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Unaudited condensed consolidated interim results for the six months ended 31 August 2018
ASCION LIMITED
Incorporated in the Republic of South Africa
(Registration Number 2014/182931/06)
ISIN: ZAE000198289
Share code: ACS
("Acsion" or "the Company" or "the Group")
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2018
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
Six months Six months Year ended
31 August 31 August 28 February
2018 2017 2018
R'000 R'000 R'000
Assets
Non-current assets
Investment property 6 642 073 5 722 995 6 468 041
Property, plant and equipment 79 348 64 150 76 503
Operating lease asset 145 295 124 675 139 182
Goodwill 625 464 625 464 625 464
Prepayments 326 429 350 744 326 429
Investment in associate 1 471 1 150 1 471
Other financial assets 5 372 11 786 6 847
Deferred tax 32 907 10 210 23 872
7 858 359 6 911 174 7 667 809
Current assets
Operating lease asset 6 720 1 997 2 138
Loans to group companies 899 1 068 899
Current tax receivables 13 661 325 525
Trade and other receivables 27 547 37 006 24 401
Loans to shareholders 4 053 - 4 053
Cash and cash equivalents 83 852 44 972 212 680
136 732 85 368 244 696
Non-current assets held for sale 50 697 52 001 52 418
Total assets 8 045 788 7 048 543 7 964 923
Equity and liabilities
Equity
Share capital 3 968 078 3 969 670 3 969 625
Retained income 2 047 183 1 449 878 2 006 548
Equity attributable to owners of the company 6 015 261 5 419 548 5 976 173
Non-controlling interest 44 516 37 510 41 122
Total equity 6 059 777 5 457 058 6 017 295
Liabilities
Non-current liabilities
Deferred tax 1 226 470 1 038 329 1 195 221
Other financial liabilities 638 970 459 012 643 861
1 865 440 1 497 341 1 839 082
Current liabilities
Current tax payable 16 725 11 194 16 282
Loans from shareholders - 506 -
Other financial liabilities 19 621 8 532 23 284
Provisions 3 234 2 363 3 174
Trade and other payables 80 958 71 037 65 773
Dividends payable 33 512 33
120 571 94 144 108 546
Total liabilities 1 986 011 1 591 485 1 947 628
Total equity and liabilities 8 045 788 7 048 543 7 964 923
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Year ended
31 August 31 August 28 February
2018 2017 2018
R'000 R'000 R'000
Revenue 322 755 266 964 586 490
Other operating income 5 822 5 356 8 215
Other operating expenses (111 909) (112 098) (223 545)
Operating profit 216 668 160 222 371 160
Investment income 9 338 11 225 27 793
Finance costs (30 516) (25 298) (56 915)
Profit from associate - - 321
Profit on sale of non-current assets held for sale 151 667 783
Fair value adjustments - - 744 785
Profit before taxation 195 641 146 816 1 087 927
Taxation (53 308) (32 784) (264 310)
Profit for the period 142 333 114 032 823 617
Other comprehensive income - - -
Total comprehensive income for the period 142 333 114 032 823 617
Profit attributable to:
Owners of the parent 138 939 112 537 814 462
Non-controlling interest 3 394 1 495 9 155
142 333 114 032 823 617
Total comprehensive income attributable to:
Owners of the parent 138 939 112 537 814 462
Non-controlling interest 3 394 1 495 9 155
142 333 114 032 823 617
Reconciliation between earnings and headline earnings
Basic earnings 138 939 112 533 814 462
Adjusted for:
Fair valuation adjustment, net of taxation - - (577 953)
Non-controlling interest relating to fair value adjustment - - 6 380
Impairment of investment property - - -
Gain on non-current assets held for sale (151) - 420
(Profit)/Loss on sale of plant and equipment - (517) 163
Impairment of subsidiary loan - 12
Headline earnings 138 788 112 016 243 484
Earnings per share information
Basic and diluted earnings per share (cents) 35.3 28.6 206.8
Headline earnings per share (cents) 35.3 28.4 61.8
Net asset value per share (cents) 1 528.8 1 376.7 1 518.3
Net asset value per share (excluding deferred taxation) (cents) 1 832.2 1 637.9 1 815.8
Dividend per share (cents) 25.0 12.5 -
Proposed dividend per share (cents) - - 25.0
Weighted number of shares 393 592 380 394 219 306 393 916 680
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Six months Six months Year ended
31 August 31 August 28 February
2018 2017 2018
R'000 R'000 R'000
Cash flows from operating activities
Cash generated from operations 229 707 159 919 376 547
Investment income received 9 338 11 225 23 234
Finance costs paid (30 516) (25 298) (56 915)
