Wrap Text
Condensed unaudited consolidated interim financial results for the six months ended 31 December 2017
Attacq Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/000543/06)
JSE share code: ATT ISIN: ZAE000177218
("Attacq" or "the Company")
CONDENSED UNAUDITED CONSOLIDATED INTERIM FINANCIAL RESULTS
for the six months ended 31 December 2017
Condensed consolidated statement of financial position
Unaudited Unaudited Audited
31 December 31 December 30 June
2017 2016 2017
R'000 R'000 R'000
ASSETS
Non-current assets
Property and equipment 47 130 48 078 52 272
Investment properties 20 323 153 18 880 950 19 735 365
Per valuation 21 165 270 19 600 881 20 536 861
Straight-line lease debtor (842 117) (719 931) (801 496)
Straight-line lease debtor 842 117 719 931 801 496
Deferred initial lease expenditure 7 079 8 327 7 666
Intangible assets 276 894 302 617 290 539
Goodwill 67 774 67 774 67 774
Investment in associates and joint ventures 3 179 281 3 524 896 3 153 392
Other financial assets 361 280 253 163 304 368
Other investments 12 456 191 866 11 941
Deferred tax assets 11 16 562 3 329
Total non-current assets 25 117 175 24 014 164 24 428 142
Current assets
Taxation receivable – 2 529 951
Trade and other receivables 183 124 221 154 174 623
Deferred initial lease expenditure – 606 –
Inventory 34 592 – 25 278
Loans to associates and joint ventures 1 070 696 1 755 028 1 250 278
Other financial assets 140 431 186 824 193 590
Cash and cash equivalents 725 244 211 554 447 846
Total current assets 2 154 087 2 377 695 2 092 566
Non-current assets held for sale 892 970 733 498 801 483
Total assets 28 164 232 27 125 357 27 322 191
EQUITY AND LIABILITIES
Equity
Stated capital 6 458 912 6 454 839 6 456 633
Distributable reserves 7 215 581 5 964 563 6 945 483
Available-for-sale reserve 286 152 781 464 282 329
Share-based payment reserve 107 738 114 938 128 216
Foreign currency translation reserve 487 954 (7 722) 238 254
Acquisition of non-controlling interests reserve (104 215) (116 483) (104 215)
Equity attributable to owners of the holding company 14 452 122 13 191 599 13 946 700
Non-controlling interests (66 057) (16 673) (43 087)
Total equity 14 386 065 13 174 926 13 903 613
Unaudited Unaudited Audited
31 December 31 December 30 June
2017 2016 2017
R'000 R'000 R'000
Non-current liabilities
Long-term borrowings 10 372 429 10 787 800 7 976 110
Deferred tax liabilities 2 079 216 1 829 870 1 932 140
Other financial liabilities 214 106 65 260 164 696
Cash-settled share-based payments 872 1 268 1 496
Finance lease obligation 85 983 80 401 83 150
Total non-current liabilities 12 752 606 12 764 599 10 157 592
Current liabilities
Other financial liabilities 158 002 121 128 137 145
Loans from associates – 4 150 –
Taxation payable 16 195 9 458 7 665
Cash-settled share-based payments 1 873 1 589 1 684
Trade and other payables 301 382 393 073 501 380
Provisions 2 645 2 888 2 777
Short-term portion of long-term borrowings 214 888 304 647 2 279 802
Total current liabilities 694 985 836 933 2 930 453
Liabilities directly associated with non-current assets held for sale 330 576 348 899 330 533
Total liabilities 13 778 167 13 950 431 13 418 578
Total equity and liabilities 28 164 232 27 125 357 27 322 191
The following information does not form part of the statement
of financial position
Net asset value per share (cents) 2 056 1 877 1 984
Net asset value per share adjusted for deferred tax (cents) 2 351 2 135 2 259
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited
31 December 31 December 30 June
2017 2016 2017
R'000 R'000 R'000
Gross revenue 1 001 983 1 037 305 2 060 895
Rental income 980 055 916 718 1 861 093
Straight-line lease income adjustment 21 928 120 587 199 802
Property expenses (348 163) (368 757) (742 277)
Net rental income 653 820 668 548 1 318 618
Other income 38 445 34 411 60 463
Operating and other expenses (142 511) (531 509) (585 730)
Operating profit 549 754 171 450 793 351
Amortisation of intangible asset (13 645) (9 982) (22 060)
Fair value adjustments 213 406 246 957 527 581
Investment properties 252 882 274 130 664 525
Other financial assets and liabilities (39 476) (28 524) (136 944)
Other investments – 1 351 –
Net income from associates and joint ventures 38 020 45 223 249 880
Investment income 82 830 106 775 189 536
Finance costs (456 060) (495 526) (987 411)
Profit before taxation 414 305 64 897 750 877
Income tax expense (173 170) 4 681 (150 599)
Profit for the period/year 241 135 69 578 600 278
Attributable to:
Owners of the holding company 264 105 73 050 630 164
Non-controlling interests (22 970) (3 472) (29 886)
Other comprehensive income (loss)
Items that will be reclassified subsequently to profit and loss
Gain (loss) on available-for-sale financial assets 3 822 (79 785) (117 827)
Taxation relating to components of other comprehensive income 1 13 750 (11 269)
Other comprehensive income (loss) for the period/year net of taxation 3 823 (66 035) (129 096)
Total comprehensive income for the period/year 244 958 3 543 471 182
Attributable to:
Owners of the holding company 267 928 7 015 501 068
Non-controlling interests (22 970) (3 472) (29 886)
Earnings per share
Basic (cents) 37.6 10.4 89.7
Diluted (cents) 37.3 10.3 89.0
Reconciliation between earnings, headline earnings
and distributable earnings
Unaudited Unaudited Audited
31 December 31 December 30 June
2017 2016 2017
