Condensed Consolidated Interim Financial Statements for the six-month period ended 31 December 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 Consolidated Interim Financial Statements for the six-month period ended 31 December 2016
Directors' report
Highlights
- Distribution per share 19,3% higher than in the previous period
- Passing rent increased by 60% since 30 June 2016
- Investment property portfolio grown by 50% since 30 June 2016
- Acquired Nova Park mall with partners Prime Kapital
- EUR80,43 million of debt drawn down
- ZAR 500 million of new equity raised
DISTRIBUTABLE EARNINGS
The group achieved distributable earnings of 2,27 euro cents per share for the six-months ended 31 December 2016,
compared to distributable earnings of 0,79 euro cents per share for the six-months ended 31 December 2015. The
improvement in recurring distributable earnings per share was driven by the accretive acquisitions of investment property in
Poland and Germany and the completion of the Adagio aparthotel at New Waverley in Scotland.
DISTRIBUTION
The board of directors has proposed a distribution of 2,66 euro cents per share in respect of the six-months ended 31
December 2016, which includes an amount of EUR1,49 million of reserves. This distribution represents an increase of 19,3%
over the 2,23 euro cents per share distribution declared in relation to the six-months to 30 June 2016. Shareholders continue
to have the option to receive the distribution in cash or as a return of capital by way of an issue of new shares. Further
details regarding the distribution will follow in due course.
The board will consider distributing retained earnings during forthcoming financial periods as the group pursues various
highly accretive property developments. Once completed, these developments are expected to have a significant positive
impact on per share distributions. Given the strength of the acquisition and development pipeline, discussed in more detail
below, in combination with the previously announced planned re-deployment of the balance sheet, the board is of the view
that the group is well placed to achieve its targeted annual growth in distribution per share of 30% per annum over a three
year period.
ACQUISITION AND DEVELOPMENT UPDATE
The income-generating property portfolio has grown by 67,5% from EUR242,63 million to EUR406,44 million in the six-months
ended 31 December 2016, with the acquisition of the Nova Park mall in Poland, the Edeka MIHA food retail portfolio and
the Munich logistics property in Germany, as well as the completion of the Adagio hotel at New Waverley, in Edinburgh, UK.
Nova Park
Nova Park is a dominant regional mall situated in Gorzów, Poland, with a catchment area of 460 000 people within 60
minutes drive. Gorzów is located in the wealthier western region of Poland, 150 km from Berlin and 50 km from the
German border. The property has an occupancy rate of 95,3% and anchor tenants include Bershka, C&A, CCC, Cropp
Town, Deichmann, H&M, House, Intersport, Media Expert, Mojito, New Yorker, Piotr I Pawel, Pull&Bear, Reserved,
Reserved Kids, Smyk and Stradivarius. An extension of approximately 6 800 square metres will further enhance the footfall
to this shopping centre, which already dominates its local competitors, and will add further to net operating income over
time through turnover linked leases.
Edeka MIHA food retail portfolio
The Edeka portfolio, which comprises 20 supermarkets in north-east Germany, provides particularly strong income returns
that underpin the low cost debt financing, resulting in attractive income returns on equity invested.
Munich logistics centre
The recently acquired Munich property, currently let to Volkswagen AG, has an initial acquisition yield of 7%, but is also
an exciting redevelopment opportunity. MAS is already in pre-lease negotiations with various tenants and in planning
discussions with the local municipality.
PIPELINE
The group made significant progress in expanding its acquisition and development pipeline during the interim period. As of
31 December 2016 the group had secured several additional earnings enhancing acquisitions and a number of attractive new
development opportunities.
Pipeline - Western Europe
New Waverley Phase II
Phase I of the New Waverley development delivered three hotels and twenty two new retail units. Phase II is now set to deliver
a significant mix of new office, retail and residential uses. The group has been chosen as development partner to deliver
approximately 19 000 sq m of Grade A office space on a pre-let to a significant tenant, and is now in the process of finalising
detailed design and leasing agreements. The tenant will have an option to occupy an additional (up to) 3 000 sq m of further
office space which would be delivered adjacent to the first proposed office building.
Pre-letting discussions with occupiers for the balance of the site are also underway. Attractive development and investment
funding is being negotiated to fund the delivery of this next phase of development. Construction is set to begin in March 2017
for completion in mid 2019.
Pipeline - Central and Eastern Europe
Accretive acquisition opportunities with value-add potential and high quality development opportunities are being
pursued in Central and Eastern Europe (CEE) in partnership with experienced developers Prime Kapital. This should
deliver significant growth in MAS' distributable earnings per share in the current and future financial periods.
Strong progress has been made since the end of the reporting period. The group has secured a further large acquisition in
excess of EUR50 million, with significant value-add potential. In addition, significant further progress has also been made in
securing a development pipeline in excess of EUR370 million at cost, with substantial further opportunities being
explored. The CEE development pipeline includes the opportunities discussed below in more detail, all of which have been
concluded within the Prime Kapital development joint venture.
Emonika mixed use retail, office and hotel development
In January 2017 the Prime Kapital development JV concluded an agreement to acquire a 97% interest in Emonika, a large-
scale development project for the construction of commercial and public logistic assets in a public-private partnership with
the Slovenian Railways and the Republic of Slovenia, in the heart of the country's capital Ljubljana. The project entails the
development of a 59 000 square metre gross lettable area ("GLA") mall and 21 000 square metre GLA of A-grade
offices and a hotel in addition to the development of public logistic infrastructure. This includes the re-development of the
city's central train station and the development of a new central bus station.
Emonika benefits from a prominent and highly visible central location, surrounded by dense residential and office
elements. The site is well served by public transport and lies on the main traffic routes that connect the city centre with
the main regional road and rail network. The catchment area is estimated to include a population of approximately
305 000 and 560 000, respectively, within 15 and 30-minute drives.
Slovenia benefits from significantly higher per capita purchasing power than other CEE countries and yet Ljubljana lacks
a large modern and centrally located mall. Feedback from potential anchor tenants has been particularly encouraging.
Significant progress has been made in the re-design of the retail and railway sections, the last in conjunction with
Slovenian Railways. Given that the project benefits from an approved master plan, construction should commence in early
2018.
Balotesti retail value centre
During 2016 the development JV secured a development site of approximately 4,1 hectares in Balotesti, Romania, with a
view to developing a value centre. Since then, given the extraordinarily high demand from retailers, an additional
neighbouring plot of approximately 3,8 hectares has been secured with the intention of developing a larger retail value
centre.
Balotesti, a rapidly developing affluent residential area, is approximately 25km north of Bucharest. Conveniently situated
on the DN1, a major motorway connecting the northern lakeside residential areas with Bucharest, the land plots are
adjacent to Bucharest's most successful DIY outlet, Hornbach Balotesti, and the development site for
a new Lidl supermarket. Catchment analysis indicates a population of 85 000 and 137 000, respectively, within 15 and 30-
minute drives. The planned development will be integrated with Hornbach and the new planned Lidl on the adjacent sites,
extending the combined 18 122 square meters GLA of these two operators by an additional 28 000 square metres
of GLA in the first phase. This is planned to be open by October 2018 with a substantial further extension to be developed
at a later stage. Tenant negotiations are progressing well and include discussions with two international hypermarket
groups, as well as various international fashion and other discounters.
Ploiesti retail value centre
In February 2017 the development JV secured approximately 9,5 hectares of land in Ploiesti, Romania, with
the intention of developing and operating a 25 600 square metre GLA retail value centre with a high concentration of
anchor tenants. Ploiesti, with 210 000 inhabitants and the capital of Prahova county, is placed centrally in the larger urban
agglomeration emerging north of Bucharest that is home to a population of approximately 750 000. The city is an
important industrial centre hosting major production facilities for leading international oil, chemical and automotive
players as well as an important distribution hub for the wider area. The scheme will be integrated with
the existing Kaufland mini-hypermarket located next to the project site, as well as with the Lidl supermarket to be
developed on an adjacent site. The planned development is located in a densely populated residential area in
close proximity to the city's main train station, tram station and bus station with high visibility and very good road
access. The property benefits from a catchment of 96 000 residents within walking distance and 565 000 residents within a
30-minute drive. Major anchor tenants have already expressed a strong interest in the project and consideration is being
given to expanding the planned scheme.
Kaufland value extensions
Five land plots have been secured in various smaller cities across Romania with the intention of developing approximately
20 000 square metres of GLA of convenience value extensions to be integrated with the existing Kaufland mini-
hypermarkets. Kaufland is a German discount mini-hypermarket and supermarket chain that operates in excess of 1 000
stores in Germany and several Central and Eastern European countries. It has become the leading food retailer in
Romania, with more than 100 well located owned and operated stores generating over EUR2.2 billion in annual sales.
Approximately 70% of the planned extensions have been pre-leased to tenants including Deichmann, Jysk, Noriel and
Pepco. The first three of these developments are expected to complete in 2017, with the balance soon thereafter.
CASH MANAGEMENT AND DEBT
During the interim period the group raised ZAR500 million via the issue of new ordinary shares in an over-subscribed
private placing and ended the period with EUR20,80 million in cash (excluding the cash held in the Prime Kapital development
JV). In addition, the group had EUR121,74 million of third-party debt finance in place as at 31 December 2016, having drawn-
down EUR80,43 million of third-party debt during the period. This leaves the portfolio loan to value at 25,1% at 31 December
2016.
In the six months ahead, a further EUR96,45 million of secured debt is expected to be drawn-down against the Edeka MIHA
portfolio, Nova Park, Adagio and Lehrte property. The weighted average cost of this debt amounts to 1,9% per annum.
PROSPECTS
Given the secured development pipeline and further potential developments being pursued, the board is confident that the
group is well placed to achieve recurring distributable earnings per share in close proximation to its targeted growth in
distribution per share of 30% per annum for the current and following two years. Guidance for the final distribution in the
current financial year is 3,19 euro cents per share, on the assumption that a stable macro-economic environment will prevail,
that no major corporate failures will occur and that the investments and developments reported on above will progress in
accordance with expectations. Budgeted rental income is based on contractual escalations and market related renewals. This
forecast has not been audited or reviewed by our auditors.
MAS will continue to pursue profitable growth through further acquisition and development opportunities in its markets.
Further announcements will be made as appropriate.
By order of the board of directors
Directors:
Ron Spencer (Non-Executive Chairman)
Lukas Nakos (Chief Executive Officer)
Malcolm Levy (Chief Financial Officer)
Jonathan Knight (Chief Investment Officer)
Gideon Oosthuizen (Non-Executive Director)
Jaco Jansen (Non-Executive Director)
Morne Wilken (Non-Executive Director)
Pierre Goosen (Non-Executive Director)
There were no changes to the board during the six-month period ended 31 December 2016.
