Condensed preliminary consolidated financial statements for the year ended 2016
MAS REAL ESTATE INC
Registered in British Virgin Islands
Registration number 1750199
Registered as an external company in the Republic of South Africa
Registration number 2010/000338/10
ISIN: VGG5884M1041
SEDOL (XLUX): B96VLJ5
SEDOL (JSE): B96TSD2
JSE share code: MSP
("MAS" or "the company")
Condensed preliminary consolidated financial statements for the year ended 2016
Report of the directors
Highlights
Increase in annual distribution per share of 34%
Increase in rental income of 63%
Updated strategy to include CEE expansion
Secured key joint venture partnership with Prime Kapital
Completed Whitbread hotels and associated retail units
Entered SAPY index
Successfully raised ZAR 1,2 billion equity
Overview
Substantial progress has been made on many fronts in the organisation during the reporting period. Of particular
significance is the updated strategy of the group, which focuses on delivering a high quality and growing income
distribution per share.
The portfolio is coming of age, with substantial developments delivered on time and on budget, and available equity
being deployed into income-generating acquisitions. The release of equity from the financial investment portfolio has
added to the capital required to continue to grow the portfolio.
The quality of the income-generating portfolio, with nearly 80% of passing rent representing A-grade tenants and a
WALT of 12,3 years, ensures the sustainability of earnings and access to long-term funding on attractive terms. The
current low portfolio LTV of 12,4%, and target portfolio LTV of 40%-50%, positions the group to enter a long period of high
earnings per share growth, benefiting from accretive acquisitions and developments.
We aim to achieve our strategy by acquiring carefully selected assets and delivering on development plans, funded
through an optimal mix of increased gearing, recycling of assets and opportune but limited capital raises. As successful
developments generally have a temporary dampening effect on per share distributions, compensated by a substantially
higher contribution to distribution growth in the long-run, we plan to use our reserves to offset this effect to deliver a
smoother distribution growth path to investors.
Distributions
The directors are pleased to propose a final distribution of 2,23 euro cents per share, bringing the distribution for the
year to 4,50 euro cents per share. This represents an increase of 34% on the previous year. Details of the distribution
will follow in due course.
Geographical focus and partnership with Prime Kapital
Asset prices in western Europe have increased in recent years and acquisition opportunities that offer an attractive
return on equity are harder to find. Our focus in western Europe is therefore now on opportunities that can deliver
substantial value through active asset management, development and re-development.
Although assets in central and eastern European ("CEE") markets have also increased in price, attractive opportunities
are still available that are backed by a combination of relatively high initial acquisition yields, substantial growth
prospects and attractive debt terms. Even more appealing is the development market, which is supported by rapidly
expanding purchasing power and, in some cases, sub-optimally designed or undersized existing assets which are ripe
for re-development or displacement.
Accordingly, we have embarked upon expansion into the growing economies of CEE. To facilitate the expansion, we
have partnered with Prime Kapital, a management team with exceptional development, investment and financing
experience in these markets. MAS has invested EUR20 million in return for a 40% equity stake in a development joint
venture, and aims to invest a further EUR200 million in 7,5% preference shares. Good progress has already been made,
with land having been acquired and further pipeline under exclusivity.
Asset class focus
MAS' strategy is to generate sustainable and growing distributable income per share by acquiring, developing and
operating retail, office, industrial and hotel assets. Where exceptional opportunities arise, the group will embark on
mixed-use or residential developments with a view to either generating recurring income, such as leasing the assets to
universities as student campuses, or disposing of the residential component for capital gains once the land is zoned.
Inclusion in the SAPY index of the JSE
The inclusion of MAS in the SAPY index is evidence of the continued growth of the portfolio. This inclusion has
significantly improved the volume and liquidity of the trading in its shares, increasing the pool of potential investors.
Income-generating property
Income-generating property has grown by EUR78,2 million to EUR242,6 million, with the acquisition of the Lehrte property in
late 2015; the completion of the 2 Whitbread hotels and associated retail from phase 1 at New Waverley in February
2016; and the acquisition of the Edeka portfolio 1 at the end of the current financial year. The New Waverley hotels are
trading particularly well, with exceptionally high occupancy levels, as are the retail tenants, which is a positive indicator
for the future lettings and operational success of the next phases of the development.
Portfolio value(1)
Euro 2015 2016 2016 Adjusted(2)
Income-generating property 164.4 242.6 336.57
Development property 44.3 24.9 7
Land bank 39.8 44.1 40.6
(1) Figures extracted from the management accounts, which account for the Prime Kapital investment on a
proportionate consolidation basis.
(2) Adjusted includes the following: Munich property, acquired in August 2016; Edeka portfolio 2, acquired
in August 2016; and the Adagio hotel and associated retail, that is part of Phase 1 at New Waverley and completes
at the end of this calendar year.
The 2016 adjusted portfolio value computation constitutes pro forma financial information in terms of the JSE Listings
Requirements and has been prepared on the assumptions detailed above in footnotes (1) and (2). KPMG Inc., has provided
a reasonable assurance report on the above information which is available for inspection at the registered
offices of the company.
After year-end we completed the acquisition of the Munich property and the Edeka portfolio 2. The Munich property is
let to Volkswagen, and has the potential to be an exciting redevelopment play in the years to come, but for now we will
benefit from strong income from an excellent covenant. The Edeka portfolio 2, which comprises 20 supermarkets in
north east Germany, also provides strong income returns.
Passing rent will be further enhanced by the completion of the Adagio hotel at New Waverley towards the end of this
calendar year. The evolution of secured passing rent, including the pipeline above, is as follows:
Evolution of rent roll - income-generating property
Euro
Rent received 30 June 2016 14 203 699
Annual passing rent 30 June 2016 17 341 798
Plus:
Munich 885 692
Edeka portfolio 2 3 849 000
Adagio (excl retail) 1 491 770
Annual passing rent - secured portfolio 23 568 260
The adjusted passing rent computation constitutes pro forma financial information in terms of the JSE Listings Requirements.
The adjusted passing rent has been derived by including the Munich property rental, Edeka portfolio 2 rental and the
Adagio rental. KPMG Inc., has provided a reasonable assurance report on the above information which is available for
inspection at the registered offices of the company.
In addition to the above, further accretive income-generating assets are expected to be acquired in the coming months,
which will continue to increase the passing rent meaningfully.
Development portfolio
The development portfolio currently comprises: New Waverley Phase 1 (Adagio and associated retail); New Waverley
Phase 2; and the budget hotel component of Langley Park.
Phase 1 of the New Waverley project has progressed particularly well, and is set to deliver the Adagio hotel and
associated retail at the end of this calendar year. Phase 2 is in the final stages of design preparation, in which a number
of attractive occupier and building combinations for the scheme are being considered.
The development portfolio is expected to increase substantially in the coming months as the CEE developments come
on stream.
Land bank
The land bank currently consists of residential elements of the developments at New Waverley, North Street Quarter
and Langley Park. Planning permission is in place at both New Waverley and North Street Quarter, and has been
applied for at Langley Park. The group continues to assess its options in respect of these projects in line with our asset
class focused approached.
Financial investments
Financial investments have been an important category for MAS over the last few years, and one from which the group has
benefitted substantially. The Karoo Fund investment has returned a net gain of EUR28,4 million to the group, and the Sirius
investment a further unrealised EUR9,3 million gain to the year end, in addition to EUR1,7 million received in the form of Sirius
dividends. However, the Karoo Fund redeemed in January, whereby we received a final cash distribution, and an in-specie
distribution of Sirius shares, and we successfully placed 60 million Sirius shares in the market shortly after year-end. The
proceeds of this are being allocated to further accretive income generating and development opportunities.
Debt
Loan to value levels have been very low in recent years, as the group has embarked upon initially investing the cash on
the balance sheet. Now that the equity has been spent, the gearing programme is in full swing, which should see the
loan to value levels approach 35-40% by the end of the next financial year. Subsequent to year end, EUR54,6 million has
been drawn down or firmly committed, and the group has negotiated extensive further facilities that will be drawn
down in the coming months.
Equity
MAS raised EUR38 million in a successful placement of shares in April of this year, and a further EUR32 million in July, shortly
after the year-end. The rationale for these capital raises was to allow MAS to acquire further earnings accretive
pipeline assets that are now under exclusivity.
Financial review
In order to assist the readers of these financial statements to better understand the underlying income-generating
capability of the business, management accounts have been included together with these results. These management
accounts proportionately consolidate investees in which the group exhibits significant influence. As a result, particular
line items in the distribution income statement and summarised statement of financial position will differ from those
reported under IFRS. In addition, the management accounts classify items of income and expense as direct and indirect
investment result. The direct result represents the underlying distributable earnings generated by the portfolio.
The UK's Brexit vote occurred on 23 June, just being a week before year-end. Consequently, the sterling collapsed against the
euro, resulting in foreign exchange losses being incurred by the group. The key driver of these exchange differences
is the depreciation in euro terms of the investment property held in sterling. As the group takes a basket-of-currencies
approach and does not hedge between sterling, Swiss franc and the base currency, euro, such exchange differences do
not relate to the underlying operations of the business and are therefore excluded from the computation of
distributable earnings. However, underlying gearing in local currencies mitigates the effects of currency movements on
the capital base. As the euro-denominated capital exposure continues to grow as a percentage of the overall portfolio,
we would expect the exposure of currency movements to reduce further.