R'000 R'000 R'000
Profit for the period/year 264 105 73 050 630 164
Headline earnings adjustments (206 079) (33 640) (468 558)
Profit on disposal of associates – (190) (35 695)
Profit on disposal of investment property (9 912) (25 282) (15 217)
Impairment of associates and other investments 6 435 268 850 244 540
Fair value adjustments (213 406) (246 957) (527 581)
Net income from associates and joint ventures (38 020) (45 223) (249 880)
Tax effect on adjustments 53 248 9 335 123 110
Non-controlling interests' share (4 424) 5 827 (7 835)
Headline earnings 58 026 39 410 161 606
Distributable earnings adjustments# 215 468 73 844 44 815
Straight-line lease income adjustments (20 644) (115 605) (187 668)
Depreciation and amortisation 20 031 14 463 31 032
Foreign currency translation effect 33 014 173 087 162 718
Finance lease interest 1 799 1 682 3 422
Distributable earnings from associates 84 498 50 362 109 113
Deferred taxation 97 148 (49 795) 73 087
Actual finance lease payments (378) (350) (715)
Distributable earnings# 273 494 113 254 206 421
Number of shares in issue* 703 055 224 702 665 224 702 815 224
Weighted average number of shares in issue* 702 838 702 702 000 822 702 389 882
Diluted weighted average number of shares in issue* 708 544 674 707 306 634 708 079 085
Headline earnings per share
Basic (cents) 8.3 5.6 23.0
Diluted (cents) 8.2 5.6 22.8
Distributable earnings per share#
Basic (cents) 38.9 16.1 29.4
Diluted (cents) 38.6 16.0 29.2
*Adjusted for 46 427 553 treasury shares (2016: 46 427 553)
(#)The distributable earnings and adjustments for 30 June 2017 were not audited
Condensed consolidated statement of cash flows
Unaudited Unaudited Audited
31 December 31 December 30 June
2017 2016 2017
R'000 R'000 R'000
Cash flow generated from operating activities 54 890 58 644 124 022
Cash generated from operations 339 737 396 257 1 033 295
Investment income 106 605 34 436 119 368
Finance costs (378 159) (344 382) (934 930)
Taxation paid (13 293) (27 667) (93 711)
Cash flow (utilised in) generated from investing activities (237 968) 136 607 310 427
Property and equipment acquired (640) (18 632) (27 319)
Investment properties acquired (455 870) (616 319) (1 098 009)
Investment properties disposed – 756 197 50 017
Associates and joint ventures acquired – (24 037) (36 227)
Associates and joint ventures disposed 23 620 – 744 845
Other financial assets raised (3 753) (15 588) (175 041)
Additions to deferred initial lease adjustments (3 601) (192) (4 845)
Cash flow relating to non-current assets held for sale 202 276 55 178 857 006
Cash flow generated from (utilised in) financing activities 460 476 (420 978) (423 884)
Capital raised 2 279 12 034 13 828
Long-term borrowings raised 1 848 047 1 797 518 2 355 304
Long-term borrowings repaid (1 496 779) (1 989 902) (3 254 770)
Loans to associates and joint ventures repaid (advanced) 135 484 (242 343) 468 643
Loans from associates repaid – 1 270 –
Payment of cash-settled share-based payments 2 236 (1 796) (2 097)
Other financial liabilities (repaid) raised (30 791) 2 241 (4 792)
Total cash movement for the period/year 277 398 (225 727) 10 565
Cash at the beginning of the period/year 447 846 437 281 437 281
Total cash at the end of the period/year 725 244 211 554 447 846
Condensed consolidated statement of changes in equity
Acquisition Equity
Foreign of non- attributable
Available- Share-based currency controlling to owners of Non-
Stated Distributable for-sale payment translation interests the holding controlling Total
capital reserves reserve reserve reserve reserve company interests equity
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Audited balance
at 1 July 2016 6 442 805 5 891 513 847 499 100 453 318 734 (116 483) 13 484 521 (13 201) 13 471 320
Total comprehensive income – 73 050 (66 035) – – – 7 015 (3 472) 3 543
Profit for the period – 73 050 – – – – 73 050 (3 472) 69 578
Other comprehensive loss – – (66 035) – – – (66 035) – (66 035)
Foreign currency translation
reserve – – – – (326 456) – (326 456) – (326 456)
Issue of shares 12 034 – – – – – 12 034 – 12 034
Recognition of share-based
payment reserve – – – 14 485 – – 14 485 – 14 485
Unaudited balance
at 31 December 2016 6 454 839 5 964 563 781 464 114 938 (7 722) (116 483) 13 191 599 (16 673) 13 174 926
Total comprehensive income – 557 114 (63 061) – – – 494 053 (26 414) 467 639
Profit for the period – 557 114 – – – – 557 114 (26 414) 530 700
Other comprehensive loss – – (63 061) – – – (63 061) – (63 061)
Foreign currency translation
reserve – – – – 245 976 – 245 976 – 245 976
Issue of shares 1 794 – – – – – 1 794 – 1 794
Derecognition reserves and
non-controlling interests due
to sale of subsidiaries – 423 806 (436 074) – – 12 268 – – –
Recognition of share-based
payment reserve – – – 13 278 – – 13 278 – 13 278
Audited balance
at 30 June 2017 6 456 633 6 945 483 282 329 128 216 238 254 (104 215) 13 946 700 (43 087) 13 903 613
Total comprehensive income – 264 105 3 823 – – – 267 928 (22 970) 244 958
Profit for the period – 264 105 – – – – 264 105 (22 970) 241 135
Other comprehensiv
income – – 3 823 – – – 3 823 – 3 823
Foreign currency translatio
reserve – – – – 249 700 – 249 700 – 249 700
Issue of shares 2 279 – – – – – 2 279 – 2 279
Settlement of share-based
payment transaction – – – (11 198) – – (11 198) – (11 198)
Transfer between reserves – 5 993 – (15 304) – – (9 311) – (9 311)