MANAGEMENT ACCOUNTS
The figures referred to above have been extracted from the management accounts that can be found in appendix 1 of these condensed
consolidated interim financial statements.
REPORTING CURRENCY
The company's results are reported in euros.
LISTINGS
MAS holds a dual primary listing on the Main Board of the Johannesburg Stock Exchange and the Euro MTF market of the Luxembourg
Stock Exchange.
HIGHLIGHTS
PORTFOLIO
- Acquired Edeka MIHA portfolio 2 and Munich contributing additional passing rent of EUR3,86 million and EUR0,89 million
respectively
- Increased passing rent by 60% since year end to EUR27,74 million
- Group WALT increased to 11.08 years
- Sold shareholding in Sirius and reinvested in investment property portfolio
- Acquired Nova Park contributing with net passing rent of EUR4,42 million
FUNDING
- Daily median share volume increased by 63% since year end
- Raised EUR31,59million in over-subscribed placement of shares
- Group weighted average cost of debt 2,43%
- Drawn down EUR 80,43 million of dept
TEAM
- Established investment joint venture with Prime Kapital
- Progressed implementation of Voyager, a property management and accounting package
- Increased staff numbers
- Leveraged experience from Prime Kapital relationship
RELATIONSHIPS
- Shortlisted for RICS award for regeneration project of the year for New Waverley
- Established relationships with more debt lenders
- Established relationships with new tenants
- Continued to develop existing tenant relationships
SUSTAINABILITY
- Support for Ikhaya Le Themba
- 5,537 Incandescent lamps switched to LEDs
- Construction of Adagio completed, conserving the listed frontage on the Royal Mile
KEY METRICS
Distribution per share
H1 Distribution per H2 Distribution per
share share
(Euro cents) (Euro cents)
2014 0.60 1.24
2015 1.15 2.20
2016 2.27 2.23
2017 2.66 3.19
Investment property
Investment property
(Euro millions)
2014 65
2015 249
2016 312
H1 2017 466
Daily Median share volume
Median daily volume
(per thousand shares)
2014 1
2015 41
2016 76
H1 2017 124
Total assets
Total assets
(Euro millions)
2014 310
2015 411
2016 468
H1 2017 569
Adjusted NAV per share
Adjusted NAV per share
(Euro cents)
2014 103.8
2015 121.2
2016 115.1
H1 2017 112.7
Loan to value
Loan to value
(%)
2014 16.0
2015 4.8
2016 12.3
H1 2017 25.1
Review report by KPMG Audit LLC to MAS Real Estate Inc.
We have been engaged by MAS Real Estate Inc. (the "company"), its subsidiaries and its associate (collectively the
"group") to review the condensed set of consolidated financial statements for the interim report for the six-months ended
31 December 2016 which comprise the condensed consolidated statement of profit or loss, the condensed consolidated
statement of other comprehensive income, the condensed consolidated statement of financial position, the condensed
consolidated statement of changes in equity, the condensed consolidated statement of cash flows and the related notes.
This report is made solely to the company in accordance with the terms of our engagement. Our review has been
undertaken so that we might state to the company those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The interim report is the responsibility of, and has been approved by, the directors. The directors are responsible for
preparing the interim report in accordance with International Financial Reporting Standard IAS 34 Interim Financial
Reporting and the Johannesburg Stock Exchange ("JSE") Listings Requirements. The annual financial statements of the
group are prepared in accordance with IFRS. The condensed set of financial statements included in this interim report have
been prepared in accordance with IAS 34 Interim Financial Reporting.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of consolidated financial statements in
the interim report based on our review.
Scope of review
We have conducted our review in accordance with International Standard on Review Engagements 2410 Review of
Interim Financial Information Performed by the Independent Auditor of the Entity issued by the International Auditing
and Assurance Standards Board. A review of interim financial information consists of making enquiries, primarily of
persons responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with applicable law and International
Standards on Auditing (International) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
Opinion on the financial statements
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of consolidated
financial statements in the interim report for the six-months ended 31 December 2016 is not prepared, in all material
respects, in accordance with IAS 34 Interim Financial Reporting.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man IM99 1HN
24 February 2017
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro Note 2016 2015 2016
Rental income 4 11 067 791 6 586 450 14 203 699
Service charges and other recoveries 1 541 342 841 651 2 047 322
Revenue 12 609 133 7 428 101 16 251 021
Service charges and other property operating expenses (2 421 484) (1 783 557) (4 036 748)
Net rental income 10 187 649 5 644 544 12 214 273
Other income - - 2 355 381
Corporate expenses (1 885 474) (2 992 634) (3 188 770)
Investment expenses (186 519) - (2 159 964)
Net operating income 8 115 656 2 651 910 9 220 920
Fair value adjustments 5 (3 265 620) 2 378 038 6 431 719
Exchange differences (2 908 077) (3 053 676) (12 913 210)
Share of profit/(loss) from equity accounted investee, net of tax 10 36 154 - (31 908)
Profit before finance income/costs 1 978 113 1 976 272 2 707 521
Finance income 39 527 318 713 392 801
Finance costs (841 656) (303 529) (773 765)
Profit before taxation 1 175 984 1 991 456 2 326 557
Taxation 6 (500 958) (644 799) (828 525)
Profit for period/year 675 026 1 346 657 1 498 032
Attributable to:
Owners of the group (397 549) 1 346 657 1 498 032
Non-controlling interest 8 1 072 575 - -
Basic and diluted earnings per share (euro cents) 17 (0,11) 0,46 0,49
The notes below form part of these condensed consolidated interim financial statements
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro 2016 2015 2016
Profit for period/year 675 026 1 346 657 1 498 032
Other comprehensive income
Items that are or may be reclassified subsequently
to profit or loss
Foreign operations - foreign currency translation (2 765 558) (2 901 167) (12 387 307)
differences
Total comprehensive loss for the period/year (2 090 532) (1 554 510) (10 889 275)
Attributable to:
Owners of the group (3 163 107) (1 554 510) (10 889 275)
Non-controlling interest 1 072 575 - -
Total comprehensive loss for the period/year (2 090 532) (1 554 510) (10 889 275)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Restated* Audited Audited
As at As at As at As at
31 December 31 December 30 June 30 June
Euro Note 2016 2015 2016 2015
Non-current assets
Intangible assets 7 24 499 280 28 449 119 25 262 818 29 351 139
Investment property 8 473 690 010 273 819 368 306 996 079 248 538 806
Financial investments 9 - 15 910 475 - 12 346 864
Investment in equity accounted investee 10 20 057 968 - 19 991 716 -
Property, plant and equipment 230 277 176 846 241 083 15 136
Deferred taxation asset 6 1 047 599 908 482 721 292 737 015
Total non-current assets 519 525 134 319 264 290 353 212 988 290 988 960
Current assets
Financial investments 9 - 34 322 404 51 614 068 69 826 873
Short term loans receivable - 19 056 917 - -
Trade and other receivables 11 27 378 402 5 118 880 11 264 083 4 527 803
Cash and cash equivalents 20 794 725 31 997 044 47 997 978 45 111 775
Assets held for sale 3 393 501 2 043 750 3 515 237 -
Total current assets 51 566 628 92 538 995 114 391 366 119 466 451
Total assets 571 091 762 411 803 285 467 604 354 410 455 411
Equity
Share capital 12 410 113 075 308 913 797 378 530 556 305 671 992
Retained earnings 26 753 444 35 197 243 27 503 007 40 269 910
Foreign currency translation reserve (7 954 169) 4 297 529 (5 188 611) 7 198 696
Equity attributable to owners of the group 428 912 350 348 408 569 400 844 952 353 140 598
Non-controlling interest 8 1 072 595 - - -
Total equity 429 984 945 348 408 569 400 844 952 353 140 598
Non-current liabilities
Interest bearing borrowings 14 117 948 266 14 219 630 43 227 831 14 779 769
Financial instruments 13 6 187 015 6 413 512 5 396 943 6 545 482
Provisions 40 410 - - -
Deferred taxation liability 6 1 652 903 1 430 625 1 242 741 1 143 646
Total non-current liabilities 125 828 594 22 063 767 49 867 515 22 468 897
Current liabilities
Interest bearing borrowings 14 3 796 331 751 848 1 350 764 968 120
Financial instruments 13 1 344 932 35 271 134 7 146 090 29 082 436
Trade and other payables 15 10 059 974 5 215 677 8 296 197 4 795 360
Provisions 76 986 92 290 98 836 -
Total current liabilities 15 278 223 41 330 949 16 891 887 34 845 916
Total liabilities 141 106 817 63 394 716 66 759 402 57 314 813
Total shareholder equity and liabilities 571 091 762 411 803 285 467 604 354 410 455 411
Actual number of ordinary shares in issue 380 583 836 294 455 630 348 625 219 291 787 889
Net asset value per share (euro cents) 112,7 118,3 115,0 121,0
Adjusted net asset value per share (euro cents)# 112,9 118,5 115,1 121,2
*Restated as a result of reclassifications, no impact on NAV, see note 19.
# Net asset value per share as adjusted for deferred taxation
The notes below form part of these condensed consolidated interim financial statements.
