To view the PDF file, sign up for a MySharenet subscription.

ACSION LIMITED - Summarised provisional consolidated financial results for the year ended 28 February 2019

Release Date: 29/05/2019 17:00
Code(s): ACS     PDF:  
Wrap Text
Summarised provisional consolidated financial results for the year ended 28 February 2019

Acsion 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")

SUMMARISED PROVISIONAL CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2019

Summarised provisional consolidated statement of financial position as at 28 February 2019
                                                                                        Audited         Audited     
                                                                                           2019            2018    
                                                                                          R'000           R'000    
Assets                                                                                                             
Non-current assets                                                                                                 
Investment property                                                                   7 409 903       6 468 041    
Property, plant and equipment                                                           671 533          76 503    
Operating lease asset                                                                   143 641         139 182    
Goodwill                                                                                625 464         625 464    
Prepayments                                                                             233 296         326 429    
Investments in associates                                                                 1 541           1 471    
Other financial assets                                                                    5 432           6 847    
Deferred tax                                                                             24 352          23 872    
                                                                                      9 115 162       7 667 809    
Current assets                                                                                                     
Operating lease assets                                                                   13 144           2 138    
Current tax receivable                                                                    2 504             525    
Loans to group companies                                                                  1 699             899    
Trade and other receivables                                                              72 010          24 401    
Loans to shareholders                                                                     4 053           4 053    
Cash and cash equivalents                                                                74 612         212 680    
                                                                                        168 022         244 696    
Non-current assets held for sale                                                              -          52 418    
Total assets                                                                          9 283 184       7 964 923    
                                                                                                                   
Equity and liabilities                                                                                             
Equity                                                                                                             
Share capital                                                                         3 968 078       3 969 625    
Reserves                                                                                 22 567               -    
Retained income                                                                       2 828 881       2 006 548    
Equity attributable to equity holders of parent                                       6 819 526       5 976 173    
Non-controlling interest                                                                 55 565          41 122    
                                                                                      6 875 091       6 017 295    
Liabilities                                                                                                        
Non-current liabilities                                                                                            
Deferred tax                                                                          1 405 014       1 195 221    
Other financial liabilities                                                             630 004         643 861    
Lease obligation                                                                        209 588               -    
                                                                                      2 244 606       1 839 082    
Current liabilities                                                                                                
Loans from shareholders                                                                   3 151               -    
Trade and other payables                                                                128 270          65 773    
Other financial liabilities                                                              23 453          23 284    
Provisions                                                                                3 767           3 174    
Current tax payable                                                                       4 747          16 282    
Dividend payable                                                                             99              33    
                                                                                        163 487         108 546    
Total liabilities                                                                     2 408 093       1 947 628    
Total equity and liabilities                                                          9 283 184       7 964 923    


Summarised provisional consolidated statement of profit or loss and other comprehensive income
                                                                                        Audited         Audited     
                                                                                           2019            2018    
                                                                                          R'000           R'000    
Revenue                                                                                 653 351         586 490    
Other operating income                                                                    9 345           8 215    
Other operating expenses                                                               (224 223)       (223 545)   
Operating profit                                                                        438 473         371 160    
Investment income                                                                        13 917          27 793    
Finance costs                                                                           (61 654)        (56 915)   
Profit from associate                                                                        70             321    
(Loss)/Profit on sale of non-current assets held for sale                                   (68)            783    
Fair value adjustments                                                                  837 877         744 785    
Profit before taxation                                                                1 228 615       1 087 927    
Taxation                                                                               (293 439)      (264 310)    
Profit for the year                                                                     935 176         823 617    
                                                                                                                   
Other comprehensive income:                                                                                        
Items that may not be reclassified to profit or loss:                                                              
Gains on property revaluation                                                            30 347               -    
Income tax relating to items that may be Reclassified                                    (6 798)              -    
Total items that may not be reclassified to profit or Loss                               23 549               -    
Other comprehensive income for the year net of                                                                     
Taxation                                                                                 23 549               -    
Total comprehensive income for the year                                                 958 725         823 617    
Profit attributable to:                                                                                            
Owners of the parent                                                                    920 734         814 462    
Non-controlling interest                                                                 14 442           9 155    
                                                                                        935 176         823 617    
Total comprehensive income attributable to:                                                                        
Owners of the parent                                                                    944 283         814 462    
Non-controlling interest                                                                 14 442           9 155    
                                                                                        958 725         823 617    
Basic and diluted earnings per share (cents)                                             233.93          206.76    
                                                                                                                   