Recognition of share-based
payment reserve – – – 6 024 – – 6 024 – 6 024
Unaudited balance at
31 December 2017 6 458 912 7 215 581 286 152 107 738 487 954 (104 215) 14 452 122 (66 057) 14 386 065
Condensed segmental analysis
Unaudited
31 December 2017
Net Investment Net asset
Revenue profit (loss) properties value
Business segment Notes R'000 R'000 R'000 R'000
Brooklyn Bridge Office Park 1 21 494 4 655 541 973 216 158
Lynnwood Bridge – Offices 102 822 22 821 832 813 534 790
Aurecon Building (21 386) 13 713 744 640 347 637
Newtown Nedbank 41 166 6 485 652 343 82 221
Majestic Offices 9 320 6 986 134 970 140 913
2 Eglin, Sunninghill 22 858 (47 956) 228 684 (133 117)
Waterfall – Altech Building* 2 3 (152) – (1)
Waterfall – Cell C Campus 79 885 44 409 828 538 997 472
Waterfall – Group Five 37 877 26 788 609 439 339 376
Waterfall – Maxwell Office Park* 30 763 10 291 527 239 414 629
Waterfall – Allandale 16 686 3 202 422 260 259 099
Waterfall – PWC Tower and Annex~ – 12 765 1 213 113 302 939
Waterfall – Gateway West – (2 887) 314 807 312 194
Waterfall – Corporate Campus Office Park* – 6 760 71 520 71 374
Waterfall – Novartis 13 539 3 387 218 380 229 078
Office and mixed-use 355 027 111 267 7 340 719 4 114 762
Glenfair Boulevard Shopping Centre 22 395 12 338 472 520 265 552
Lynnwood Bridge Retail 24 967 8 936 353 247 209 222
Newtown Junction 34 413 (43 553) 580 660 (67 304)
Garden Route Mall 78 513 35 399 1 350 527 629 146
Brooklyn Mall(#) 40 361 2 393 736 215 343 160
MooiRivier Mall 61 857 20 192 1 157 439 535 274
Eikestad Mall^ 50 975 21 065 868 521 297 895
Waterfall – Mall of Africa^ 228 545 88 143 4 247 185 1 917 015
Waterfall – Waterfall Corner 15 418 10 918 218 585 227 494
Waterfall – Waterfall Lifestyle 10 643 2 493 118 101 133 757
Retail 568 087 158 324 10 103 000 4 491 211
Waterfall – Massbuild 8 634 8 473 340 587 176 378
Waterfall – Torre 9 305 2 357 128 856 80 806
Waterfall – Dimension Data 5 478 3 604 89 861 32 883
Waterfall – Amrod 26 974 6 438 371 852 231 495
Waterfall – BMW Group South Africa Regional
Distribution Centre – (15 071) 275 755 266 700
Waterfall – K101 warehouse – 6 888 79 256 17 205
Light industrial 50 391 12 689 1 286 167 805 467
Notes:
1. Held for sale at 31 December 2017.
2. Sold during the prior year.
Represents Attacq's co-ownership: #25%; *50%; ~75%; ^80%;
Unaudited Audited
31 December 2016 30 June 2017
Net Investment Net asset Net Investment Net asset
Revenue profit (loss) properties value Revenue profit (loss) properties value
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
36 757 9 912 615 657 311 606 79 533 (53 539) 525 735 219 475
54 673 20 097 846 436 484 809 112 685 47 979 859 473 499 341
49 641 17 780 671 575 308 577 99 187 30 836 673 537 323 998
40 403 12 768 637 210 117 842 80 955 23 285 645 869 110 873
9 592 1 175 134 108 31 191 19 460 9 217 132 940 30 057
22 797 (66 702) 287 903 (96 413) 45 861 (56 121) 289 735 (89 150)
3 228 1 524 44 746 31 957 1 097 3 617 – –
65 388 8 273 776 582 450 938 127 477 71 078 831 089 968 462
36 923 17 241 573 317 264 713 77 940 48 068 595 727 307 999
29 109 17 334 510 455 279 664 59 250 32 420 525 062 309 287
9 945 21 594 384 201 163 767 27 696 42 937 414 839 180 544
– – – – – – – –
– – – – – – – –
– – – – – – – –
13 847 3 766 212 770 95 583 28 199 10 779 220 259 103 109
372 303 64 762 5 694 960 2 444 234 759 340 210 556 5 714 265 2 963 995
27 651 17 923 436 698 239 378 58 124 32 851 455 501 259 152
24 376 11 270 335 495 193 897 47 453 8 212 346 552 200 051
37 236 (8 046) 643 160 41 914 81 525 (46 696) 601 929 20 060
76 469 28 127 1 296 907 556 071 152 651 48 329 1 318 172 641 973
39 154 15 127 764 288 344 023 77 300 (10 903) 736 390 347 850
61 188 11 356 1 122 667 470 696 122 731 15 284 1 128 318 526 456
57 694 17 787 824 330 356 858 109 939 31 157 838 609 415 054
231 632 104 676 3 844 967 2 337 610 444 953 327 184 4 138 982 2 737 350
17 273 (5 947) 200 205 69 830 30 378 (1 126) 212 747 217 483
11 962 3 571 118 119 47 209 21 143 5 772 119 183 49 634
584 635 195 844 9 586 836 4 657 486 1 146 197 410 064 9 896 383 5 415 063
19 644 5 476 258 608 93 891 39 010 21 817 283 776 117 382
5 249 15 601 123 666 49 416 13 139 21 477 129 905 59 099
3 737 11 908 83 578 24 789 9 258 14 255 85 581 27 917
– 255 340 902 201 562 26 143 36 029 370 869 100 136
– – – – – – – –
– – – – – – – –
28 630 33 240 806 754 369 658 87 550 93 578 870 131 304 534
Unaudited
31 December 2017
Net Investment Net asset
Revenue profit (loss) properties value
Business segment Notes R'000 R'000 R'000 R'000
Newtown Junction – City Lodge 7 273 3 512 112 398 28 817
Lynnwood Bridge – City Lodge 10 983 9 741 201 725 118 029
Waterfall – City Lodge 7 041 4 528 107 318 112 255
Hotel 25 297 17 781 421 441 259 101
Le Chateau – (2) 5 000 2 752
Waterfall – Development rights 3 – (19 135) 961 511 961 511
Waterfall – Infrastructure and services 3 – (1 163) 664 343 662 123
Vacant land – (20 300) 1 630 854 1 626 386
Waterfall – PwC Tower and Annex~ – – – –
Waterfall – Gateway West – – – –
Waterfall – K101 warehouse – – – –
Waterfall – BMW Group South Africa Regional
- Distribution Centre – – – –
Waterfall – Waterfall Point Office Park – – – 27 726
Waterfall – Corporate Campus Office Park* – – – –
Waterfall – Pirtek – – – 6 866
Waterfall – Cummins SA's Regional Office* – 807 75 034 57 569
Waterfall – River Creek (Deloitte head office) – (171) 160 893 169 404