These condensed consolidated interim financial statements were approved by the board of directors on 24 February
2017 and signed on their behalf by:
Ron Spencer Malcolm Levy
Chairman Chief financial officer
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Retained Foreign currency Equity attributable to Non-controlling Total
Euro Note capital earnings translation reserve owners of the group interest equity
Balance at 30 June 2015 (audited) 305 671 992 40 269 910 7 198 696 353 140 598 - 353 140 598
Comprehensive income for the period
Profit for the period - 1 346 657 - 1 346 657 - 1 346 657
Other comprehensive income - - (2 901 167) (2 901 167) - (2 901 167)
Total comprehensive income for the period - 1 346 657 (2 901 167) (1 554 510) - (1 554 510)
Transactions with the owners of the group
Issue of shares 12 3 241 805 - - 3 241 805 - 3 241 805
Distributions - (6 419 324) - (6 419 324) - (6 419 324)
Total transactions with the owners of the group 3 241 805 (6 419 324) - (3 177 519) - (3 177 519)
Balance at 31 December 2015 308 913 797 35 197 243 4 297 529 348 408 569 - 348 408 569
Comprehensive income for the period
Profit for the period - 151 375 - 151 375 - 151 375
Other comprehensive income - - (9 486 140) (9 486 140) - (9 486 140)
Total comprehensive income for the period - 151 375 (9 486 140) (9 334 765) - (9 334 765)
Transactions with the owners of the group
Issue of shares 12 69 616 759 - - 69 616 759 - 69 616 759
Distributions - (7 845 611) - (7 845 611) - (7 845 611)
Total transactions with the owners of the group 69 616 759 (7 845 611) - 61 771 148 - 61 771 148
Balance at 30 June 2016 (audited) 378 530 556 27 503 007 (5 188 611) 400 844 952 - 400 844 952
Comprehensive income for the period
Profit for the period - (397 549) - (397 549) 1 072 575 675 026
Other comprehensive income - - (2 765 558) (2 765 558) - (2 765 558)
Total comprehensive income for the period - (397 549) (2 765 558) (3 163 107) 1 072 575 (2 090 532)
Transactions with the owners of the group and non-
controlling interests
Issue of shares 12 39 576 609 - - 39 576 609 - 39 576 609
Distributions (7 994 090) (352 014) - (8 346 104) - (8 346 104)
Acquisition of subsidiary with non-controlling interests - - - - 20 20
Total transactions with the owners of the group and 31 582 519 (352 014) - 31 230 505 20 31 230 525
non-controlling interests
Balance at 31 December 2016 410 113 075 26 753 444 (7 954 169) 428 912 350 1 072 595 429 984 945
The notes on below form part of these condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro 2016 2015 2016
Profit for the period/year 675 026 1 346 657 1 498 032
Cash (used in)/generated from operating activities (6 144 396) 1 245 361 6 119 848
Net cash (used in)/generated from operating activities (6 335 337) 743 083 5 808 854
Cash used in investing activities (127 764 942) (10 385 043) (56 997 957)
Cash generated from/(used in) financing activities 108 235 974 (3 886 730) 58 824 462
Net (decrease)/increase in cash and cash equivalents (25 864 305) (13 528 690) 7 635 359
Cash and cash equivalents at the beginning of the period/year 47 997 978 45 111 775 45,111 775
Effect of exchange rate fluctuations (1 338 948) 413 959 (4 749 156)
Cash and cash equivalents at the end of the period/year 20 794 725 31 997 044 47 997 978
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Reporting entity
MAS Real Estate Inc. (the "company" or "MAS") is domiciled in the British Virgin Islands ("BVI"). These condensed
consolidated interim financial statements as at, and for the six-month period ended 31 December 2016, comprise
the company, its subsidiaries and associate (together referred to as the "group" and individually as "group entities")
and reflect the group's interest in its associate.
MAS is a real estate investment company with a portfolio of commercial properties in Europe. MAS' strategy is to
generate sustainable and growing distributable earnings per share by acquiring, developing and operating retail,
office, industrial, logistics and hotel assets in western Europe and central and eastern Europe ("CEE"). Where
exceptional opportunities arise, the group will embark on mixed-use or residential developments with the view to
either generate recurring income, or capital gains. The company aims to distribute all of its distributable earnings on
a semi-annual basis, with distribution of capital and other profits at the discretion of the directors.
2. Basis of preparation
Statement of compliance
These condensed consolidated interim financial statements have been prepared in accordance with International
Financial Reporting Standard IAS 34: Interim Financial Reporting and the Johannesburg Stock Exchange ("JSE")
Listings Requirements.
3. Significant accounting policies
The accounting policies applied in the preparation of these condensed consolidated interim financial statements
are consistent with those applied in the preparation of the consolidated financial statements for the year ended 30
June 2016. The accounting policy for business combinations below has been updated for the recognition of a non-
controlling interest in the period.
Business combinations
These consolidated financial statements include the financial statements of the company and its group entities for
the period under review.
The group accounts for business combinations using the acquisition method from the date when control of the entity
is obtained. The consideration transferred on acquisition of the entity and the identifiable assets and liabilities
of the entity are measured at fair value and the amount of any non-controlling interest is recognised. The Group
measures the non-controlling interests proportionate share of the identifiable net assets. Transaction costs in
relation to the acquisition are expensed unless they relate to the issue of new debt or equity.
Subsidiaries are the group entities controlled by the group. Control exists where the group is exposed to, or has the
right to, variable returns from its involvement in an entity and has an ability to affect those returns through its power
over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from
the date on which control commences until the date control ceases.
When the group loses control of a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any
related non-controlling interests and other components of equity. Any resulting gain or loss is recognised in profit
or loss. Any interest retained in the former subsidiary is measured at fair value at the date control was lost.
Intra-group balances and income and expenses arising from intra-group transactions are eliminated in preparing the
consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised gains, to the
extent that there is no evidence of impairment.
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 yet IASB effective for annual
effective periods beginning on or after
IFRS 12 - Amendments clarifying scope 1 January 2017
IAS 7 - Amendment to disclosure initiative 1 January 2017
IAS 12 - Amendments to recognition of deferred tax
assets for unrealised losses 1 January 2017
IFRS 2 - Amendments to classification and measurement
of share based payment transactions 1 January 2018
IFRS 9 (2014) - Financial instruments 1 January 2018
IFRS 15 - Revenue from contracts with customers 1 January 2018
IAS 28 - Amendments fair value measurement clarification 1 January 2018
IAS 40 -Amendments to clarify transfers of property to, or from, investment 1 January 2018
property
IFRS 16 - Leases 1 January 2019
Management has not yet assessed the impact of adopting these standards, amendments and interpretations.
4. Rental income
Rental income of EUR11 067 791 (December 2015: EUR6 586 450, June 2016: EUR14 203 699) was generated for the six-
month period ended 31 December 2016.
Revenue derived from the following tenants represents more than 10% of the group's rental income and is
included within the income-generating segment of the group:
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro 2016 2015 2016
Edeka MIHA AG 2 630 622 - -
Toom Baumarkt GmbH 1 134 034 1 103 528 2 227 811
Bauhaus GmbH and Co KG 859 092 825 041 1 644 562
4 623 748 1 928 569 3 872 373
The future aggregate minimum rental receivable under non-cancellable operating leases is as follows:
Audited
As at As at As at
31 December 31 December 30 June
Euro 2016 2015 2016
No later than 1 year 28 108 091 15 292 948 18 796 482
Greater than 1 year and less than 5 years 99 462 055 65 655 806 71 729 913
Greater than 5 years 185 296 845 121 583 632 157 873 608
312 866 991 202 532 386 248 400 003
5. Fair value adjustments
The group's fair value adjustments comprise:
Restated*
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro Note 2016 2015 2016
(Loss)/gain on fair value of financial (4 569 029) 8 100 659 12 938 105
investments
Gain/(loss) on fair value of investment 598 369 (2 074 710) (3 088 606)
property
Gain on assets held for sale 26 474 - -
Gain/(loss) on fair value of financial 678 566 (3 647 911) (3 417 780)
instruments (3 265 620) 2 378 038 6 431 719
Summarised as follows:
Fair value movement in financial investments
Karoo Fund 9 - 7 076 240 6 130 579
Sirius Real Estate Limited ("Sirius") 9 (4 569 029) 1 024 419 6 807 526
(4 569 029) 8 100 659 12 938 105
Fair value movement in investment property
Income-generating 8 677 340 (2 074 710) (1 764 630)
Development 8 (78 971) - (2 103 869)
Land bank 8 - - 779 893
598 369 (2 074 710) (3 088 606)
Fair value movement in assets held for sale
Langley park - retail unit (16 950) - -
New Waverley - retail unit 43 424 - -
26 474 - -
Fair value movement in financial instruments
Interest rate swaps 13 559 117 (46 837) (493 594)
Attacq Limited ("Attacq") financial 13 - (3 601 074) (4 032 584)
liability
Development management fee 13 205 516 - (1 092 047)
Forward currency contract 13 (86 067) - -
Priority participating profit dividend 13 - - 2 200 445
678 566 (3 647 911) (3 417 780)
* Fair value adjustments disclosed in the prior period as 'Treasury investments' related to Sirius. These have been
reclassified to fair value of 'Financial investments' to aid comparability with the classifications in the current
period, see note 19.
6. Taxation
The company, which is domiciled in the British Virgin Islands, is not subject to tax in that jurisdiction. Operating
subsidiaries of the group, however, are exposed to taxation in the jurisdictions in which they operate and,
potentially, in the jurisdictions through which the SPV investment companies are held, as follows:
Six-month Six-month Audited
period ended period ended Year ended
31 December 2016 31 December 2015 30 June 2016
Applicable Applicable Applicable
Euro rate Taxation rate Taxation rate Taxation
Income taxation
UK 20,0% 256 173 20,0% 322 347 20,0% 324 054
Switzerland 26,2% - 26,2% - 26,2% -
Germany 15,8% 143 965 15,8% 176 505 15,8% 311 461
Luxembourg 0,0% - 0,0% - 0,0% -
Wealth taxation
Switzerland 0,2% 1 801 0,2% 3 426 0,2% 3 544
Luxembourg 0,5% 22 557 0,5% - 0,5% 45 690
424 496 502 278 684 749
Corporate tax charge and deferred taxation
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro 2016 2015 2016
Current taxation 424 496 502 278 684 749
Deferred taxation expense 76 462 142 521 143 776
Taxation expense 500 958 644 799 828 525
Reconciliation of deferred taxation:
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro 2016 2015 2016
Deferred taxation brought forward 521 449 406 631 406 631
Current period/year deferred taxation 76 462 142 521 143 776
Foreign currency translation difference 7 393 (27 009) (28 958)
Deferred taxation liability carried forward 605 304 522 143 521 449
The deferred taxation liability results from the following:
Audited
As at As at As at
31 December 31 December 30 June
Euro 2016 2015 2016
Deferred taxation on temporary differences
between accounting and fiscal value of:
Investment property 1 047 599 908 482 721 292
Deferred taxation asset 1 047 599 908 482 721 292
Deferred taxation on temporary differences
between accounting and fiscal value of:
Investment property 1 652 903 1 430 625 1 242 741
Deferred taxation liability 1 652 903 1 430 625 1 242 741
Net deferred taxation liability 605 304 522 143 521 449
Reconciliation of effective taxation rate
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro % 2016 % 2015 % 2016
Profit before taxation 1 175 984 1 991 456 2 326 557
Taxation using the company's 0,00 - 0,00 - 0,00 -
domestic rate
Effect of tax rates in foreign (36,10) (424 496) (25,23) (502 278) (29,43) (684 749)
jurisdictions
Change in recognised deductible
temporary differences
- Revaluation of 34,74 408 498 12,12 241 286 (7,99) (185 826)
investment property
- Change in tax base (41,24) (484 960) (19,27) (383 807) 1,81 42 050
(42,60) (500 958) (32,38) (644 799) (35,61) (828 525)
7. Intangible assets
The group's intangible assets comprise:
Audited
As at As at As at
31 December 31 December 30 June
Euro 2016 2015 2016
Goodwill 24 387 942 28 449 119 25 262 818
Other intangible assets 111 338 - -
24 499 280 28 449 119 25 262 818
Reconciliation of the group's carrying amount of goodwill:
MAS Property New
Advisors Waverley 10
Euro Limited Limited Total
Cost
Balance at 30 June 2015 (audited) 27 768 955 1 582 184 29 351 139
Foreign currency translation difference (853 396) (48 624) (902 020)
Closing balance 31 December 2015 26 915 559 1 533 560 28 449 119
Foreign currency translation difference (3 014 543) (171 758) (3 186 301)
Closing balance 30 June 2016 (audited) 23 901 016 1 361 802 25 262 818
Foreign currency translation difference (827 715) (47 161) (874 876)
Closing balance 31 December 2016 23 073 301 1 314 641 24 387 942
Impairment
The recoverable amounts of the group's CGUs are determined by their value-in-use, as this is greater than fair
value less costs to sell.
