Wrap Text
Preliminary audited summarised consolidated financial statements for the year ended 30 June 2018
Resilient Reit Limited
Incorporated in the Republic of South Africa
Reg no 2002/016851/06
JSE share code RES
ISIN ZAE000209557
Company code BIRPIF
("Resilient" or "the group")
(Approved as a REIT by the JSE)
www.resilient.co.za
Preliminary audited summarised consolidated financial statements
for the year ended 30 June 2018
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 incubated a number of new businesses over the years and remains an
equity investor in these listed businesses.
Distributable earnings
Following the distribution of Resilient's interest in Fortress B shares and
amending the amount included in distributable earnings from the loans to the
Siyakha Trusts, a dividend of 258,98 cents per share for the six months ended
June 2018 has been declared by the Board. Together with the 306,46 cents per
share declared for the interim period, the total dividend for the 2018
financial year amounts to 565,44 cents per share.
Commentary on results
South Africa
Sales growth in Resilient's portfolio for the 2018 financial year was ahead of
expectations and ahead of national retail sales growth. The economy contracted
in the first quarter of 2018, followed by an increase in the VAT rate from 14%
to 15% in April 2018 and a substantial increase in the petrol price from
R13,54 per litre in March 2018 to R15,54 per litre in June 2018.
Despite the IMF raising its growth forecast for South Africa from 0,9% in 2018
and 2019, to 1,5% and 1,7%, respectively, economic conditions remain difficult.
The comparable sales growth per province is set out below (I'langa Mall and
Limpopo Mall, excluding its taxi centre component, were excluded as these were
redeveloped. Mams Mall was excluded as it was only acquired during March 2017
and is currently being redeveloped and substantially expanded):
Comparable Percentage Of
sales SA properties
growth by value
%
Eastern Cape (1,5) 3,6
Limpopo 3,7 25,8
Gauteng 3,8 26,4
Mpumalanga 4,4 9,4
KwaZulu-Natal 5,9 22,1
Northern Cape 7,9 6,7
North West 10,6 6,0
(Details per property will be included in the investor presentation.)
The comparable sales growth for the portfolio was 4,8% and was ahead of the
inflation rate of 4,6% year-on-year.
Eastern Cape: Circus Triangle continues to be negatively affected by competing
developments in its catchment area as well as by a weak economy in Mthatha and
the surrounding region. Limpopo: Mall of the North's performance was negatively
affected by the vacancy created for the Fun Company entertainment complex. The
mall is, however, showing good growth since the opening of the additional
entertainment offering. Although the trading densities achieved at Mvusuludzo
Mall are still pleasing, it experienced negative performance due to the opening
of a competing shopping centre in Thohoyandou during the year. Gauteng:
Resilient has benefitted from its exposure to the emerging middle class.
Jubilee Mall and Soshanguve Mall continued to grow strongly and it may be
appropriate to expand these malls in the future. Irene Village Mall and The
Grove Mall were negatively impacted by competing developments in their
catchment areas. Irene Village Mall was further impacted by improvements in
tenancy being delayed ahead of the planned substantial expansion of the mall.
The Grove Mall will be expanded once the town planning process has been
completed which will increase its dominance in its primary market. Northern
Cape: Both Diamond Pavilion and Village Mall Kathu benefitted from improved
commodity prices, particularly Iron Ore, Vanadium and Manganese. North West:
Mahikeng Mall is benefitting from the transfer of trade from the CBD.
Although not included in the comparable turnovers, I'langa Mall's performance
evidences its increased dominance in the region.
Resilient actively assesses the tenant profile and mix within each of its
centres. On average, expiring leases with tenants that remained in occupation
were renewed at a 4,0% increase on expiring rentals whilst leases concluded
with new tenants were 22,9% higher than the rentals of the outgoing tenants.
Property acquisitions and extensions
The interest in Mahikeng Mall was increased by 13% to 85% at a yield of 8,25%
effective from July 2017.
The expansion to Boardwalk Inkwazi to accommodate increases in Woolworths from
3 347m2 to 5 328m2, Truworths from 1 509m2 to 2 209m2 and Clicks from 858m2 to
953m2 was completed. The expansion of the entertainment offering to include
Fun Company, the relocation of House & Home and the introduction of H&M were
completed in November 2017.
The redevelopment and refurbishment of Limpopo Mall has been completed.
Pick n Pay commenced trading on its reduced footprint in December 2017.
Subsequent to its relocation, Jet commenced trading in April 2018. Truworths
took occupation of the first section of its new premises in May 2018 and its
full offering is scheduled to open in November 2018.
The 18 968m2 expansion of I'langa Mall was completed marginally ahead of
budget in September 2017. Negotiations are in progress to let the remaining
1 059m2 of available space. The improved performance of the mall has created
additional demand and Resilient is now in negotiation with Woolworths to
expand its store by approximately 500m2.
The expansion of Mams Mall in Mamelodi which commenced in November 2017 is on
schedule to open in November 2018. This 75 821m2 mall will be anchored by
Edgars, Game, Pick n Pay and Shoprite and is forecast to yield approximately
8% on Resilient's 50% cost of R655 million. The size of the mall has been
increased to accommodate an extension to the Viva Oil filling station and a
drive-through McDonalds. Resilient has provided funding to the co-owner which
is repayable six months after the mall's opening. Mams Mall's entertainment
offering will include Nu Metro cinemas and a Fun Company entertainment centre.
In addition, there will be a full-offering Planet Fitness gym including a
swimming pool.
Following numerous delays, Resilient expects transfer of the last portion
of land required to facilitate the expansion of the existing 29 464m2 GLA
Irene Village Mall to an 80 000m2 GLA regional mall by December 2018.
Earthworks and the installation of the sewerage and stormwater infrastructure
have been completed and the site development plan has been submitted to
council for approval. The delays in the commencement of development have
resulted in tenant requirements changing and as such requires re-approval by
the Board. Resilient has been approached by a number of prospective partners
to acquire an interest in the development.
The Crossing Mokopane is undergoing a 2 664m2 GLA extension to expand the
Checkers and Woolworths stores and to introduce additional tenants to the
offering. A parking deck is also being constructed.
Vacancies
In a difficult market, Resilient has reduced its vacancies to 1,7% from 1,9%
at June 2017. Truworths in Limpopo Mall, for which terms were agreed in
May 2018,is included as let even though a portion of the space is still being
shopfitted. Vacancies at Arbour Crossing are currently 15,0%, however,the
majority of the vacant space is under negotiation and vacancies are expected
to decline substantially by December 2018.
Edcon
Resilient's exposure to Edcon has been reduced. Resilient agreed to the
relocation of all six Boardmans stores in the portfolio into Edgars. All the
vacated space has either been re-let or is under negotiation with tenants
including @Home, Pick n Pay Clothing, Fashion World and Miniso. Jet continues
to trade well in the portfolio. The Jet Mart concept is currently under review
by Edcon.
Nigeria
Resilient owns 60,94% of Resilient Africa, the initiative for the development
of malls in Nigeria, in partnership with Shoprite Checkers. Resilient Africa
together with local partners own Delta Mall, Asaba Mall and Owerri Mall.
Resilient Africa is currently evaluating the development of a well-located
property in Port Harcourt.
Resilient's net exposure to Nigeria was R705 million at year-end. Results
from the Nigerian property portfolio were disappointing, particularly in view
of the sharp increase in the oil price. Oil is Nigeria's major export and is
a major driver of the Nigerian economy. The IMF is forecasting growth of
2,1% for 2018.
Vacancies are currently 6,3% which is marginally behind projections. Vacancies
are expected to decline as economic conditions improve.
Portugal
Following an offer from Greenbay, Resilient agreed to sell its 50% interest in
Locaviseu, the joint venture owning Forum Coimbra and Forum Viseu. Approval
by Greenbay shareholders for the acquisition was obtained on 2 August 2018
and the investment in Locaviseu was recognised as available for sale at
year-end. The cash consideration of EUR66,4 million was received in August 2018
and was converted to R1,053 billion.