MANAGEMENT ACCOUNTS
Purpose and basis of preparation
In order to provide information of relevance to investors and a meaningful basis of comparison for users of the financial
information, unaudited management accounts have been prepared and presented below, in conjunction with condensed preliminary
consolidated financial statements set out below. The directors consider that the management accounts better reflects performance
of the group. In terms of section 8.15 of the JSE Listings Requirements, the management accounts constitutes pro forma financial
information and the company is therefore required to comply with the requirements of sections 8.16 to 8.34 of the Listings
Requirements on Pro forma Financial Information, revised and issued in September 2014.
The management accounts diverge from IFRS as they account for associates using the proportionate consolidation method,
as opposed to the equity accounting method embodied in the condensed preliminary consolidated financial statements
in accordance with IFRS.
Director's responsibility
The preparation of the management accounts is the sole responsibility of the directors and has been prepared in accordance with
the basis stated above, for illustrative purposes only, to show the impact on the distribution income statement and the summarised
statement of financial position. Due to their nature, the management accounts may not fairly present the results of the group and
the financial position. KPMG Inc. has provided a reasonable assurance report on the management accounts which is available for
inspection at the head office of the company.
Distribution income statement
Year ended Year ended
Euro 30 June 2016 30 June 2015
Rental income 14 203 699 8 733 519
Net service charges and property operating expenses (1 989 426) (2 815 813)
Service charge income and other recoveries 2 047 322 589 637
Service charges and other property operating expenses (4 036 748) (3 405 450)
Net rental income 12 214 273 5 917 706
Other income 1 717 829 -
Corporate expenses (3 203 472) (1 767 154)
Net operating income 10 728 630 4 150 552
Net finance costs (355 990) (576 698)
Finance income 433 132 4 676
Finance costs (817 928) (581 374)
Interest capitalised on development property 28 806 -
Current taxation (684 749) (371 447)
Direct investment result 9 687 891 3 202 407
Indirect investment result
Fair value adjustments 6 431 719 27 877 364
Investment expenses (2 202 144) (537 417)
Other income 637 552 -
Currency differences (12 913 210) 17 660 295
Deferred taxation (143 776) 272 259
Indirect investment result (8 189 859) 45 272 501
IFRS net profit (direct plus indirect result) 1 498 032 48 474 908
Earnings per share (euro cents) 15 0,49 16,87
Diluted earnings per share (euro cents) 15 0,49 16,87
The group uses distribution per share as its relevant unit of measure for trading statement purposes.
Summarised statement of financial position
As at As at
Euro 30 June 2016 30 June 2015
Investment property 311 613 772 248 538 806
Income-generating property 242 625 172 164 390 518
Development property 23 532 709 44 335 117
Land bank 45 455 891 39 813 171
Financial investments 51 614 068 82 173 737
Goodwill 25 262 818 29 351 139
Deferred taxation asset 721 292 737 015
Trade and other receivables 11 313 808 4 527 803
Other assets 241 083 15 136
Cash and cash equivalents 66 946 902 45 111 775
Total assets 467 713 743 410 455 411
Shareholders' equity 400 844 952 353 140 598
Interest bearing borrowings 44 578 595 15 747 889
Financial instruments 12 543 033 35 627 918
Deferred taxation liability 1 242 741 1 143 646
Trade and other payables 8 405 586 4 795 360
Other liabilities 98 836 -
Total liabilities 66 868 791 57 314 813
Total shareholders' equity and liabilities 467 713 743 410 455 411
Actual number of ordinary shares in issue 348 625 219 291 787 889
NAV per share (euro cents) 115,0 121,0
Adjusted NAV per share (euro cents)* 115,1 121,2
* Net asset value per share as adjusted for deferred tax
BASIS OF DISTRIBUTION
Year ended Year ended
Euro 30 June 2016 30 June 2015
Direct investment result 9 687 891 3 202 407
Other specific adjustments 1 698 750 * (81 932)
Adjustment relating to shares issued during period 1 568 915 49 096
Distributable earnings 12 955 556 3 169 571
Distribution from reserves 2 750 000 6 618 272
Total distribution 15 705 556 9 787 843
Closing number of shares 348 625 219 291 787 889
Final distribution (euro cents per share) 2,23 2,20
Interim distribution (euro cents per share) 2,27 1,15
Total distribution (euro cents per share) 4,50 3,35
* In order to align with industry peers, the board of directors has refined the methodology for computing
distributable earnings, upon which the level of distribution is based. In the prior year the difference between the
core income methodology used and the updated direct investment result methodology amounts to EUR81 932. This has
been included in other specific adjustments to reconcile the distributable earnings to core income in the previous year.
Outlook
The 2016 results have resulted in a substantially increased distribution per share for the year. Importantly, the group is
now in the final stages of completing its initial portfolio construction, and shareholders will start to benefit from the
effects of an efficiently invested, and optimally geared, portfolio. The board is confident that the group is well
positioned for strong distribution per share growth in the reporting periods to follow. Whilst remaining vigilant
towards movements in our investment markets, we are excited at the prospect of our expansion strategy, and the
performance that this will generate in the years to come.
Assurance
These condensed preliminary consolidated financial statements for the year ended 30 June 2016 have been reviewed by KPMG
Audit LLC who expressed an unmodified review conclusion. The auditor's report does not necessarily report on all of the
information contained in this announcement. The pro forma financial information contained within these condensed preliminary
consolidated financial statements for the year ended 30 June 2016 has been reviewed by KPMG Inc.
Shareholders are advised that in order to obtain a full understanding of the nature of the auditor's engagement and the reporting
accountant's review engagement regarding pro forma financial information they should obtain a copy of the auditor's review report
and the reasonable assurance report from the company's head office together with the financial statements identified in the
auditor's report.
Reporting currency
The company's results are reported in euros.
Listings
MAS is listed the Main Board of the Johannesburg Stock Exchange and on the Euro MTF Market of the Luxembourg
Stock Exchange.
Directors and changes thereto
Ron Spencer (non-executive chairman)
Lukas Nakos (chief executive officer)
Malcolm Levy (chief financial officer)
Jonathan Knight (chief investment officer)
Gideon Oosthuizen (non-executive)
Pierre Goosen (non-executive) – Dewald Joubert (alternate non-executive director to Pierre Goosen) resigned on 10 March 2016
Morne Wilken (non-executive)
Jaco Jansen (non-executive)
By order of the board
Lukas Nakos
Chief Executive Officer
Douglas, Isle of Man
8 September 2016
DEFINITIONS AND ABBREVIATIONS
Adjusted NAV NAV less deferred taxation assets plus deferred taxation liabilities
Attacq Attacq Limited
BVI British Virgin Islands
CEE Central and Eastern Europe
CGU Cash Generating Unit
company MAS Real Estate Inc.
Corona Corona Real Estate Partners Limited
EBITDA Earnings Before Interest, Taxation, Depreciation and Amortisation
EMI EMI Group Limited, an external party to MAS
FVTPL Fair Value Through Profit or Loss
group the company and its subsidiaries
group entities Subsidiaries of the company
IASB International Accounting Standards Board
IFRS International Financial Reporting Standards
JSE Johannesburg Stock Exchange
Karoo Fund Karoo Investment Fund S.C.A. SICAF-SIF
LuxSE Luxembourg Stock Exchange
MAS the company and its subsidiaries
MAS Prop MAS Property Advisors Limited
NAV Net Asset Value
NW Advisers New Waverley Advisers Limited
NW Holdings New Waverley Holdings Limited
PKM PKM Development Limited
Sauchiehall Sauchiehall Street Properties 1 Limited
Sirius Sirius Real Estate Limited
SPA Sale and Purchase Agreement
WALT Weighted Average Lease Term
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Year ended Year ended
30 June 2016 30 June 2015
Euro Note Restated*
Rental income 14 203 699 8 733 519
Service charge income and other recoveries 2 047 322 589 637
Revenue 16 251 021 9 323 156
Service charges and other property operating expenses (4 036 748) (3 405 450)
Net rental income 12 214 273 5 917 706
Other income 2 355 381 -
Corporate expenses (3 188 770) (1 767 154)
Investment expenses (2 159 964) (537 417)
Net operating income 9 220 920 3 613 135
Fair value adjustments 3 6 431 719 27 877 364
Exchange differences 4 (12 913 210) 17 660 295
Share of loss from equity accounted investees, net of tax 9 (31 908) -
Profit before finance income/(costs) 2 707 521 49 150 794
Finance income 392 801 4 676
Finance costs (773 765) (581 374)
Profit before taxation 2 326 557 48 574 096
Taxation 5 (828 525) (99 188)
Profit for the year 1 498 032 48 474 908
Earnings per share (euro cents) 15 0,49 16,87
Diluted earnings per share (euro cents) 15 0,49 16,87
* Restated as a result of reclassifications, with no impact on profit or loss, see note 16.