MAS Property Advisors Limited and New Waverley 10 Limited
As there were no indicators of impairment at 31 December 2016, no impairment test was performed. Goodwill will
be tested for impairment at 30 June 2017. No impairment charge arose as a result of the group's previous annual
impairment test of goodwill in relation to New Waverley 10 Limited and MAS Property Advisors Limited (December
2015: nil; June 2016: nil).
8. 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 opportunities 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 bank consists of residential elements of the developments at New
Waverley, North Street Quarter and Langley Park, all of which now have
planning permission in place.
The carrying amount of the group's investment property was as follows:
As at 31 December 2016
Euro Fair value Cost Total
Income-generating property 425 203 212 - 425 203 212
Development property - 7 583 361 7 583 361
Land bank - 40 903 437 40 903 437
425 203 212 48 486 798 473 690 010
As at 31 December 2015
Euro Fair value Cost Total
Income-generating property 169 911 602 - 169 911 602
Development property - 59 081 009 59 081 009
Land bank - 44 826 757 44 826 757
169 911 602 103 907 766 273 819 368
As at 30 June 2016 (audited)
Euro Fair value Cost Total
Income-generating property 242 625 172 - 242 625 172
Development property 17 927 863 4 502 390 22 430 253
Land bank - 41 940 654 41 940 654
260 553 035 46 443 044 306 996 079
As at 31 December 2016
Income-
Euro generating Development Land bank Total
Opening balance 242 625 172 22 430 253 41 940 654 306 996 079
Property acquisitions 155 151 088 - - 155 151 088
Capitalised acquisition costs 3 057 070 - - 3 057 070
Capitalised retentions (see note 13) 600 000 - - 600 000
Property disposal - (274 480) - (274 480)
Transfer 25 458 248 (23 907 416) (1 550 832) -
Capitalised expenditure (22 373) 9 995 649 1 919 729 11 893 005
Capitalised interest from general borrowings - 182 256 45 953 228 209
Fair value adjustment (see note 5) 677 340 (78 971) - 598 369
Foreign currency translation difference (2 343 333) (763 930) (1 452 067) (4 559 330)
Closing balance 425 203 212 7 583 361 40 903 437 473 690 010
As at 31 December 2015
Income-
Euro generating Development Land bank Total
Opening balance 164 390 519 42 907 443 41 240 845 248 538 807
Property acquisitions 10 315 400 - - 10 315 400
Capitalised retentions (see note 13) 270 755 - - 270 755
Capitalised acquisition costs 1 089 375 - - 1 089 375
Capitalised expenditure 26 219 17 494 995 4 853 324 22 374 538
Fair value adjustment (see note 5) (2 074 710) - - (2 074 710)
Transfer to assets held for sale (2 043 750) - - (2 043 750)
Foreign currency translation difference (2 062 206) (1 321 429) (1 267 412) (4 651 047)
Closing balance 169 911 602 59 081 009 44 826 757 273 819 368
As at 30 June 2016 (audited)
Income-
Euro generating Development Land bank Total
Opening balance 164 390 518 42 907 443 41 240 845 248 538 806
Property acquisitions 37 439 245 - - 37 439 245
Capitalised retentions (see note 13) 1 370 755 - - 1 370 755
Capitalised acquisition costs 4 578 229 - - 4 578 229
Property disposal (1 814 850) - - (1 814 850)
Transfer 43 937 100 (43 937 100) - -
Capitalised expenditure 749 693 31 356 543 5 910 392 38 016 628
Capitalised financial liability (see note 13) - - 3 327 225 3 327 225
Capitalised interest from general borrowings - 28 452 354 28 806
Fair value adjustment (see note 5) (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 difference (6 260 888) (5 821 216) (5 802 818) (17 884 922)
Closing balance 242 625 172 22 430 253 41 940 654 306 996 079
Fair value
Investment property is carried at fair value. Where fair value cannot be reliably determined for development and
land bank property, but for which the group expects the fair value to be reliably determinable as construction
progresses, these properties are measured under the cost model of investment property until fair value becomes
reliably determinable. Changes in fair values are recognised in profit or loss.
Acquisitions and non-controlling interest
In August 2016, the group acquired a portfolio of 20 retail units tenanted by Edeka MIHA AG and an industrial
property tenanted by Volkswagen AG both in Germany for EUR56 010 400 and EUR10 500 000 respectively.
On 20 September 2016 the group was issued 80% of the ordinary share capital of a newly incorporated entity PKM
CEE Investments Limited ("PKM CEE") for the consideration of EUR80. The remaining 20% of the share capital of PKM
CEE was issued to Prime Kapital CEE Property Investment Management Ltd, a non-controlling interest ("NCI") for
the consideration of EUR20. The shares of PKM CEE carry equal voting rights, such that the group has 80% of the
voting rights and control over PKM CEE. At the date of acquisition PKM CEE had no assets or liabilities. PKM CEE
was incorporated initially to purchase the Nova Park investment property.
In November 2016 PKM CEE acquired a retail shopping mall in Poland, Nova Park, for EUR88 640 688. The profit
attributable to NCI of EUR1 072 575 is predominately attributable to the fair value movement of Nova Park of which
the NCI's share is EUR1 037 862. The profit attributable to NCI is disclosed in the condensed consolidated statement
of profit or loss, the equity attributable to NCI of EUR1 072 595 is disclosed in the condensed consolidated
statement of financial position.
Operating leases
Investment properties are subject to operating leases. The group's investment property portfolio generated
EUR11 067 791 (December 2015: EUR6 586 450; June 2016: EUR14 203 699) in rental income and EUR1 541 342 (December
2015: EUR841 651; June 2016: EUR2 047 322) in service charges and other recoveries with service charges and other
property operating expenses of EUR2 421 484 (December 2015: EUR1 783 557, June 2016: EUR4 036 748) being recognised
in profit or loss.
Interest bearing borrowings
Bank borrowings of EUR121 744 597 (December 2015: EUR14 971 478; June 2016: EUR44 578 595) are secured on income-
generating property with a fair value of EUR220 249 618 (December 2015: EUR28 272 258; June 2016: EUR79 269 836). The
group has total designated bank borrowings of EUR107 417 874 (December 2015: nil, June 2016: EUR29 978 966) as
general borrowings. During the period interest costs on general borrowings of EUR228 209 (December 2015: nil,
June 2016: EUR28 806) have been capitalised and included within development and land bank investment property.
Related parties
The group has a development management agreement with the developer New Waverley Advisers Limited, a
related party, for the development and construction of the New Waverley site in Edinburgh. A development
management fee of EUR2 083 575 (December 2015: EUR1 528 321; June 2016: EUR2 367 448) has been recognised in
relation to this development, see note 13.
The group has capitalised costs incurred from related parties amounting to EUR12 123 929 (December 2015:
EUR17 790 498; June 2016: EUR27 117 356) during the period, see note 18.
Measurement of fair values
Valuation process for level 3 investment property
On an annual basis, the fair value of investment property is determined by external independent property valuers
who have appropriate recognised professional qualifications and recent experience in the location and category of
the property being valued. At the interim reporting date, the fair value of investment property is determined by
the directors either by reviewing the most recent external valuation and updating for any material changes to the
significant inputs or by reference to other relevant information generated by market transactions.
For all investment properties their current use equates to the highest and best use. The external valuations
received are initially reviewed by the relevant internal asset manager and compared to their expectation of what
fair value would be for individual investment properties. If the asset manager is in agreement with the valuation,
the valuation reports are then checked by the finance team to confirm their numerical and methodological
accuracy. Lastly, the investment property valuation is reviewed by the Audit Committee.
Fair value hierarchy
The fair value measurement of all the group's investment properties have been categorised as level 3 in the fair
value hierarchy based upon the significant unobservable inputs into the valuation techniques used.
The following table shows the carrying amount and fair value of the group's investments in the fair value
hierarchy:
As at 31 December 2016
Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Income-generating property 425 203 212 - - 425 203 212
425 203 212 - - 425 203 212
As at 31 December 2015
Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Income-generating property 169 911 602 - - 169 911 602
169 911 602 - - 169 911 602
As at 30 June 2016 (audited)
Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Income-generating property 242 625 172 - - 242 625 172
Development property 17 927 863 - - 17 927 863
260 553 035 - - 260 553 035
Valuation techniques and significant unobservable inputs
The following table shows the valuation techniques used in measuring the fair value of investment property, as
well as the significant unobservable inputs used.
As at 31 December 2016, 31 December 2015 and 30 June 2016
Inter-relation between key
Investment Significant unobservable inputs and fair
property type Valuation technique unobservable inputs value measurement
Income- Discounted cash flows: - Risk adjusted The estimated fair value
generating The valuation model considers discount rates would increase/(decrease) if:
property the present value of net cash - Market rent - Expected market rental
flows to be generated from the - Net rental growth growth was higher/
property, taking into account - Reversionary (lower)
expected rental growth rate, discount rate - The occupancy rate was
void periods, occupancy rate, higher/(lower)
lease incentive costs such as - The reversionary discount
rent-free periods and other rate was lower/(higher)
costs not paid by tenants. The - The risk adjusted discount
expected net cash flows are rate was lower/(higher)
discounted using risk-adjusted
discount rates. Among other
factors, the discount rate
estimation considers the
quality of a building and its
location, tenant credit quality
and lease terms.
As at 30 June 2016
Inter-relation between key
Investment Significant unobservable inputs and fair
property type Valuation technique unobservable inputs value measurement
Development Discounted cash flows less - Risk adjusted The estimated fair value would
property cost to complete: discount rates increase/(decrease) if:
The discounted cash flow is - Market rent - Expected market rental
determined on the same - Net rental growth growth was higher/(lower)
basis as income-generating - Reversionary - The occupancy rate was
properties based on the discount rate higher/(lower)
completed development - Costs to complete - The reversionary discount
property. rate was lower/(higher)
- The risk adjusted discount
Costs to complete as rate was lower/(higher)
determined by external - The cost to complete was
quantity surveyors are lower/(higher)
deducted from the - Completion date was
discounted cash flow. earlier/(later)
Income-generating investment property held at 31 December 2016 continues to be held at their 30 June 2016 fair
value. A sensitivity analysis is available in the group's integrated annual report 2016. Development and land bank
property for which fair value cannot be reliably determined are carried under the cost model of investment property.
