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Condensed Audited Financial Results for the year ended 31 March 2014
Annuity Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 2011/145994/06)
Share code: ANP
ISIN no: ZAE000165643 ("Annuity" or "the Company")
CONDENSED AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2014
1. Introduction
Annuity listed on the Real Estate – Real Estate Holdings and Development sector of the Johannesburg Stock Exchange
("JSE") on 4 May 2012 and transferred to the Real Estate Investment Trust sector of the JSE on 23 September 2013. The
Company's property portfolio at 31 March 2014 consisted of eighteen properties, diversified between the retail, commercial,
special and light industrial sectors. The Company is a variable loan stock company and distributes all its distributable
earnings, as calculated in terms of its debenture trust deed, to its linked unit holders on a semi-annual basis.
2. Results
The following table reflects the financial results for the twelve months ended 31 March 2014.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
31 March 31 March
2014 2013
R R
Revenue
Property portfolio 178 706 367 88 927 644
Contractual rental income 149 096 045 69 909 932
Straight-line rental income accrual 29 610 322 19 017 712
Recoveries and other property income 50 877 473 19 734 723
Total revenue 229 583 840 108 662 367
Property expenses (60 735 161) (25 429 963)
Administration and corporate costs (10 762 934) (5 882 092)
Net operating profit 158 085 745 77 350 312
Investment and other income 15 821 169 13 408 617
Gain on bargain purchase 3 300 000 31 623 832
Property acquisition costs (7 114 944) (17 069 572)
Goodwill impairment charge (12 762 553) -
Changes in fair values 18 885 675 32 053 060
Net profit before finance costs, interest on linked units and
taxation 176 215 092 137 366 249
Finance costs (45 400 303) (18 693 232)
Net profit before interest on linked units and taxation 130 814 789 118 673 017
Interest on linked units (105 666 139) (58 574 648)
Profit before taxation 25 148 650 60 098 369
Taxation 11 986 706 (11 721 067)
Total comprehensive income for the year 37 135 356 48 377 302
EARNINGS, HEADLINE EARNINGS AND DISTRIBUTABLE EARNINGS
Audited Audited
31 March 31 March
2014 2013
R R
Number of linked units in issue used at year end 236 572 769 189 132 917
Weighted average number of linked units in issue used for the
calculation of earnings and headline earnings per linked unit 213 195 827 114 998 290
Weighted average number of linked units in issue adjusted for potential
dilutive effects of the options used for the calculation of diluted earnings
and headline earnings per linked unit 213 665 976 115 533 809
Reconciliation of earnings, headline earnings and distributable earnings
Profit for the financial period attributable to equity holders 37 135 356 48 377 302
Adjusted for interest on linked units 105 666 139 58 574 648
Earnings attributable to linked unitholders 142 801 495 106 951 950
Deduct fair value adjustments and gains on bargain purchases (15 011 692) (57 909 908)
Gains on bargain purchases (net of deferred taxation) (3 300 000) (31 153 422)
Fair value adjustments (2013: net of deferred taxation) (11 711 692) (26 756 486)
Add back Goodwill impairment loss 12 762 553 -
Headline earnings attributable to linked unitholders 140 552 356 49 042 042
Fair value adjustments on derivative instruments (net of deferred
taxation) (5 165 268) 611 296
Straight line rental income accrual (2013: net of deferred taxation) (29 610 322) (13 692 752)
Amortisation of debt transaction costs 2 547 710 1 108 067
Interest on other borrowings – IFRS adjustment 3 361 290 3 552 758
Reversal of previously raised deferred taxation on capital gains tax
timing differences not to be incurred in future as a result of REIT status (12 963 938) -
obtained by the company as from 1 April 2013.