Listed portfolio
Resilient
Jun 2018 Jun 2017
Number of Fair value Number of Fair value
Counter shares R'000 shares R'000
Fortress B (FFB) 5 309 515 79 908 172 930 000 6 000 671
NEPI (NEP) & 29 270 000 4 843 014
NEPI Rockcastle
(NRP)& 75 140 000 9 201 644
9 281 552 10 843 685
Greenbay (GRP)* 2 052 361 996 2 709 119 1 550 975 000 2 993 382
Hammerson (HMN)# - 9 381 225 914 951
Rockcastle (ROC)* & 200 400 000 7 150 272
11 990 671 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 of 2017. The investment in Greenbay was impaired in the 2018
financial statements as its carrying value exceeded its recoverable amount.
#The Hammerson position was sold in the current year.
The Siyakha Trusts
Jun 2018 Jun 2017
Number of Fair value Number of Fair value
Counter shares R'000 shares R'000
Fortress A (FFA) 947 525 14 592 107 939 454 1 852 241
Fortress B (FFB) 135 870 288 2 044 848 121 977 629 4 232 624
2 059 440 6 084 865
Resilient (RES)* 52 182 504 2 935 266 49 204 060 5 990 102
4 994 706 12 074 967
* Shares are held in treasury.
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. As a result of the subsequent
decline in the share prices of the listed shares Resilient is invested in,
the fair value losses on investments recognised during the year are as
follows: Fortress B R3,3 billion; Hammerson R0,1 billion and NEPI Rockcastle
R3,9 billion. Together with the R2,0 billion fair value loss on investments
recorded by the Siyakha Trusts, the total fair value loss relating to
investments amounted to R9,3 billion.
Distribution by Resilient of Fortress B shares
Following feedback from shareholders, Resilient evaluated the various
alternatives to eliminate the cross-shareholding between itself and Fortress
REIT Limited ("Fortress"). In May 2018 Resilient distributed 169 981 569
Fortress B shares as a return of capital to its shareholders in the ratio of
0,4 Fortress B shares for every Resilient share held. The remaining
5,3 million Fortress B shares held by Resilient, as a result of rounding,
will be sold in due course.Full details were released on SENS on 6 April 2018.
Broad-based Black Economic Empowerment ("B-BBEE")
As announced on SENS on 22 May 2018, the Board has revisited the accounting
treatment of The Siyakha Education Trust ("Siyakha"), The Siyakha 1 Education
Trust ("Siyakha 1") and The Siyakha 2 Education Trust ("Siyakha 2")
(collectively referred to as the "Siyakha Trusts") in terms of IFRS 10:
Consolidated Financial Statements. During this process, various parties were
engaged and consulted with and a legal opinion was obtained on the
interpretation of the trust deeds and certain Board decisions taken in the
past in relation to the Siyakha Trusts. The Board has reached the conclusion
that the definition of control as provided in IFRS 10 is met and as such the
decision was taken to consolidate the Siyakha Trusts. Historical financial
statements were therefore restated. The impact of the restatement on the
previously reported June 2017 and June 2016 annual financial statements is
disclosed in note 4.
The restructure, whereby Siyakha will become a dedicated BEE ownership vehicle
for Resilient and Siyakha 2 a dedicated BEE ownership vehicle for Fortress,
as announced on SENS, could not be finalised by year-end. As such all three
trusts were consolidated into Resilient's results at year-end.
Siyakha, which in the past supported the funding and administration of
Learning Labs, computer and science laboratories and a university bursary
scheme, is a B-BBEE ownership vehicle and will be renamed the Resilient
Empowerment Trust. In May 2018, Resilient took over the funding,
administration and operation of the learning labs in Tubatse Crossing and
Jubilee Mall from Siyakha 1, whilst Arbour Town, in which Resilient has a 75%
interest, took over the Learning Lab in Galleria Mall. Resilient will
financially support Siyakha 1 to assist it in honouring its bursary obligations
to its 106 bursars enrolled at universities throughout South Africa.
Previously, Resilient calculated its dividend to be declared by including the
amount of interest it earned on the loans it advanced to the Siyakha Trusts.
This was in the context of the Siyakha Trusts having positive net asset values.
For so long as the Siyakha Trusts’ total liabilities exceed the value of its
total assets Resilient will, for purposes of calculating its distributable
earnings, recognise interest accrued on its loans advanced to the Siyakha
Trusts only to the extent that the accrued interest is matched by dividends
declared for the same period in respect of the shares held by the trust.
Corporate governance
Following feedback from investors and the retirement of Barry Stuhler, three
new independent, non-executive directors (David Brown, Des Gordon and Alan
Olivier) were appointed to the Board. Alan Olivier has been appointed
chairman of the Board and Thembi Chagonda will remain an independent
non-executive director of Resilient.
The Financial Sector Conduct Authority ("FSCA") has made public that it is
undertaking investigations relating to possible insider trading, market
manipulation and false or misleading reporting relating to Resilient or shares
in Resilient. Resilient and its management will co-operate fully with the
FSCA as required with the objective of doing all it can to achieve finality
as soon as possible.
Financial commentary
Property valuations and yield
The Board appointed Jones Lang LaSalle Proprietary Limited ("JLL") to value
the entire property portfolio at June 2018. Resilient's share of the
South African portfolio was revalued upwards by 3,9% (R826,5 million) and its
share of the upwards revaluation of the Portuguese properties was
R68,0 million. Resilient's share of the devaluation of the Nigerian properties
amounted to R58,3 million.
The average annualised property yield was 8,0% at June 2018.
As at June 2018, 39,6% of the Group's total direct and indirect property
assets were offshore assets. The ratio would have been 36,3% if the disposal
of Locaviseu was finalised by year-end.
Staff incentive loans
All executive directors settled their loans to the incentive scheme in full.
The substantial decrease in the value of the shares held as collateral
resulted in an impairment of R72,7 million being recorded on the balance
of the loans outstanding.
Loan-to-value ratio, funding and facilities
The loan-to-value ratio of Resilient was 30,1% at year-end. It would have been
26,9% if the disposal of Locaviseu was adjusted for at year-end. The Board
maintains a conservative balance sheet and is in a position to take advantage
of opportunities that may arise. To date, 1 786 744 Resilient shares were
acquired in the open market at an average price of R53,72 per share and are
held in treasury.
A R500 million facility from RMB that expired in March 2018 was renewed for a
further five years. Resilient has secured R1,45 billion in new bank facilities
with direct property as collateral. The proceeds from the Locaviseu disposal
was partially used to settle a R570 million facility from Absa that expired
in August 2018. Standard Bank has agreed to renew facilities of R692,5 million
that expire in August 2018 for a further three years.
Facility Amount Average
expiry 'million margin
South Africa
Jun 2019 R2 650 3-month Jibar+1,46%
Jun 2020 R4 663 3-month Jibar+1,65%
Jun 2021 R2 700 3-month Jibar+1,91%
Jun 2022 R1 991 3-month Jibar+1,87%
Jun 2023 R1 241 3-month Jibar+1,69%
Jun 2024 R270 3-month Jibar+1,80%
R13 515 3-month Jibar+1,70%
Nigeria
Mar 2024 USD45 90-day US Libor+6,25%
Portugal
Jun 2022 EUR51 Fixed at 2,40%
All facilities represent Resilient's proportionate share.