Taxation paid (43 786) (32 775) (73 087)
Net cash from operating activities 164 743 113 071 269 779
Cash flows from investing activities
Purchase of plant and equipment (16 728) (203) (25 001)
Proceeds on sale of plant and equipment 2 695 - 260
Development costs of investment property (174 479) (214 259) (384 807)
Repayment of loans to group associate companies - 1 069 -
Decrease in financial assets 1 475 - 6 008
Proceeds on sale of non-current assets held for sale 1 871 15 305 17 204
Net cash used in investing activities (185 166) (198 088) (386 336)
Cash flows from financing activities
Purchase of treasury shares (1 547) (4 055) (4 100)
(Decrease)/Increase in other financial liabilities (8 554) 166 493 366 095
Movement in loans to group associate company - (118) 52
Dividends paid (98 304) (48 858) (49 337)
Net cash (used in)/from financing activities (108 405) 113 462 312 710
Total cash movement for the period (128 828) 28 445 196 153
Cash at the beginning of the period 212 680 16 527 16 527
Total cash at end of the period 83 852 44 972 212 680
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Total equity
attributable Non-
Share Treasury Share Retained to owners of controlling Total
capital shares capital income the company interest equity
R'000 R'000 R'000 R'000 R'000 R'000 R'000
Group
Balance at 1 March 2017 3 979 956 (6 231) 3 973 725 1 386 711 5 360 436 36 015 5 396 451
Profit for the period - - - 112 537 112 537 1 495 114 032
Dividends paid - - - (49 370) (49 370) - (49 370)
Purchase of treasury shares - (4 055) (4 055) - (4 055) - (4 055)
Balance at 31 August 2017 -
Previously stated 3 979 956 (10 286) 3 969 670 1 449 878 5 419 548 37 510 5 457 058
Restatement of prior
year results* - - - (145 255) (145 255) (4 048) (149 303)
Balance at 31 August 2017
- Restated 3 979 956 (10 286) 3 969 670 1 304 623 5 274 293 33 462 5 307 775
Profit for the period - - - 701 925 701 925 7 660 709 585
Dividends paid - - - - - - -
Purchase of treasury shares - (45) (45) - (45) - (45)
Balance at 28 February 2018 3 979 956 (10 331) 3 969 625 2 006 548 5 976 173 41 122 6 017 295
Profit for the period - - - 138 939 138 939 3 394 142 333
Dividends paid - - - (98 304) (98 304) - (98 304)
Purchase of treasury shares - (1 547) (1 547) - (1 547) - (1 547)
Balance at 31 August 2018 3 979 956 (11 878) 3 969 078 2 047 183 6 015 261 44 516 6 059 777
* Restatement of prior year results in the 2018 financial year as previously disclosed on SENS.
GEOGRAPHIC AND TENANT PROFILES
The existing income generating investment properties consist of nine well established, strategically located
retail properties in Gauteng, Mpumalanga and Limpopo with an aggregate gross lettable area ("GLA") of
256 644 m2 (2018H1: 237 800 m2). The tenant profile by GLA comprises 72% national tenants (2018H1: 73%),
18% semi-national (2018H1: 13%) and 10% line and other franchises (2018H1:14%). The tenant profile is
separated into national and semi-national tenants to indicate the exposure Acsion has to direct head
office leases and individual franchises. Exposure to national and semi-national tenants as a percentage
of GLA is at 90% (2018H1: 86%). Line shops and other franchises are carefully vetted by Acsion's leasing
division to promote maximum dwelling time and footfall in each centre, underpinning trading densities and
the overall sustainability of tenants' lease terms.
Tenant profile Tenant profile
by GLA by Revenue
National 72% 65%
Semi-national 18% 22%
Line and other franchises 10% 13%
Sector profile Sector profile
by GLA by Revenue
Retail - metropolitan 61% 66%
Retail - rural 37% 33%
Light - industrial 2% 1%
Geographic profile Geographic profile
by Revenue by GLA
Gauteng 71% 69%
Limpopo 12% 14%
Mpumalanga 17% 17%
COMMENTARY
ABOUT ACSION
Acsion ("the Group" or "the Company") is a property development company listed on the Johannesburg Stock
Exchange ("JSE"). Acsion differs from Real Estate Investment Trusts ("REITs") in the listed property sector
as it focuses on the delivery of double-digit net asset value ("NAV") growth cumulatively on a year on year
basis. A few of the NAV growth drivers applied are: Sourcing development opportunities, both locally and
internationally; upgrading the existing development pipeline; extending the existing properties to enhance
tenant mix and operational efficiencies while applying the ethos of value engineering in every day running
of the business.
