRS gross-up Greenbay
for the for the for the
six months six months six months
ended ended ended
Dec 2017 Dec 2017 Dec 2017
R'000 R'000 R'000
Income statement
Net rental and
related revenue 846 204 - -
Recoveries and
contractual
rental revenue 1 292 063
Straight-lining
of rental
revenue adjustment 26 684
Rental revenue 1 318 747 - -
Property operating
expenses (472 543)
Income from
investments 517 219 78 506
Fair value gain on
investment property,
investments and
currency derivatives 4 264 044 - 1 604 353
Adjustment resulting
from straight-lining
of rental revenue (26 684)
Fair value gain on
investments 4 308 043 1 604 353
Fair value loss
on currency
derivatives (17 315)
Administrative expenses (53 099)
Foreign exchange loss (36 558)
Profit on sale of
interest in associates 3 538 393 (3 538 393)
Income from associates
and joint venture (5 036) - 32 585
- distributable 108 569 (78 506)
- non-distributable (113 605) 111 091
Profit before net
finance costs 9 071 167 - (1 822 949)
Net finance costs (71 269) - -
Finance income 413 200 - -
Interest received: cross-
currency swaps 142 717
Interest received: loans 259 793
Fair value adjustment
on interest rate
derivatives 10 690
Finance costs (484 469) - -
Interest on borrowings (513 150)
Capitalised interest 28 681
Profit before income tax 8 999 898 - (1 822 949)
Income tax (27 781)
Profit for the period 8 972 117 - (1 822 949)
Profit for the period
attributable to:
Equity holders of
the company 8 972 369 (1 822 949)
Non-controlling interests (252)
8 972 117 - (1 822 949)
Adjustment 3 Adjustment 4
Proportionate Proportionate
Consolidation consolidation
of investment of partially-
in Portuguese owned Management
joint venture subsidiaries accounts
for the for the for the
six months six months six months
ended ended ended
Dec 2017 Dec 2017 Dec 2017
R'000 R'000 R'000
Income statement
Net rental and
related revenue 51 323 (43 169) 854 358
Recoveries and
contractual
rental revenue 78 705 (73 871) 1 296 897
Straight-lining
of rental
revenue adjustment (1 565) 25 119
Rental revenue 78 705 (75 436) 1 322 016
Property operating
expenses (27 382) 32 267 (467 658)
Income from investments 595 725
Fair value gain on
investment property,
investments and
currency derivatives - 1 565 5 869 962
Adjustment resulting
from straight-lining
of rental revenue 1 565 (25 119)
Fair value gain on
investments 5 912 396
Fair value loss on currency
derivatives (17 315)
Administrative expenses (12 937) 4 418 (61 618)
Foreign exchange loss 12 118 (24 440)
Profit on sale of interest
in associates -
Income from associates and
joint venture (27 549) - -
- distributable (30 063) -
- non-distributable 2 514 -
Profit before net finance
costs 10 837 (25 068) 7 233 987
Net finance costs - 25 320 (45 949)
Finance income - 25 443 438 643
Interest received: cross-
currency swaps 142 717
Interest received: loans 25 443 285 236
Fair value adjustment on
interest rate derivatives 10 690
Finance costs - (123) (484 592)
Interest on borrowings 720 (512 430)
Capitalised interest (843) 27 838
Profit before income tax 10 837 252 7 188 038
Income tax (10 837) - (38 618)
Profit for the period - 252 7 149 420
Profit for the period
attributable to:
Equity holders of
the company 7 149 420
Non-controlling
interests 252 -
- 252 7 149 420
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)
Changes to the board of directors
There were no changes to the board of directors since 3 August 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,
19 Ameshoff Street, Braamfontein, 2001
Sponsor
Java Capital
Date: 26/01/2018 04:01:00 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,
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