The funding in Nigeria and Portugal is secured by the respective investment
properties and there is 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:
Interest rate Amount Average
swap expiry R'million swap rate %
Jun 2020 300 6,15
Jun 2021 1 000 7,68
Jun 2022 300 8,08
Jun 2023 100 7,91
Jun 2024 500 7,78
Jun 2025 100 7,78
2 300 7,57
Interest rate Amount Average
cap expiry R'million cap rate %
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 8,67% at
June 2018 and the average hedge term was 4,6 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:
Interest rate Amount Average Amount Average
cap expiry EUR'000 cap rate % USD'000 cap rate %
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 variable South Africa South Africa Portugal Nigeria
interest rates '000 '000 '000 '000
Interest-bearing
borrowings R12 670 563
Currency derivatives (R3 867 700) R3 867 700
Foreign denominated
debt (R1 190 575) R813 506 R377 069
Loans to co-owners (R319 282)
Tenant loans
advanced (R32 695)
Cash and cash
equivalents (R478 550) (R93 138) (R13 882)
Capital commitments
contracted for R512 173
Capital commitments
approved R20 944
R7 314 878 R3 867 700 R720 368 R363 187
Exchange rate 14,71 16,04 13,73
Exposure R7 314 878 EUR262 930 EUR44 911 USD26 452
Interest rate derivatives
- fixed rate funding EUR50 727
- swaps/caps R5 500 000 EUR200 000 USD22 000
Percentage hedged 75,2% (R)* 81,4% (EUR) 83,2% (USD)
* The loans advanced to the Siyakha Trusts carry interest at rates referenced
to prime. As such it was regarded as a natural hedge against interest rate risk.
Historically the amount required to be hedged was reduced by the amount of the
loans advanced. Following the Board’s decision to only recognise dividends to
be received on the shares pledged to Resilient as interest, the loans advanced
to the Siyakha Trusts no longer provide a natural hedge.
Currency derivatives
Balance sheet hedging
The Board's policy is to use cross-currency swaps to mitigate exposure to
foreign currency risk on its investments in Greenbay and NEPI Rockcastle. This
has the effect of obtaining funding in currencies similar to that of the
underlying foreign investments. At June 2018 cross-currency swaps totalled
EUR263 million at an exchange rate of R14,71 against investments of
EUR743 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
Greenbay Rockcastle Nigeria
Forward rate against R EUR EUR USD
Dec 2018 R17,28 R17,47 R13,79
Jun 2019 R18,16 R18,28 R14,37
Dec 2019 R18,22 R18,10 R14,26
Jun 2020 R19,26 R18,85 R15,05
Dec 2020 R19,35 R19,05 R14,23
Jun 2021 R20,62 R20,27 R15,77
Summary of financial performance
Jun Dec Jun Dec
2018 2017 2017 2016
Dividend (cents per
share) 258,98 306,46 297,07 270,22
Shares in issue for
IFRS 371 536 240 371 771 496 352 056 149 352 056 149
Shares held in treasury
- Resilient Properties 1 235 256 - - -
Shares held in treasury
- Siyakha Trusts 52 182 504 53 182 504 49 204 060 49 204 060
Shares in issue and
used for dividend per
share calculation 424 954 000 424 954 000 401 260 209 401 260 209
Management account
information
Net asset value per
share R65,22 R105,35 R89,44 R84,16
Loan-to-value ratio
(%)* 30,1 20,1 24,8 23,8
Net property expense
ratio (%) 16,8 18,5 15,4 16,9
Gross property
expense ratio (%) 35,0 36,1 35,6 36,3
Net total expense
ratio (%) 15,9 15,5 13,7 14,6
Gross total expense
ratio (%) 29,3 28,5 28,1 28,6
IFRS accounting
Net asset value per
share R61,49 R106,75 R81,38 R78,28
* 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 35,8% and for its US
Dollar debt 47,9% at June 2018.
If the dividend per share was adjusted retrospectively to remove the impact
of the distribution of the Fortress B shares to Resilient’s shareholders
and therefore to not account for any dividends received from Fortress
B shares, the revised dividends per share would have been 513,92c and
493,91c for the 2018 and 2017 financial years respectively.
Prospects
Resilient's distribution per share is permanently reduced as a result of it
distributing Fortress B shares to its shareholders in May 2018. In addition,
the amount included in the dividend calculation from the loans advanced to
the Siyakha Trusts referred to above, will impact future distributions.
Despite difficult economic conditions in South Africa, the portfolio is
expected to perform well. Resilient's distributions are forecast to be between
550 and 560 cents per share for the 2019 financial year. The growth is based
on the assumptions that there is no material 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. The forecast also assumes that Greenbay and NEPI
Rockcastle will achieve the growth in their respective distributions
communicated to the market and is expected to continue with strong growth after
the periods for which they have provided guidance, albeit at lower rates
than historical growth given more challenging conditions globally. This
forecast and prospects have not been audited, reviewed or reported on by
Resilient's auditors.
By order of the Board
Des de Beer Nick Hanekom
Managing director Financial director
Johannesburg
17 August 2018
Summarised consolidated statement of financial position
Audited Audited
Audited restated restated
Jun 2018 Jun 2017 Jun 2016
R'000 R'000 R'000
Assets
Non-current assets 38 678 611 47 762 099 42 444 385
Investment property 22 838 483 21 395 097 19 499 061
Straight-lining of rental
revenue adjustment 395 407 353 248 378 036
Investment property under
development 796 582 798 785 955 803
Investment in and loans to
associates and joint venture 2 709 119 7 234 270 3 788 851
Investments 11 340 992 16 928 550 16 986 879
Staff incentive loans 184 657 607 879 466 510
Loans to co-owners 140 124 212 496 168 205
Other financial assets 222 302 231 774 201 040
Other assets 50 945 - -
Current assets 950 960 1 286 298 841 796
Staff incentive loans 5 461 19 970 13 100
Loans to co-owners 182 537 - 178 647
Trade and other receivables 183 349 142 052 106 913
Hammerson equity derivative - 151 760 324 128
Other financial assets 49 958 113 648 125 423
Other assets 19 616 3 102 60 348
Cash and cash equivalents 510 039 855 766 33 237
Non-current asset held for sale 1 063 057 - -
Total assets 40 692 628 49 048 397 43 286 181
Equity and liabilities
Total equity attributable
to equity holders 22 845 898 28 649 382 27 900 209
Stated capital 13 822 359 13 521 054 12 712 894
Treasury shares (4 363 737) (3 881 621) (3 381 621)
Currency translation
reserve 115 481 59 380 193 838
Reserves 13 271 795 18 950 569 18 375 098
Non-controlling interests 52 761 120 311 386 354
Total equity 22 898 659 28 769 693 28 286 563
Total liabilities 17 793 969 20 278 704 14 999 618
Non-current liabilities 14 754 431 18 315 675 13 053 693
Interest-bearing borrowings 13 703 284 16 375 017 10 949 094
Other financial liabilities 40 742 81 644 32 338
Deferred tax 22 917 911 727 918 215
Amounts owing to non-
controlling shareholders 987 488 947 287 1 154 046
Current liabilities 3 039 538 1 963 029 1 945 925
Trade and other payables 390 680 372 357 340 699
Other financial liabilities 374 156 195 918 28 326
Other liabilities 36 780 39 987 20 830
Income tax payable 20 406 - 839
Interest-bearing borrowings 2 217 516 1 354 767 1 555 231
Total equity and liabilities 40 692 628 49 048 397 43 286 181
Summarised consolidated statement of comprehensive income
Audited
Audited restated
for the year for the year
ended ended
Jun 2018 Jun 2017
Income statement R'000 R'000
Recoveries and contractual rental revenue 2 620 104 2 402 628
Straight-lining of rental revenue adjustment 41 683 (23 618)
Revenue from direct property operations 2 661 787 2 379 010
Revenue from investments 1 205 117 754 159
Total revenue 3 866 904 3 133 169
Fair value (loss)/gain on investment
property, investments and derivative
financial instruments (8 652 225) 1 162 364
Fair value gain on investment property 745 274 413 514
Adjustment resulting from straight-
lining of rental revenue (41 683) 23 618
Fair value (loss)/gain on investments (9 266 220) 96 820
Fair value (loss)/gain on currency
derivatives (107 557) 702 007
Fair value gain/(loss) on interest rate
derivatives 17 961 (73 595)
Property operating expenses (931 041) (869 811)
Administrative expenses (153 279) (150 598)
Foreign exchange gains 76 386 132 089
Profit on sale of interest in associates 3 538 393 3 231
Donations received by The Siyakha 1
Education Trust 16 000 -
Impairment of investment in associate (126 419) -
Impairment of staff incentive loans receivable (72 685) -
Impairment of loans receivable (33 876) -
Amortisation of interest rate cap premiums (6 972) -
Income from associates and joint venture (179 466) 356 825
- distributable 237 229 366 768
- non-distributable (416 695) (9 943)
(Loss)/profit before net finance costs (2 658 280) 3 767 269
Net finance costs (1 513 761) (1 432 051)
Finance income 86 652 69 763
Interest received: loans and cash balances 86 652 69 763
Finance costs (1 600 413) (1 501 814)
Interest on borrowings (1 655 891) (1 594 523)
Capitalised interest 55 478 92 709
(Loss)/profit before income tax (4 172 041) 2 335 218
Income tax 866 648 7 327
(Loss)/profit for the year (3 305 393) 2 342 545
Other comprehensive loss net of tax
Items that may subsequently be
reclassified to profit or loss
Exchange differences on translation
of foreign operations (21 215) (367 063)
Total comprehensive (loss)/income
for the year (3 326 608) 1 975 482
(Loss)/profit for the year attributable to:
Equity holders of the Company (3 320 347) 2 509 766
Non-controlling interests 14 954 (167 221)
(3 305 393) 2 342 545
Total comprehensive (loss)/income
for the year attributable to:
Equity holders of the Company (3 346 165) 2 290 395
Non-controlling interests 19 557 (314 913)
(3 326 608) 1 975 482
Basic (loss)/earnings per share (cents) (900,37) 713,80
Resilient has no dilutionary instruments in issue.