9. Financial investments
The carrying amount of the group's financial investments was as follows:
Audited
As at As at As at
31 December 31 December 30 June
Euro 2016 2015 2016
Non-current
Sirius - 15 910 475 -
- 15 910 475 -
Current
Karoo Fund - 34 322 404 -
Sirius - - 51 614 068
- 34 322 404 51 614 068
- 50 232 879 51 614 068
Financial investments have been classified as fair value through profit or loss ("FVTPL"). Accordingly, they are
measured at fair value at the reporting date with changes in fair value being recognised in profit or loss.
On 22 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%. On 21 September 2016 the remaining 36 474 895 shares in Sirius were disposed of for
EUR17 762 716.
Reconciliation of financial investments at fair value:
Restated* Audited
As at As at As at
31 December 31 December 30 June
Euro 2016 2015 2016
Opening balance 51 614 068 82 173 737 82 173 737
Reclassification - (42 537) (42 537)
Disposal (47 045 039) - -
Cash redemptions - (37 799 435) (40 376 739)
Fair value movement (note 5) (4 569 029) 8 100 659 12 938 105
Foreign currency translation difference - (2 199 545) (3 078 498)
Closing balance - 50 232 879 51 614 068
* Fair value adjustments disclosed in the prior period as 'Treasury investments' related to Sirius. These have been
reclassified to fair value of 'Financial investments' to aid comparability with the classifications in the current
period, see note 19.
10. Investment in equity accounted investee
The carrying amount of the group's investments in equity accounted investee was as follows:
Audited
As at As at As at
31 December 31 December 30 June
Euro 2016 2015 2016
PKM Developments Limited ("PKM") 20 057 968 - 19 991 716
Reconciliation of investments in equity accounted investee
Audited
As at As at As at
31 December 31 December 30 June
Euro 2016 2015 2016
Opening balance 19 991 716 - -
Acquisition - - 20 000 000
Capitalised acquisition costs 30 098 - 23 624
20 021 814 - 20 023 624
Share of profit/(loss) 36 154 - (31 908)
20 057 968 - 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.
The following table summarises the financial information of PKM as included in its own financial statements:
Audited
As at As at As at
Euro 31 December 2016 31 December 2015 30 June 2016
Statement of financial position - PKM
Non-current assets 20 051 534 - 2 697 078
Current assets 30 696 114 - 47 496 624
Total assets 50 747 648 - 50 193 702
Current liabilities 737 035 - 273 474
Total liabilities 737 035 - 273 474
Net assets 50 010 613 - 49 920 228
Percentage ownership interest 40% - 40%
Group share of net assets 20 004 245 - 19 968 092
Capitalised costs 53 723 - 23 624
Carrying amount 20 057 968 - 19 991 716
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro 2016 2015 2016
Statement of profit or loss and other
comprehensive income - PKM
Revenue - - -
Corporate expenses (39 191) - (36 756)
Net finance income/(costs) 129 575 - (43 014)
Total profit/(loss) and other 90 384 - (79 770)
comprehensive income
Percentage ownership interest 40% - 40%
Group's share of total comprehensive 36 154 - (31 908)
profit/(loss)
11. Trade and other receivables
The group's trade and other receivables comprise:
Audited
As at As at As at
31 December 31 December 30 June
Euro 2016 2015 2016
Property retentions held in escrow 2 115 000 1 615 000 2 115 000
VAT receivable 20 911 114 757 949 1 866 772
Dividends receivable - - 1 256 586
Lease incentive accruals 207 710 - 737 423
Prepayments 578 672 411 651 3 746 679
Other 485 185 349 817 607 688
EMI receivable - - 589 826
Trade receivables from lessees 2 456 071 1 984 463 344 109
Collateral receivable (see note 18) 624 650 - -
27 378 402 5 118 880 11 264 083
The carrying amount of the group's trade and other receivables is an approximation of the fair value.
The property retentions that relate to the acquisition of the Bruchsal, Heppenheim park and Munich properties
have been held in escrow. Included in the VAT receivable balance is an amount of PLN92 000 000 which at the
reporting date was approximately EUR20 280 739 (December 2015: nil; June 2016: nil) due to MAS CEE Investments
Limited, a group entity on the purchase price of Nova Park.
12. Share Capital
The ordinary share capital of the company has no par value. The reconciliation of share capital for the period was
as follows:
Number of Share capital
shares Euro
Balance at 30 June 2015 (audited) 291 787 889 305 671 992
Issued during the period
- Distributions reinvested 2 667 741 3 241 805
Balance at 31 December 2015 294 455 630 308 913 797
Issued during the period
- Distributions reinvested 3 004 004 3 784 335
- Settlement of Attacq liability 21 317 449 28 156 329
- Capital raise 29 848 136 37 676 095
Balance at 30 June 2016 (audited) 348 625 219 378 530 556
Issued during the period
- Distributions - (7 994 090)
- Distributions reinvested 6 317 591 7 983 727
- Capital raise 25 641 026 31 592 882
Balance at 31 December 2016 380 583 836 410 113 075
Distributions reinvested represent scrip dividends paid out of share capital. During the period the group incurred
EUR199 328 (December 2015: nil; June 2016: EUR13 029) expenses in relation to issuing shares which have been offset
against share capital.
13. Financial instruments
The carrying amounts of the group's financial instruments were as follows:
Restated* Audited
As at As at As at
31 December 31 December 30 June
Euro 2016 2015 2016
Non-current
Derivative financial instruments 2 488 440 2 592 709 3 029 495
Financial liabilities 3 698 575 3 820 803 2 367 448
6 187 015 6 413 512 5 396 943
Current
Derivative financial instruments 86 067 - -
Financial liabilities 1 258 865 35 271 134 7 146 090
1 344 932 35 271 134 7 146 090
7 531 947 41 684 646 12 543 033
*Deferred consideration as disclosed in December 2015 has been reclassified to financial instruments and is included
within financial liabilities to aid comparability with the classifications in the current period, see note 19.
As at 31 December 2016
Euro Fair value Amortised cost Total
Derivative financial instruments
Current 86 067 - 86 067
Non-current 2 488 440 - 2 488 440
2 574 507 - 2 574 507
Financial liabilities
Current - 1 258 865 1 258 865
Non-current 2 083 575 1 615 000 3 698 575
2 083 575 2 873 865 4 957 440
4 658 082 2 873 865 7 531 947
As at 31 December 2015
Euro Fair value Amortised cost Total
Derivative financial instruments
Non-current 2 592 709 - 2 592 709
2 592 709 - 2 592 709
Financial liabilities
Current 32 886 514 2 384 620 35 271 134
Non-current 3 820 803 - 3 820 803
36 707 317 2 384 620 39 091 937
39 300 026 2 384 620 41 684 646
As at 30 June 2016 (audited)
Euro Fair value Amortised cost Total
Derivative financial instrument
Non-current 3 029 495 - 3 029 495
3 029 495 - 3 029 495
Financial liabilitie
Current 3 327 225 3 818 865 7 146 090
Non-current 2 367 448 - 2 367 448
5 694 673 3 818 865 9 513 538
8 724 168 3 818 865 12 543 033
Financial liabilities held at amortised cost
Deferred consideration is held at amortised cost. On the acquisitions of Heppenheim park, Bruchsal and Munich,
the group retained a portion of the purchase price per the relevant selling purchase agreements, which will be
released to the vendor at such time that they complete the agreed retention works/activities. These amounts have
been capitalised within investment property.
Reconciliation of financial liabilities held at amortised cost:
Audited
As at As at As at
31 December 31 December 30 June
Euro 2016 2015 2016
Opening 3 818 865 2 703 865 2 703 865
Purchase price retained 600 000 270 755 1 370 755
Purchase price released (1 545 000) (590 000) (255 755)
Closing 2 873 865 2 384 620 3 818 865
Financial instruments held at fair value
The carrying amount of the group's financial instruments held at fair value was as follows:
Audited
As at As at As at
31 December 31 December 30 June
Euro 2016 2015 2016
Derivative financial instruments
Interest rate swaps 2 488 440 2 592 709 3 029 495
Forward currency contract 86 067 - -
2 574 507 2 592 709 3 029 495
Financial liabilities
Development management fee 2 083 575 1 528 321 2 367 448
Priority participating profit dividend - 2 292 482 -
Attacq financial liability - 29 112 780 -
Santon financial liability - 3 773 734 3 327 225
2 083 575 36 707 317 5 694 673
Derivative financial instruments
The group has hedged the interest rate exposure on EUR14 326 723 of interest bearing borrowings on German and
Swiss debt. In addition, the group has entered into a Polish zloty forward currency contract to hedge the exposure
on VAT receivable in relation to the Nova Park acquisition (see note 11). These hedging instruments are classified
as FVTPL; accordingly, they are measured at fair value at the reporting date with changes in fair value being
recognised in profit or loss.
Reconciliation of derivative financial instruments:
Interest rate Forward currency
Euro swaps contract Total
Balance at 30 June 2015 (audited) 2 603 535 - 2 603 535
Fair value adjustment 46 837 - 46 837
Foreign currency translation difference (57 663) - (57 663)
Balance at 31 December 2015 2 592 709 - 2 592 709
Fair value adjustment 446 757 - 446 757
Foreign currency translation difference (9 971) - (9 971)
Balance at 30 June 2016 (audited) 3 029 495 - 3 029 495
Fair value adjustment (559 117) 86 067 (473 050)
Foreign currency translation difference 18 062 - 18 062
Balance at 31 December 2016 2 488 440 86 067 2 574 507
Financial liabilities
Reconciliation of financial liabilities held at fair value:
Priority
Attacq Santon Development participating
financial financial management profit
Euro liability liability fee dividend Total
Balance at 30 June 2015 (audited) 26 378 571 - 1 576 779 2 365 168 30 320 518
Recognised on grant of planning - 3 773 734 - - 3 773 734
permission
Fair value adjustment (note 5) 3 601 074 - - - 3 601 074
Foreign currency translation difference (866 865) - (48 458) (72 686) (988 009)
Balance at 31 December 2015 29 112 780 3 773 734 1 528 321 2 292 482 36 707 317
Fair value adjustment (note 5) 431 510 - 1 092 047 (2 200 445) (676 888)
Settlement (28 156 329) - - - (28 156 329)
Foreign currency translation difference (1 387 961) (446 509) (252 920) (92 037) (2 179 427)
Balance at 30 June 2016 (audited) - 3 327 225 2 367 448 - 5 694 673
Fair value adjustment (note 5) - - (205 516) - (205 516)
Settlement - (3 327 225) - - (3 327 225)
Foreign currency translation difference - - (78 357) - (78 357)
Balance at 31 December 2016 - - 2 083 575 - 2 083 575
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 has a development management agreement with the developer under which the developer provides
services in procuring the construction of the New Waverly 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 Waverly 10 Limited, shareholders are entitled to 7,5% annualised
return on invested capital. The first part of the fee payable to the developer is 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 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 capital any gain that will be made should New Waverly 10 Limited ever decide to realise its
investment in the site.