The following information does not form part of the Statement      
of Profit or Loss and Other Comprehensive Income or the            
Statement of Financial Position:                                   
Per share information                                                                                              
Headline earnings per share (cents)                                                       71.73           61.81    
Proposed dividend per share (cents)                                                           -           25.00    


Summarised provisional consolidated statement of changes in equity (R'000)
                                                                                                                   Total                                  
                                                                                                            attributable                               
                                                             Foreign                                           to equity                               
                                                 Total      currency                                          holders of          Non-                
                         Share   Treasury        share   translation   Revaluation      Total    Retained     the group/   controlling       Total    
Audited                capital     shares      capital       reserve       reserve   reserves      income        company      interest      equity    
Balance at                                 
01 March 2017        3 979 956     (6 231)   3 973 725             -             -          -   1 241 456      5 215 181        31 967   5 247 148    
Total comprehensive                                                                                                       
income for the year          -          -            -             -             -          -     814 462        814 462         9 155     823 617    
Purchase of                                
treasury shares              -     (4 100)      (4 100)            -             -          -                     (4 100)            -      (4 100)   
Dividends paid               -          -            -             -             -          -     (49 370)       (49 370)            -     (49 370)   
                                                                                                                                                      
Balance at                                 
01 March 2018        3 979 956    (10 331)   3 969 625             -             -          -   2 006 548      5 976 173        41 122   6 017 295    
Total comprehensive                                                                                                       
income for the year          -          -            -             -        23 549     23 549     920 734        944 283        14 442     958 725    
Purchase of                                
treasury shares              -     (1 547)      (1 547)            -             -          -           -         (1 547)            -      (1 547)   
Dividends paid               -          -            -             -             -          -     (98 401)       (98 401)            -     (98 401)   
Foreign currency                           
translation                  -          -            -          (982)            -       (982)          -           (982)            -        (982)   
Balance at                                 
28 February 2019     3 979 956    (11 878)   3 968 078          (982)       23 549     22 567   2 828 881      6 819 526        55 565   6 875 091    


Summarised provisional consolidated statement of cash flows
                                                                                        Audited         Audited    
                                                                                           2019            2018    
                                                                                          R'000           R'000    
Cash generated by operations                                                            511 923         376 547    
Investment income received                                                               13 917          23 234    
Finance costs paid                                                                      (61 283)        (56 915)   
Taxation paid                                                                          (104 438)        (73 087)   
Net cash from operating activities                                                      360 118         269 779    
                                                                                                                   
Purchase of property, plant and equipment                                               (36 846)        (25 001)   
Proceeds on sale of plant and equipment                                                       -             260    
Development costs relating to investment property                                      (353 161)       (384 807)   
Decrease of financial assets                                                              1 415           6 008    
Proceeds on sale of non-current assets held for sale                                      3 265          17 204    
Net cash used in investing activities                                                  (385 327)       (386 336)   
                                                                                                                   
Purchase of treasury shares                                                              (1 547)         (4 100)   
Proceeds from other financial liabilities                                               (13 688)        366 095    
Proceeds of loans from shareholders                                                       3 151               -    
Finance lease payments                                                                     (286)              -    
Finance cost                                                                               (372)              -    
Dividends paid                                                                          (98 335)        (49 337)   
Proceeds of loans to group companies                                                          -              52    
Advance of loans to associate and group companies                                          (800)              -    
Net cash (used in)/from financing activities                                           (111 877)        312 710    
                                                                                                                   
Total cash movement for the year                                                       (137 086)        196 153    
Cash at the beginning of the year                                                       212 680          16 527    
Effect of exchange rate movement on cash balances                                          (982)              -    
Total cash at the end of the year                                                        74 612         212 680    
                                                                                                                   
Reconciliation of earnings per share to headline earnings per share:                                               
Basic earnings                                                                          920 734         814 462    
Adjusted for:                                                                                                      
Fair valuation adjustment, net of taxation                                             (650 192)       (577 953)   
Non-controlling interest relating to fair valuation adjustment                           11 403           6 380    
Loss on non-current assets held for sale                                                    375             420    
Loss on sale of plant and equipment                                                           -             163    
Impairment of subsidiary loan                                                                 -              12    
Headline earnings                                                                       282 320         243 484    
Net asset value per share (cents)                                                      1 733.56        1 518.25    
Net asset value per share excluding deferred taxation (cents)                          2 084.53        1 815.83    


Geographic and tenant profiles
The existing income generating investment properties consist of nine predominantly retail developments 
strategically located in Gauteng, Mpumalanga and Limpopo with an aggregate gross lettable area ("GLA") 
of 256 466 m2 (2018: 253 800 m2). The tenant profile by GLA comprises 71% national tenants (2018: 71%),
17% semi-national (2018: 14%) and 12% line and other franchises (2018: 15%).