Summarised consolidated statement of cash flows
Audited
Audited restated
for the year for the year
ended ended
Jun 2018 Jun 2017
R'000 R'000
Operating activities
Cash generated from operations 2 689 320 2 238 299
Interest paid (1 659 285) (1 594 523)
Dividends paid (2 296 325) (1 893 217)
Income tax paid (1 756) -
Cash outflow from operating activities (1 268 046) (1 249 441)
Investing activities
Development and improvement of investment property (714 840) (1 417 681)
Acquisition of investment property - (273 000)
Increase of interest in associates (942 859) (1 266 074)
Loans to joint venture advanced (21 714) (301 585)
Acquisition of interest in joint venture (22 806) (566 215)
Proceeds on disposal of investment in associate - 37 254
Share purchase trust loans advanced (100 459) -
Share purchase trust loans repaid 450 286 159 921
Co-owner loans (advanced)/repaid (110 165) 134 356
Tenant loans advanced (33 245) (16 236)
Acquisition of investments (370 547) (440 421)
Proceeds on disposal of investments 2 489 911 565 444
Cash flow on Hammerson equity derivative 21 647 334 270
Interest received 101 871 69 763
Cash flow on currency derivatives 187 345 851 624
Cash flow on interest rate derivatives (134 361) (9 037)
Cash inflow/(outflow) from investing activities 800 064 (2 137 617)
Financing activities
(Decrease)/increase in interest-bearing borrowings (2 305 590) 4 225 459
Acquisition of additional interest in subsidiaries (34 356) (15 872)
Proceeds on disposal of treasury shares 69 671 -
Acquisition of treasury shares (341 176) -
Raising of stated capital 2 733 706 -
Cash inflow from financing activities 122 255 4 209 587
(Decrease)/increase in cash and cash equivalents (345 727) 822 529
Cash and cash equivalents at the
beginning of the year 855 766 33 237
Cash and cash equivalents at the end of
the year 510 039 855 766
Cash and cash equivalents consist of:
Current accounts 510 039 855 766
Cash flow from investing activities includes the following items available for
distribution: net interest received on interest rate derivatives and
cross-currency swaps of R296 million, interest received on loans and cash
balance of R101 million and realised profits on forward exchange contracts
of R129 million. Scrip dividends received amounted to R360 million.
The impact of the Siyakha Trusts was R673 million which will be neutral
on cash flow once the restructuring has been effected.
Summarised consolidated statement of changes in equity
Currency
Stated Treasury translation
capital shares reserve Reserves
Audited R'000 R'000 R'000 R'000
Balance at Jun 2016 12 712 894 - 193 838 17 552 044
Adjustment for the
retrospective
consolidation of
the Siyakha Trusts (3 381 621) 823 054
Restated balance
at Jun 2016 12 712 894 (3 381 621) 193 838 18 375 098
Issue of shares 808 160
Resilient shares held
by the Siyakha Trusts (500 000)
Equity contributed
by non-controlling
shareholders
Acquisition of
additional interest
in subsidiaries (2 659)
Exchange differences
on translation of
foreign operations (219 371)
Profit/(loss) for the
year (restated) 2 509 766
Dividends paid
(restated) (1 846 723)
Transfer to currency
translation reserve 84 913 (84 913)
Restated balance at
Jun 2017 13 521 054 (3 881 621) 59 380 18 950 569
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
Resilient shares held
by the Siyakha Trusts (414 132) (39 297)
Shares acquired and
held in treasury (67 984)
Distribution of
Fortress B shares as
a return of capital (2 682 309)
Equity contributed
by non-controlling
shareholders
Acquisition of
additional interest
in subsidiaries (8)
Exchange differences
realised on disposal
of associate 6 346
Exchange differences
on translation of
foreign operations (25 818)
(Loss)/profit for the
year (3 320 347)
Dividends paid (2 243 549)
Transfer to currency
translation reserve 75 573 (75 573)
Balance at Jun 2018 13 822 359 (4 363 737) 115 48 13 271 795
Equity
attributable Non-
to equity controlling Total
holders interests equity
Audited R'000 R'000 R'000
Balance at Jun 2016 30 458 776 386 354 30 845 130
Adjustment for the retrospective
consolidation of the Siyakha Trusts (2 558 567) (2 558 567)
Restated balance at Jun 2016 27 900 209 386 354 28 286 563
Issue of shares 808 160 808 160
Resilient shares held by the
Siyakha Trusts (500 000) (500 000)
Equity contributed by non-controlling
shareholders 108 577 108 577
Acquisition of additional interest
in subsidiaries (2 659) (13 213) (15 872)
Exchange differences on translation
of foreign operations (219 371) (147 692) (367 063)
Profit/(loss) for the year
(restated) 2 509 766 (167 221) 2 342 545
Dividends paid (restated) (1 846 723) (46 494) (1 893 217)
Transfer to currency translation
reserve - -
Restated balance at Jun 2017 28 649 382 120 311 28 769 693
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
Resilient shares held by the
Siyakha Trusts (453 429) (453 429)
Shares acquired and held in
treasury (67 984) (67 984)
Distribution of Fortress B
shares as a return of capital (2 682 309) (2 682 309)
Equity contributed by non-controlling
shareholders 17 17
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 (25 818) 4 603 (21 215)
(Loss)/profit for the year (3 320 347) 14 954 (3 305 393)
Dividends paid (2 243 549) (52 776) (2 296 325)
Transfer to currency translation
reserve - -
Balance at Jun 2018 22 845 898 52 761 22 898 659
Notes
1. Preparation, accounting policies and audit opinion
The preliminary audited summarised consolidated financial statements have been
prepared in accordance with the requirements of the JSE Listings Requirements
for preliminary reports and the requirements of the Companies Act of South
Africa applicable to summary financial statements.
The JSE Listings Requirements require preliminary reports to be prepared in
accordance with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards ("IFRS"), the
SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by the Financial Reporting
Standards Council, and to also, as a minimum, contain the information required
by IAS 34: Interim Financial Reporting. This report complies with the SA REIT
Association Best Practice Recommendations. This report and the consolidated
annual financial statements were compiled under the supervision of Nick
Hanekom CA(SA), the financial director.