Deferred taxation resulting from utilisation of estimated taxation loss
and accrued income (1 031 483) 17 826
Change in fair value of executives linked unit options 1 072 606 983 222
Once off property acquisition costs 7 114 944 17 069 572
Available for distribution to linked unitholders 105 877 895 58 692 031
Distribution declared:
Debenture interest 105 666 139 58 574 648
Ordinary dividend 211 756 117 383
Total distribution 105 877 895 58 692 031
Interim six months ended 30 September 51 449 497 17 872 180
Final six months ended 31 March 54 428 398 40 819 851
Basic earnings per share (cents) 17.42 42.07
Diluted earnings per share (cents) 17.38 41.87
Headline earnings per share (cents) 16.36 (8.29)
Diluted headline earnings per share (cents) 16.33 (8.25)
Basic earnings per linked unit (cents) 66.98 93.00
Diluted earnings per linked unit (cents) 66.83 92.57
Headline earnings per linked unit (cents) 65.93 42.65
Diluted headline earnings per linked unit (cents) 65.78 42.45
Distribution per linked unit (cents) 45.15 40.91
Interim six months ended 30 September 22.14 19.15
Final six months ended 31 March 23.01 21.76
CONDENSED STATEMENT OF FINANCIAL POSITION
Audited Audited
31 March 2014 31 March 2013
R R
Assets
Non-current assets 1 904 479 961 1 415 100 000
Investment property 1 898 155 000 1 415 100 000
Fair value of property portfolio 1 849 413 180 1 395 968 502
Straight-line rental adjustment 48 741 820 19 131 498
Derivative instruments 6 324 961 -
Current assets 36 033 277 40 810 888
Trade and other receivables 20 358 186 17 481 192
Taxation 14 280 14 280
Cash and cash equivalents 15 660 811 23 315 416
Total assets 1 940 513 238 1 455 910 888
Equity and Liabilities
Equity 95 069 844 56 552 672
Stated capital 2 327 567 1 833 850
Share based payment reserve 2 055 828 983 222
Accumulated profit 90 686 449 53 735 600
Non-current liabilities 1 701 717 224 1 337 828 022
Debentures 1 162 736 644 930 956 392
Financial liabilities 538 224 530 393 279 853
Derivative instruments - 849 022
Deferred taxation 756 050 12 742 755
Current liabilities 143 726 170 61 530 194
Trade and other payables 28 492 637 20 791 978
Current portion of financial liabilities 60 913 992 -
Linked unitholders for distribution 54 319 541 40 738 216
Total equity and liabilities 1 940 513 238 1 455 910 888
Number of linked units in issue 236 572 769 189 132 917
Net asset value per linked unit (R) 5.32 5.22
Net tangible asset value per linked unit (R) 5.32 5.22
CONDENSED STATEMENT OF CHANGES IN EQUITY
Stated Accumulated Share based Total
Capital profit payment
reserve
R R R R
Balance at 31 March 2012 10 5 394 048 - 5 394 058
Issue of linked units 1 833 840 - - 1 833 840
Total comprehensive income for the period - 48 377 302 - 48 377 302
Share based payment - - 983 222 983 222
Dividends declared during the year - (35 750) - (35 750)
Balance at 31 March 2013 1 833 850 53 735 600 983 222 56 552 672
Issue of linked units 493 717 - - 493 717
Total comprehensive income for the period - 37 135 356 - 37 135 356
Share based payment - - 1 072 606 1 072 606
Dividends declared during the year - (184 507) - (184 507)
Balance at 31 March 2014 2 327 567 90 686 449 2 055 828 95 069 844
CONDENSED STATEMENT OF CASH FLOW
Audited Audited
31 March 2014 31 March 2013
R R
Net cash generated from operating activities 7 276 690 23 910 018
Cash generated from operations 126 577 430 45 973 027
Interest received 12 459 883 9 855 858
Finance charges (39 491 302) (14 032 407)
Taxation paid - (14 280)
Distribution paid to linked unitholders (92 269 321) (17 872 180)
Net cash utilised in investing activities (436 653 014) (1 135 883 446)
Acquisition of businesses (net of cash acquired) (445 233 233) (1 089 774 240)
Capital expenditure, tenant installations and lease
commissions (5 282 986) (309 206)
Loans raised / (repaid) 13 863 205 (45 800 000)
Net cash generated from financing activities 421 721 719 1 135 288 486
Proceeds from issue of linked units 231 601 547 831 809 866
Increase in secured borrowings 203 983 377 303 975 492
Repayment of unsecured borrowings (13 863 205) (496 872)