OPERATIONAL AND DEVELOPMENT UPDATE:
DEVELOPMENT PIPELINE:
The Acsiopolis development in Benmore, Sandton is in the process of final development. Since acquiring the
land in 2014 Acsion has designed a mixed use project that focuses on providing the Sandton Node with luxury
short-stay accommodation. The development will consist of a mix of approximately 1,104 hotel rooms and bespoke
apartments, tailored for the astute business traveller that demands express check in and spacious living
quarters. The remaining lettable area has been carefully crafted to support the apartment living, these
include: Two private pool and bar areas, signature gym, transcendental spa, piazza living, business centre,
24 hour concierge services, best in brand crèche, private cinema rooms and specialised medical suites.
August 2018 saw the finalising and pouring of concrete on the 20th storey. Final completion is anticipated
during the 2020 financial year.
The Metropolis Mall@Larnaca is the Group's first international retail development, which will be similar in
value to Acsiopolis. The Group has signed a leasehold over land in Larnaca, Cyprus. The lease is a 33 year
lease with two options to renew of 33 years each. The Group intends to develop a 39 000 m2 retail centre.
Final approvals from the Ministry and all relevant Municipal bodies have been received and development will
commence shortly. At 39,000 m2 of GLA, it will be the dominant retail offering in Larnaca, catering for
approximately 150,000 people. Acsion is forecasting double-digit initial yields on this project, with a
considerable uplift to net asset value on completion. The development will also enhance geographical and
currency diversification to Acsion’s property portfolio.
EXISTING PROPERTY DEVELOPMENT AND EXPANSIONS:
Development planning of the additional 10,000m2 for the second phase at Mall@55 (Monavoni, Gauteng) is in
progress. Bulk earthworks to the platforms of the new retail development, together with the widening of the
access road to the shopping centre will incorporate the entrance slipway feeding traffic into both the
existing phase I and II of the precinct being improved. Building construction will commence shortly.
Construction of the KFC drive thru at Mall@Moutsiya is planned to commence in January 2019 with an
expected opening date of July 2019.
The Burger King drive thru outlet is under construction in the parking area of the Mall@Carnival and is
due to open in December 2018.
FINANCIAL RESULTS
Revenue for the Group for the six months ended 31 August 2018 was R322.8 million (2018H1: R267.0 million).
The increase of 20.9% is mostly due to additional revenues generated by the opening of Mall@55, which was
not fully operational in the first half of the 2018 financial year.
Other rental income supplemented revenue by R5.8 million (2018H1: R5.4 million), while operating expenses
remained similar to the prior financial year due to cost savings derived from contractual renegotiations
with key service providers.
The group continuously seeks to find alternative supportive revenue sources to bolster the traditional
property rental model. Since 2015, Acsion has successfully installed roof mounted photovoltaic grid tied
solar panels to all the major malls in the portfolio. The performance of these solar plants have been
in line with performance guarantees and continue to provide cost recovery and sustainable energy solutions
for the ever increasing electricity burden in South Africa.
The increase in net finance costs from R14.0 million in the first half of the 2018 financial year to
R21.2 million during the first half of the 2019, can mainly be attributed to the ongoing development
of Acsiopolis. Gearing for the group remains low at 8.3% (2018H1:7.1%) when compared with the rest
of the sector.
Despite the continuous development undertaken and the dividend distribution in July 2018, gearing
remained low which is testament to the strong cash flow generation ability of the group.
Headline earning per share increased to 35.3 cents for the period under review (2018H1: 28.4 cents).
The investment property portfolio (which includes elements of plant and equipment, and the operating
lease asset) is carried at R6.846 billion (2018H1:R5.896 billion). Investment properties were revalued
as at 28 February 2018. Non-current assets held for sale is carried at fair value of R50.7 million
(2018H1: R52.0 million). Total property assets under control of the Group therefore increased in value
by a respectable 16.0% year on year.
With regards to the proposed development of the Mall@Maputo, the directors are in constant negotiations
with the Mozambican government and still pursue tenants and interested parties to find a viable future
development.
Group liquidity is considered to be adequate due to the Group's diligence in adhering to strict and
aggressive cash management policy.
NAV per share was 1 528.8c as at 31 August 2018 (2018H1: 1 376.7c). NAV per share (excluding deferred
taxation) for the six months ended 31 August 2018 increased by 11.9% to 1 832.2c when compared with the
NAV per share of 1 637.9c as at 31 August 2017.
TREASURY SHARE PURCHASE
The Group repurchased 239 143 (2018H1: 580 581) Acsion shares during the six months ended August 2018
and currently holds these as treasury shares. The decision to repurchase shares was made as the share
price were trading significantly below the reported NAV of the Company. These shares were repurchased
at approximately 64.7% below the reported NAV per share (excluding deferred taxation) as at
31 August 2018.
VACANCY LEVELS AND LEASE EXPIRY PROFILE
Strategic vacancies are maintained in order to accommodate potential tenant relocations and to support
lease optimisation. The weighted vacancy (by GLA) for the portfolio as at August 2018 was 6.3%
(2018H1: 7.3%). The Group remains focused on reducing the vacancy rate to more acceptable levels.