Measurement of fair values
Fair value hierarchy
The following table shows the carrying amount and fair value of the group's financial instruments held at fair value
in the fair value hierarchy:
As at 31 December 2016
Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Derivative financial liabilities
Interest rate swaps 2 488 440 - 2 488 440 -
Forward currency contract 86 067 - 86 067 -
Financial liabilities
Development management fee 2 083 575 - - 2 083 575
4 658 082 - 2 574 507 2 083 575
As at 31 December 2015
Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Derivative financial liabilities
Interest rate swap 2 592 709 - 2 592 709 -
Financial liabilities
Attacq financial liability 29 112 780 - 29 112 780 -
Development management fee 1 528 321 - - 1 528 321
Santon financial liability 3 773 734 - - 3 773 734
Priority participating profit dividend 2 292 482 - - 2 292 482
39 300 026 - 31 705 489 7 594 537
As at 30 June 2016 (audited)
Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Derivative financial liabilities
Interest rate swap 3 029 495 - 3 029 495 -
Financial liabilities
Development management fee 2 367 448 - - 2 367 448
Santon financial liability 3 327 225 - - 3 327 225
8 724 168 - 3 029 495 5 694 673
Level 2 financial instruments
Valuation techniques and unobservable inputs
The following table shows the valuation technique used to measure investments held at fair value as well as the
inputs used for level 2 financial instruments.
As at 31 December 2016
Level 2 financial Valuation technique Inputs Inter-relationship
liability between inputs and
fair value
measurement
Forward currency The fair value of the - Spot currency rate The estimated fair value
contract forward contract is based - Risk free rate would
on the underlying spot - Currency amount increase/(decrease) if:
price of the currency, the - Spot currency rate
risk-free rate and the date for purchased
of expiration. The currency was
theoretical price is derived stronger/(weaker)
from the cash-and-carry - Risk-free rate for
arbitrage. purchased currency
was lower/(higher)
- Currency amount was
higher/(lower)
As at 31 December 2016, 31 December 2015 and 30 June 2016
Financial Valuation technique Inputs Inter-relationship
instrument between inputs and
fair value
measurement
Interest rate swaps The fair value is based on - 3 month Swiss The estimated fair value
discounting future cash Libor/Euribor would increase/(decrease) if:
flows using the interest rate - Swap rate
swap curves plus the - Notional loan value - 3 month Swiss
historic charged credit - Fixed rate of interest libor/Euribor was
margin at the dates when higher/(lower)
the cash flows will take - Swap rate was
place. lower/(higher)
- Notional loan was
lower/(higher)
- Fixed rate of interest
was lower/(higher)
As at 31 December 2015
Level 2 financial Valuation technique Inputs Inter-relationship
liability between inputs and fair
value measurement
Attacq financial Fair value is based on the NAV per share The estimated fair value
liability fund's reported net asset 31 December 2015 - EUR2 236 would increase/
value ("NAV"). (decrease) if:
The NAV of the fund is - NAV per share was
valued by the fund's All inputs used by the higher/(lower)
investment manager as fund's investment
follows: manager in determining
- Investments in the fund's NAV are
equities by the Karoo observable with the
Fund are valued at exception of a convertible
quoted prices in active debenture that is not
markets significant to the input for
- Where there is not an fair valuation.
active market, fair
value is based on
broker quotes on
similar contracts that
are traded in an active
market and the quotes
reflect the actual
transactions in similar
instruments
Level 3 financial instruments
Valuation process of level 3 financial liabilities
The fair value of level 3 financial liabilities in respect of New Waverley Advisers Limited and New Waverley
Holdings Limited is calculated annually. The investment property valuation process is part of this valuation process
as a consequence of the financial liability to New Waverley Advisors Limited and New Waverley Holdings Limited
being derived from the fair value of New Waverley investment property. The fair value of the financial liability is
calculated and based on the fair value of the New Waverley investment property. The fair value is then reviewed
by the finance manager and chief financial officer before being reviewed by the Audit Committee.
Valuation techniques and unobservable inputs
The following table shows the valuation technique used to measure financial instruments held at fair value as well
as the significant unobservable inputs for level 3 financial liabilities:
As at 31 December 2016, 30 June 2016 and 31 December 2015
Level 3 financial Valuation technique Significant Inter-relationship
liability unobservable inputs between significant
unobservable inputs and
fair value measurement
Development Discounted cash flows: - Expected market The estimated fair value
management fee Fair value is based on rental growth would increase/(decrease)
the profitability of the - Occupancy rate if:
New Waverley - Reversionary discount - Expected market
and development. See note rate rental growth was
8, for the valuation - Risk adjusted higher/(lower)
technique in respect of discount rates - The occupancy rate
New Waverley. - Costs to complete was higher/(lower)
Priority participating - Completion dates - The reversionary
discount rate was
profit dividend lower/(higher)
- The risk adjusted
discount rate was
lower/(higher)
- The costs to complete
was lower/(higher)
- Completion date was
earlier/(later)
As at 30 June 2016 and 31 December 2015
Level 3 financial Valuation technique Significant Inter-relationship between
liability unobservable inputs significant unobservable
inputs and fair value
measurement
Santon financial Discounted cash flows: - Risk adjusted The estimated fair value
liability discount rate would increase/(decrease)
Fair value is based on - Contractual amount if:
the contractual amount.
- The risk adjusted
discount rate was
lower/(higher)
- The contractual rate
was higher/(lower)
A sensitivity analysis is available in the group's 2016 integrated annual report for the development management
fee and priority participating profit dividend.
14. Interest bearing borrowings
The carrying amount of the group's interest bearing borrowings is as follows:
Audited
As at As at As at
31 December 31 December 30 June
Euro 2016 2015 2016
Non-current - secured bank loans
UK investment property 31 691 617 - -
German investment property 77 943 361 5 620 509 34 833 306
Swiss investment property 8 313 288 8 599 121 8 394 525
117 948 266 14 219 630 43 227 831
Current
UK investment property 1 530 080 - -
German investment property 1 903 083 391 917 991 886
Swiss investment property 363 168 359 931 358 878
3 796 331 751 848 1 350 764
121 744 597 14 971 478 44 578 595
Interest bearing borrowings are held at amortised cost, accordingly interest on interest bearing borrowings
drawn down to fund development property is capitalised. All other 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:
Audited
As at As at As at
31 December 31 December 30 June
Euro 2016 2015 2016
Opening balance 44 578 595 15 747 889 15 747 889
Drawn down 80 430 900 - 30 550 000
Capitalised transaction costs (1 456 967) (30 135) (412 345)
Amortisation (1 135 900) (375 923) (922 638)
Finance costs 840 195 303 529 770 243
General borrowings capitalised 228 209 - 28 806
Interest paid (842 927) (300 072) (827 855)
Foreign currency translation difference (897 508) (373 810) (355 505)
121 744 597 14 971 478 44 578 595
Interest from general borrowings of EUR228 209 was capitalised to investment property during the period
(December 2015: nil; June 2016: EUR28 806), see note 8 at a capitalisation rate of 2,11%.
15. Trade and other payables
The group's trade and other payables comprise:
As at 31 As at 31 Audited
December December As at
Euro 2016 2015 30 June 2016
Construction payables 707 600 796 643 3 881 404
Trade payables 6 152 030 2 746 407 3 382 531
Deferred income 1 373 463 716 879 425 202
Current taxation payable 593 793 460 289 373 755
VAT payable 1 233 088 495 459 233 305
10 059 974 5 215 677 8 296 197
Construction payables relate to amounts owed to developers from the construction of the group's development
properties.
16. Operating segments
The group's chief operating decision maker is determined to be the executive management team. During the
prior period 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 Land plots held for schemes that have not yet
commenced, residential developments and other 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 31 December 2015 comparative period has been reclassified to aid comparability with segmental reporting
in the current period and the 30 June 2016 year end.
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.
31 December 2016
Euro Income-generating property Development property Land bank Corporate Total
Statement of comprehensive income
External revenue 12 379 928 1 823 227 382 - 12 609 133
Segment profit/(loss) before tax 10 240 594 161 924 (4 488 483) (4 738 051) 1 175 984
Taxation (499 520) 5 175 (1 618) (500 958)
Interest income 157 - 17 39 353 39 527
Interest cost (840 545) - - (1 111) (841 656)
Depreciation - - - (13 504) (13 504)
Other material non-cash items
- Fair value adjustments 1 150 391 126 544 (4 542 555) - (3 265 620)
- Foreign exchange (57 672) 22 - (2 850 427) (2 908 077)
Statement of financial position
Segment non-current assets 427 871 884 27 646 524 40 933 425 23 073 301 519 525 134
- Investment in equity accounted
investee - 20 057 968 - - 20 057 968
Segment current assets 37 765 491 106 723 4 460 800 9 233 614 51 566 628
Segment non-current liabilities 123 704 609 2 083 575 - 40 410 125 828 594
Segment current liabilities 13 192 414 712 180 592 926 780 703 15 278 223
31 December 2015 Restated*
Euro Income-generating property Development property Land bank Corporate Total
Statement of comprehensive income
External revenue 7 073 749 3 039 248 764 102 549 7 428 101
Segment profit/(loss) before tax 3 101 796 (5 407) 33 228 (1 138 161) 1 991 456
Taxation (643 194) - - (1 605) (644 799)
Interest income 42 1 42 318 628 318 713
Interest cost (303 529) - - - (303 529)
Depreciation - - - (2 990) (2 990)
Other material non-cash items
- Fair value adjustments (2 121 548) - - 4 499 586 2 378 038
- Exchange differences (527) (2 888) - (3 050 261) (3 053 676)
Statement of financial position
Segment non-current assets 170 820 083 60 614 569 44 826 759 43 002 879 319 264 290
Segment current assets 16 228 343 544 064 34 655 977 41 110 611 92 538 995
Segment non-current liabilities 18 242 964 3 820 803 - - 22 063 767
Segment current liabilities 7 584 154 5 352 4 032 094 29 709 349 41 330 949
*The December 2015 figures have been restated following the reclassification of prior year expenses in the condensed consolidated interim
statement of profit or loss and the reclassification of certain items in the condensed consolidated statement of financial position,
see note 19.