The accounting policies applied in the preparation of the consolidated
financial statements, from which the summarised consolidated financial
statements were derived, are in terms of IFRS and are consistent with the
accounting policies applied in the preparation of the previous consolidated
financial statements, with the exception of the adoption of new and revised
standards which became effective during the year.
The consolidated annual financial statements have been restated in terms
of IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors.
Refer to note 4 for the disclosure on these restatements.
The Group's investment properties were externally valued by an independent
valuer. In terms of IAS 40: Investment Property and IFRS 7: Financial
Instruments: Disclosures, 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 7,30% and 9,30% (Jun 2017: 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 R710,3 million (Jun 2017: R693,9 million). A 25 basis points
decrease in the capitalisation rate will increase the value of investment
property by R756,0 million (Jun 2017: R739,6 million). A 1% increase in
vacancy for a full year will decrease the value of investment property by
R292,5 million. A change in the assumption on maintenance cost will not have
a significant impact on the fair value of investment property.
In terms of IAS 39: Financial Instruments: Recognition and Measurement and
IFRS 7, the Group's currency and interest rate derivatives as well as the
Hammerson equity derivate are measured at fair value through profit or loss
and are categorised as level 2 investments. In terms of IAS 39, investments
are measured at fair value being the quoted closing price at the reporting
date and are categorised as level 1 investments.
There were no transfers between levels 1, 2 and 3 during the year. The
valuation methods applied are consistent with those applied in preparing the
previous consolidated financial statements.
Other than the disposal of Locaviseu for which the cash consideration was
received in August 2018, the directors are not aware of any other events
subsequent to June 2018, not arising in the normal course of business, that
require any additional disclosure or adjustment to the financial statements.
The auditor, Deloitte & Touche, has issued an unmodified audit opinion on the
consolidated financial statements for the year ended June 2018. The audit was
conducted in accordance with International Standards on Auditing.
These preliminary audited summarised consolidated financial statements have
been derived from the consolidated financial statements and are consistent,
in all material respects, with the consolidated financial statements.
This preliminary summarised report has been audited by Deloitte & Touche and
an unmodified audit opinion has been issued. Copies of its audit reports and
the consolidated financial statements are available for inspection at
Resilient's registered address.
The auditor's report does not necessarily report on all of the information
contained in this announcement. Shareholders are therefore advised that in
order to obtain a full understanding of the nature of the auditor's engagement,
they should obtain a copy of that report together with the accompanying
financial information from Resilient's registered address.
2. Lease expiry profile
Based on
Based on contractual
rentable rental
area revenue
Lease expiry: South Africa (unaudited) % %
Vacant 1,7
Jun 2019 15,6 17,5
Jun 2020 14,0 15,8
Jun 2021 18,0 19,1
Jun 2022 12,1 14,2
Jun 2023 14,2 16,3
> Jun 2023 24,4 17,1
100,0 100,0
3. Segmental analysis
Audited Audited restated
for the year for the year
ended Jun 2018 ended June 2017
Total Total Total Total
assets liabilities assets liabilities
R'000 R'000 R'000 R'000
Retail: South
Africa 22 889 442 279 275 21 285 029 254 299
Retail: Nigeria 1 320 299 25 320 1 312 804 30 486
Retail: Portugal 1 063 057 - 867 800 -
Corporate: South
Africa 15 397 480 16 384 819 25 531 694 18 930 201
Corporate:
Nigeria 22 350 1 104 555 51 070 1 063 718
40 692 628 17 793 969 49 048 397 20 278 704
Audited
Audited restated
for the year for the year
ended ended
Jun 2018 Jun 2017
R'000 R'000
Total revenue
Revenue from direct property operations
Retail: South Africa 2 529 296 2 271 907
Retail: Nigeria 132 491 107 103
Revenue from investments
Corporate: South Africa 1 205 117 754 159
3 866 904 3 133 169
(Loss)/profit for the year
Retail: South Africa 2 476 050 2 415 534
Retail: Nigeria (41 788) (469 203)
Retail: Portugal 116 727 6 097
Corporate: South Africa (5 745 435) 386 496
Corporate: Nigeria (110 947) 3 621
(3 305 393) 2 342 545
Audited
Audited restated
for the year for the year
ended ended
Reconciliation of (loss)/profit Jun 2018 Jun 2017
for the year to dividend declared R'000 R'000
(Loss)/profit for the year (3 305 393) 2 342 545
Fair value gain on investment property (745 274) (413 514)
Fair value loss/(gain) on investments 9 266 220 (96 820)
Fair value loss/(gain) on currency derivatives 107 557 (702 007)
Realised gain: forward exchange contracts 129 129 68 276
Cross-currency swaps: interest received 314 008 248 852
Fair value (gain)/loss on interest rate derivatives (17 961) 73 595
Interest rate derivatives: interest received 5 816 12 188
Interest rate derivatives: interest paid (23 681) (21 225)
Foreign exchange gains (76 386) (132 089)
Profit on sale of interest in associates (3 538 393) (3 231)
Impairment of investment in associate 126 419 -
Impairment of loans receivable 33 876 -
Non-distributable loss from associates 416 695 9 943
Income tax (866 648) (7 327)
Non-controlling interests (31 366) (19 175)
Antecedent dividend 22 381 13 836
Income hedging adjustment of Nigeria and
Portugal performance 5 391 -
Termination of interest rate derivatives (14 354) -
Dividends accrued (95 285) 144 000
Amount available for distribution under best practice 1 712 751 1 517 847
Effect of consolidating the Siyakha Trusts* 493 323 479 332
- relating to Resilient 256 030 282 890
- relating to Fortress 237 294 196 442
Adjustment for revised distributable
earnings relating to the Siyakha Trusts (104 538) -
Reverse interest received on the loans to
the Siyakha Trusts during the second half of the year (211 680) -
Dividends relating to the second half of the
year to be received by the Siyakha Trusts on
shares pledged to Resilient 141 795 -
Interest on borrowings to effect Siyakha
restructuring (34 653) -
Dividend declared (2 101 536) (1 997 179)
Dividend declared – interim (1 139 331) (951 326)
- total share register (1 302 314) (1 084 285)
- shares held in treasury: the Siyakha Trusts 162 983 132 959
Dividend declared – final (962 205) (1 045 853)
- total share register (1 100 546) (1 192 024)
- shares held in treasury: Resilient Properties 3 199 -
- shares held in treasury: the Siyakha Trusts 135 142 146 171
- -
* This is the amount by which the expenses of the Siyakha Trusts
exceeded the dividends it received during the year.
Audited
Audited restated
for the year for the year
ended ended
Jun 2018 Jun 2017
R'000 R'000
Reconciliation of (loss)/profit for
the year to headline earnings
Basic (loss)/earnings - (loss)/profit for
the year attributable to equity holders (3 320 347) 2 509 766
Adjusted for: (4 241 984) (440 363)
- fair value gain on investment property (703 591) (437 132)
- profit on sale of interest in associate (3 538 393) (3 231)
- income tax effect - -
Headline (loss)/earnings (7 562 331) 2 069 403
Headline (loss)/earnings per share (cents) (2 050,66) 588,56
Basic earnings per share and headline earnings per share are based on the
weighted average of 368 775 538 (Jun 2017: 351 604 313) shares in issue
during the year.
Resilient has no dilutionary instruments in issue.