The notes form part of these condensed preliminary consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Year ended Year ended
Euro 30 June 2016 30 June 2015
Profit for the year 1 498 032 48 474 908
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Foreign operations – foreign currency translation differences,
net of tax (12 387 307) 6 575 768
Total comprehensive (loss)/income for the year (10 889 275) 55 050 676
The notes form part of these condensed preliminary consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at As at
30 June 2016 30 June 2015 30 June 2014
Euro Note Restated*
Non-current assets
Goodwill 6 25 262 818 29 351 139 1 371 537
Investment property 7 306 996 079 248 538 806 64 751 842
Financial investments 8 - 12 346 864 35 743 617
Investment in equity accounted investees 9 19 991 716 - -
Property, plant and equipment 241 083 15 136 -
Deferred taxation asset 721 292 737 015 52 886
Total non-current assets 353 212 988 290 988 960 101 919 882
Current assets
Financial investments 8 51 614 068 69 826 873 -
Trade and other receivables 11 264 083 4 527 803 2 270 221
Cash and cash equivalents 47 997 978 45 111 775 205 800 188
Assets held for sale 3 515 237 - -
Total current assets 114 391 366 119 466 451 208 070 409
Total assets 467 604 354 410 455 411 309 990 291
Equity
Share capital 10 378 530 556 305 671 992 289 978 080
Retained earnings/(loss) 27 503 007 40 269 910 (1 276 580)
Foreign currency translation reserve (5 188 611) 7 198 696 622 928
Shareholders' equity 400 844 952 353 140 598 289 324 428
Non-current liabilities
Interest bearing borrowings 11 43 227 831 14 779 769 14 340 752
Financial instruments 12 5 396 943 6 545 482 2 104 606
Deferred taxation liability 1 242 741 1 143 646 926 285
Total non-current liabilities 49 867 515 22 468 897 17 371 643
Current liabilities
Interest bearing borrowings 11 1 350 764 968 120 1 757 425
Financial instruments 12 7 146 090 29 082 436 -
Trade and other payables 8 296 197 4 795 360 1 536 795
Provisions 98 836 - -
Total current liabilities 16 891 887 34 845 916 3 294 220
Total liabilities 66 759 402 57 314 813 20 665 863
Total shareholders' equity and liabilities 467 604 354 410 455 411 309 990 291
Actual number of ordinary shares in issue 10 348 625 219 291 787 889 279 483 999
NAV per share (euro cents) 115,0 121,0 103,5
Adjusted NAV per share (euro cents) 115,1 121,2 103,8
* Restated as a result of reclassifications, with no impact on NAV, see note 16.
The notes form part of these condensed preliminary consolidated financial statements.
These condensed preliminary consolidated financial statements were approved by the board of directors, and signed on
8 September 2016 on their behalf by:
Ron Spencer Malcolm Levy
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
currency
Retained translation
Euro Note Share capital Earnings/(loss) reserve Total
Balance at 30 June 2014 289 978 080 (1 276 580) 622 928 289 324 428
Comprehensive income for the year
Profit for the year - 48 474 908 - 48 474 908
Other comprehensive income - - 6 575 768 6 575 768
Total comprehensive income for the year - 48 474 908 6 575 768 55 050 676
Transactions with the owners of the group
Issue of shares 10 15 693 912 - - 15 693 912
Distributions 10 - (6 928 418) - (6 928 418)
Total transactions with the owners of the 15 693 912 (6 928 418) - 8 765 494
group
Balance at 30 June 2015 305 671 992 40 269 910 7 198 696 353 140 598
Comprehensive income for the year
Profit for the year - 1 498 032 - 1 498 032
Other comprehensive loss - - (12 387 307) (12 387 307)
Total comprehensive (loss) for the year - 1 498 032 (12 387 307) (10 889 275)
Transactions with the owners of the group
Issue of shares 10 72 858 564 - - 72 858 564
Distributions 10 - (14 264 935) - (14 264 935)
Total transactions with the owners of the 72 858 564 (14 264 935) - 58 593 629
group
Balance at 30 June 2016 378 530 556 27 503 007 (5 188 611) 400 844 952
The notes form part of these condensed preliminary consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended
Year ended 30 June 2015
Euro Note 30 June 2016 Restated*
Profit for the year 1 498 032 48 474 908
Adjustments for:
Depreciation 35 535 18 884
Provisions 98 836 -
Fair value adjustments 3 (6 431 719) (27 877 364)
Exchange differences 12 913 210 (17 660 295)
Finance income (392 801) (4 676)
Finance costs 773 765 581 374
Share of loss from equity accounted investees 9 31 908 -
Taxation expense 5 828 525 99 188
Changes in:
Trade and other receivables (6 736 280) (2 257 582)
Trade and other payables 3 500 837 3 258 565
Cash generated from operating activities 6 119 848 4 633 002
Taxation paid (310 994) (371 447)
Net cash from operating activities 5 808 854 4 261 555
Investing activities
Acquisition of investment property 7 (37 439 245) (131 572 515)
Capitalised acquisition costs on investment property 7 (4 578 229) (8 681 404)
Capitalised expenditure on investment property 7 (38 016 628) (22 378 542)
Settlement of investment property acquisition retentions 12 (255 755) -
Acquisition of subsidiary net of cash acquired - (12 500 000)
Acquisition of financial investments 8 - (40 178 432)
Acquisition of equity accounted investee 9 (20 023 624) -
Acquisition of property, plant and equipment (263 591) -
Issue of short term loans receivable 14 (18 920 000) -
Proceeds from the sale of financial investments 8 40 376 739 51 910 765
Proceeds from the sale of investment property 7 1 814 850 -
Proceeds from the repayment of short term loans receivable 19 918 247 -
Interest paid on cash and equivalents (3 522) -
Interest received 392 801 4 676
Cash used in investing activities (56 997 957) (163 395 452)
Financing activities
Proceeds from the issue of share capital 10 37 676 095 -
Proceeds from interest bearing borrowings 11 30 550 000 -
Transaction costs related to interest bearing borrowings 11 (412 345) -
Repayment of interest bearing borrowings 11 - (969 927)
Payment of amortisation on interest bearing borrowings 11 (922 638) (819 723)
Interest paid on interest bearing borrowings 11 (827 855) (581 374)
Distributions paid (7 238 795) (3 721 477)
Cash generated from/(used in) financing activities 58 824 462 (6 092 501)
Net increase/(decrease) in cash and equivalents 7 635 359 (165 226 398)
Cash and cash equivalents at the beginning of the year 45 111 775 205 800 188
Effect of movements in exchange rate fluctuations on cash held (4 749 156) 4 537 985
Cash and cash equivalents at the end of the year 47 997 978 45 111 775
* Restated as a result of reclassifications, with no net impact on cash and cash equivalents, see note 16.
The notes form part of these condensed preliminary consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
Statement of compliance
These condensed preliminary consolidated financial statements have been prepared in accordance with
International Financial Reporting Standard IAS 34: Interim Financial Reporting, the JSE Listings Requirements,
LuxSE rules and regulations and applicable legal and regulatory requirements of the BVI Companies Act 2004.
These condensed preliminary consolidated financial statements do not include all the information required by a
complete set of IFRS financial statements. However, selected explanatory notes are included to explain events
and transactions that are significant to an understanding of the changes in the group's financial position and
performance since the last annual consolidated financial statements as at and for the year ended 30 June 2015.
Reclassification
In the current year the group has classified some items in the consolidated statement of financial position,
the consolidated statement of profit or loss, and the consolidated statement of cash flows differently to the
prior year. To aid comparability the prior year comparatives have been restated, see note 16.
New and amended standards and interpretations not yet adopted
Below is a summary of amendments/improvements to standards and interpretations that are not yet effective
and were not early adopted:
Amendments/improvements to standards and interpretations not IASB effective for annual periods
yet effective beginning on or after
Disclosure initiative (Amendments to IAS 7) 1 January 2017
Recognition of Deferred Tax Assets for Unrealised Losses 1 January 2017
(Amendments to IAS 12)
IFRS 15 Revenue from Contracts with Customers 1 January 2018
IFRS 9 (2014) Financial instruments 1 January 2018
Classification and measurement of share-based payment transactions 1 January 2018
(Amendments to IFRS 2)
IFRS 16 Leases 1 January 2019
The directors have not yet assessed the impact of adopting these standards and interpretations.
2. General and significant accounting policies
Other than as outlined below, the accounting policies applied in the preparation of these condensed preliminary
consolidated financial statements are consistent with those applied in the preparation of the consolidated
financial statements for the year ended 30 June 2015.
The following new accounting policy has been applied in the period:
Assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held for sale if it is highly
probable that they will be recovered primarily through their sale rather than through continuing use, and the
following criteria are met:
- Management is committed to a plan to sell;
- The asset is available for immediate sale and an active programme to locate a buyer is initiated;
- The sale is highly probable, within 12 months of classification as held for sale;
- The asset is being actively marketed for a reasonable sale price in relation to its fair value; and
- Actions required to complete the plan indicate that it is unlikely that the plan will be significantly changed
or withdrawn.
Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less
costs to sell. However, the measurement provisions of IFRS 5: Non current assets held for sale and discontinued
operations do not apply to investment property, which continues to be measured at fair value in accordance with
groups accounting policy for investment property.
3. Fair value adjustments
The group's fair value adjustments comprise:
Year ended Year ended
30 June 2016 30 June 2015
Euro Note Restated*
Fair value adjustments
- Investment property (3 088 606) 5 718 442
- Financial investments 12 938 105 51 087 922
- Financial instruments (3 417 780) (28 929 000)
Total 6 431 719 27 877 364
Detailed as follows:
Fair value of investment property
Income-generating 7 (1 764 630) (9 163 196)
Development 7 (2 103 869) 14 881 638
Land bank 7 779 893 -
Total (3 088 606) 5 718 442
Fair value of financial investments
Karoo Fund 8 6 130 579 45 651 311
Sirius 8 6 807 526 1 134 917
Treasury investments 8 - 4 301 694
Total 12 938 105 51 087 922
Fair value of financial instruments
Interest rate swaps (493 594) (312 488)
Attacq Limited financial liability 12 (4 032 584) (24 896 101)
Development management fee 12 (1 092 047) (1 488 165)
Priority participating profit dividend 12 2 200 445 (2 232 246)
Total (3 417 780) (28 929 000)
* Fair value adjustments disclosed in the prior year as Treasury investments have been reclassified to Fair value of
financial investments and are included within Sirius to aid comparability with the classifications in the current
year, see notes 8 and 16.
4. Exchange differences
Exchange gains and losses arise from the revaluation of monetary assets and liabilities. It is not the policy of the
group to hedge currencies held between euro, sterling and Swiss franc. As a result, exchange differences arise
predominantly from the intra-group loans of foreign operations. In the current year, this totalled a loss of
EUR12 913 210 (2015: EUR17 660 295 gain).
5. Taxation
The group's current taxation charge and deferred taxation is as follows:
Year ended Year ended
Euro 30 June 2016 30 June 2015
Current taxation (684 749) (371 447)
Deferred taxation (expense)/income (143 776) 272 259
Taxation expense (828 525) (99 188)
6. Goodwill
The group's goodwill comprises:
As at As at
Euro 30 June 2016 30 June 2015
New Waverley 10 Limited 1 361 802 1 582 184
MAS Prop 23 901 016 27 768 955
Total 25 262 818 29 351 139
Reconciliation of the group's carrying amount of goodwill:
New Waverley
Euro MAS Prop 10 Limited Total
Cost
Balance at 30 June 2014 - 1 371 537 1 371 537
Acquisition of subsidiary 24 970 329 - 24 970 329
Foreign currency translation difference in OCI 2 798 626 210 647 3 009 273
Balance at 30 June 2015 27 768 955 1 582 184 29 351 139
Foreign currency translation difference in OCI (3 867 939) (220 382) (4 088 321)
Balance at 30 June 2016 23 901 016 1 361 802 25 262 818
Accumulated impairment losses
Balance at 30 June 2014 - - -
Balance at 30 June 2015 - - -
Balance at 30 June 2016 - - -
Carrying amount
Balance at 30 June 2014 - 1 371 537 1 371 537
Balance at 30 June 2015 27 768 955 1 582 184 29 351 139
Balance at 30 June 2016 23 901 016 1 361 802 25 262 818
The goodwill arising on acquisitions in prior periods has been recognised as follows:
MAS Prop New Waverley 10 Limited
Sterling Euro Sterling Euro
Consideration transferred 19 778 012 25 000 000 6 586 667 7 719 052
Fair value of identifiable net assets (23 473) (29 671) (2 430 232) (2 823 930)
Additional debt acquired - - (3 941 686) (4 580 239)
Movement in foreign currency translation
reserve - - - (1 695)
Fair value of pre-existing interest in New
Waverley 10 Limited - - 910 799 1 058 349
Total 19 754 539 24 970 329 1 125 548 1 371 537
Impairment
The group's recoverable amounts of its CGU's are determined to be value in use as it is greater than fair value less
costs to sell.
New Waverley 10 Limited
No impairment charge arose as a result of the group's annual impairment test of goodwill in relation to New
Waverley 10 Limited (2015: EURnil).
The recoverable amount of the New Waverley 10 Limited CGU has been determined based upon independent
external third party valuation for the element of the site in an advanced stage of construction and development
appraisals from the group's quantity surveyors for elements of the site which are still in the process of being finalised.
Management has determined that a reasonably possible change to the key assumptions would not result in an
impairment.
MAS Prop
No impairment charge arose as a result of the group's annual impairment test of goodwill in relation to MAS Prop (2015: EURnil).
The recoverable amount of the MAS Prop CGU was based on the value in use, as determined
using a discounted cash flow. The cash flow was forecast for a period of 8 years (2015: 9 years), which is the
remaining term of the investment advisory agreement. Budgeted EBITDA was based on expectations of future
outcomes taking into account past experience adjusted for anticipated net asset growth of the group and
increases in operating expenses.
The following key assumptions were used in the impairment assessment:
As at As at
Inputs 30 June 2016 30 June 2015
Pre-tax discount rate 6,68% 7,51%
Annual increase in revenue 7,00% - 11,00% 5,00% - 6,00%
Annual increase in operating expenses 4,00% - 6,00% 5,00%
Budgeted period 8 years 9 years
No cash flows have been assumed beyond the budgeted period, and accordingly no growth is assumed beyond
the forecast period. Management has determined that a reasonably possible change to the key assumptions
would not result in an impairment.
7. Investment property
The group's investment property comprises income-generating property, development property and land bank:
Segment Detail
Income-generating property Property that is currently producing income and held for the purpose of
earning a yield. There may be further asset management angles on these
properties, which could further enhance income returns.
Development property Property that is being developed in order to create income producing
property held for the purpose of earning a better yield than by acquiring
standing property.
Land bank Land plots held for schemes that have not yet commenced, and residential
developments.
The carrying amount of the group's investment property was as follows:
As at 30 June 2016 As at 30 June 2015
Euro Fair value Cost Total Fair value Cost Total
Income-generating 242 625 172 - 242 625 172 164 390 518 - 164 390 518
property
Development property 17 927 863 4 502 390 22 430 253 35 288 845 7 618 598 42 907 443
Land bank - 41 940 654 41 940 654 - 41 240 845 41 240 845
Total 260 553 035 46 443 044 306 996 079 199 679 363 48 859 443 248 538 806
Reconciliation of investment property
The group’s investment property is measured at fair value, where fair value cannot be determined reliably as a result of a development being
in the early stages, but the group expects that the fair value will be reliably determinable when construction is further progressed, the group
measures such properties at cost less impairment until such point in time that the fair value becomes reliably determinable. Investment property
is situated in three jurisdictions (UK, Germany and Switzerland). The group has an investment in an associate in CEE through partners Prime Kapital.
This has been included within Investments in equity accounted investees, see note 9.
As at 30 June 2016
Income-generating Development Land bank
Euro UK Germany Switzerland Total UK UK Total
Opening balance 40 413 876 102 830 000 21 146 642 164 390 518 42 907 443 41 240 845 248 538 806
Property acquisitions - 37 439 245 - 37 439 245 - - 37 439 245
Capitalised retentions - 1 370 755 - 1 370 755 - - 1 370 755
Capitalised acquisition costs - 4 578 229 - 4 578 229 - - 4 578 229
Property disposal (1 814 850) - - (1 814 850) - - (1 814 850)
Transfer from development 43 937 100 - - 43 937 100 (43 937 100) - -
property
Capitalised expenditure 377 171 372 522 - 749 693 31 356 543 5 910 392 38 016 628
Capitalised financial liability (see - - - - - 3 327 225 3 327 225
note 12)
Capitalised interest - - - - 28 452 354 28 806
Fair value adjustment (3 144 069) 2 169 249 (789 810) (1 764 630) (2 103 869) 779 893 (3 088 606)
Transfer to assets held for sale - - - - - (3 515 237) (3 515 237)
Foreign currency translation (5 393 892) - (866 996) (6 260 888) (5 821 216) (5 802 818) (17 884 922)
difference in OCI
Closing balance 74 375 336 148 760 000 19 489 836 242 625 172 22 430 253 41 940 654 306 996 079
As at 30 June 2015
Income-generating Development Land bank
Euro UK Germany Switzerland Total UK UK Total
Opening balance 13 225 620 7 900 000 18 524 952 39 650 572 7 822 049 17 279 221 64 751 842
Property acquisitions 24 821 334 90 488 931 - 115 310 265 487 867 15 774 383 131 572 515
Capitalised acquisition costs 1 441 896 7 239 508 - 8 681 404 - - 8 681 404
Capitalised expenditure - - 183 723 183 723 17 789 911 4 404 908 22 378 542
Capitalised retentions - 2 703 865 - 2 703 865 - - 2 703 865
Fair value adjustment (3 044 610) (5 502 304) (616 282) (9 163 196) 14 881 638 - 5 718 442
Foreign currency translation 3 969 636 - 3 054 249 7 023 885 1 925 978 3 782 333 12 732 196
difference in OCI
Closing balance 40 413 876 102 830 000 21 146 642 164 390 518 42 907 443 41 240 845 248 538 806
8. Financial investments
The carrying amount of the group's investments was as follows:
As at
As at 30 June 2015
30 June 2016 Restated*
Amortised Amortised
Euro Fair value cost Total Fair value cost Total
Non-current
Sirius - - - 12 346 864 - 12 346 864
Total - - - 12 346 864 - 12 346 864
Current
Karoo Fund - - - 67 221 894 - 67 221 894
Sirius 51 614 068 - 51 614 068 2 604 979 - 2 604 979
Total 51 614 068 - 51 614 068 69 826 873 - 69 826 873
Total 51 614 068 - 51 614 068 82 173 737 - 82 173 737
* Treasury investments as disclosed in the prior year have been reclassified to Financial investments and are
included within Sirius (current) to aid comparability with the classifications in the current year, see note 16 and
the reconciliation below.