30 June 2016 (audited)
Euro Income-generating property Development property Land bank Corporate Total
Statement of comprehensive income
External revenue 15 370 255 11 090 709 469 160 207 16 251 021
Segment profit/(loss) before tax 6 221 242 (1 007 358) 4 375 190 (7 262 517) 2 326 557
Interest income - 57 383 370 9 374 392 801
Interest 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
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 assets/liabilities or income/expense.
Geographical information
The group invests in investment property in western Europe and CEE. 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;
Poland; and Romania.
Revenue
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro 2016 2015 2016
BVI - - -
UK 3 208 219 2 584 456 5 674 973
Germany 8 075 817 4 220 335 9 332 689
Switzerland 619 086 623 310 1 243 359
Poland 706 011 - -
12 609 133 7 428 101 16 251 021
Non-current assets
Audited
As at As at As at
31 December 31 December 30 June
Euro 2016 2015 2016
BVI - - -
UK 170 476 751 184 903 550 164 250 144
Germany 215 437 599 114 038 482 149 481 292
Switzerland 19 722 816 20 322 258 19 489 836
Romania 20 057 968 - 19 991 716
Poland 93 830 000 - -
519 525 134 319 264 290 353 212 988
17. Earnings per share and diluted earnings per share
Basic and diluted earnings per share
The calculation of basic and diluted 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
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro 2016 2015 2016
(Loss)/profit for the period/year attributable to the
owners of the group (397 549) 1 346 657 1 498 032
Weighted-average number of ordinary shares
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro 2016 2015 2016
Issued ordinary shares 348 625 219 291 787 889 291 787 889
Effect of shares issued for capital raise 21 599 777 - 5 871 764
Effect of shares issued related to the settlement of
the Attacq liability - - 6 465 128
Effect of shares issued for scrip distributions 2 025 750 728 891 2 281 979
Weighted-average number of ordinary shares 372 250 746 292 516 780 306 406 760
Basic earnings per share
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro 2016 2015 2016
(Loss)/profit attributable to ordinary
shareholders (397 549) 1 346 657 1 498 032
Weighted-average number of ordinary shares 372 250 746 292 516 780 306 406 760
Basic earnings per share (euro cents) (0,11) 0,46 0,49
Diluted earnings per share
There are no dilutionary investments 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:
Six-month period ended
31 December 2016
Euro Gross Net
Loss for the period (397 549) (397 549)
Adjusted for:
Revaluation of investment property (598 369) (1 006 867)
Headline earnings (995 918) (1 404 416)
Weighted-average number of ordinary shares 372 250 746 372 250 746
Headline earnings per share (euro cents) (0,27) (0,38)
Six-month period ended
31 December 2015
Euro Gross Net
Profit for the period 1 346 657 1 346 657
Adjusted for:
Revaluation of investment property 2 074 710 1 833 424
Headline earnings 3 421 367 3 180 081
Weighted-average number of ordinary shares 292 516 780 292 516 780
Headline earnings per share (euro cents) 1,17 1,09
Audited
Year ended
30 June 2016
Euro Gross Net
Profit for the year 1 498 032 1 498 032
Adjusted for:
Revaluation of investment property 3 088 606 3 274 432
Headline earnings 4 586 638 4 772 464
Weighted-average number of ordinary shares 306 406 760 306 406 760
Headline earnings per share (euro cents) 1,50 1,56
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 more relevant measure.
18. Related parties
Parent and ultimate controlling party
The group has no ultimate controlling party, but is controlled by its ordinary shareholders in aggregate.
Related party transactions
Artisan Real Estate Investors Limited ("Artisan")
Artisan is a real estate management company over which the directors of MAS have significant influence.
An associate of Malcolm Levy also has an indirect beneficial interest.
During the period, Artisan on-charged expenses of EUR6 179 (December 2015: EUR30 120; June 2016: EUR51 962 income).
At the end of the reporting period there was EUR2 920 payable (December 2015: EUR7 494 receivable; June 2016: EUR41
255 receivable) to Artisan.
New Waverley Advisers Limited ("NW Advisers")
NW Advisers is a real estate developer and is a 100% owned subsidiary of Artisan, as such is controlled by Artisan
which is a related party of the group.
During the period, NW Advisers on-charged expenses in relation to the development of New Waverley which
amounted to EUR12 049 068 (December 2015: EUR17 790 498; June 2016: EUR21 117 356). These have been capitalised as
part of the New Waverley development within investment property. On-charges were charged to the group in
accordance with the development management agreement, were on an arm's length basis, and relate to the
construction costs of the development.
In addition, the group has provided for a development management fee of EUR2 083 575 (December 2015: EUR1 528
321; June 2016: EUR2 367 448). This fee is in accordance with the development management agreement and is on an
arm's length basis.
New Waverley Holdings Limited ("NW Holdings")
NW Holdings is a real estate developer and is a 100% owned subsidiary of Artisan. As such it is controlled by
Artisan which is a related party of the group.
Corona Real Estate Partners Limited ("Corona")
Corona is a real estate management company with six staff members and is owned 100% by Jonathan Knight who
is the Chief Investment Officer of the group.
During the period the group used the professional services of Corona and incurred expenses of EUR486 539
(December 2015: EUR464 726; June 2016: EUR850 180), which were charged to the group on an arm's length basis. At
the end of the reporting period nil (December 2015: nil; June 2016: EUR41 984) was due from Corona.
Related party transactions
Income/(expenses)
for the period/year ended Capitalised for the period/year ended Balances receivable/(payable) as at
Audited Audited Audited
31 December 31 December 30 June 31 December 31 December 30 June 31 December 31 December 30 June
Euro 2016 2015 2016 2016 2015 2016 2016 2015 2016
New Waverley Advisers Limited
- Oncharged development costs - - - 12 049 068 17 790 498 27 117 356 (90 587) (127 164) (1 069 607)
- Development management fee (1) 913 946 - (1 092 047) - - - (2 083 575) (1 528 321) (2 367 448)
913 946 - (1 092 047) 12 049 068 17 790 498 27 117 356 (2 174 162) (1 655 485) (3 437 055)
New Waverley Holdings Limited
- Development profit participation - - 2 200 445 - - - - (2 292 482) -
fee1
- - 2 200 445 - - - - (2 292 482) -
Corona Real Estate Partners Limited
- Investment advisory (486 539) (464 726) (850 180) 74 861 - - - - (41 984)
(486 539) (464 726) (850 180) 74 861 - - - - (41 984)
Attacq
- Karoo Fund financial liability - (3 601 074) (4 032 584) - - - - (29 112 780) -
- Interest income from loan - 134 803 383 263 - - - - 19 056 917 -
receivable
- (3 466 271) (3 649 321) - - - - (10 055 863) -
Artisan Real Estate Investors Limited
- Oncharged administrative (6 179) (30 120) 51 962 - - - (2 920) 7 494 41 255
expenses
(6 179) (30 120) 51 962 - - - (2 920) 7 494 41 255
421 228 (3 961 117) (3 339 141) 12 123 929 17 790 498 27 117 356 (2 177 082) (13 996 336) (3 437 784)
All related party balances are unsecured and are repayable on demand.
(1) Differences between the income/(expense) and the corresponding receivable/(payable) related to foreign exchange movements recognised in OCI.
Transactions with key management
Six-months ended 31 December 2016
Short-term Long-term
Euro Role Basic salary Benefits incentive incentive Total
Lukas Nakos CEO 95 120 - 190 240 - 285 360
Malcolm CFO 89 175 - 178 350 - 267 525
Levy
Jonathan CIO 35 670 - 89 176 - 124 846
Knight
Ron Spencer Chairman 15 000 - - - 15 000
Gideon NED 13 750 - - - 13 750
Oosthuizen
Jaco Jansen NED 13 750 - - - 13 750
Morne NED 10 000 - - - 10 000
Wilken
Pierre NED 10 000 - - - 10 000
Goosen
282 465 - 457 766 - 740 231
Six-months ended 31 December 2015
Short-term Long-term
Euro Role Basic salary Benefits incentive incentive Total
Lukas Nakos CEO 110 728 - 166 092 166 092 442 912
Malcolm CFO 103 808 - 155 711 155 711 415 230
Levy
Jonathan CIO 41 523 - 77 856 77 856 197 235
Knight
Ron Spencer Chairman 15 000 - - - 15 000
Gideon NED 13 750 - - - 13 750
Oosthuize
Jaco Jansen NED 13 750 - - - 13 750
Morne NED 10 000 - - - 10 000
Wilke
Pierre NED 10 000 - - - 10 000
Goose
318 559 - 399 659 399 659 1 117 877
Year ended 30 June 2016 (audited)
Short-term Long-term
Euro Role Basic salary Benefits incentive incentive Total
Lukas Nakos CEO 209 248 - 166 092 166 092 541 432
Malcolm CFO 196 170 - 155 711 155 711 507 592
Levy
Jonathan CIO 78 468 - 77 856 77 856 234 180
Knight
Ron Spencer Chairman 30 000 - - - 30 000
Gideon NED 27 500 - - - 27 500
Oosthuizen
Jaco Jansen NED 27 500 - - - 27 500
Morne NED 20 000 - - - 20 000
Wilken
Pierre NED 20 000 - - - 20 000
Goosen
608 886 - 399 659 399 659 1 408 204
The directors haven't received any benefits other than as disclosed above.
19. Reclassification
The group has reclassified some prior year expenses in the condensed consolidated statement of profit or loss and
some items in the condensed consolidated statement of financial position to aid comparability with the classifications
in the current period.
There is no impact of the reclassifications on the prior period profit. The impact of the reclassification on the
condensed consolidated statement of profit or loss and the condensed consolidated statement of financial position is
as follows:
Condensed consolidated statement of profit or loss
Six-month period ended 31 December 2015
Impact of reclassification
As previously
Euro reported Adjustment As reclassified
Other income 145 964 (145 964) -
Service charge 695 687 (695 687) -
Service charges and other recoveries - 841 651 841 651
841 651 - 841 651
Condensed consolidated statement of financial position
As at 31 December 2015
Impact of reclassification
As previously
Euro reported Adjustment As reclassified
Non-current assets
Investments 15 910 475 (15 910 475) -
Financial investments - 15 910 475 15 910 475
Current assets
Investments 34 322 404 (34 322 404) -
Financial investments - 34 322 404 34 322 404
Current liabilities
Deferred consideration 2 384 620 (2 384 620) -
Financial instruments 32 886 514 2 384 620 35 271 134
85 504 013 - 85 504 013
APPENDIX 1 - MANAGEMENT ACCOUNTS
Basis of preparation
In order to provide information of relevance to investors and a meaningful basis of comparison for users of the financial
statements, unaudited management accounts have been prepared and are presented below, in conjunction with the condensed
consolidated financial statements. The directors consider that the management accounts are useful in interpreting the performance
of the group. In terms of section 8.15 of the JSE Listings Requirements, the management accounts constitute pro forma financial
information and the company is therefore required to comply with the requirement of sections 8.16 to 8.34 of the JSE Listings
Requirements on pro forma financial information. In accordance with section 8.19, the pro forma financial information is to be
presented in columnar format showing separately the unadjusted financial information, the pro forma adjustments and the pro
forma financial information, see table below.
