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Unaudited interim results for the three months ended 31 August 2018
EXEMPLAR REITAIL LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2018/022591/06)
JSE share code: EXP
ISIN : ZAE000257549
Approved as a REIT by the JSE
("Exemplar" or "the Company")
UNAUDITED INTERIM RESULTS FOR THE 3 MONTHS ENDED 31 AUGUST 2018
Condensed Consolidated Statement of Financial Position
Unaudited as at
R'000 31 Aug 2018
Non-current assets 5 204 237
Investment Property 4 962 830
Operating Lease Asset 159 434
Property, Plant and Equipment 526
Loans Receivable 81 447
Current assets 110 301
Cash and Cash Equivalents 74 525
Trade and Other Receivables 35 776
TOTAL ASSETS 5 314 538
EQUITY
Total equity 3 295 075
Shareholders' interest 3 171 028
Stated Capital 3 055 290
Retained Earnings 115 738
Non-controlling Interest 124 047
Non-Current Liabilities 1 864 855
Financial Liabilities 1 781 045
Deferred Taxation 83 810
Current Liabilities
Trade and Other Payables 154 608
TOTAL EQUITY AND LIABILITIES 5 314 538
Shares in issue 305 871 896
Net asset value per share (Rand) 10.37
Net tangible asset value per share (Rand) 10.37
Net asset value per share (excluding deferred tax) (Rand) 10.64
Net tangible asset value per share (excluding deferred tax) (Rand) 10.64
Condensed Consolidated Statement of Comprehensive Income
Unaudited for the
3 months ended
R'000 31 Aug 2018
Property portfolio 166 724
Rental income and recoveries 162 448
Straight-line lease income adjustments 4 276
Property operating expenses (59 593)
Net rental and related income 107 131
Other income 2 725
Administrative expenses and corporate costs (6 853)
Profit from operations 103 003
Interest income 2 369
Finance costs (41 018)
Profit before fair value adjustments 64 354
Fair value adjustments 58 584
Profit before taxation 122 938
Taxation -
Total profit for the period 122 938
Total profit attributable to:
Equity holders of Exemplar 115 738
Non-controlling interests 7 200
Total profit for the period 122 938
Reconciliation between earnings and headline earnings
Unaudited for the
3 months ended
Rand 31 Aug 2018
Profit for the year attributable to equity holders of Exemplar 115 738
Change in fair values of investment properties (58 584)
Non-controlling interest in fair value adjustment 4 776
Headline earnings 61 930
Number of shares in issue 305 871 896
Weighted average number of shares in issue 305 871 896
Basic and diluted earnings per share (cents) 37.84
Headline earnings per share (cents) 20.25
Condensed Consolidated Statement of Changes in Equity
Unaudited for the period ended
R'000 31 Aug 2018
Non-
Stated Retained controlling
capital earnings interest Total
Balance at 17 January 2018 - - - -
Issue of shares on listing 3 077 254 - - 3 077 254
Share issue expenses (21 964) - - (21 964)
Non-controlling interest on acquisition of assets - - 116 847 116 847
Profit for the period - 115 738 7 200 122 938
Balance at 31 August 2018 3 055 290 115 738 124 047 3 295 075
Condensed Consolidated Statement of Cash Flows
Unaudited for the
3 months ended
R'000 31 Aug 2018
Cash generated from operations 99 587
Interest income 2 369
Finance costs (41 018)
Cash inflow from operating activities 60 938
Additions to investment property (1 353)
Cash outflow to investing activities (1 353)
Proceeds from the issue of share capital 106 778
Share issue expenses (21 964)
Decrease in financial liabilities (69 874)
Cash inflow to financing activities 14 940
Net increase in cash and cash equivalents 74 525
Cash and cash equivalents at beginning of period -
Cash and cash equivalents at end of period 74 525
COMMENTARY
Introduction
Exemplar was incorporated as a public company on 17 January 2018 and listed on the main board of
the JSE on 12 June 2018 in the "Retail REITs" sector. It holds a portfolio of income generating
properties that were acquired in a sequence of transactions with an effective date of 1 June 2018.
The properties were all developed by the Company's biggest shareholder, McCormick Property
Development (Pty) Ltd ("MPD"). MPD continues to develop its significant pipeline of greenfields
projects which, if disposed of by MPD, will be offered to Exemplar on a right of first refusal basis.
This access to a pipeline of value and yield enhancing properties is a key differentiator for Exemplar
and will contribute to the Company's objective of growing its base of quality assets, earnings and
distributions, thereby improving shareholder value.
Financial results
Notwithstanding its date of incorporation, prior to 1 June 2018 Exemplar was not trading and hence
the interim results reflect the results of its operations for the 3 months ended 31 August 2018. As
this is the first period of trading, no comparative information has been presented.
Exemplar has declared a maiden dividend of 19.10 cents per share for the 3 months ended
31 August 2018.
Property portfolio
Exemplar holds, either directly or indirectly, a portfolio of 20 income generating shopping malls in
peri-urban townships and rural areas of South Africa. The properties are all internally managed. The
properties were internally valued by the directors at the reporting date at R5,1 billion. This valuation
represents an increase of 3.9% relative to the valuation prepared by the independent valuer,
Quadrant Properties (Pty) Ltd, at 1 December 2017, as reflected in the prospectus dated 30 May
2018 ("the prospectus").