Financial investments have been classified as FVTPL because the contractual terms of the financial assets do not
give rise to cash flows that are solely payments of principal and interest on the amount outstanding.
On 28 August 2015 and 26 October 2015 the Karoo Fund compulsorily redeemed a portion of the investment
amounting to EUR12 410 441 and EUR25 388 994 respectively. On 31 January 2016 the group's remaining shares in the
Karoo Fund were compulsorily redeemed. The group received an in-specie redemption of 64 540 371
(EUR29 834 661) shares in Sirius and EUR2 577 304 cash in exchange for the group's share of the Karoo Fund's net
asset value at 31 January 2016. The final redemption triggered the settlement of the Attacq financial liability, see
note 12.
During the year the group recognised EUR1 717 829 (2015: EURnil) in dividends from the investment in Sirius. The
group owned 12,8% of Sirius shares at 30 June 2016. On 12 August 2016 the group sold 60 000 000 shares in
Sirius for EUR29 282 323. As a result, the group's shareholding in Sirius decreased to 4,3%, see note 17.
Reconciliation of financial investments at fair value
As at 30 June 2016
Euro Karoo Fund Sirius Total
Opening balance 67 221 894 14 951 843 82 173 737
Cash redemptions (40 376 739) - (40 376 739)
Receipt of shares from in-specie redemption (29 834 661) 29 834 661 -
Fair value movement 6 130 579 6 807 526 12 938 105
Foreign currency translation difference in OCI (3 141 073) 20 038 (3 121 035)
Total - 51 614 068 51 614 068
As at 30 June 2015
Euro Treasury Karoo Fund Sirius Total
Opening balance - 35 743 617 - 35 743 617
Acquisition 30 000 000 - 10 178 432 40 178 432
Redemption (31 696 715) (20 214 050) - (51 910 765)
Fair value movement 4 301 694 45 651 311 1 134 917 51 087 922
Foreign currency translation - 6 041 016 1 033 515 7 074 531
difference in OCI
Reclassification (2 604 979) - 2 604 979 -
Total - 67 221 894 14 951 843 82 173 737
9. Investment in equity accounted investees
The carrying amount of the group's investments in equity accounted investees was as follows:
As at As at
Euro 30 June 2016 30 June 2015
PKM 19 991 716 -
Reconciliation of investments in equity accounted investees
As at As at
Euro 30 June 2016 30 June 2015
Opening balance - -
Acquisition 20 000 000 -
Capitalised acquisition costs 23 624 -
Total 20 023 624 -
Share of loss (31 908) -
Total 19 991 716 -
On 23 March 2016, the group invested EUR20 000 000 in the ordinary shares of PKM a development property
company with its principal place of business in CEE. PKM is an associate in which the
group has a 40% ownership interest. PKM is a separate entity and the group has a residual interest in the net
assets of the associate.
In addition to the investment in the ordinary shares, the group intends to fund a further EUR200 000 000 over
4 years through the investment in 7,5% preference shares, see note 17.
The following table summarises the financial information of PKM as included in its own financial statements:
As at As at
Euro 30 June 2016 30 June 2015
Statement of financial position - PKM
Non-current assets 2 697 078 -
Current assets 47 496 624 -
Total assets 50 193 702 -
Current liabilities 273 474 -
Total liabilities 273 474 -
Net assets 49 920 228 -
Percentage ownership interest 40% -
Group share of net assets 19 968 092 -
Capitalised costs 23 624 -
Carrying amount 19 991 716 -
For the period For the period
ended ended
Euro 30 June 2016 30 June 2015
Statement of profit or loss and other comprehensive income - PKM
Revenue - -
Corporate expenses (36 756) -
Net finance costs (43 014) -
Total loss and other comprehensive loss (79 770) -
Percentage ownership interest 40% -
Group's share of total comprehensive loss (31 908) -
10. Share capital
The ordinary share capital of the company has no par value. The reconciliation of share capital is as follows:
Number of Share capital
shares Euro
Balance at 30 June 2014 279 483 999 289 978 080
Issued during the year
- Acquisition of MAS Property Advisors Limited 9 751 326 12 486 971
- Scrip distributions 2 552 564 3 206 941
Total 12 303 890 15 693 912
Balance at 30 June 2015 291 787 889 305 671 992
Issued during the year
- Scrip distributions 5 671 745 7 026 140
- Settlement of Attacq liability (see note 12) 21 317 449 28 156 329
- Capital raise 29 848 136 37 676 095
Total 56 837 330 72 858 564
Balance at 30 June 2016 348 625 219 378 530 556
During the year the group incurred EUR225 212 (2015: EUR13 029) in expenses in relation to issuing shares. These
were offset against share capital.
The group issued 21 317 449 on 11 March 2016 to Attacq, a related party of the group, in settlement of the
financial liability due to Attacq in relation to the Karoo Fund, see notes 8 and 12. On 7 April 2016 the group
issued a further 29 848 136 shares as part of an accelerated book build, raising cash of EUR37 676 095.
The holders of the company's shares are entitled to distributions as declared, and are entitled to one vote per
share at general meetings of the company. Distributions of the company can be paid from retained earnings and
share capital in accordance with the BVI Business Companies Act 2004.
The following distributions were paid by the group:
Year ended 30 June 2016
Distribution per share
Euro Scrip Cash Total (euro cents)
11 November 2015 3 241 806 3 177 518 6 419 324 2,20
8 April 2016 3 784 334 4 061 277 7 845 611 2,27
Total 7 026 140 7 238 795 14 264 935 4,47
Year ended 30 June 2015
Distribution per share
Euro Scrip Cash Total (euro cents)
21 November 2014 1 693 902 1 892 595 3 586 497 1,24
17 June 2015 1 513 039 1 828 882 3 341 921 1,15
Total 3 206 941 3 721 477 6 928 418 2,39
The directors are pleased to propose a final distribution to shareholders of 2,23 euro cents per share.
11. Interest bearing borrowings
The carrying amount of the group's interest bearing borrowings was as follows:
As at As at
Euro 30 June 2016 30 June 2015
Non-current 43 227 831 14 779 769
Current 1 350 764 968 120
Total 44 578 595 15 747 889
Interest bearing borrowings are held at amortised cost, accordingly interest is charged to profit or loss at the
effective interest rate. These liabilities have been classified as amortised cost because the group does not hold
them for trading purposes.
Reconciliation of the group's carrying amount of interest bearing borrowings:
As at As at
Euro 30 June 2016 30 June 2015
Opening 15 747 889 16 098 177
Drawn down 30 550 000 -
Capitalised transaction costs (412 345) -
Amortisation (922 638) (819 723)
Repayment - (969 927)
Finance costs 770 243 581 374
General borrowings capitalised 28 806 -
Interest paid (827 855) (581 374)
Foreign currency translation difference in OCI (355 505) 1 439 362
Total 44 578 595 15 747 889
Interest from general borrowings of EUR28 806 was capitalised in investment property during the year (2015: EURnil),
see note 7, at a capitalisation rate of 2,65%.
On 28 July 2016 and 24 August 2016, the group drew down on two further loans, see note 18.
12. Financial instruments
The carrying amount of the group's financial instruments was as follows:
As at As at
30 June 2016 30 June 2015
Euro Restated*
Non-current
Derivative financial instruments 3 029 495 2 603 535
Financial liabilities 2 367 448 3 941 947
Total 5 396 943 6 545 482
Current
Financial liabilities 7 146 090 29 082 436
Total 7 146 090 29 082 436
12 543 033 35 627 918
The carrying amount of the group's financial instruments are classified as follows:
As at As at
30 June 2016 30 June 2015
Restated*
Fair Amortised Fair Amortised
Euro value cost Total value cost Total
Derivative financial instruments
Non-current 3 029 495 - 3 029 495 2 603 535 - 2 603 535
Total 3 029 495 - 3 029 495 2 603 535 - 2 603 535
Financial liabilities
Non-current 2 367 448 - 2 367 448 3 941 947 - 3 941 947
Current 3 327 225 3 818 865 7 146 090 26 378 571 2 703 865 29 082 436
Total 5 694 673 3 818 865 9 513 538 30 320 518 2 703 865 33 024 383
Total
8 724 168 3 818 865 12 543 033 32 924 053 2 703 865 35 627 918
* Deferred consideration as disclosed in the prior year has been reclassified to Financial instruments and is
included within Financial liabilities (current) to aid comparability with the classifications in the current year, see
note 16.