Developments under construction – 636 235 927 261 565
MAS Real Estate Inc. – 38 281 – 2 950 461
Atterbury Cyprus Limited 2 – – – –
Atterbury Africa Limited – 872 – (150 054)
Stenham European Shopping Centre Fund
Limited – – – 2 714
Atterbury Serbia B.V. 2 – – – –
Gruppo Investment Nigeria Limited – (484) – 10 123
Grove Mall of Namibia Proprietary Limited – 1 447 – 185 950
Other international – 9 759 – 199 838
International – 49 875 – 3 199 032
Head office/other 3 181 (85 314) – (371 459)
Total 1 001 983 244 958 21 018 108 14 386 065
Notes:
2. Sold during the prior year
3. Portion held for sale at 31 December 2017
Represents Attacq's co-ownership: *50%; ~75%
Unaudited Audited
31 December 2016 30 June 2017
Net Investment Net asset Net Investment Net asset
Revenue profit (loss) properties value Revenue profit (loss) properties value
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
7 126 1 651 110 568 24 236 14 195 3 411 110 701 26 298
28 823 10 045 169 173 104 914 24 560 13 737 191 466 111 887
6 785 5 697 99 983 52 983 13 935 11 182 105 073 58 817
42 734 17 393 379 724 182 133 52 690 28 330 407 240 197 002
– (1) 5 000 2 753 – (4) 5 000 2 752
– 23 562 1 059 720 1 059 724 – (50 862) 1 081 968 1 081 968
– (5 427) 1 100 556 804 287 – (7 229) 737 172 713 619
– 18 134 2 165 276 1 866 764 – (58 095) 1 824 140 1 798 339
– 21 952 705 873 175 063 – 28 562 1 027 098 236 553
– 6 874 183 183 183 183 – 4 348 291 787 275 073
– 660 18 747 18 747 – 7 443 45 609 23 576
– – – – – 13 709 206 448 178 568
– – – – – (143) – 25 278
– – – – – 2 756 28 024 20 481
– – – – – – – –
– – – – – – – –
– – – – – – – –
– 29 486 907 803 376 993 – 56 675 1 598 966 759 529
– (11 916) – 2 377 696 – 106 014 – 2 729 308
– 39 379 – 802 842 – 32 866 – –
– (180 096) – (21 465) – (104 971) – (121 169)
– (155 617) – 180 568 – (142 104) – 197 677
– (41 966) – 171 231 – 8 383 – –
– (21 324) – 292 495 – (26 491) – 86 976
– 8 378 – 173 845 – 16 324 – 184 085
– (6 350) – 155 170 – (32 502) – 143 889
– (369 512) – 4 132 382 – (142 481) – 3 220 766
9 003 14 196 – (854 724) 15 118 (127 445) – (755 615)
1 037 305 3 543 19 541 353 13 174 926 2 060 895 471 182 20 311 125 13 903 613
Commentary
Highlights
- Year-on-year growth in net asset value per share ("NAVPS"), adjusted for deferred tax, of 10.1% to R23.51;
- Distributable earnings per share of 38.9 cents achieved during the last six months;
- Mall of Africa's trading densities increased December on December by 10.7%;
- Waterfall developments completed adding 114 916 m(2); and
- Gearing ratio improved from 41.4% to 36.2% year-on-year.
Introduction
Attacq's vision is to be the premier property company in South Africa with the Waterfall development portfolio as its unique value
proposition. Attacq's business model is focused on four key value drivers, namely the South African portfolio, an investment in
MAS Real Estate Inc. ("MAS"), the Waterfall development portfolio and the Rest of Africa retail investments.
Attacq's focus is on delivering both sustainable income distributions and capital growth, through its four key value drivers.
The Real Estate Investment Trust ("REIT") conversion, subject to JSE approval, is anticipated to be in place for the next
financial year.
Performance
NAVPS adjusted for deferred tax increased by 10.1% year-on-year from R21.35 to R23.51, and NAVPS increased by 9.5% from
R18.77 to R20.56.
Attacq's distributable earnings per share for the interim reporting period is 38.9 cents (December 2016: 16.1 cents) which is on
track with the communicated guideline for the current financial year.
Financial position
Attacq's assets have increased over the last six months by 3.1% to R28.2 billion.
31 December 2017 31 December 2016 30 June 2017
R'000 R'000 R'000
South African portfolio 20 618 521 17 572 130 18 060 726
Investment in MAS 2 950 461 2 377 696 2 729 308
Waterfall development portfolio 2 057 292 3 368 149 3 840 759
Rest of Africa retail investments 1 137 905 1 257 890 1 246 835
Other assets 1 400 553 2 549 492 1 444 563
Total 28 164 232 27 125 357 27 322 191
South African portfolio
Overview
Attacq has a high-quality operational portfolio of retail, commercial and industrial properties with a weighted average lease expiry
profile of 6.7 years as at 31 December 2017 (June 2017: 6.4 years). The value of the existing South African portfolio increased to
R20.6 billion (June 2017: R18.1 billion), comprising 73.2% (June 2017: 66.1%) of Attacq's total gross assets.
During the six months ended 31 December 2017 five buildings and one extension were completed in Waterfall. Attacq's
attributable share of the total newly completed 114 916 m(2) primary gross lettable area ("PGLA") is 100 676 m(2):
Practical PGLA Occupancy
Property Sector completion date (m(2)) %
Waterfall City
PwC Tower and Annex~ Office October 2017 45 223 100
Gateway West Office October 2017 13 481 >70
Corporate Campus Office Park Phase 1+ Office December 2017 5 868 >94
Waterfall Logistics Hub
BMW Group South Africa Regional Distribution Centre Industrial December 2017 31 987 100
K101 warehouse Industrial October 2017 8 518 –
Massbuild extension Industrial December 2017 9 839 100
Total 114 916 >89
~ Attacq has a 75.0% co-ownership
+ Attacq has a 50.0% co-ownership
Net rental income
Rental income increased by 6.9% to R980.1 million compared with the prior comparative period (December 2016: R916.7 million).