Net movement in cash and cash equivalents (7 654 605) 23 315 058
Cash and cash equivalents at the beginning of the year 23 315 416 358
Cash and cash equivalents at the end of the year 15 660 811 23 315 416
SEGMENTAL REPORT
Light
Financial year ended Total Retail Office Industrial Special Admin
31 March 2014 (Audited) R R R R R R
REVENUE
Property portfolio 178 706 367 71 977 119 83 479 550 14 897 701 8 351 997 -
Contractual rental
income 149 096 045 62 717 380 68 814 292 12 421 356 5 143 016 -
Straight-line rental
income accrual 29 610 322 9 259 739 14 665 258 2 476 345 3 208 981 -
Recoveries and other
property income 50 877 473 28 895 848 17 527 194 2 834 147 1 620 284 -
Total revenue 229 583 840 100 872 966 101 006 744 17 731 848 9 972 281 -
Property expenses (60 735 161) (32 987 746) (22 373 989) (3 491 009) (1 882 417) -
Administration and
corporate costs (10 762 934) - - - - (10 762 934)
Net operating profit 158 085 745 67 885 220 78 632 756 14 240 839 8 089 863 (10 762 934)
Investment and other
income 15 821 169 - - - - 15 821 169
Gain on bargain
purchase 3 300 000 612 500 - - 2 687 500 -
Property acquisition
costs (7 114 944) (2 117 104) (549 283) (2 565 440) (1 416 156) (466 960)
Goodwill impairment loss (12 762 553) (7 207 936) (923 603) (4 631 014) - -
Changes in fair values 18 885 675 22 649 457 (14 992 246) 4 087 325 (32 844) 7 173 983
Net profit before finance
cost, interest on linked
units and taxation 176 215 092 81 822 137 62 167 624 11 131 710 9 328 363 11 765 258
Finance costs (45 400 303) - - - - (45 400 303)
Net profit before interest
on linked units and
taxation 130 814 789 81 822 137 62 167 624 11 131 710 9 328 363 (33 635 045)
Interest on linked units (105 666 139) - - - - (105 666 139)
Segment profit / (loss)
before taxation 25 148 650 81 822 137 62 167 624 11 131 710 9 328 363 (139 301 184)
Investment property 1 898 155 000 823 381 941 757 730 000 211 074 387 105 968 671 -
Other assets 42 358 238 14 923 412 2 699 160 1 202 946 718 634 22 814 087
Total assets 1 940 513 238 838 305 353 760 429 160 212 277 333 106 687 305 22 814 087
Total liabilities 1 845 443 394 202 639 642 210 525 969 109 988 884 98 130 298 1 224 158 601
SEGMENTAL REPORT
Light
Financial year ended Total Retail Office Industrial Special Admin
31 March 2013 (Audited) R R R R R R
Revenue
Property portfolio 88 927 644 30 303 649 58 044 482 579 513 - -
Contractual rental income 69 909 932 24 915 071 44 418 074 576 787 - -
Straight-line rental income
accrual 19 017 712 5 388 578 13 626 408 2 726 - -
Recoveries 19 734 723 11 405 198 8 309 692 19 833 - -
Total revenue 108 662 367 41 708 847 66 354 174 599 346 - -
Property expenses (25 429 963) (13 056 902) (11 957 461) (223 994) - (191 606)
Administration and
corporate costs (5 882 092) - - - - (5 882 092)
Net operating profit 77 350 312 28 651 945 54 396 713 375 352 - (6 073 698)
Investment and other
income 13 408 617 - - - - 13 408 617
Gains on bargain purchases 31 623 832 11 075 876 18 452 832 2 095 124 -
Property acquisition costs (17 069 572) (8 424 965) (7 578 066) (586 479) - (480 062)
Changes in fair values 32 053 060 12 037 741 28 195 757 (1 662) - (8 178 776)
Net profit before interest on
linked units and taxation 137 366 249 43 340 597 93 467 236 1 882 335 - (1 323 919)
Finance costs (18 693 232) - - - - (18 693 232)
Net profit before interest on
linked units and taxation 118 673 017 43 340 597 93 467 236 1 882 335 - (20 017 151)
Interest on linked units (58 574 648) - - - - (58 574 648)
Segment profit before
taxation 60 098 369 43 340 597 93 467 236 1 882 335 - (78 591 799)
Investment property 1 415 100 000 644 649 964 727 500 000 42 950 036 - -
Other assets 40 810 888 7 916 616 3 240 096 359 373 - 29 294 803
Total assets 1 455 910 888 652 566 580 730 740 096 43 309 409 - 29 294 803
Total liabilities 1 399 358 216 193 167 690 166 819 848 5 046 688 - 1 034 323 990
3. Acquisitions and Commitments
The company acquired a hundred percent interest in all the assets and some liabilities of eight letting enterprises during the financial year ending 31 March 2014.