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 88% (2018: 85%). 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.
                                           
Geographic profile by revenue    
Gauteng                   - 72%              
Limpopo                   - 12%              
Mpumalanga                - 16%           
                                 
Geographic profile by GLA        
Gauteng                   - 69%              
Limpopo                   - 15%              
Mpumalanga                - 16%           
                                 
Tenant profile by revenue        
National                  - 66%             
Semi national             - 21%        
Line and other franchises - 13%   
                                 
Tenant profile by GLA            
National                  - 71%             
Semi national             - 17%        
Line and other franchises - 12%   
                                           
COMMENTARY

About Acsion
Acsion ("the Group" or "the Company") is a property manager, real estate developer and owner which is 
listed on the Johannesburg Stock Exchange ("JSE"). Acsion is differentiated from Real Estate Investment 
Trusts ("REITs") in the listed property sector as it focuses on the delivery of superior net asset value 
("NAV") growth. NAV growth drivers include enhancing existing properties, completing the identified 
development pipeline and obtaining additional future development opportunities.

The Group's development function and "value-engineering" approach to development, significantly enhances 
returns to shareholders. Value engineering focuses on optimising upfront feasibility studies, planning, 
designing and constructing in an innovative and more cost-effective way, resulting in lower construction 
costs, without compromising on quality.

Operational update
The Acsiopolis development (Benmore, Sandton) has progressed in the current financial year. As at year 
end, the development had reached 80% completion stage.

The final building permit application has been obtained in regards to the 39 000m2 Metropolis Mall@Larnaka 
(Larnaka, Cyprus) and groundwork has commenced. Construction is anticipated to be completed in the latter 
part of 2020.                                                                    

Financial results
Revenue for the Group increased from R586.5 million in 2018 to R653.4 million in 2019. The increase of 
11.4% was mainly due to Mall@55 being operational for a complete year compared to only five months in the
prior year. Other income supplemented rental revenue by R9.3 million (2018: R8.2 million).

Operating expenses increased by 0.3% (2018: 9.0% increase). Factors contributing to the low increase 
included renegotiating with contractual suppliers as well as an overall focus on cost savings throughout 
operations.

The increase in finance cost from R56.9 million in 2018 to R61.7 million in 2019 can mainly be attributed 
to the change in the prime lending rate. The group continues to aggressively manage its cash resources.

Headline earning per share increased to 71.73 cents (2018: 61.81 cents) representing a 16.0% increase.

The financial position of the Group remains very strong. Investment property (which includes elements 
of plant and equipment and the operating lease asset) is carried at R8.3 billion (2018: R6.7 billion). 
Non-current asset held for sale previously carried at R52.4 million was transferred back to Investment 
Property. Total property under control of the Group therefore increased by a respectable 23.9% year 
on year.

Prepayments consist of two developments acquired during the formation of the Group, known as Acsiopolis 
and Mall@Maputo. With the construction industry under pressure, Acsiopolis has made significant progress 
despite experiencing delays. The Group is still delaying Mall@Maputo until feasible to commence. These 
delays are in management's opinion welcomed to some extent as the economy in Mozambique is not as strong 
as what management would have liked it to be. Management however continues to work on this project to bring 
it to finalisation as it firmly believes that this development meets the investment criteria for the Group.
Acsiopolis as well as the development in Larnaca will be the Group's main focus areas during the 2020 
financial year.

Goodwill equates to R625.5 million (2018: R625.5 million) relating to the premium paid by shareholders to 
secure participation in the development pipeline as well as to receive the value attributable to 
internalising the property development and property management functions performed by Southern Palace 
Investments 108 Proprietary Limited within the Group upon listing. As at year end no impairment was 
required.

Group liquidity is considered to be adequate.