Financial instruments held at fair value
The carrying amount of the group's financial instruments held at fair value was as follows:
As at As at
Euro 30 June 2016 30 June 2015
Derivative financial instruments
Interest rate swaps 3 029 495 2 603 535
Financial liabilities
Development management fee (see note 14) 2 367 448 1 576 779
Priority participating profit dividend (see note 14) - 2 365 168
Attacq financial liability (see note 14) - 26 378 571
Santon financial liability 3 327 225 -
Total 5 694 673 30 320 518
Financial liabilities
Reconciliation of financial liabilities held at fair value:
Attacq Santon Development Priority
financial financial management participating
Euro liability liability fee profit dividend Total
Balance at 30 June 2014 - - - - -
Fair value adjustment 24 896 101 - 1 488 165 2 232 246 28 616 512
Foreign currency translation 1 482 470 - 88 614 132 922 1 704 006
difference in OCI
Balance at 30 June 2015 26 378 571 - 1 576 779 2 365 168 30 320 518
Recognised on grant of planning - 3 327 225 - - 3 327 225
permission
Fair value adjustment 4 032 584 - 1 092 047 (2 200 445) 2 924 186
Settlement (28 156 329) - - - (28 156 329)
Foreign currency translation (2 254 826) - (301 378) (164 723) (2 720 927)
difference in OCI
Balance at 30 June 2016 - 3 327 225 2 367 448 - 5 694 673
Development management fee and priority participating profit dividend
These financial liabilities are classified as FVTPL. This reduces the accounting mismatch by matching the
movement in the fair value of the financial liabilities with the fair value movement on the related investment
directly in profit or loss.
The group entered into a development management agreement with the developer under which the developer
provides services in procuring the construction of the New Waverley site in Edinburgh. Under the terms of this
agreement, a fee is payable to the developer for its services with that fee being in two parts. Under the terms of
a shareholders' agreement between the shareholders of New Waverley 10 Limited, shareholders are entitled to a 7,5%
annualised return on invested capital. The first part of the fee payable to the developer is an amount equal to
1/3rd of the annualised return payable to the group. The second part of the fee payable to the developer is linked
to the value of the site following development with the developer entitled to a fee broadly equal to 25% of the
value of the developed site less both costs of development and the annualised return to shareholders on
invested capital. This second part of the fee is only payable once the group has received its return on capital
meaning that, in effect, the developer will receive a fee broadly equal to 25% of any capital gain that will be made
should New Waverley 10 Limited ever decide to realise its investment in the site.
Attacq financial liability
This financial liability was classified as FVTPL by electing to use the fair value option. This reduces the accounting
mismatch by matching the movement in the fair value of the liability with the fair value movement in investment
property.
During the year, the group's remaining shares in the Karoo Fund were redeemed, see note 8. The final
redemption triggered the settlement of the financial liability to Attacq, from whom the group acquired the
investment through the issuance of MAS shares. Under the purchase agreement, 21 317 449 shares were issued
on 11 March 2016 at EUR1,3208 per share in settlement of the Attacq financial liability, see note 10.
Santon Financial liability
The terms of the revenue agreement with Santon require the group to pay Santon GBP2 750 000 (approx EUR3 327 225)
on receipt of implementable planning permission. On 10 December 2015 the South Downs National Park
Authority's planning committee approved in principle the plans to develop the North Street Quarter
development in Lewes. Final uncontested written planning permission was granted on 8 July 2016 and the
liability was settled, see note 18.
13. Operating segments
The group's chief operating decision maker is determined to be the executive management team. During the year
the segmentation to monitor group performance was refined. Performance is now considered as follows:
Reportable segment Description
Income-generating property Property that is currently producing income and held for
the purpose of earning a yield. There may be further
asset management angles on these properties, which
could further enhance income returns.
Development property Property that is being developed in order to create
income producing property held for the purpose of
earning a better yield than by acquiring standing
property.
Land bank and other strategic assets Land plots held for schemes that have not yet
commenced, residential developments and real estate
equity investments.
Corporate Consists of the cash holdings outside of the other
reporting segments and goodwill on the acquisition of
MAS Prop.
The comparative period has been restated to aid comparability with segmental reporting in the current year.
The executive management team analyses the performance and position of the group by aggregating the group
into the four reportable segments. These reportable segments have different risk profiles and generate
revenue/income from different sources, accordingly, it allows the executive management team to make better
informed strategic decisions for the group. Management reports are prepared and reviewed on a quarterly basis
by the executive management team to facilitate this process.
As at and for the year ended 30 June 2016
Reportable segments
Income-generating Development Land bank and other
Euro property property strategic assets Corporate Total
Statement of profit or loss
External revenue 15 370 255 11 090 709 469 160 207 16 251 021
Inter-segment revenue - - - - -
Segment profit/(loss) before tax 6 221 242 (1 007 358) 4 375 190 (7 262 517) 2 326 557
Finance income - 57 383 370 9 374 392 801
Finance cost (770 243) - - (3 522) (773 765)
Depreciation - - - (35 535) (35 535)
Taxation (828 525) - - - (828 525)
Other material non-cash items
- Fair value adjustments (1 478 331) (995 471) 8 905 521 - 6 431 719
- Exchange differences (93 783) 196 (5 835 877) (6 983 746) (12 913 210)
Statement of financial position
Segment non-current assets 243 509 575 43 798 848 42 003 549 23 901 016 353 212 988
- Investment in equity accounted investee - 19 991 716 - - 19 991 716
Segment current assets 19 124 497 1 479 407 52 750 489 41 036 973 114 391 366
Segment non-current liabilities 47 500 067 2 367 448 - - 49 867 515
Segment current liabilities 8 051 526 4 813 814 3 683 792 342 755 16 891 887
As at and for the year ended 30 June 2015 (Restated)
Reportable segments
Income-generating Development Land bank and other
Euro property property strategic assets Corporate Total
Statement of profit or loss
External revenue 8 885 744 168 666 268 746 - 9 323 156
Inter-segment revenue - - - - -
Segment profit/(loss) before tax 22 383 939 10 876 413 15 818 326 (504 582) 48 574 096
Finance income 3 915 16 745 - 4 676
Finance cost (576 350) - (5 024) - (581 374)
Depreciation - - - (18 884) (18 884)
Taxation (99 188) - - - (99 188)
Other material non-cash items
- Fair value adjustments 12 485 558 11 161 228 4 230 578 - 27 877 364
- Exchange differences 5 046 353 - 12 613 942 - 17 660 295
Statement of financial position
Segment non-current assets 165 135 057 44 491 591 53 593 360 27 768 952 290 988 960
- Investment in equity accounted investee - - - - -
Segment current assets 79 752 688 12 894 925 9 036 018 17 782 820 119 466 451
Segment non-current liabilities 18 526 950 3 941 947 - - 22 468 897
Segment current liabilities 31 789 561 2 456 983 174 929 424 443 34 845 916
Where assets/liabilities and income/expense are shared by reportable segments they are allocated to each
respective reportable segment based on a rational driver of use or ownership of the asset/liabilities,
income/expense.
Geographical information
The group invests in investment property in Europe.
The geographical information below analyses the group's revenue and non-current assets by the company's
country of domicile and the jurisdiction in which the underlying assets are held: UK; Germany; Switzerland; and
also now Romania as a result of the investment in associate during the year, see note 9.
Revenue
Year ended Year ended
Euro 30 June 2016 30 June 2015
BVI - -
UK 5 674 973 3 336 893
Germany 9 332 689 4 806 043
Switzerland 1 243 359 1 180 220
Romania - -
Total 16 251 021 9 323 156
Non-current assets
As at As at
Euro 30 June 2016 30 June 2015
BVI - -
UK 164 250 144 166 275 302
Germany 149 481 292 103 567 015
Switzerland 19 489 836 21 146 643
Romania 19 991 716 -
Total 353 212 988 290 988 960
14. Related parties
Parent and ultimate controlling party
The group has no ultimate controlling party, but is controlled by its ordinary shareholders in aggregate.