The letting enterprises were acquired as going concerns and were paid for in cash.
Details of the net assets acquired are as follows:
31 March 2014 31 March 2013
R R
Fair value of the investment properties at acquision 436 450 000 1 218 871 000
Gains on bargain purchases (3 300 000) (31 771 000)
Goodwill recognised 12 762 553 147 168
Present value adjustment of vendor loan finance - 11 477 591
Investment property at acquisition price 445 912 553 1,198,724,759
Trade and other payables (679 320) (1 784 398)
Trade and other receivables - 91 470
Purchase consideration 445 233 233 1 197 031 831
Portion settled in linked units - (49 980 000)
Portion settled through vendor finance - (57 277 591)
Purchase consideration settled in cash 445 233 233 1 089 774 240
Annuity took transfer of four properties during the first six months of the financial year, whilst a further four properties
transferred during the second six months. Annuity acquired the newly developed Virgin Active – Bryanston letting enterprise
("the Virgin Active Building") on the intersection of William Nicol Drive and Main Road, Bryanston, which consists of a Virgin
Active gym and a retail component, at a purchase price of R119 million on 19 August 2013. A light industrial property with an
office component ("the Aveng Building") was acquired on 8 August 2013 at an acquisition price of R63,6 million. The letting
enterprise is located in the Stormill industrial area and occupied by Alpret Control Specialists, a subsidiary of the JSE-listed
Aveng Limited. Three properties, a warehouse in the Ormonde industrial area ("the Clarins Modulus Road Property") and a
small office building in Gardens, Cape Town ("the Clarins Dunkley House Property"), as well as Clarins Head Office, situated
in Scott Street, Waverley ("the Clarins Scott Street Property"), were acquired on 16 September 2013, 27 September 2013 and
4 December 2013 respectively. The acquisition price for the three properties amounted to R37,3 million. The three properties
are all tenanted by Clarins South Africa.
The Company also acquired the "Coricraft Distribution Centre", a 19,369m light industrial property situated in Stormill,
Johannesburg, occupied by the Coricraft Group. This property transferred into Annuity's name on 7 October 2013. Thereafter
two further properties were acquired namely "Unitrans Nissan Clearwater property", tenanted by Unitrans and the "McCarthy
Audi Clearwater property", anchored by McCarthy. These two retail dealerships are located in Constantia Kloof, on the West
Rand of Johannesburg, and transferred into Annuity's name on 4 February 2014 and 25 February 2014 respectively.
The Virgin Active Building, Aveng Building and the Clarins Scott Street Property were funded from Annuity's debt facilities
whilst the Clarins Modulus Road Property, the Clarins Dunkley House Property, the Coricraft Distribution Centre and the
Unitrans Nissan Clearwater Property were paid for in cash through funding by way of an issue of linked units on 20 September
2013. The McCarthy Audi Clearwater Property was paid for in cash funded through a combination of debt and equity.
The investment properties were recognised at their fair values of R436,5 million (2013: R1,2 billion) resulting in a gain on
bargain purchase of R3,3 million (2013: R31,7 million) and goodwill of R12,8 million (2013: nil). The goodwill arose as a result
of the purchase prices exceeding the fair value of the properties on date of recognition.
The Company earned rental income (excluding the straight-lining income accrual) of R17,7 million (2013: R57,4 million) from
these letting enterprises during the year. Based on rental income which the Company earned during the year, it would have
earned rental income of R41,2 million (2013: R115,4 million) had it owned all eight of these letting enterprises for the full year.
The net operating income (excluding the straight-lining of income accrual) earned by the Company from these letting
enterprises were R16,6 million (2013: R49,4 million). Based on the net operating income which the Company earned during
the year, it would have earned R38,9 million had the Company owned all eight letting enterprises for the entire year.
As at 31 March 2014 the Company was committed to acquire a further letting enterprise, namely the Warich Close Office
Park, for a total purchase consideration of R49,1 million. Details of the transactions are set out in the SENS announcement
dated 29 July 2013.