Net rental income, decreased by 2.2% compared with December 2016, negatively impacted by straight-line lease adjustments.
Developments completed during the past six months, added 100 676 m(2) of PGLA, bringing the total PGLA to 807 467 m(2).
Rental income will be positively impacted for the balance of the financial year as a result of the commencement of
new leases for the five completed buildings and the one extension.
Vacancies
Overall portfolio vacancies, measured in terms of PGLA, increased by 18 130 m(2) when compared with 31 December 2016.
Subsequent to 31 December 2017, 10 744 m(2) of this vacant space was let, reducing the overall vacancy rate to 3.2%. Vacancies
that were filled post 31 December 2017 relate mainly to Gateway West (9 403 m(2)) and Corporate Campus Office Park ("Corporate
Campus") (947 m(2)).
31 December 2017 31 December 2016 30 June 2017
Vacancy Vacant Vacancy Vacant Vacancy Vacant
Sector % PGLA m(2) % PGLA m(2) % PGLA m(2)
Retail 1.5 5 083 1.5 4 729 2.4 7 869
Office and mixed-use 7.6 22 642 5.2 13 384 5.0 13 094
Light industrial 5.3 8 518 – – – –
Hotel – – – – – –
Portfolio vacancy 4.5 36 243 2.6 18 113 3.0 20 963
Property expenses
Property expenses decreased by 5.6% or R20.6 million to R348.2 million mainly due to non-recurring spend incurred in the
prior period relating to the opening of the Mall of Africa. Municipal charges of R221.3 million (December 2016: R218.1 million) are
included in property expenses. The cost-to-income ratio on a gross basis improved to 35.5% (December 2016: 40.2%) and 17.7%
(December 2016: 19.3%) on a net basis.
Investment in MAS
Overview
Attacq's shareholding in MAS reduced from 30.6% as at 30 June 2017 to 22.7% as at 31 December 2017. This was as a result of two
large capital raisings by MAS in which Attacq did not participate due to deploying surplus cash into the Waterfall development.
The market value of Attacq's investment, using the 31 December 2017 MAS share price of R30.00 (June 2017: R23.50) equates to
R4.4 billion (June 2017: R3.5 billion). During the six-month period ended 31 December 2017, Attacq received a cash dividend of
R74.2 million (December 2016: R54.9 million), which represents a 3.4% annualised income return, based on the 31 December 2017
market value.
Attacq's equity accounted investment at 31 December 2017 is R2.9 billion (June 2017: R2.7 billion). The increase is due to MAS'
NAVPS increasing by 9.7% from 124.5 Euro cents per share to 136.6 Euro cents per share (after adjusting for treasury shares),
offset by the 1.4% strengthening of the Rand against the Euro and the dividend of 3.19 Euro cents per share.
MAS' acquisition pipeline of income-producing assets, covering Western Europe and Central and Eastern Europe ("CEE"), totals
EUR175.0 million. The secured Prime Kapital development pipeline in CEE totals EUR495.0 million and includes major extensions of its
malls in Bulgaria and Poland and the development of sizeable new retail assets in Romania.
MAS' strong balance sheet, as well as its ability to recycle capital from mature assets, positions it well to deliver on its strong
acquisition and development pipelines and drive distribution growth.
Waterfall development portfolio
Overview
Waterfall's location and ease of access creates an attractive value proposition for the continued development of a new city
and logistics hub in the centre of Gauteng. Attacq has 975 468 m(2) (June 2017: 1.0 million m(2)) of remaining developable bulk
in Waterfall. This bulk is ungeared and approximately 600 000 m(2) is already serviced and immediately available for the value
accretive roll out of commercial, residential and industrial developments.
The value of the Waterfall development portfolio, comprising 7.3% (June 2017: 14.1%) of total gross assets, decreased to R2.1 billion
(June 2017: R3.8 billion) as a result of the five completed buildings. The values below include non-current assets held for sale.
31 December 2017 31 December 2016 30 June 2017
R'000 R'000 R'000
Developments under construction 288 011 1 074 092 1 880 605
Development rights 961 511 1 059 724 1 081 968
Infrastructure and services 665 596 1 100 571 737 187
Attacq Sanlam joint venture 142 174 133 762 140 999
Total 2 057 292 3 368 149 3 840 759
Developments under construction
The following properties were under construction as at 31 December 2017. Attacq's attributable share of the total 58 732 m(2) PGLA
is 29 366 m(2).
Land Anticipated PGLA
Property parcel Sector completion date (m(2))* Pre-let %
Waterfall City
River Creek (Deloitte head office)+ 10 Office January 2020 42 500 100
Waterfall Logistics Hub
Cummins South Africa's Regional Office+ 9 Industrial November 2018 16 232 100
Total 58 732 100
* Estimated PGLA for 100.0% of development. Subject to change upon final remeasurement post completion
+ Attacq has a 50.0% co-ownership
The River Creek development is a 50/50 joint venture between Attacq and Atterbury Property Holdings Proprietary Limited
and its subsidiaries ("Atterbury Group"). As transfer is still pending, 50.0% of the carrying value is classified as held for sale.
Once transfer occurs the 31 December 2017 book value of R60.9 million will be converted to cash. Upon completion, Waterfall
City stands to further benefit from a significant densification brought about by the introduction of an estimated 3 500 Deloitte
staff members.
Attacq classified 50.0% of the development rights as well as infrastructure and service costs relating to Cummins South Africa's
Regional Office ("CISARO") as held for sale due to the 50/50 joint venture arrangement between Attacq and Zenprop Property
Holdings Proprietary Limited ("Zenprop"). The 31 December 2017 value of R37.0 million will be converted to cash on transfer to
the co-owner.
Development rights
Development rights relate to the notarially secured contractual rights held by Attacq Waterfall Investment Company Proprietary
Limited ("AWIC"), a 100.0% subsidiary of Attacq, to develop certain Waterfall land parcels.