Key management - transactions
Year ended 30 June 2016
Basic Short-term Long-term
Euro Role salary Benefits incentive incentive Total
Lukas Nakos CEO 209 248 - 166 092 166 092 541 432
Malcolm Levy CFO 196 170 - 155 711 155 711 507 592
Jonathan Knight CIO 78 468 - 77 856 77 856 234 180
Ron Spencer Chairman 30 000 - - - 30 000
Gideon NED 27 500 - - - 27 500
Oosthuizen
Jaco Jansen NED 27 500 - - - 27 500
Morné Wilken NED 20 000 - - - 20 000
Pierre Goosen NED 20 000 - - - 20 000
Total 608 886 - 399 659 399 659 1 408 204
Year ended 30 June 2015
Basic Short-term Long-term
Euro Role salary Benefits incentive incentive Total
Lukas Nakos CEO 152 149 - - - 152 149
Malcolm Levy(a) CFO 142 641 - - - 142 641
Jonathan Knight CIO 57 056 - - - 57 056
Ron Spencer Chairman 24 500 - - - 24 500
Gideon NED 23 250 - - - 23 250
Oosthuizen
Jaco Jansen NED 23 250 - - - 23 250
Morné Wilken NED 10 000 - - - 10 000
Pierre Goosen NED 10 000 - - - 10 000
Total 442 846 - - - 442 846
(a) In addition, the directors fees of EUR24 940 were paid directly to MAS Property Advisors Limited. These fees
ceased from a group perspective on 15 October 2014, when Malcolm Levy became an employee of the group.
Key management - shareholdings
As at 30 June 2016
Euro Direct Indirect Associate Total
Lukas Nakos 85 143 - 100 659^ 185 802
Malcolm Levy 11 633 1 568 928* - 1 580 561
Jonathan Knight 523 371 74 000 - 597 371
Ron Spencer 11 370 - - 11 370
Gideon Oosthuizen 254 505 - - 254 505
Jaco Jansen - - - -
Morné Wilken 55 784 234 818* - 290 602
Pierre Goosen - - 3 113 529^ 3 113 529
Total 941 806 1 877 746 3 214 188 6 033 740
* Associate family trust
^ Non-beneficial to director
As at 30 June 2015
Euro Direct Indirect Associate Total
Lukas Nakos 106 - 100 659^ 100 765
Malcolm Levy 11 632 1 462 699* - 1 474 331
Jonathan Knight 504 964 - - 504 964
Ron Spencer 10 970 - - 10 970
Gideon Oosthuizen 250 000 - - 250 000
Jaco Jansen - - - -
Morné Wilken 53 823 226 560* - 280 383
Pierre Goosen - - 783 677^ 783 677
Total 831 495 1 689 259 884 336 3 405 090
* Associate family trust
^ Non-beneficial to director
Other related party transactions:
Income/(expenses) Capitalised for the year ended Balances receivable/(payable)
for the year ended as at
Euro 30 June 2016 30 June 2015 30 June 2016 30 June 2015 30 June 2016 30 June 2015
MAS Prop
- Investment advisor fee - (1 249 295) - - - -
- Transaction fee - - - 352 500 - -
- Oncharged staff costs - (123 269) - - - -
Total - (1 372 564) - 352 500 - -
NW Advisers
- Oncharged development costs - - 27 117 356 19 605 967 (1 069 607) 33 432
- Development management fee (see note 12)(1) 1 466 964 (1 488 165) - - (2 367 448) (1 576 779)
Total 1 466 964 (1 488 165) 27 117 356 19 605 967 (3 437 055) (1 543 347)
NW Holdings
- Development profit participation fee (see note 12)(1) (358 566) (2 232 246) - - - (2 365 168)
Total (358 566) (2 232 246) - - - (2 365 168)
Corona
- Legal and professional expenses (850 180) (331 218) - - (41 984) 37 251
Total (850 180) (331 218) - - (41 984) 37 251
Attacq
- Karoo Fund financial liability (see note 12) (4 032 584) (24 896 101) - - - (26 378 571)
- Interest income from loan receivable 383 263 - - - - -
Total (3 649 321) (24 896 101) - - - (26 378 571)
Artisan
- Oncharged administrative expenses 51 962 6 435 - - 41 255 12 737
Total 51 962 6 435 - - 41 255 12 737
(3 339 141) (30 313 859) 27 117 356 19 958 467 (3 437 784) (30 237 098)
(1) Differences between the income/(expense) and the corresponding receivable/(payable) related to foreign exchange movements recognised in OCI.
MAS Prop
MAS Prop is a real estate advisory company. During the prior period MAS Prop was acquired by the group and is a
100% owned subsidiary. Prior to the acquisition MAS Prop was owned by a group of investors of which Lukas
Nakos and Malcolm Levy, the chief executive officer and chief financial officer of the group respectively, had
significant influence.
Artisan
Artisan is a real estate management company and is owned by a group of investors of which Lukas Nakos and
Malcolm Levy, the chief executive officer and chief financial officer of the group respectively have significant
influence. In this context significant influence refers to the fact that Lukas Nakos and Malcolm Levy are directors
of Salt Properties Limited, which owns 33,33% of Artisan, and that 2Fireflies Capital Inc, which is associated with
Malcolm Levy, is a shareholder of Salt Properties.
The board of Artisan comprises five directors, three of which are common to MAS, being Jaco Jansen, Malcolm
Levy and Pierre Goosen.
NW Advisers
NW Advisers is a real estate developer and is a 100% owned subsidiary of NW Holdings which is a 60% owned
subsidiary of Artisan, as such is controlled by Artisan which is a related party of the group.
During the year NW Advisers on-charged expenses in relation to the development of New Waverley which
amounted to EUR27 117 356 (2015: EUR19 605 967). These have been capitalised as part of the New Waverley
development within investment property, see note 7. These on-charges were charged to the group in accordance
with the development management agreement and are on an arm's length basis.
In addition, the group has provided for a development management fee of EUR2 367 448 (2015: EUR1 576 779) as a
result of the revaluation of the three pre-let hotels at the New Waverley development, see note 12. This fee is in
accordance with the development management agreement and is on an arm's length basis.
NW Holdings
NW Holdings is a real estate developer and is a 60% owned subsidiary of Artisan. As such it is controlled by
Artisan which is a related party of the group.
At the reporting date the group has provided for a development management priority participation fee of EURnil
(2015: EUR2 365 168) as a result of the revaluation of the three pre-let hotels at the New Waverley development
(see note 12). This fee is in accordance with the development management agreement and is on an arm's length basis.
Corona
Corona is a real estate management company with seven staff, and is owned by Jonathan Knight as the sole
shareholder. Jonathan is also chief investment officer of the group.
During the year, the group used the professional services of Corona and incurred expenses of EUR850 180 (2015:
EUR331 218), which were charged to the group on an arm's length basis. Professional services fees are expensed in
profit or loss within investment expenses and service charge and other property operating expenses.
Attacq
Attacq is a significant shareholder in the company and has significant influence over the group.
On 30 November 2015 the group entered into a short-term loan agreement with Attacq. The group provided for
EUR18 920 000 over a maximum term of 3 months and a minimum term of 1 month with early repayment permitted
thereafter without penalty, subject to interest of 8% per annum. The group took two forms of security, firstly the
amount payable to Attacq under the Karoo transaction of EUR29 112 780; and Attacq's shares in the company
owning Nova Aventis (Stenham European Shopping Centre Fund (Guernsey) to the value of EUR22 931 521). The
loan was repaid in full on 29 February 2016. Interest of EUR383 263 (2015: EURnil) was received on the loan.
The short-term loan receivable was classified as a financial asset at amortised cost. Accordingly on initial
recognition it was recognised at fair value and subsequently measured at amortised cost using the effective
interest method.
The group purchased the Karoo Fund from Attacq in 2013 for an all-share consideration of EUR34 199 731. Under
the purchase agreement of the Karoo Fund, Attacq was entitled to a contingent adjustment (the "Adjustment") in
the consideration paid to it by the group. This contingent adjustment was dependent upon the value at which the
Karoo Fund redeemed. On 31 January 2016 the group's remaining shares in the Karoo Fund were redeemed. The
group received an in-specie redemption of 64 540 371 shares in Sirius and EUR2 577 304 cash in exchange for EUR32 411 907
being the group's share of the Karoo Fund's net asset value at 31 January 2016. The final redemption
triggered the settlement of the Attacq financial liability, see note 12, from whom the group acquired the
investment, through the issuance of MAS shares. Under the purchase agreement the MAS adjustment shares
were issued at a price per share equal to the 30-day volume weighted average price of MAS shares at each point
the Karoo Fund was realised. Accordingly, 21 317 449 shares were issued to Attacq in settlement of the Attacq
financial liability.
15. Earnings per share and diluted earnings per share
The calculation of basic earnings per share has been based on the following profit attributable to ordinary
shareholders and the weighted-average number of ordinary shares outstanding.
Profit attributable to ordinary shareholders
Year ended Year ended
Euro 30 June 2016 30 June 2015
Profit for the year attributable to the 1 498 032 48 474 908
owners of the group
Weighted-average number of ordinary shares
Year ended Year ended
Euro Note 30 June 2016 30 June 2015
Opening issued ordinary shares 291 787 889 279 483 999
Effect of shares issued for capital raise 10 5 871 764 -
Effect of shares issued related to business combinations 10 - 6 911 654
Effect of shares issued related to the settlement of the 10 6 465 128 -
Attacq liability
Effect of shares issued for scrip distributions 10 2 281 979 872 468
Weighted-average number of ordinary shares 306 406 760 287 268 121
Basic earnings per share
Year ended Year ended
Euro 30 June 2016 30 June 2015
Profit attributable to ordinary
shareholders 1 498 032 48 474 908
Weighted-average number of ordinary
shares 306 406 760 287 268 121
Basic earnings per shares (euro cents) 0,49 16,87
There are no dilutionary instruments in issue and therefore basic earnings and diluted earnings are the same.