NAV per share increased from 1 518.25c to 1 733.56c. NAV per share (excluding deferred taxation) for the 
year ended 28 February 2019 increased by 14.8% (2018: 15.5%) from 1 815.83c in 2018 to 2 084.53c in 2019.

Treasury share purchase
The Group repurchased 239 143 (2018: 611 851) shares at an average price of 647 cents per share during 
the 2019 financial year and currently holds these as treasury shares. The decision to repurchase shares 
was made as the share price was trading significantly below the reported NAV of the Company. These shares 
were purchased at approximately 63% below the reported NAV per share (including deferred tax) as at 
28 February 2019.

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 year end was 3.82% (2018: 4.42%)
and the Group remains focused on reducing this percentage. The weighted average lease expiry profile by 
GLA for the portfolio decreased to 3.2 years (2018: 4.0 years). The decrease is mainly attributable to 
new retail centres signing up leases with extended lease expiry profiles in the prior year.

Developed investment property portfolio (excluding residential property in Hyde Park valued at 
R55.9 million) consisted of the following nine properties at 28 February 2019:
                                                                            Value/m2           Percentage    
                               Directors/                                 (excluding             of total    
                              independent                                bulk, where            portfolio    
                                valuation                  GLA           applicable)             by value    
Property name                       R'mil                   m2                     R                    %    
Mall@Carnival*                      2 793               90 547                30 459                 45.0    
Mall@Reds*                          1 285               54 788                23 454                 20.7    
Mall@Emba*                            572               24 035                23 798                  9.2    
Mall@Lebo                             518               23 536                22 015                  8.3    
Mall@Mfula                            308               17 955                17 162                  5.0    
Mall@Moutsiya*                        232               14 715                15 188                  3.7    
Mall@55*                              305               15 419                18 225                  4.9    
Moreleta Square                       152                8 581                17 690                  2.5    
Simarlo Rainbow                        46                6 890                 6 699                  0.7    
Total                               6 211              256 466                24 220                100.0    
The above properties are trading at an average annualised net operating yield of approximately 
7.0% (2018: 6.9%).

Developments under construction consisted of the following properties at 28 February 2019:
                               Directors/                                                                
                              independent                                                         Antici-    
                                valuation                  GLA              Value/m2                pated    
Property name                       R'mil                   m2                     R              opening    
Acsiopolis*                         1 689               67 000                25 215           March 2020    
Trade55*                               48               10 000                 4 800          Negotiating    
Larnaca (valued at cost)              246               39 000                 6 307             Nov 2020    
Total                               1 983              116 000                17 095                         

* Independently valued

The group uses a discounted cash flow and income capitalisation methodology as a basis when determining 
the fair value of investment property. At least one third of the properties are valued externally and 
the balance of the properties are valued by the Directors. A property will be externally valued at least 
once every three years. All investment properties for the Group is Level 3 hierarchy investment properties. 
There were no transfers between Levels 1, 2 and 3 during the year.

Reconciliation of investment property                                                             (R'000)   
Opening balance                                                                                 6 468 041    
Additions                                                                                         353 161    
Right of use asset                                                                                209 874    
Transfer from prepayment                                                                           93 133    
Classification from Non-current assets held for sale                                               55 900    
Transfer of Investment property to Property, plant and equipment                                 (555 321)   
Transfer of Investment property to insurance claim receivable                                     (45 951)   
Fair value adjustments #                                                                          831 066    
Closing balance                                                                                 7 409 903    
# Fair value adjustment recognised through profit and loss.                                                  

Unobservable inputs used in determining the fair value of investment property (excluding mixed used 
development) were based on the following:
                                                                                                   Ranges    
Exit capitalisation rate                                                                   7.50% - 11.00%    
Discount rate                                                                             12.50% - 17.00%    
Revenue escalation rate                                                                     6.25% - 8.07%    
Expense escalation rate                                                                     7.00% - 8.00%    
                                                                                                             
The estimated impact of a change in the significant unobservable inputs would result in a change in 
the 2019 investment property fair value estimation:
Properties excluding mixed use development                                                          R'000    
An increase of 50 basis points in the discount rate:                                              (87 650)   
A decrease of 50 basis points in the discount rate:                                                89 695    
An increase of 50 basis points in the capitalisation rate:                                       (269 906)   
A decrease of 50 basis points in the capitalisation rate:                                         305 324    