4. Restatement of financial statements
Trade and other receivables and trade and other payables
In the current financial year Resilient has reclassified balances previously
included in trade and other receivables and trade and other payables. The
intention was to separately disclose derivative balances and loans advanced
in a category called other financial assets/liabilities and also to separate
items that do not meet the definition of a financial instrument into a category
called other assets/liabilities in order to enhance disclosure. Furthermore,
the derivative balances were disclosed as non-current and current where
applicable in order to correct a prior period error. The line items impacted
by this reclassification are as follows:
Audited Audited
Jun 2017 Jun 2016
R'000 R'000
Other financial assets (non-current) 231 774 201 040
Trade and other receivables (348 524) (386 811)
Other financial assets (current) 113 648 125 423
Other assets 3 102 60 348
Total assets - -
Other financial liabilities (non-current) 42 815 11 424
Trade and other payables (278 720) (60 580)
Other financial liabilities (current) 195 918 28 326
Other liabilities 39 987 20 830
Total liabilities - -
Consolidation of the Siyakha Trusts
As mentioned in the directors' commentary, in terms of IAS 8, the comparative
amounts together with the opening balances of assets, liabilities and equity
for the 2017 financial year have been restated for the consolidation of the
Siyakha Trusts.
IAS 1 requires that when an entity makes a retrospective restatement of items
in its financial statements and such restatement has a material effect on the
information in the statement of financial position at the beginning of the
preceding period, it shall present, as a minimum, three statements of financial
position. The Group therefore presents statements of financial position at:
- the end of the current year;
- the end of the preceding year; and
- the beginning of the preceding year (presented as June 2016).
The error has been corrected by restating each of the affected financial
statement line items for the prior periods, as follows:
Audited Audited
Jun 2017 Jun 2016
Impact on equity (increase/(decrease) in equity) R'000 R'000
Investments 6 084 865 4 942 920
Loans to BEE ownership vehicle (3 577 228) (2 750 986)
Trade and other receivables 3 -
Cash and cash equivalents (57) (11 889)
Total assets 2 507 583 2 180 045
Interest-bearing borrowings (5 929 984) (4 713 100)
Other financial liabilities: fair value of
interest rate derivatives (38 829) (20 914)
Trade and other payables (1 222) (4 598)
Total liabilities (5 970 035) (4 738 612)
Net impact on equity (3 462 452) (2 558 567)
Equity previously reported 32 111 834 30 458 776
Restated equity 28 649 382 27 900 209
Shares in issue previously reported 401 260 209 393 970 580
Shares held in treasury (49 204 060) (44 574 431)
Shares in issue after restatement 352 056 149 349 396 149
Net asset value per share previously reported R80,03 R77,31
Net asset value per share after restatement R81,38 R79,85
Impact on net asset value per share R1,35 R2,54
Audited
for the
year ended
Impact on statement of profit or loss (increase/(decrease) Jun 2017
in profit) R'000
Revenue from investments 281 782
Fair value gain on investments 125 302
Administrative expenses (34 437)
Interest received: loans and cash balances (385 624)
Interest on borrowings (608 670)
Fair value loss on interest rate derivatives (29 428)
Net impact on profit for the year (651 075)
Attributable to:
Equity holders of the parent (651 075)
Non-controlling interests -
(651 075)
Audited
for the
year ended
Impact on basic earnings per share ("EPS") (increase/(decrease) Jun 2017
in EPS) R'000
Profit for the year attributable to equity holders of the parent
- previously reported 3 160 841
- restated 2 509 766
Weighted average shares in issue during the year
- previously reported 398 690 160
- restated 351 604 313
Basic earnings per share (cents)
- previously reported 792,81
- restated 713,80
Impact on basic earnings per share (cents) (79,00)
There are no dilutionary instruments in issue.
Audited
for the
year ended
Impact on statement of cash flows (increase/(decrease) Jun 2017
in cash flows) R'000
Cash generated from operations 243 966
Interest received* (385 624)
Interest paid (620 183)
Dividends paid 247 190
Cash flows from operating activities (514 651)
Loans advanced to BEE ownership vehicles 826 242
Acquisition of investments (116 399)
Proceeds on disposal of investments 99 383
Cash flows from investing activities 809 226
Increase in interest-bearing borrowings 216 884
Raising of stated capital (499 627)
Cash flows from financing activities (282 743)
Movement in cash and cash equivalents 11 832
Cash and cash equivalents at the beginning of the year (11 889)
Cash and cash equivalents at the end of the year (57)
* Interest received has subsequently been reclassified to investing activities,
refer to the note below.
Presentation of the statement of comprehensive income
The line item "Income from investments", as previously reported, has been
renamed "Revenue from investments". The consolidated statement of comprehensive
income has been re-ordered in order to reflect total revenue which includes
revenue from direct property operations and revenue from investments.
Reclassification of derivatives in the statement of comprehensive income
During the current year, the presentation of interest rate and currency
derivatives in the statement of comprehensive income was reassessed in order
to ensure compliance with IFRS. The Group does not apply hedge accounting and
as such the following reclassifications as a result of a prior period error
were made:
Interest received/paid on interest rate derivatives, together with the fair
value adjustment on interest rate derivatives was removed from net finance
costs and is now disclosed in the income statement as a fair value gain/(loss)
on interest rate derivatives.
Similarly, the interest received/paid on currency derivatives was removed
from net finance costs and is now included in the fair value (loss)/gain on
currency derivatives in the income statement.
The cash flow on the expiry of forward exchange contracts, previously included
in revenue from investments, has also been reclassified to fair value (loss)/
gain on currency derivatives.
Audited
for the
year ended
Impact on statement of profit or loss (increase/(decrease) Jun 2017
in profit) R'000
Revenue from investments (68 276)
Fair value (loss)/gain on currency derivatives 317 128
Fair value gain/(loss) on interest rate derivatives (44 167)
Finance income (248 852)
Finance costs 44 167
Net impact on profit for the year -
Restatement of items disclosed in the statement of cash flows (prior period
error)
In 2017 loans of R308,533 million were advanced to employees in terms of the
Resilient Share Purchase Trust. This was disclosed in the cash flow statement
for the year ended June 2017 on a gross basis as share purchase trust loans
advanced and a cash inflow from the raising of stated capital. This represents
a prior period error as the advance of the loans to employees did not result
in a movement in cash and cash equivalents. The cash flow statement for the
year ended June 2017 has therefore been restated in terms of IAS 8 in order
to remove this non-cash item.
Interest received on loans of R69,763 million is not revenue in nature and
is ancillary to Resilient's business. As such, since cash flows from operating
activities are primarily derived from the principal revenue-producing
activities of the entity, the cash related to interest received has been
reclassified from operating activities to investing activities.
Tenant loans advanced was previously included in trade and other receivables
and has been reclassified to other financial assets. This resulted in an
increase of R16,236 million in cash generated from operating activities and
a decrease in investing activities.
The classification of derivatives in the statement of cash flows was revisited
in the current year. As contracts are not held for dealing or trading purposes,
the cash flows were reclassified as investing activities. The following
reclassifications were made:
- Interest received/paid on cross-currency swaps previously classified as
cash flows from operating activities has been reclassified to cash flow on
currency derivatives in cash flow from investing activities; and
- Interest received/paid on interest rate derivatives previously classified
as cash flows from operating activities has been reclassified to cash flow
on interest rate derivatives in cash flows from investing activities.
Audited
for the
year ended
Impact on statement of cash flows (increase/(decrease) Jun 2017
in cash flows) R'000
Cash generated from operations (68 276)
Interest received* (248 852)
Interest paid 9 037
Cash flows from operating activities (308 091)
Cash flow on currency derivatives 317 128
Cash flow on interest rate derivatives (9 037)
Cash flows from investing activities 308 091
* Interest received has subsequently been reclassified to investing activities.
Management accounts
Basis of preparation
In order to provide information of relevance to investors these management
accounts, which comprise financial information extracted from the audited
annual financial statements for the year ended June 2018, have been prepared
and are presented below to provide users with the position:
- Had the Siyakha Trusts not been consolidated as required by IFRS;
- 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 at its carrying value using the equity method in terms of
IFRS 5, 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, Galleria Mall 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.