4. Goodwill
31 March 2014 31 March 2013
R R
Additions 12 762 553 -
Impairment loss (12 762 553) -
- -
The goodwill asset arose from the acquisition of seven letting enterprises, namely the Aveng Building, Clarins Modulus Road
Property, Clarins Dunkley House Property, Clarins Scott Street Property, Coricraft Distribution Centre, Unitrans Nissan
Clearwater Property and McCarthy Audi Clearwater Property. The asset was reduced to nil, after the goodwill was assessed
against the total market value of the Company in relation to its net asset value.
5. Related party transactions
The company paid transaction fees of R4,5 million and asset management fees of R6,4 million to Annuity Asset Managers
Proprietary Limited and property management fees and letting commission of R5,8 million to Annuity Property Managers
Proprietary Limited, which two entities are considered to be related parties to Annuity, during the financial year.
At the time of acquiring the Sasfin Head Office in May 2012, the Company granted an option to Sasfin Private Equity Fund
Managers Proprietary Limited ("Sasfin Private Equity"), which is a twenty five percent shareholder in Annuity Asset Managers
Proprietary Limited, to sell to the Company, its shareholding in, and claims against Annuity Asset Managers Proprietary
Limited at a price to be determined which is 0,875% of the Company's enterprise value, being the market capitalisation plus
debt, less trade creditors and cash. The shares and claims so acquired, in the event that Sasfin Private Equity should
exercise the option, shall subsequently be purchased and cancelled by Annuity Asset Managers Proprietary Limited in
consideration for a reduction in the annual asset management fee charged to the Company, which has the effect of making
the transaction non-dilutionary to earnings during the term of the asset management contract. At the reporting date, Sasfin
Private Equity has not exercised this option. Based on the Company's enterprise value as at 31 March 2014 the price at
which Sasfin Private Equity could sell the shares to the company at this date would be R15,3 million.
6. Property Portfolio (not audited)
Geographical Profile Western Cape Gauteng Kwazulu Natal Total
By revenue (R) 52 491 599 86 261 504 10 342 942 149 096 045
By rentable area (m 2) 42 462 86 241 12 489 141 192
Sectorial Profile Retail Offices Light Industrial Special Total
By revenue (R) 62 717 380 68 814 292 12 421 356 5 143 016 149 096 045
By rentable area (m 2) 58 098 46 330 32 254 4 510 141 192
Light
Retail Office Industrial Special Total
Portfolio valuation (R) 823 381 941 757 730 000 211 074 387 105 968 671 1 898 155 000
Value per (m 2) 14 172 16 355 6 544 23 496 13 444
Vacancy % by gross lettable area 0.91% 2.91% 0.87% 0.00% 1.53%
Average monthly gross rental per m 2 114.13 134.93 52.94 164.31 108.58
(Rand)
Weighted Average rental escalation 7.03% 7.14% 8.11% 7.62% 7.33%
(%)
Annualised property yield (%) 8.39% 8.68% 9.02% 10.07% 8.67%
Tenant analysis
A - Large national tenants, listed tenants, government and major franchises
Percentage of GLA 82%
Number of tenants 41 tenants
B - Other national tenants, other listed tenants, franchisees and medium to large professions
Percentage of GLA 7%
Number of tenants 47 tenants
C – Other
Percentage of GLA 11%
Number of tenants 111 tenants
Lease expiry profile
Light
Retail Office Industrial Special Total
By rentable area
Expiring within one year 7.0% 8.5% 2.6% 4.7% 6.4%
Expiring between one and two years 33.4% 8.9% 1.7% 0.0% 17.1%
Expiring between two and three years 23.5% 5.7% 9.7% 0.0% 13.8%
Expiring between three and four years 10.3% 4.2% 6.7% 0.0% 7.1%
Expiring between four and five years 3.8% 0.0% 18.7% 0.0% 5.7%
Expiring between five and six years 4.3% 0.5% 0.0% 0.0% 1.9%
Expiring between six and seven years 0.4% 0.0% 0.0% 0.0% 0.3%
Expiring between seven and eight years 9.9% 24.3% 0.0% 0.0% 12.0%
Expiring between eight and nine years 0.0% 41.1% 0.0% 0.0% 13.4%
Expiring after nine years 7.4% 6.8% 60.6% 95.3% 22.3%
By revenue
Expiring within one year 9.8% 19.7% 3.4% 3.6% 12.8%
Expiring between one and two years 31.2% 7.8% 1.9% 0.0% 16.7%
Expiring between two and three years 24.2% 7.0% 10.3% 0.0% 14.4%
Expiring between three and four years 12.7% 5.3% 10.7% 0.0% 8.8%
Expiring between four and five years 5.4% 0.0% 33.8% 0.0% 6.2%
Expiring between five and six years 4.9% 0.8% 0.0% 0.0% 2.4%
Expiring between six and seven years 0.6% 0.0% 0.0% 0.0% 0.3%
Expiring between seven and eight years 6.2% 20.0% 0.0% 0.0% 10.8%
Expiring between eight and nine years 0.0% 39.3% 0.0% 0.0% 16.0%
Expiring after nine years 5.0% 0.1% 39.9% 96.4% 11.6%
7. Development and Capital Projects
The Company was not engaged in any major developments or capital projects during the financial period except for
R669,655 spent on refurbishing the Ethos Building. The Company is committed to spend a further R1,4 million on
refurbishments at the Ethos Building. The Company is committed to spend R3,3 million on refurbishing the Marion Place
Office Park.