Unobservable inputs used in determining the fair value of the mixed used development were 
based on the following:
                                                                                   Ranges (if applicable)    
Capitalisation rate (apartments and retail)                                                 7.50% - 9.00%    
Average Room rate (apartments)                                                                     R3 276    
Average occupancy rate (apartments)                                                                75.00%    
Net profit %                                                                                       22.30%    
Discount rate (retail)                                                                             12.50%    
Revenue escalation (retail)                                                                         8.00%    

The estimated impact of a change in the significant unobservable inputs would result in a change 
in the 2019 investment property fair value estimation:                 
Mixed use development                                                                               R'000    
An increase of 100 basis points in capitalisation rate:                                          (162 868)   
A decrease of 100 basis points in the capitalisation rate:                                        205 097    
An increase of 100 basis points in the room rate:                                                  29 628    
A decrease of 100 basis points in the room rate:                                                  (29 628)   
An increase of 100 basis points in net profit %:                                                   60 466    
A decrease of 100 basis points in net profit %:                                                   (60 466)   
An increase of 100 basis points in the occupancy rate:                                             41 357    
A decrease of 100 basis points in the occupancy rate:                                             (41 357)   
                                                                                                             
Unobservable inputs used in determining the fair value of the owner occupied hotel disclosed as part 
of property, plant and equipment:                                 
                                                                                   Ranges (if applicable)    
Capitalisation rate                                                                                 9.00%    
Average Room rate                                                                                  R1 752    
Average occupancy rate                                                                             75.00%    
Net profit %                                                                                       22.30%    

The estimated impact of a change in the significant unobservable inputs would result in a change in 
the 2019 property (PPE) fair value estimation:                 
Owner occupied hotel                                                                                R'000    
An increase of 100 basis points in capitalisation rate:                                          (102 805)   
A decrease of 100 basis points in the capitalisation rate:                                        128 506    
An increase of 100 basis points in the room rate:                                                  20 367    
A decrease of 100 basis points in the room rate:                                                  (20 367)   
An increase of 100 basis points in net profit %:                                                   45 489    
A decrease of 100 basis points in net profit %:                                                   (45 489)   
An increase of 100 basis points in the occupancy rate:                                             27 450    
A decrease of 100 basis points in the occupancy rate:                                             (27 450)   

Acsiopolis (Benmore) has been designed as a twenty storey mixed use development, situated in Sandton.
Acsiopolis addresses the new micro-living trend, which is developing in the commercially dense 
Sandton node, allowing people to live and work in close proximity, whilst taking advantage of 5-star 
amenities, and making use of public transport. The site measures approximately one hectare and is well 
positioned on Benmore Drive upon which 67 000 m2 is being developed. The majority of this has been 
earmarked for short-term residential letting which supports Acsion's strategy of sectoral diversification. 
Of this approximately 35 000 m2 will be available as executive suites, 26 000 m2 is earmarked for short 
term stay units, 5 000 m2 will be utilised for retail purposes and 1 000 m2 for office use. Acsiopolis 
will incorporate six levels of parking equating to approximately 1 400 parking bays which is expected to 
further enhance convenience for shoppers and residents alike. In addition to vehicular access, Acsiopolis
has been designed to take into consideration the evolving public transport systems in Sandton to 
accommodate the integration of pedestrian accessibility. New innovations such as solar PV and electric 
car charging stations, will be incorporated to bring the building in line with international standards 
of design, and provide residents with technology to challenge the head winds of the fourth industrial 
revolution. Construction of the development has been effected by the construction slowdown in South Africa 
and delays have been experienced. The development team have made a considerable effort to keep the 
development on track with the intended timeline and is expecting to deliver the final Acsiopolis offering
to the market by the end of quarter two of the 2020 financial year. This development represents the largest 
single phase developments the Group has undertaken to date within South Africa.

Metropolis Mall@Larnaka is the Group's first international retail development. The Group has signed a
leasehold over land in Larnaka, Cyprus. The lease is a 33 year lease with two options to renew of 33 years 
each. The Group has started to develop a 39 000 m2 retail centre. Final building approvals from the Ministry 
and all relevant bodies have been received during the 2019 financial year and groundwork have been started. 
The development construction is intended to commence during May 2019. At 39,000 m2 of GLA, it will be the 
dominant and only formal retail mall in Larnaka, catering for approximately 150 000 people. Acsion is 
forecasting double-digit yields on this project, with a considerable uplift to our net asset value on 
completion, which is targeted for end of 2020. The development will also enhance geographical and currency 
diversification for the Acsion portfolio. 