Directors' responsibility statement
The preparation of the management accounts is the sole responsibility of the
directors and have been prepared on the basis stated, for illustrative purposes
only, to show the impact on the summarised consolidated statement of financial
position and the summarised consolidated statement of comprehensive income.
Due to their nature the management accounts may not fairly present the
financial position and results of the Group in terms of IFRS.
Reporting accountant's opinion
The pro forma financial information has been reviewed by Deloitte & Touche and
its unmodified assurance report is available for inspection at Resilient's
registered address.
Management account adjustments
Adjustment 1
In order to enhance disclosure, the fair value loss on currency derivatives,
the fair value gain on interest rate derivatives as well as other financial
assets/liabilities have been expanded to present the components thereof.
Adjustment 2
Resilient has no entitlement to or share in the assets of the Siyakha Trusts.
Furthermore, the external debt of the Siyakha Trusts is ring-fenced to the
Siyakha Trusts and as such the Board does not believe that this debt should
impact the loan-to-value ratio of Resilient. It is for these reasons that the
Siyakha Trusts are deconsolidated in the preparation of the management
accounts. The management accounts provide a true reflection of the assets
under management of Resilient.
Adjustment 3
The investment in Greenbay is reflected at its fair value by multiplying the
2 052 361 996 shares held by the quoted closing price at 29 June 2018. All
entries recorded to account for this investment using the equity method are
reversed. This more accurately reflects the Group's assets and liabilities.
In addition, the profit on sale of interest in associate (Rockcastle) is
disclosed as a fair value gain on investments.
Adjustment 4
This adjustment proportionately consolidates the indirect investments in
Forum Coimbra and Forum Viseu that are held through Locaviseu, accounted for
as a non- current asset held for sale in terms of IFRS 5. 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 year ended June 2018 on a line-by-line basis. Resilient is
satisfied with the quality of the financial information contained in the
management accounts of Locaviseu.
Adjustment 5
This adjustment proportionately consolidates the indirect investments in
partially-owned subsidiaries (Resilient Africa and the indirect investments
in Arbour Crossing, Galleria Mall and Mahikeng Mall) previously consolidated.
It uses the audited financials for the year ended June 2018 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.
Summarised consolidated statement of financial position
Adjustment 3
Fair value
Adjustment 2 accounting
Adjustment 1 Deconsolidation for
Component of the investment
IFRS disclosure Siyakha Trusts in Greenbay
Jun 2018 Jun 2018 Jun 2018 Jun 2018
R'000 R'000 R'000 R'000
Assets
Non-current assets 38 678 611 - 988 320 -
Investment property 22 838 483
Straight-lining of
rental revenue
adjustment 395 407
Investment property
under development 796 582
Investment in and loans
to associates and
joint venture 2 709 119 (2 709 119)
Investments 11 340 992 (2 059 440) 2 709 119
Goodwill -
Staff incentive loans 184 657
Loans to BEE ownership
vehicle - 3 047 760
Loans to co-owners 140 124
Other financial assets 222 302 (222 302)
Fair value of interest
rate derivatives 172 748
Fair value of currency
derivatives 28 500
Loans advanced 21 054
Other assets 50 945
Current assets 950 960 - (3 266) -
Staff incentive loans 5 461
Loans to co-owners 182 537
Trade and other
receivables 183 349 (116)
Other financial assets 49 958 (49 958)
Fair value of currency
derivatives 38 317
Loans advanced 11 641
Other assets 19 616
Cash and cash
equivalents 510 039 (3 150)
Non-current asset held
for sale 1 063 057
Total assets 40 692 628 - 985 054 -
Adjustment 4 Adjustment 5
Proportionate Proportionate
consolidation of consolidation
investment in of partially-
Portuguese owned Management
joint venture subsidiaries accounts
Jun 2018 Jun 2018 Jun 2018
R'000 R'000 R'000
Assets
Non-current assets 2 066 801 (1 297 718) 40 436 014
Investment property 1 883 530 (1 365 705) 23 356 308
Straight-lining of rental revenue
adjustment (18 317) 377 090
Investment property under development (4 709) 791 873
Investment in and loans to associates
and joint venture -
Investments 11 990 671
Goodwill 183 271 183 271
Staff incentive loans 184 657
Loans to BEE ownership vehicle 3 047 760
Loans to co-owners 91 013 231 137
Other financial assets -
Fair value of interest rate derivatives 172 748
Fair value of currency derivatives 28 500
Loans advanced 21 054
Other assets 50 945
Current assets 113 664 (20 659) 1 040 699
Staff incentive loans 5 461
Loans to co-owners 182 537
Trade and other receivables 20 526 (6 202) 197 557
Other financial assets -
Fair value of currency derivatives 38 317
Loans advanced 11 641
Other assets 19 616
Cash and cash equivalents 93 138 (14 457) 585 570
Non-current asset held for sale (1 063 057) -
Total assets 1 117 408 (1 318 377) 41 476 713
Adjustment 3
Fair value
Adjustment 2 accounting
Adjustment 1 Deconsolidation for
Component of the investment
IFRS disclosure Siyakha Trusts in Greenbay
Jun 2018 Jun 2018 Jun 2018 Jun 2018
R'000 R'000 R'000 R'000
Equity and liabilities
Total equity attributable
to equity holders 22 845 898 - 4 790 316 -
Stated capital 13 822 359
Treasury shares (4 363 737) 4 295 753
Currency translation
reserve 115 481
Reserves 13 271 795 494 563
Non-controlling
interests 52 761
Total equity 22 898 659 - 4 790 316 -
Total liabilities 17 793 969 - (3 805 262) -
Non-current
liabilities 14 754 431 - (3 805 122) -
Interest-bearing
borrowings 13 703 284 (3 805 122) -
Other financial
liabilities 40 742 (40 742)
Fair value of interest
rate derivatives 11 175
Fair value of currency
derivatives 29 567
Deferred tax 22 917
Amounts owing to
non-controlling
shareholders 987 488
Current liabilities 3 039 538 - (140) -
Trade and other
payables 390 680 (140)
Other financial
liabilities 374 156 (374 156)
Fair value of
currency derivatives 374 156
Other liabilities 36 780
Income tax payable 20 406
Interest-bearing
borrowings 2 217 516
Total equity and
liabilities 40 692 628 - 985 054 -
Adjustment 4 Adjustment 5
Proportionate Proportionate
consolidation of consolidation
investment in of partially-
Portuguese owned Management
joint venture subsidiaries accounts
Jun 2018 Jun 2018 Jun 2018
R'000 R'000 R'000
Equity and liabilities
Total equity attributable to equity
holders - - 27 636 214
Stated capital 13 822 359
Treasury shares (67 984)
Currency translation reserve 115 481
Reserves 13 766 358
Non-controlling interests (52 761) -
Total equity - (52 761) 27 636 214
Total liabilities 1 117 408 (1 265 616) 13 840 499
Non-current liabilities 1 061 992 (1 246 096) 10 765 205
Interest-bearing borrowings 813 506 (258 621) 10 453 047
Other financial liabilities -
Fair value of interest rate derivatives 11 175
Fair value of currency derivatives 29 567
Deferred tax 248 486 13 271 416
Amounts owing to non-controlling
shareholders (987 488) -
Current liabilities 55 416 (19 520) 3 075 294
Trade and other payables 55 416 (13 101) 432 855
Other financial liabilities -
Fair value of currency derivatives 374 156
Other liabilities (6 042) 30 738
Income tax payable (377) 20 029
Interest-bearing borrowings 2 217 516
Total equity and liabilities 1 117 408 (1 318 377) 41 476 713
Summarised consolidated statement of comprehensive income
Adjustment 3
Fair value
Adjustment 2 accounting
Adjustment 1 Deconsolidation for
Component of the investment
IFRS disclosure Siyakha Trusts in Greenbay
for the for the for the for the
year ended year ended year ended year ended