The weighted average lease expiry profile by GLA for the portfolio increased to 3.4 years (2018H1:
3.0 years). The Group is however confident that its tenants will be retained on lease renewal.
DEVELOPED INVESTMENT PROPERTY PORTFOLIO
The developed investment properties as at 31 August 2018 consisted of the nine properties (Valued as at
28 February 2018) detailed below:
Directors/
independent Value/m2 Percentage of
valuation (R'mil) GLA (excluding bulk, total portfolio
Property name February 2018 (m2) where applicable) by value (%)
Mall@Carnival* 2 665 88 134 30 238 45.2
Mall@Reds 1 242 54 578 22 756 21.0
Mall@Emba* 552 24 500 22 531 9.4
Mall@Lebo 474 23 536 20 139 8.0
Mall@Mfula* 275 17 871 15 388 4.7
Mall@Moutsiya 212 14 506 14 580 3.6
Mall@55* 277 15 305 18 099 4.7
Moreleta Square 161 8 479 18 929 2.7
Simarlo Rainbow 43 6 891 6 298 0.7
Total developed
investment portfolio 5 901 253 800 23 251 100.0
The above properties are trading at an average annualised net operating yield of approximately 7.6%
(2018H1: 7.4%). As at February 2018 the net operating yield was reported as 6.9%.
Properties under construction as at 31 August 2018 (Valued as at 28 February 2018) detailed below:
Directors/ Value/m2
independent (excluding bulk,
valuation GLA where applicable) Anticipated
Developments nearing completion R'mil M2 R opening
Acsiopolis* 701 67 000 10 468 May 2019
Trade55* 60 10 000 6 000 Negotiating
Total developments under
construction 761 77 000 9 888
* Independently valued
PROSPECTS
Acsion's Board remain confident that the Group will continue to grow despite the challenging economic
operating environment. The Group remains focused on unlocking development profits and generating annuity
income to further capital growth for its shareholders. This is achieved through managing its developed
portfolio in generating rental income and following a "value-engineering" approach in developing and
completing pipeline projects.
DIVIDEND
The proposed dividend of 25 cents per share (2017: 12.5 cents) was approved after year end and was paid
to shareholders in July 2018. No further dividends have been declared for the six months ended
31 August 2018.
SEGMENTAL REPORTING
Due to the current investment property portfolio exposure being heavily weighted to retail, financial
reviews are based on a single operating segment. Segment reporting as required in terms of IFRS 8:
Operating segments are, therefore, not applicable to the Group.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The reviewed provisional condensed consolidated financial statements are prepared in accordance with the
requirements of the JSE Listings Requirements and the requirements of the Companies Act 71 of 2008 of
South Africa. The unaudited interim results have been prepared in accordance with the framework concepts
and the measurement and recognition requirements of International Financial Reporting Standards (IFRS),
at a minimum, IAS 34: Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting
Standards Council.
The accounting policies applied in the preparation of these unaudited condensed consolidated interim results
are consistent with those applied in the 2018 unaudited condensed consolidated interim results.
These results have been prepared using the historical cost basis, except for investment properties, which
are measured at fair value, and certain financial instruments, which are measured at either fair value
or amortised cost.
These unaudited condensed consolidated interim results were prepared under the supervision of
Ms S le Roux CA(SA), in her capacity as Chief Financial Officer.
CHANGE IN DIRECTORS
During the 2019 financial year Mrs S. Griesel resigned as an independent non-executive director and
chair of the Audit Committee, effective 31 July 2018. Ms M Hlobo has been appointed in this position
effective 29 October 2018.
By order of the Board
Centurion, 30 October 2018
D Green K Anastasiadis
(Chairman) (Chief Executive Officer)
Directors: D Green (Chairman)*, K Anastasiadis (CEO), S le Roux (CFO), PD Sekete*, T Jali*,
HN Bila*, M Hlobo* (*Independent non-executive)
Registered office: Mall@Reds, 1st Floor, Corner of Rooihuiskraal and Hendrik Verwoerd Drives,
Rooihuiskraal, Ext 15, Centurion
Postal address: PO Box 569, Wierda Park, 0149
Registration number: 2014/182931/06
Transfer secretaries: Computershare Investor Services Proprietary Limited, Rosebank Towers,
15 Biermann Avenue, Rosebank 2192, Johannesburg 2001
Sponsor: Nedbank Corporate and Investment Banking Limited
JSE share code: ACS
ISIN code: ZAE000198289
Company secretary: MWRK Accountants and Auditors Incorporated
Date: 30/10/2018 05:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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