8. Borrowings
The Company's borrowings at 31 March 2014 consisted of two secured loans from Rand Merchant Bank (a division of First
Rand Bank Ltd) amounting to R510,5 million and a secured loan from Standard Bank of R92,5 million. The Rand Merchant
Bank loans consist of two three year facilities of which R60,9 million expires on 23 March 2015. The balance expires on 18
December 2015. Interest rates are fixed for 74% of the debt, either through interest rate swap agreements or as part of the
facility at an average interest rate of 7,86% for the year. The average rate of interest at 31 March 2014 was 8.02%. Surplus
cash is invested into the floating facilities to ensure effective cash management. The Company is also party to vendor loans
with a nominal value of R43,4 million arising from the acquisition of the Oakfields Shopping Centre and the Cell C building.
The accounting value of these loans of R38,9 million has been netted off against loans receivable to give effect to what is
considered a net settled arrangement.
At 31 March 2014, Annuity's average loan to value ratio is 35,3% based on investment properties valued at R1,9 billion. The
Company had debt facilities available of R294 million at 31 March 2014 (2013: R282 million).
9. Share and debenture capital
The Company issued 43 249 636 linked units on 20 September 2013 at 530,52 cents per linked unit in terms of a private
placement. A further 4 190 216 shares were issued on 18 December 2013 in terms of the distribution re-investment
programme ("DRIP") offered in respect of the interim cash distribution at an issue price of 509 cents per linked unit.
10. Fair value measurement of financial instruments
The financial instruments were valued by Investec Bank Limited by discounting the future cash flows using the Jibar swap
curve.
The different levels have been defined as:
Level 1 - fair value is determined from quoted prices (unadjusted) in active markets for identical asset or liabilities
Level 2 - fair value is determined through the use of valuation techniques based on observable inputs, either directly or
indirectly
Level 3 - fair value is determined through the use of valuation techniques using significant inputs
Level 1 Level 2 Level 3 Total
At 31 March 2014 R R R R
Financial instruments - 6 324 961 - 6 324 961
Level 1 Level 2 Level 3 Total
At 31 March 2013 R R R R
Financial instruments - 849 022 - 849 022
11. REIT Legislation
Annuity received REIT Status from the JSE Limited on 15 July 2013, effective from the financial year commencing on 1 April
2013. As a result of its REIT status Annuity will not be taxed on its future capital gains and will be able to deduct its full
distribution to linked unit holders against taxable income. The deferred tax liability raised previously on fair value adjustments
to Investment Properties and the straight line rental income accrual has therefore been reduced to nil.
12. Events subsequent to reporting date
The Company took transfer of the Warich Close Office Park on 28 May 2014. The acquisition was funded from debt.
13. Strategy and prospects
Annuity's strategy since its listing in May 2012 has been to build a diversified portfolio of income producing properties in the
retail, commercial and industrial sectors. In keeping with this strategy, Annuity has grown its property portfolio to in excess of
R1,9 billion, through the acquisition of high quality properties, generally located in sought after, well established and
defensive nodes in the major metropolitan areas or commercial precincts, underpinned by national tenants with strong
covenants.