As at 31 December 2017, Attacq has 975 468 m(2) remaining developable bulk. The heart of the development portfolio is Waterfall
City, zoned for retail, office, hotels and residential developments, amounting to 710 667 m(2). The Logistics Hub is, well positioned
for light industrial tenants, adding 173 710 m(2) to the remaining developable bulk. In addition, Attacq has a further 686 054 m(2) in
the joint venture with Sanlam Properties, a division of Sanlam Life Insurance Limited ("Sanlam Properties"). As at 31 December
2017 the equity accounted value of Attacq's interest in the joint venture was R142.2 million (June 2017: R141.0 million).
A maximum development roll out period of 12 years was incorporated in the development rights valuation process.
Infrastructure and services
The reduced value of infrastructure and services is attributable to an allocation of related service costs incurred on developments
under construction. Whilst this asset currently generates no cash return, it creates a platform for future economic benefits from
top structure developments.
Developments in the pipeline
The Atria – Land Parcel 10
Attacq and Barrow Properties Proprietary Limited ("Barrow Group") have established a 50/50 joint venture to develop The Atria,
a mixed-use precinct adjacent to the Mall of Africa which comprises two office buildings, one residential tower with 125 rental
apartments and a 179 room four star hotel. The hotel development will be sold prior to the commencement of the top structure
construction. The development cost, excluding the hotel, for this 37 280 m(2) PGLA precinct, is estimated at R981.5 million.
The super basement bulk excavations have been completed at a carrying value of R110.2 million and as transfer is pending, 50.0%
of the carrying value is classified as held for sale.
Corporate Campus – Land Parcel 10B
Corporate Campus is a 50/50 joint venture with Zenprop, with an approximate total development cost of R930.0 million. The
development comprises six multi-tenanted office buildings with an estimated total PGLA of 34 068 m(2). Phase I (5 868 m(2) of
PGLA) was completed in December 2017 with more than 94.0% of the building being tenanted. The construction of Phase
II, which consists of two buildings and the communal area, commenced post 31 December 2017. One of the buildings will be
tenanted by Accenture SA Proprietary Limited.
Waterfall Point Office Park ("Waterfall Point") – Land Parcel 15
Waterfall Point is a sectional title office park which is situated opposite Waterfall Corner along the R55. The office park will consist
of four buildings with a total PGLA of 9 584 m(2). Conditional sale agreements have been entered into for all of the sectional title
units. The cost as at 31 December 2017 of R27.7 million assigned to the development is classified as inventory as the office park is
being developed for disposal.
Pirtek and speculative warehouse – Land Parcel 8
Attacq commenced with the development of a warehouse for Pirtek post 31 December 2017. The estimated PGLA for Pirtek is
2 908 m(2) at an estimated cost of R29.4 million. In order to take advantage of economies of scale, a speculative warehouse will
be developed at the same time of 5 213 m(2) PGLA, at an estimated cost of R46.1 million. As the Pirtek warehouse is developed for
disposal, the cost assigned to the development is classified as inventory.
Rest of Africa retail investments
Overview
The value of Attacq's Rest of Africa retail investments is R1.1 billion (June 2017: R1.2 billion), comprising 4.0% (June 2017: 4.5%)
of Attacq's total gross assets. The net reduction over the year was largely as a result of a return of capital by AttAfrica Limited
("AttAfrica") as well as the strengthening of the Rand against the US Dollar.
Attacq's Rest of Africa investments are held via its:
- 25.0% shareholding in Gruppo Investment Nigeria Limited ("Gruppo"), the owner of Ikeja City Mall, located in Lagos, Nigeria;
- 31.8% shareholding in AttAfrica, which is invested in four retail properties in Ghana and one retail property in Zambia; and
- 25.0% interest in Grove Mall of Namibia Proprietary Limited ("The Grove"), owner of The Grove Mall of Namibia.
As at 31 December 2017, the Group's investment into Gruppo totalled R278.9 million (June 2017: R286.5 million). The reduced
investment value is due to the strengthening of the Rand against the US Dollar. Trading conditions in Nigeria remain challenging
despite an increase in the availability of foreign exchange. Consumers continue to be under pressure, even though the overall
economy is recovering on the back of higher oil prices.
Attacq's investment in AttAfrica, through its shareholder loan, amounted to R673.1 million (June 2017: R776.2 million). AttAfrica
repaid an amount of R99.3 million during the period, using funds generated by the external refinancing of Accra Mall. An
impairment of R3.5 million (June 2017: R82.8 million) was recognised against the loan due to poor operational performance in
Ghana and Zambia.
Currently Attacq is not receiving cash distributions from AttAfrica, due to the unfavourable trading conditions as well as a
consequence of the legal structure of Attacq's investment in AttAfrica.
Management's focus continues to be the filling of vacancies and tenant retention in order to optimise net income and asset value.
At 31 December 2017, the retail properties in which Attacq has an interest, together with the vacancy percentages were as follows:
Attacq's
effective
Property Location Owner PGLA (m(2)) Vacancy % interest %
Manda Hill Lusaka, Zambia AttAfrica 40 561 5.8 15.9
Accra Mall Accra, Ghana AttAfrica 21 349 7.2 15.0
West Hills Mall Accra, Ghana AttAfrica 27 560 12.3 14.3
Achimota Retail Centre Accra, Ghana AttAfrica 15 006 8.5 23.9
Kumasi City Mall Kumasi, Ghana AttAfrica 17 948 12.6 23.9
Ikeja City Mall Lagos, Nigeria Gruppo 22 223 3.8 25.0
The Grove Mall of Namibia Windhoek, Namibia The Grove 52 089 0.6 25.0
Financial position
Investment properties
Investment properties increased by 3.0% to R20.3 billion (June 2017: 72.2%) of the total gross assets of the Group. The information
below excludes investment properties disclosed as non-current assets held for sale.
31 December 2017 31 December 2016 30 June 2017
R'000 R'000 R'000
Completed buildings 19 298 489 16 527 802 17 163 784
Developments under construction 235 927 907 803 1 598 966
Development rights 961 511 1 059 720 1 058 236
Infrastructure and services 664 343 1 100 556 710 875
Vacant land 5 000 5 000 5 000
Per valuation 21 165 270 19 600 881 20 536 861
Straight-line lease debtor (842 117) (719 931) (801 496)
Total 20 323 153 18 880 950 19 735 365
Investments in and loans to associates and joint ventures
Investments in and loans to associates reduced from June 2017 (R4.4 billion) to December 2017 (R4.2 billion) and relate mainly to
MAS, AttAfrica, Gruppo and The Grove.