Mall@55 is a 15 000 m2 convenience shopping centre located in Monavoni, Gauteng. It is on an extremely 
busy arterial route accessible from the N14 freeway and the R55. This development caters for a
value/convenience/lifestyle centre, which is underrepresented in the Monavoni area. The shopping centres 
started trading in September 2017 and has been well received by the market. Acsion has commenced the 
construction of an expansion of the Mall@55 with a second phase measuring 10,000m2, with a projected 
opening date of March 2020. 

Trade 55 Phase I, will comprise of a 10 000 m2 large ("big box") retail centre with special commercial
rights obtained in Monavoni, Gauteng. This development is located on an extremely busy arterial route 
accessible from the N14 freeway and R55 provincial route. Trade 55's value offering will be complementary 
to that of Mall@55 as it is located right across from the Mall@55 site. 

Hyde Park Terrace, a high end residential development consisting of land parcels and units ranging from 
350 m2 to 540 m2 under roof, is situated in Hyde Park, Sandton, approximately 500 m from Hyde Park shopping
centre. The development is nearly sold out with only six (2018: six) completed houses and seven (2018: nine) 
vacant stands still available for sale. Management has taken the decision to reclassify this property from 
held for sale to investment property as at 28 February 2019. Management is still committed to selling these 
assets, but due to economic circumstances the likelihood of selling within one year is low.

Future investment opportunities
Acsion continuously evaluates a consistent stream of new opportunities and is in advanced discussions on
certain projects to further enhance capital growth in the coming five years. At the date of this report, 
the following future development opportunities, amongst others, were being considered by Acsion:

Mall@Emba, is another of Acsion's highly successful rural developments in Embalenhle and expansion to the
centre (Phase 3) is being assessed. On 25 June 2018 a fire occurred at the mall due to service delivery protest
action. The mall was covered by insurance and is being rebuilt. It is expected that the mall would be fully
operational by end of June 2019.

Mamahlodi Gardens is an affordable housing development in Walkraal, Limpopo with a total land size of 40
hectares. Acsion has formed a partnership with local residents and the local municipality to approach prospective
buyers with access to housing subsidies from the Department of Human Settlements. Proclamation of the land is
completed with all services (water, sewage and electricity) already secured. Plans to construct up to 515
residential units for sale are supported by a shortage of affordable housing in the Walkraal area. The market
price will range between R300 000 and R350 000 per unit. The development will be demand driven and will be
supplementary to the Mall@Moutsiya development. The Group is currently in negotiations with various parties to bring
this aspect of the development to fruition. The Group is also considering alternatives to the housing
development to utilise the remaining extent of the land.

The Mall@Maputo development will be located in northern Maputo and will be adjacent to the main Maputo ring
road, with a total land size of 8.9 hectares. A memorandum of understanding was originally signed with the
Mozambican Ministry of Sport to develop a 50 000 m2 shopping centre. Subsequently, the Group decided to acquire
an alternative land parcel adjacent to the existing land parcels which now requires an additional agreement
with the Ministry of Interior to be concluded. The Group have been in constant negotiations with the Ministry 
of Interior and a final draft contract has been negotiated.

With Offices@Lusaka, Acsion aims to take advantage of Zambia's growing economy and limited available
infrastructure for multinational companies. Negotiations with a local land owner to co-develop up to 
20 000 m2 of office space are currently underway. The site is located in close proximity to Manda Hill 
Shopping Mall and alongside Stanbic's Lusaka offices.

Prospects
Acsion's Board remain confident that the Group's growth objectives can be achieved despite the challenging
economic operating environment. The Group remains focused on the completion of its secured development pipeline
over the next year.

Acsion will continue reinvesting in its existing portfolio and focus on its development expertise, or
"value-engineering" approach, to ensure above average NAV growth. In addition, Acsion will explore further
development opportunities in high-growth markets across Africa and Europe.

Proposed dividend
The Company's policy as per the listing statement was not to declare any dividends for a period of five
years but to reinvest all profits and return capital growth to shareholders. The board revisited this decision
considering the development funding requirements in the foreseeable future as well as the impact on the 
liquidity and solvency position of the company. It was decided not to propose any dividend for the year 
ended 28 February 2019. 