Investment Property carrying value reconciliation: R'000
Investment Property 4 962 830
Operating Lease Asset 159 434
Operating Lease Liability (Included in Trade and Other Payables) (21 869)
5 100 396
Acquisitions
As detailed in the prospectus, Exemplar agreed to acquire the ModiMall and Kwagga
Redevelopments from the vendors on their completion. The ModiMall Redevelopment has been
completed to the satisfaction of Exemplar. In accordance with the agreement, 6 314 284 Exemplar
shares will be issued to the vendors on or about 26 November 2018. The Kwagga Redevelopment is
expected to be completed and handed over on or about 1 December 2018.
Vacancies and arrears
As at 31 August 2018 the average vacancy rate across the portfolio was 2.93% of GLA which
compares favourably to the vacancy rate disclosed in the prospectus of 3.1%. All arrears have been
fully provided.
Borrowings and interest rate hedging
Total facilities available to the Company at the reporting date amounted to R1,9 billion of which
R1,781 billion had been utilised at the reporting date. R200 million of the total facilities are
structured as a revolving credit facility against which surplus funds are deposited such that as at the
date of this announcement the revolving credit facility was entirely unutilised. The Company's
average cost of borrowing is 3 month JIBAR plus 1.86%.
Subsequent to the reporting date the Company has entered into the following sequence of collar
and cap transactions to hedge its interest rate exposure:
Cap/Floor rate
Fixed rate payer Floating rate payer (3m JIBAR) Notional
Interest rate cap Exemplar Counterparty 7.25% R1.1bn
Interest rate cap Counterparty Exemplar 8.75% R1.1bn
Interest rate collar Exemplar Counterparty 7.00% R1.1bn
Interest rate cap Exemplar Counterparty 7.25% R600m
Interest rate cap Counterparty Exemplar 8.00% R600m
Interest rate collar Exemplar Counterparty 7.00% R600m
The above arrangements terminate on 4 October 2021.
Segment analysis
Profit from Investment
R'000 Revenue operations property GLA (m2)
Gauteng 69 413 45 642 2 333 750 123 573
Mpumalanga 36 899 25 115 1 158 744 81 079
KwaZulu Natal 25 992 14 244 745 071 59 224
Limpopo 24 441 13 836 684 401 55 058
Eastern Cape 5 703 3 606 178 430 13 597
Exemplar H/O - 560 - -
Total 162 448 103 003 5 100 396 332 531
Reconciliation between earnings and distributable income
Unaudited for
the 3 months
ended
Rand 31 Aug 2018
Profit for the year attributable to equity holders of Exemplar 115 738
Change in fair values of investment properties (58 584)
Non-controlling interest in fair value adjustment 4 776
Straight-line lease income adjustments (4 276)
Non-controlling interest in straight-line lease adjustment 752
Distributable income 58 406
Number of shares in issue 305 871 896
Weighted average number of shares in issue 305 871 896
Distributable income per share (cents) 19.10
Prospects
The board of directors of Exemplar is confident that the Company will deliver the forecast
distribution of at least 61.37 cents per share for the 9 months ending 28 February 2019 as detailed in
the prospectus.
As indicated in the prospectus this view assumes no material deterioration in the macroeconomic
environment relative to current levels, that no major corporate failures will occur and that tenants
will be able to absorb increases in municipal and utility costs. Forecast rental income is based on
contractual lease terms and anticipated market related renewals.
Dividend declaration
Dividend number 1 of 19.10000 cents per share for the 3 months ended 31 August 2018 will be paid
to shareholders in accordance with the timetable set out below:
Last date to trade cum dividend Tuesday, 20 November 2018
Shares trade ex dividend Wednesday, 21 November 2018
Record date Friday, 23 November 2018
Payment date Monday, 26 November 2018
Share certificates may not be dematerialised or rematerialised between Wednesday, 21 November 2018
and Friday, 23 November 2018, both days inclusive. The dividend will be transferred to dematerialised
shareholders' CSDP/broker accounts on Monday, 26 November 2018. Certificated shareholders' dividend payments
will be paid to certificated shareholders' bank accounts on or about Monday, 26 November 2018.
An announcement informing shareholders of the tax treatment of the dividend will be released
separately on SENS.
BASIS OF PREPARATION
These unaudited interim financial results for the period ended 31 August 2018 ("the interim results")
have been prepared in accordance with International Financial Reporting Standards ("IFRS"), IAS34
Interim Financial Reporting, the SAICA Financial Reporting Guidelines as issued by the Accounting
Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting
Standards Council, the Companies Act of South Africa, No 71 of 2008 as amended and the JSE
Listings Requirements. The accounting policies applied are consistent with those disclosed in the
prospectus.
The interim results have been prepared by the Chief Financial Officer, DA Church CA(SA). They are
unaudited and have not been reviewed or reported on by the Company's independent auditors,
Grant Thornton Johannesburg.
The directors are not aware of any matters or circumstances arising subsequent to 31 August 2018
that require additional disclosure or adjustment to the financial statements, other than as disclosed
in this announcement.
By order of the board
Exemplar REITail Limited
2 November 2018
Executive directors Non-executive directors
Jason McCormick (CEO) FM Berkeley (Chairman)
DA Church (CFO) PJ Katzenellenbogen (Lead independent director)
John McCormick (Executive director) GVC Azzopardi
EP Maponya
Company Secretary
A Booysen BA(Hons) LLB
Registered Office
Sokatumi Estate, Cnr Lyttelton Road and Leyden Avenue, Clubview, Centurion, 0157
PO Box 12169, Clubview, 0014
Transfer Secretaries
Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank, Johannesburg, 2196
PO Box 61051, Marshalltown, 2107
Auditor
Grant Thornton Johannesburg
Sponsor
Java Capital
Date: 02/11/2018 02:46:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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