Annuity has built an attractive portfolio of high quality assets, featuring long lease expiry profiles and very low vacancies.
Following a rigorous strategic review process, the board of directors of Annuity resolved that a disposal of the company's
linked units to Redefine Properties Limited ("the Redefine transaction") would be in the best interest of Annuity linked unit
holders, in the context of the current and foreseeable operating and economic environment and taking into account the
specific challenges facing a smaller capitalised, lower liquidity listed property entity such as Annuity. As indicated in an
announcement to Annuity linked unit holders released on the Stock Exchange News Service ("SENS") of the JSE Limited on
Thursday, 5 June 2014, the Redefine transaction has become unconditional as to its terms and will be fully implemented on
Monday, 23 June 2014 on which date the Annuity linked units will be delisted from the JSE. The effective date of the
Redefine transaction is 1 March 2014.
14. Directorate
There were no changes to the Board of directors during the financial year.
15. Merger with Redefine and payment of special distribution
Annuity Linked Unitholders are referred to the joint announcement released on SENS on 5 June 2014 and the declaration of
the special 5 month cash dividend and interest distribution (the "Special Distribution") for the period 1 October 2013 to 28
February 2014 amounting to 19,04500 cents per unit.
Linked Unitholders are referred to the above stated announcement for salient dates and times for the finalisation and
implementation of the proposed transaction, the payment of the Special Distribution and the termination of Annuity's listing on
the JSE.
16. Basis of preparation and accounting policies
The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), including the
presentation and disclosure requirements of IAS34, SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee and the requirements of the Companies Act of South Africa, 2008, as amended.
The financial results above include disclosure of earnings and headline earnings per share as well as earnings and headline
earnings per linked unit, which is obligatory in terms of IAS33, Earnings per share and the JSE Listings Requirements. The
directors are of the view that this disclosure is not meaningful to investors as the shares are traded as part of a linked unit
and practically all the distributable earnings are distributed in the form of debenture interest with a small dividend portion in
the ratio of 500 to 1. In addition, headline earnings include fair value adjustments for financial liabilities, accounting
adjustments to account for lease income on a straight line basis, once off property acquisition costs, as well as other non-
cash accounting adjustments which do not affect distributable earnings. The calculation of distributable earnings per linked
unit as disclosed above is therefore more meaningful to investors.
The financial statements are summarised from a complete set of annual financial statements on which the independent
auditors, Grant Thornton (Jhb) Inc. have expressed an unmodified audit opinion, which is available for inspection at the
Company's registered office. Grant Thornton (Jhb) Inc. has also issued an unmodified audit opinion on these summarised
financial statements stating that these summarised results are consistent in all material respects with the complete set of
annual financial statements. A copy of the auditors' report is available for inspection at the Company's registered office.
The accounting policies are consistent with those applied in the most recent audited financial statements for the year ended
31 March 2013 other than the adoption of the amendments to the following standards that are relevant to the Company's
financial information:
- IFRS 7 - 1 January 2013
- IAS 1 - 1 January 2013
- IAS 27 - 1 January 2013
- IAS 28 - 1 January 2013
- IAS 32 - 1 January 2013
- IAS 34 - 1 January 2013
And adoption of the following new standards and interpretations that are relevant to the Company's financial information:
- IFRS 10 - 1 January 2013
- IFRS 11 - 1 January 2013
- IFRS 12 - 1 January 2013
- IFRS 13 - 1 January 2013
There is no impact on these results from the adoption of these new and amended standards.
The financial results have been prepared by Mr S Strydom CA(SA), the Chief Financial Officer of the company.
By order of the Board
PJ Moleketi P Theocharides
(Chairman) (Joint Chief Executive Officer)
20 June 2014
Directors:
P.J. Moleketi #
P. Theocharides
D. Greenberg
S. Strydom
D.E. Rubenstein
M. Ettin *
E.C. Loubser #
A.M. Chait #
D.T. Soondarjee *
S.J. Williams #
N.N Eppel (alternate director) *
# Independent non-executive director
* Non-executive director
Registered Office: Boundary Office Park, 18 Rivonia Road, Illovo, Sandton.
Tel:010 595 3000 Fax: 086 718 3622 Email: info@annuityproperties.co.za
Web: www.annuityproperties.co.za
Income taxation reference number 9050/047/19/1
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 20/06/2014 05:41:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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