The management accounts diverge from IFRS as they account for associates and joint ventures using the proportionate
consolidation method, as opposed to the equity accounting method embodied in the condensed consolidated financial statements
and in accordance with IFRS.
Directors' responsibility
The preparation of the management accounts is the sole responsibility of the directors and has been prepared in accordance with
the basis stated, 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.
Reconciliation of unadjusted financial information to pro forma financial information
Distribution income statement
Six-month Six-month
period ended period ended Year ended
31 December 31 December 30 June
Euro 2016 2015 2016
Rental income 10 959 343 6 586 450 14 203 699
Net service charges and property operating expenses (899 648) (1 064 227) (1 989 426)
- Service charges and other recoveries 1 508 587 841 651 2 047 322
- Service charges and other property operating expenses (2 408 235) (1 905 878) (4 036 748)
Net rental income 10 059 695 5 522 223 12 214 273
Other income - - 1 717 829
Corporate expenses (1 895 966) (1 740 285) (3 203 472)
Net operating income 8 163 729 3 781 938 10 728 630
Net finance costs (669 627) 15 184 (355 990)
- Finance income 114 179 318 713 433 132
- Finance costs (1 011 661) (303 529) (817 928)
- Interest capitalised on development and land bank 227 855 - 28 806
property
Current taxation (424 496) (644 799) (684 749)
Direct investment result 7 069 606 3 152 323 9 687 891
Fair value adjustments (4 303 482) 2 378 038 6 431 719
Investment expenses (183 040) (1 130 028) (2 202 144)
Other income - - 637 552
Exchange differences (2 904 171) (3 053 676) (12 913 210)
Deferred taxation (76 462) - (143 776)
Indirect investment result (7 467 155) (1 805 666) (8 189 859)
IFRS net (loss)/profit for the period/year attributable to
owners of the group (397 549) 1 346 657 1 498 032
Earnings per share (0,11) 0,46 0,49
Diluted earnings per share (0,11) 0,46 0,49
Six-month Six-month
period ended period ended Year ended
31 December 31 December 30 June
Euro 2016 2015 2016
Direct investment result 7 069 606 3 152 323 9 687 891
Other specific adjustments 1 372 699 (844 123)* 1 698 750
Adjustment relating to shares issued during period/year 188 987 31 425 1 568 915
Distributable earnings 8 631 292 2 339 625 12 955 556
Distribution from reserves 1 492 238 4 355 077 2 750 000
Total distribution 10 123 530 6 694 702 15 705 556
Closing number of shares 380 583 836 294 455 630 348 625 219
Final distribution per share (euro cents) - - 2,23
Interim distribution per share (euro cents) 2,66 2,27 2,27
Total distribution per share (euro cents) 2,66 2,27 4,50
The group uses distribution per share as its relevant unit of measure for trading statement purposes.
* In order to align with industry peers, the board of directors has refined the methodology for commuting 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 (844 123). This has been included in other specific adjustments to
reconcile the distributable earnings to core income in the previous year.
Summarised statement of financial position
As at As at As at
31 December 31 December 30 June
Euro 2016 2015 2016
Investment property 466 391 848 275 863 118 311 613 772
- Income-generating property 406 437 212 169 911 602 242 625 172
- Development property 15 665 601 59 081 009 24 907 797
- Land bank 44 289 035 46 870 507 44 080 803
Financial investments 21 875 305 50 232 879 51 614 068
Intangible assets 24 499 280 28 449 119 25 262 818
Deferred taxation assets 1 047 599 908 482 721 292
Trade and other receivables 23 174 544 5 118 880 11 313 808
Other assets 230 277 19 233 763 241 083
Cash and cash equivalents 32 210 809 31 997 044 66 946 902
Total assets 569 429 662 411 803 285 467 713 743
Shareholders' equity 428 912 350 348 408 569 400 844 952
Interest bearing borrowings 121 744 597 14 971 478 44 578 595
Financial instruments 7 531 949 41 684 646 12 543 033
Deferred taxation liabilities 1 652 903 1 430 625 1 242 741
Trade and other payables 9 470 469 5 215 677 8 405 586
Other liabilities 117 394 92 290 98 836
Total liabilities 140 517 312 63 394 716 66 868 791
Total shareholders' equity and liabilities 569 429 662 411 803 285 467 713 743
Actual number of ordinary shares in issue 380 583 836 294 455 630 348 625 219
NAV per share (euro cents) 112,7 118,3 115,0
Adjusted NAV per share (euro cents) 112,9 118,5 115,1
Distribution income statement
MANAGEMENT
IFRS ADJUSTMENTS ACCOUNTS
Six-month
period ended Equity Six-month period
31 December Reclassification accounted ended
Euro 2016 (1) investee(2) Nova Park(3) 31 December 2016
Rental income 11 067 791 - - (108 448) 10 959 343
Service charges and other recoveries 1 541 342 - - (32 755) 1 508 587
Revenue 12 609 133 - - (141 203) 12 467 930
Service charges and other property (2 421 484) - - 13 249 (2 408 235)
operating expenses
Net rental income 10 187 649 - - (127 954) 10 059 695
Other income - - - - -
Corporate expenses (1 885 474) - (15 676) 5 184 (1 895 966)
Investment expenses (186 519) 186 519 - - -
Net operating income 8 115 656 186 519 (15 676) (122 770) 8 163 729
Fair value adjustments (3 265 620) 3 265 620 - - -
Exchange differences (2 908 077) 2 908 077 - - -
Share of profit/(loss) from equity 36 154 - (36 154) - -
accounted investee, net of taxation
Profit before finance income/costs 1 978 113 6 360 216 (51 830) (122 770) 8 163 729
Finance income 39 527 - (6 020) 80 672 114 179
Finance costs (841 656) - (170 005) - (1 011 661)
Interest capitalised on development - - 227 855 - 227 855
propert
Profit before taxation 1 175 984 6 360 216 - (42 098) 7 494 102
Taxation (500 958) 76 462 - - (424 496)
Profit for period/year 675 026 6 436 678 - (42 098) 7 069 606
DIRECT INVESTMENT RESULT 675 026 6 436 678 - (42 098) 7 069 606
Fair value adjustments - (3 265 620) - (1 037 862) (4 303 482)
Investment expenses - (186,519) - 3 479 (183,040)
Exchange differences - (2 908 077) - 3 906 (2 904 171)
Deferred taxation - (76 462) - - (76 462)
INDIRECT INVESTMENT - (6 436 678) - (1 030 477) (7 467 155)
RESULT
(1) A number of items in the condensed consolidated interim statement of profit or loss have been reclassified in the management accounts to provide information
of relevance to investors and a meaningful basis of comparison by classifying profit for the year as a direct or indirect investment result. The direct result
represents the realised result attributable to the generating of gross rental income. The indirect relates to all other elements of profit or loss: unrealised
fair value movements, deferred taxation, exchange differences and costs not attributable to gross rental income generation.
(2) Proportional consolidation has been used as the basis of consolidation of the group's equity accounted investees in the manage ment accounts.
(3) Proportional consolidation has been used as the basis of consolidation for the group's 80% ownership of Nova Park.
Summarised statement of financial position
IFRS ADJUSTMENTS MANAGEMEN
As at Equity T ACCOUNTS
As at
31 December Reclassification accounted 31 December 2016
Euro 2016 (1) investee(2) Nova Park(3)
Non-current assets
Intangible assets 24 499 280 - - - 24 499 280
Investment property 473 690 010 3 393 501 8 074 337 (18 766 000) 466 391 848
Investment in equity accounted investee 20 057 968 - (20 057 968) - -
Property, plant and equipment 230 277 - - - 230 277
Deferred taxation asset 1 047 599 - - - 1 047 599
Total non-current assets 519 525 134 3 393 501 (11 983 631) (18 766 000) 492 169 004
Current assets
Financial investments - - - 21 875 305 21 875 305
Trade and other receivables 27 378 402 - 70 773 (4 274 631) 23 174 544
Cash and cash equivalents 20 794 725 - 12 207 673 (791 589) 32 210 809
Assets held for sale 3 393 501 (3 393 501) - - -
Total current assets 51 566 628 (3 393 501) 12 278 446 16 809 085 77 260 658
Total assets 571 091 762 - 294 815 (1 956 915) 569 429 662
Equity
Share capital 410 113 075 - - - 410 113 075
Retained earnings 26 753 444 - - - 26 753 444
Foreign currency translation reserve (7 954 169) - - - (7 954 169)
Equity attributable to owners of the 428 912 350 - - - 428 912 350
group
Non-controlling interest 1 072 595 - - (1 072 595) -
Total Equity 429 984 945 - - (1 072 595) 428 912 350
Non-current liabilities
Interest bearing borrowings 117 948 266 3 796 331 - - 121 744 597
Financial instruments 6 187 015 1 344 932 - - 7 531 947
Provisions 40 410 76 986 - - 117 396
Deferred taxation liability 1 652 903 - - - 1 652 903
Total non-current liabilities 125 828 594 5 218 249 - - 131 046 843
Current liabilities
Interest bearing borrowings 3 796 331 (3 796 331) - - -
Financial instruments 1 344 932 (1 344 932) - - -
Trade and other payables 10 059 974 - 294 815 (884 320) 9 470 469
Provisions 76 986 (76 986) - - -
Total current liabilities 15 278 223 (5 218 249) 294 815 (884 320) 9 470 469
Total liabilities 141 106 817 )
- 294 815 (884 320) 140 517 312
Total shareholder equity and liabilities 571 091 762 - 294 815 (1 956 915) 569 429 662
(1)A number of items in the condensed consolidated statement of financial position have been reclassified in the management accounts to provide information of
relevance to investors and a meaningful basis of comparison by removing current and non-current assets and liabilities and reclassifying assets held for sale.
(2)Proportional consolidation has been used as the basis of consolidation of the groups equity accounted investees in the manage ment accounts.
(3)Proportional consolidation has been used as the basis of consolidation for the group's 80% ownership of Nova Park.
27 February 2017
JSE sponsor
Java Capital
Date: 27/02/2017 09:00:00
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