Other financial assets
Other financial assets comprise mainly of loans advanced to Atterbury Group and the 25.0% co-owner in the new PwC Tower
and Annex development. The Atterbury Group loan, with a 31 December 2017 outstanding balance of R111.3 million (June 2017:
R177.2 million), was settled in January 2018. The loan of R328.6 million (June 2017: R243.1 million) provided to the co-owner of the
PwC Tower and Annex carries similar terms and conditions to the debt raised by AWIC in respect of the development and will be
serviced monthly from the property's rental income.
Non-current assets held for sale
31 December 2017 31 December 2016 30 June 2017
R'000 R'000 R'000
Brooklyn Bridge Office Park 550 548 640 000 553 000
Altech Building – 50 017 –
50% of The Atria 55 125 – 50 025
50% of River Creek (Deloitte head office) 60 854 – –
The Grove 185 951 – –
50% of Cummins South Africa's Regional Office 37 003 – –
Stenham European Shopping Centre Fund Limited ("Stenham") 2 714 – 197 677
Rainprop Proprietary Limited 775 – 781
Pemba – 43 481 –
Total 892 970 733 498 801 483
The disposal of the Nova Eventis regional shopping centre in Leipzig, Germany, held by Stenham, was implemented. Attacq
utilised the proceeds to reduce interest-bearing debt. In line with Attacq's strategy to convert to a REIT, and to dispose of
non-core assets, The Grove is in the process of being sold to one of the existing co-owners.
Borrowings
Total interest-bearing borrowings net of cash decreased by 0.5% to R10.2 billion compared with 30 June 2017. Gearing, calculated
as total interest-bearing debt less cash on hand as a percentage of total assets, improved from 37.1% (June 2017) to 36.2%
(December 2017). The improved gearing is as a result of a reduction in debt facilities that took place during the last six months,
and an increase in the gross asset value of assets. Attacq simultaneously amended the majority of its facilities to an interest-only
profile as part of the process to convert to a REIT.
In order to mitigate interest rate risk, as at 31 December 2017, approximately 98.0% (June 2017: 90.8%) of total committed
facilities of R11.5 billion (June 2017: R12.0 billion) were hedged by way of fixed interest rate loans and interest rate swaps. This is
well in excess of the 70.0% minimum interest rate hedging policy set by the Attacq Board. The weighted average cost of funding
decreased over the last 12 months to 8.9% (June 2017: 9.2%).
R545.5 million (June 2017: R2.6 billion) of the Group's interest-bearing debt is due for repayment over the next 12 months,
including R330.6 million relating to non-current assets held for sale. During the past six months, Attacq successfully refinanced
R3.2 billion of debt, through its Attacq Retail Fund Proprietary Limited and Lynnwood Bridge Office Park Proprietary Limited
portfolios. Notwithstanding that half of the debt was due to expire in May 2018, the Group refinanced the entire amount early in
order to extend the tenure of its loan book and take advantage of favourable pricing. Attacq used the refinance opportunity to
introduce three new institutional lenders to the Group.
Financial performance
Profit before taxation has increased from R64.9 million to R414.3 million due to materially lower operating and other expenses as
well as lower finance costs.
Other income
Other income increased by 11.7% to R38.4 million which includes a foreign exchange gain of R18.0 million on the Euro bank
funding, a further R10.0 million profit (June 2017: R22.0 million) on the original disposal of 25.0% of the PwC Tower and Annex to
the co-owners and a R7.3 million reversal of impairment on the Stenham investment.
Operating and other expenses
Operating and other expenses consists of operating expenses of R75.0 million (December 2016: R77.2 million) and other expenses
of R67.5 million (December 2016: R454.3 million). Other expenses mainly consists of foreign exchange losses of R50.8 million
(December 2016: R173.1 million). The decrease is primarily attributable to a number of once off expenses included in the prior
reporting period, namely the Stenham impairment of R138.0 million, the AttAfrica impairment of R89.5 million, a decrease in
foreign exchange losses of R122.3 million and a R22.3 million impairment on the Gruppo investment.
Fair value adjustments
Total fair value adjustments for the period, which include fair value adjustments on investment properties and mark-to-market
movements on the interest rate swaps, reduced by 13.6% to R213.4 million (December 2016: R247.0 million).
Compared with the prior period, fair value adjustments on investment properties decreased by 7.8% to R252.9 million (December
2016: R274.1 million) and are made up as follows:
Six months ended Six months ended 12 months ended
31 December 2017 31 December 2016 30 June 2017
R'000 R'000 R'000
Completed buildings 228 036 165 620 536 936
Developments under construction 49 505 78 147 193 133
Development rights (24 659) 30 363 (65 544)
Total 252 882 274 130 664 525
Fair value adjustments on the South African completed buildings increased by 38.0% from R165.6 million to R228.0 million,
however, the growth was negatively impacted by further impairments on the 2 Eglin, Sunninghill and Newtown Junction
properties. The negative fair value adjustment on Newtown Junction is due to the negative outlook on market and future
rental escalations. The 2 Eglin, Sunninghill property's impairment is due to market rentals in the Sunninghill area coming under
considerable pressure coupled with management's more conservative assumptions around tenanting of the building.
Property valuations for the interim reporting period are Directors' valuations which are in the main, supported by external desktop
valuations performed by Jones Lang LaSalle Proprietary Limited, Sterling Valuation Specialists and Mills Fitchet Magnus Penny &
Wolffs. The Directors have made adjustments for straight-lining and cost to complete.
The Directors' valuation in respect of the Waterfall development rights is based on a residual land valuation model. The inputs to
this model is an external desktop valuation performed on a freehold, fully serviced basis. The desktop valuation is then adjusted
downward by management to take into account, inter alia, the costs required to complete the servicing of the development rights
as well as the obligations pursuant to the leasehold nature of the development rights.
Over the last six months a negative movement of R39.5 million (December 2016: R28.5 million) was recorded on the mark-to-
market valuation of interest rate swaps.