Headline earnings and headline earnings per share
Headline earnings and headline earnings per share was as follows:
Year ended Year ended
30 June 2016 30 June 2015
Euro Gross Net Gross Net
Profit for the year 1 498 032 1 498 032 48 474 908 48 474 908
Adjusted for:
Revaluation of investment property 3 088 606 3 274 432 (5 718 442) (6 759 124)
(see note 7)
Headline earnings 4 586 638 4 772 464 42 756 466 41 715 784
Weighted-average number of ordinary 306 406 760 306 406 760 287 268 121 287 268 121
shares
Headline earnings per share (euro cents) 1,50 1,56 14,88 14,52
There are no dilutionary instruments in issue and therefore headline earnings and diluted headline earnings are the same.
The JSE Listings Requirements require the calculation of headline earnings and diluted headline earnings per
share and the disclosure of a detailed reconciliation of headline earnings to the earnings numbers used in the
calculation of basic earnings per share, as required by IAS 33 – Earnings per Share. Disclosure of headline
earnings is not an IFRS requirement. The directors do not use headline earnings or headline earnings per share in
their analysis of the group's performance, and do not consider it to be a useful or relevant metric for the group.
The directors make no reference to headline earnings or headline earnings per share in their commentaries,
instead, the directors use distributable earnings as a measure.
16. Reclassification
The group has reclassified some prior year expenses in the consolidated statement of profit or loss and some
items in the consolidated statement of financial position disclosed in the prior year consolidated financial
statements to aid comparability with the classifications in the current year.
There is no impact of the reclassifications on the prior year profit. The impact of the reclassification on the
consolidated statement of profit or loss, the consolidated statement of financial position and the
consolidated statement of cash flows is as follows:
Consolidated statement of profit or loss
Year ended 30 June 2015
Impact of change in reclassification
As previously
Euro reported Adjustment As reclassified
Portfolio related expenses (2 036 856) 2 036 856 -
Administrative expenses (1 249 295) 1 249 295 -
Investment adviser fees (2 423 870) 2 423 870 -
Service charges and other property operating - (3 405 450) (3 405 450)
expenses
Corporate expenses - (1 767 154) (1 767 154)
Investment expenses - (537 417) (537 417)
Total (5 710 021) - (5 710 021)
Consolidated statement of financial position
As at 30 June 2015
Impact of change in reclassification
As previously
Euro reported Adjustment As reclassified
Current assets
Financial investments 67 221 894 2 604 979 69 826 873
Treasury investments 2 604 979 (2 604 979) -
Current liabilities
Financial instruments 26 378 571 2 703 865 29 082 436
Deferred consideration 2 703 865 (2 703 865) -
Total 98 909 309 - 98 909 309
Consolidated statement of cash flows
As at 30 June 2015
Impact of change in reclassification
As previously
Euro reported Adjustment As reclassified
Investing activities
Acquisition of investment property and (162 632 461) 162 632 461 -
capitalised development costs
Acquisition of investment property - (131 572 515) (131 572 515)
Capitalised acquisition costs on investment - (8 681 404) (8 681 404)
property
Capitalised expenditure on investment - (22 378 542) (22 378 542)
property
Acquisition of investments (10 178 432) 10 178 432 -
Acquisition of treasury investments (30 000 000) 30 000 000 -
Acquisition of financial investments - (40 178 432) (40 178 432)
Proceeds from the sale of investments 20 214 050 (20 214 050) -
Proceeds from the sale of treasury 31 696 715 (31 696 715) -
investments
Proceeds from sale of financial investments - 51 910 765 51 910 765
Total (150 990 128) - (150 900 128)
Financing activities
Repayment of borrowings (1 789 650) 1 789 650 -
Repayment of interest bearing borrowings - (969 927) (969 927)
Payment of amortisation on interest bearing - (819 723) (819 723)
borrowings
Total (1 789 650) - (1 789 650)
17. Capital commitments
Investment property
The group entered into contracts for the construction and development of New Waverley, see note 7. These
contracts will give rise to expenses of GBP7 882 360 (approx. EUR9 536 867) (2015: GBP31 203 848 (approx. EUR43 863 249)),
which will be capitalised as part of the New Waverley development.
On 5 April 2016 the group entered into an SPA to acquire a portfolio of properties throughout northern and
central Germany for EUR56 010 400. The acquisition is under a sale and leaseback arrangement from various
subsidiaries of Edeka MIHA AG, see note 18.
Investment in equity accounted investee
On the 23 March 2016, the group entered into a contract with PKM to develop investment property in central
and eastern Europe. The terms of the contract commit the group to invest an initial EUR100 000 000 in 7,5%
preference shares in PKM over 4 years, with an election to invest a further EUR100 000 000 by 23 March 2017, see
note 9. The group intends to invest EUR200 000 000 into the investee.
18. Subsequent events
Acquisition of investment properties
On 17 August 2016 the group completed on the acquisition of a logistics centre in Munich, Germany for
EUR10 500 000. This property has an annual rent of EUR885 692 and is currently leased to Volkswagen AG until
December 2018, after which MAS may re-let or redevelop the site.
On 31 August 2016 the group completed on the acquisition of a portfolio of properties in northern and central
Germany under a sale and lease back arrangement from various subsidiaries of Edeka MIHA AG. The purchase
price was EUR56 010 400 and has an annual rent of EUR3 849 000.
Sale of financial investments
On 12 August 2016 the group sold 60 000 000 shares in Sirius for EUR29 282 323. As a result, the group's
shareholding in Sirius decreased to 4,3%.
Capital raise
On 29 July 2016 the group issued 25 641 026 ordinary shares through an accelerated book build raising capital
net of fees of EUR31 781 846.
Drawdown on interest bearing borrowings
On 28 July 2016 the group entered into a loan agreement with Royal Bank of Scotland International for a facility
of GBP21 000 000 (approx. EUR25 407 900). The facility is for a term of 5 years at an interest rate of LIBOR plus 2% per
annum. This facility has been secured against the income-generating Whitbread hotels at New Waverley.
On 24 August 2016 the group entered into a loan agreement with Deutsche Pfandbreifbank AG for a facility of
EUR29 179 000, for a 9-year term. This facility has been secured against the Heppenheim retail park and
the Bruchsal property and has not yet been drawn down.
Both loans have been classified as general borrowings.
Santon financial liability
On 8 July 2016 the group settled the GBP2 750 000 (EUR3 327 225) Santon financial liability in full. There are no other
amounts owed to Santon.
Other than the above, there were no material events after the condensed consolidated statement of financial
position that have a bearing on the understanding of these condensed preliminary consolidated financial
statements.
Company information and advisors
Registrar/ Transfer secretaries
Registered office in the BVI British Virgin Islands
MAS Real Estate Inc. Computershare Investor Services (BVI) Limited
Midocean Chambers Registration number 003287V
Road Town, Tortola Woodbourne Hall
British Virgin Islands PO Box 3162
Road Town, Tortola
Correspondence address British Virgin Islands
MAS Real Estate Inc.
Clarendon House South Africa
Victoria Street Computershare Investor Services Proprietary Limited
Douglas Registration number 2004/003647/07
Isle of Man Ground Floor
IM1 1LB 70 Marshall Street
Johannesburg 2001
Company Secretary PO Box 61051, Marshalltown 2107
Helen Cullen ACIS
(Associate of the Institute of Depository
Chartered Secretaries & Administrators) Computershare Investor Services PLC
The Pavilions
Independent auditor Bridgewater Road
KPMG Audit LLC Bristol,
Heritage Court BS13 8AE
41 Athol Street
Douglas Property valuers
Isle of Man
IM99 1HN Germany
Cushman & Wakefield LLP
JSE sponsor Westhanfenplatz 6
Java Capital Trustees and Sponsors Proprietary Limited 60327 Frankfurt
2nd Floor Germany
6a Sandown Valley Crescent
Sandown DTZ Zadelhoff Tie Leung GmbH
Sandton Neune Mainzerstratrasse 69 -75
2196 60311 Frankfurt (M),
Johannesburg Germany
South Africa JLL
Luxembourg legal adviser Wilhelm-Leuschner-Strasse 78
M Partners D-60329 Frankfurt
56, rue Charles Martel Germany
L-2134
Luxembourg Switzerland
Wüest & Partner AG
Luxembourg administrator Bleicherweg 5
Hoche Partner Trust Services SA CH-8001
121 Avenue de la Faiencerie Zürich
L-1511 Switzerland
Luxembourg
UK
BVI administrator Colliers International
Midocean Management and Trust Services (BVI) Limited 50 George Street
Midocean Chambers, P. O. Box 805, Road Town, Tortola, London
British Virgin Islands VG1110 W1U 7GA
GVA Grimley Limited
Quayside House
127 Fountainbridge
Edinburgh
EH3 9QG
Date: 09/09/2016 09:00:00
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