Jun 2018 Jun 2018 Jun 2018 Jun 2018
Income statement R'000 R'000 R'000 R'000
Recoveries and
contractual
rental revenue 2 620 104
Straight-lining of
rental revenue
adjustment 41 683
Revenue from direct
property operations 2 661 787 - - -
Revenue from
investments 1 205 117 (317 499) 167 097
Realised gain: forward
exchange contracts 129 129
Total revenue 3 866 904 129 129 (317 499) 167 097
Fair value loss on
investment property,
investments and
derivative financial
instruments (8 652 225) (425 272) 2 041 326 2 291 868
Fair value gain on
investment property 745 274
Adjustment resulting
from straight-lining
of rental
revenue (41 683)
Fair value loss on
investments (9 266 220) 2 045 300 2 291 868
Fair value loss on
currency derivatives (107 557) 107 557
Unrealised fair value
loss (294 902)
Realised loss: cross-
currency swaps (255 792)
Fair value gain on
interest rate
derivatives 17 961 (17 961)
Unrealised fair value
gain 85 035 (38 829)
Realised fair value loss (49 209) 34 855
Property operating
expenses (931 041)
Administrative
expenses (153 279) 13 568
Foreign exchange gains 76 386
Profit on sale of
interest in associate 3 538 393 (3 538 393)
Donations received by
The Siyakha 1 Education
Trust 16 000 (16 000)
Impairment of investment
in associate (126 419) 126 419
Impairment of staff
incentive loans
receivable (72 685)
Impairment of loans
receivable (33 876) (1 642 745)
Amortisation of interest
rate cap premiums (6 972)
Income from associates
and joint venture (179 466) - - 296 193
- distributable 237 229 (167 097)
- non-distributable (416 695) 463 290
Loss before net finance
costs (2 658 280) (296 143) 78 650 (656 816)
Net finance costs (1 513 761) 296 143 1 111 379 -
Finance income 86 652 319 824 431 358 -
Interest received on
loans and
cash balances 86 652 431 358
Interest received on
interest rate derivatives 5 816
Interest received on cross-
currency swaps 314 008
Finance costs (1 600 413) (23 681) 680 021 -
Interest on
borrowings (1 655 891) 666 883
Interest paid on
interest
rate derivatives (23 681) 13 138
Capitalised interest 55 478
Loss before income
tax (4 172 041) - 1 190 029 (656 816)
Income tax 866 648
Loss for the year (3 305 393) - 1 190 029 (656 816)
Loss for the year
attributable to:
Equity holders of
the Company (3 320 347) 1 190 029 (656 816)
Non-controlling
interests 14 954
(3 305 393) - 1 190 029 (656 816)
Adjustment 4 Adjustment 5
Proportionate Proportionate
consolidation of consolidation
investment in of partially-
Portuguese owned Management
joint venture subsidiaries accounts
for the for the for the
year ended year ended year ended
Jun 2018 Jun 2018 Jun 2018
Income statement R'000 R'000 R'000
Recoveries and contractual
rental revenue 149 038 (152 111) 2 617 031
Straight-lining of rental revenue
adjustment (3 464) 38 219
Revenue from direct property
operations 149 038 (155 575) 2 655 250
Revenue from investments 1 054 715
Realised gain: forward exchange
contracts 129 129
Total revenue 149 038 (155 575) 3 839 094
Fair value loss on investment property,
investments and derivative financial
instruments 68 039 26 389 (4 649 875)
Fair value gain on investment property 68 039 22 925 836 238
Adjustment resulting from straight-
lining of rental revenue 3 464 (38 219)
Fair value loss on investments (4 929 052)
Fair value loss on currency derivatives -
Unrealised fair value loss (294 902)
Realised loss: cross-currency swaps (255 792)
Fair value gain on interest rate
derivatives -
Unrealised fair value gain 46 206
Realised fair value loss (14 354)
Property operating expenses (43 537) 59 088 (915 490)
Administrative expenses (2 860) 9 245 (133 326)
Foreign exchange gains (6 543) 69 843
Profit on sale of interest in associate -
Donations received by The Siyakha 1
Education Trust -
Impairment of investment in associate -
Impairment of staff incentive loans
receivable (72 685)
Impairment of loans receivable (1 676 621)
Amortisation of interest rate cap
premiums (6 972)
Income from associates and joint
venture (116 727) - -
- distributable (70 132) -
- non-distributable (46 595) -
Loss before net finance costs 53 953 (67 396) (3 546 032)
Net finance costs (23 523) 52 413 (77 349)
Finance income - 50 995 888 829
Interest received on loans and cash
balances 50 995 569 005
Interest received on interest rate
derivatives 5 816
Interest received on cross-currency
swaps 314 008
Finance costs (23 523) 1 418 (966 178)
Interest on borrowings (23 523) 1 418 (1 011 113)
Interest paid on interest rate
derivatives (10 543)
Capitalised interest 55 478
Loss before income tax 30 430 (14 983) (3 623 381)
Income tax (30 430) 29 836 247
Loss for the year - (14 954) (2 787 134)
Loss for the year attributable to:
Equity holders of the Company (2 787 134)
Non-controlling interests (14 954) -
- (14 954) (2 787 134)
Dividend calculation
Management accounts
for the year ended
Jun 2018
R'000
Recoveries and contractual rental revenue 2 617 031
Revenue from investments 1 054 715
Realised gain: forward exchange contracts 129 129
Termination of interest rate derivatives (14 354)
Property operating expenses (915 490)
Administrative expenses (133 326)
Impairment of staff incentive loans receivable (72 685)
Amortisation of interest rate cap premiums (6 972)
Interest received on loans and cash balances (inclusive of interest
on loans to the Siyakha Trusts at contractual rates) 569 005
Reverse interest received on the loans to the Siyakha Trusts during
the second half of the year (211 680)
Interest received on interest rate derivatives 5 816
Cross-currency swaps interest received 314 008
Interest on borrowings (1 011 113)
Interest on borrowings to effect Siyakha restructuring (34 653)
Interest paid on interest rate derivatives (10 543)
Capitalised interest 55 478
Income tax (8 987)
Dividends accrued (95 285)
Antecedent dividend 22 381
Income hedging adjustment of Nigeria and Portugal performance 5 391
Dividends relating to the second half of the year to be received
by the Siyakha Trusts on shares pledged to Resilient 141 795
Dividend on shares held by Resilient Properties in treasury 3 199
Distributable earnings 2 402 860
Interim dividend (1 302 314)
Final dividend (1 100 546)
-
Payment of final dividend
The Board has approved and notice is hereby given of a final dividend of
258,98000 cents per share for the six months ended 30 June 2018.
The dividend is payable to Resilient shareholders in accordance with the
timetable set out below:
Last date to trade cum dividend Tuesday, 4 September 2018
Shares trade ex dividend Wednesday, 5 September 2018
Record date Friday, 7 September 2018
Payment date Monday, 10 September 2018
Share certificates may not be dematerialised or rematerialised between
Wednesday, 5 September 2018 and Friday, 7 September 2018, both days inclusive.
In respect of dematerialised shareholders, the dividend will be transferred to
the CSDP accounts/broker accounts on Monday, 10 September 2018. Certificated
shareholders' dividend payments will be deposited on or about Monday,
10 September 2018.
An announcement informing shareholders of the tax treatment of the dividend
will be released separately on SENS.
Directors
Alan Olivier (chairman); David Brown; Thembi Chagonda; Des de Beer*;
Andries de Lange*; Des Gordon; Nick Hanekom*; Bryan Hopkins; Johann Kriek*;
Dawn Marole; Protas Phili; Umsha Reddy; Barry van Wyk
(*executive director)
Changes to the board of directors
Barry Stuhler resigned from the Board on 28 June 2018. David Brown,
Des Gordon and Alan Olivier were appointed to the Board on 10 August 2018.
Alan Olivier was appointed as chairman on 17 August 2018.
Company secretary
Monica Muller CA(SA)
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: 17/08/2018 05:36:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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