Net income from associates
Net income from associates for the current period includes:
- Income of R41.8 million (December 2016: R2.2 million) from MAS;
- R11.5 million of income (December 2016: Loss of R34 000) from Artisan Development Partners Limited;
- A loss of R6.7 million (December 2016: R0.6 million) from Retail Africa Wingspan Investments Proprietary Limited
("Wingspan"); and
- A loss of R9.4 million (December 2016: R8.6 million) from Gruppo.
Investment income
Investment income for the current period reduced by 22.4% to R82.8 million (December 2016: R106.8 million). Interest income
from international investments, via loan accounts, amounted to R60.7 million (December 2016: R83.1 million).
The MAS dividend received of R74.2 million (December 2016: R54.9 million) as well as the Wingspan dividend of R10.3 million, is
excluded from investment income as these dividends are applied to reduce the carrying value of the investments in associates.
No other dividend income was recorded under investment income.
Finance costs
The decrease in finance costs of 8.0% to R456.1 million (December 2016: R495.5 million) is mainly attributable to a reduction
of debt and a lower JIBAR rate. The interest cover ratio for the six months ended 31 December 2017 improved to 1.6 times
(December 2016: 1.2 times) as a result of both an increase in income and a reduction in the finance cost.
Change in directors
Effective 1 July 2017, Louis van der Watt resigned from the Board of Directors of the Company as a Non-Executive Director.
Morne Wilken resigned from the Board as an Executive Director and Chief Executive Officer ("CEO") with effect from
31 December 2017, in order to take up a position as CEO of MAS. The Board, through its Remuneration Committee, has
commenced the process of identifying and appointing a successor to Morne. As an interim measure the Board appointed
Melt Hamman, the current Chief Financial Officer ("CFO"), as Interim CEO from 31 December 2017 until a new CEO is appointed.
Subsequent events
The Directors are unaware of any matters or circumstances arising subsequent to 31 December 2017 that require any additional
disclosure or adjustment to the interim financial statements.
Prospects
Attacq is focusing on its four key value drivers while making good progress towards converting to a REIT. As Waterfall City and
its surrounds continue to develop, the increasing tenant occupation will in turn contribute to the improvement in the Mall of
Africa's trading densities, further increasing its asset value in the years to come.
The location of Waterfall's Logistic Hub between Johannesburg and Pretoria with its close proximity to major highways and
transport routes, makes it a natural location for distribution centres and other light industrial users. The joint venture with Sanlam
Properties has further increased the land available for industrial developments.
Outside of Waterfall, Attacq will continue to optimise and extract further value from its South African portfolio of high quality
properties, including its portfolio of regional malls.
On an international front, Attacq expects to benefit from increasing distributions from its MAS investment underpinned by MAS'
income-generating investments and its strong acquisition and development pipeline.
In Africa, no further acquisitions or expansions will be pursued.
Attacq is targeting a maiden dividend payment of 73 cents per share, payable in October 2018, for the year ended 30 June 2018.
It is anticipated that Attacq's distributions will grow by 20.0% per annum for the next three financial years commencing 1 July
2018. The guidance is based on assumptions which include forecasted rental income based on contractual terms and anticipated
market-related renewals, the expected roll-out of the current and budgeted development portfolio, MAS achieving its distribution
targets, the required positioning to become a REIT and that no unforeseen circumstances such as major corporate tenant failures
or macro-economic instability materialise. The guidance has not been reviewed or reported on by Attacq's auditors.
Basis of preparation
The condensed unaudited consolidated interim financial statements for the six months ended 31 December 2017 have been
prepared in accordance with International Financial Reporting Standards ("IFRS"), 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 Listings Requirements and the requirements of the Companies Act of
South Africa. These interim results was compiled under the supervision of M Hamman CA(SA), CFO and Interim CEO of Attacq.
The accounting policies applied in the preparation of the condensed unaudited consolidated interim financial statements 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 period. The new
and revised standards had no material impact on the interim financial statements.
The Group's investment properties are valued internally by the Directors at interim reporting periods and externally by
independent valuers for year-end reporting. In terms of IAS 40: Investment Property and IFRS 7: Financial Instruments:
Disclosures, the Group's investment properties are measured at fair value and are categorised as level 3 investments. In terms of
IAS 39: Financial Instruments: Recognition and measurement and IFRS 7, the Group's interest rate derivatives are measured at fair
value through profit or loss and are categorised as level 2 investments. In terms of IAS 39, listed investments are measured at fair
value, being the quoted closing price at the reporting date, and are categorised as level 1 investments. Unlisted investments are
categorised as level 3 investments. There were no transfers between levels 1, 2 and 3 investments during the period. The valuation
methods applied are consistent with those applied in preparing the previous consolidated financial statements.
The condensed interim financial statements have not been audited or reviewed by Attacq's auditors.
On behalf of the Board
P Tredoux M Hamman
Chairman CFO and Interim CEO
27 February 2018
Independent Non-Executive Directors
P Tredoux (Chairman)
MM du Toit
HR El Haimer
KR Moloko
BT Nagle
S Shaw-Taylor
JHP van der Merwe
Executive Director
M Hamman (CFO and Interim CEO, effective date 31 December 2017)
Company Secretary
T Kodde
Attacq Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/000543/06)
JSE share code: ATT ISIN: ZAE000177218
("Attacq" or "the Company" or "the Group")
Registered office
ATT House, 2nd Floor
Maxwell Office Park
37 Magwa Crescent
Waterfall City
2090
Postal address
PostNet suite 016
Private Bag X81
Halfway House
1685
Transfer Secretaries
Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
(PO Box 61051, Marshalltown, 2107)
Sponsor
Java Capital
Company contact details
Head of Marketing
Mandy Shave
Landline number: 087 845 1147
mandy@attacq.co.za
Head of Investor Relations
Brenda Botha
Landline number: 087 845 1112
InvestorRelations@attacq.co.za
ATT House, 2nd Floor, Maxwell Office Park,
37 Magwa Crescent, Waterfall City, 2090
Tel +27 87 845 1136
reception@attacq.co.za
www.attacq.co.za
Date: 27/02/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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