The 2018 dividend of 25.0 cents per share was declared and paid in the 2019 financial year. 

Segmental reporting
Due to the current investment property portfolio exposure heavily weighted towards retail, the chief
operating decision maker considers the operations to be a single operating segment and as such reviews financial
information on that basis. Segment reporting as required in terms of IFRS 8: Operating segments is therefore not
applicable to the Group at this stage.

Changes in directors
During the 2019 financial year Mrs S. Griesel resigned as a non-executive director, effective 31 July 2018.
Ms M. Hlobo was appointed on 29 October 2018 to succeed Mrs S. Griesel.

Related party transactions
There were no significant related party transactions during the current year with the exception of
construction costs amounting to R24 million (2018: R109 million) relating mainly to rebuilding of Mall@Emba 
and Acsiopolis which was paid to K Anastasi Projects Proprietary Limited (interest held by director). 

Events after reporting period
A dispute is ongoing with the main contractor for the construction of Acsiopolis. The dispute is in regards
to delays and penalties on the construction. The outcome of the dispute is currently uncertain.

The Directors are not aware of any other material event which occurred after the reporting date and up to
the date of this report.

Basis of preparation and accounting policies
The summarised provisional 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 results have been prepared in accordance with the framework concepts, the measurement 
and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial 
Reporting Guides as issued by the Accounting Practices Committee, Financial Pronouncements as issued by 
the Financial Reporting Standards Council, and also as a minimum, contain the information required by 
IAS 34: Interim Financial Reporting.

The accounting policies applied in the preparation of the summarised provisional consolidated financial
statements are in compliance with IFRS and are consistent with those applied in the 2018 consolidated 
financial statements except for the adoption of new and amended standards as set out below.
The Group adopted the following standards:
- IFRS 9 Financial Instruments, and
- IFRS 15 Revenue from Contracts with Customers; and
- IFRS 16 (early adoption), 'Leases' requiring lessees to recognise a lease liability reflecting future
  lease payments and a 'right-of-use asset' for all material long-term lease contracts

The adoption of IFRS 9 and IFRS 15 had no material impact on the results.

Summary of revenue recognised as follows:
                                                                                    Audited       Audited    
                                                                                       2019          2018    
                                                                                      R'000         R'000    
Collection commission                                                                   315           217    
Rental income on investment property                                                492 527       449 858    
Interest received (Trading)                                                           1 542         1 162    
Utility cost recovery                                                               143 506       133 942    
Operating lease - straight line rental                                               15 461         1 311    
Total                                                                               653 351       586 490    

The early adoption of IFRS 16 resulted in an increase in investment property of R210 million as well as an
increase in lease obligation of R210 million.

These results have been prepared under the historical cost convention, except for investment properties and
property, plant and equipment, which are measured at fair value, and certain financial instruments, which are
measured at either fair value or amortised cost. 

These summarised provisional consolidated financial statements were prepared under the supervision of
Sandarie le Roux CA (SA) in her capacity as Financial Director.

Audit report
The auditor, Deloitte & Touche, has issued its opinion on Acsion's consolidated financial statements for the
year ended 28 February 2019. The audit was conducted in accordance with International Standards on Auditing.
Deloitte & Touche has issued an unmodified opinion. A copy of the auditor's report together with a copy of the
audited consolidated and separate financial statements is available for inspection at the Company's
registered office during normal business hours. The auditor's report does not necessarily report on all of the
information contained in this announcement/financial results. Shareholders are advised that, in order to obtain 
a full understanding of the nature of the auditor's engagement, they should obtain a copy of that report together
with the audited consolidated financial statements as at 28 February 2019 from the Company's registered office
during normal business hours.

These summarised provisional consolidated financial statements have been derived from the audited
consolidated Financial statements and are consistent in all material respects with the audited consolidated 
financial statements for the year ended 28 February 2019 but is not itself audited. 
 
The Directors take full responsibility for the preparation of these summarised provisional consolidated
financial results and confirm that the financial information has been correctly extracted from the underlying
annual consolidated financial statements. Any reference to future financial information included in this
announcement has not been reviewed or reported on by the auditor. 

By order of the Board

Centurion, 29 May 2019

D Green            K Anastasiadis
(Chairman)        (Chief Executive Officer)

Directors: D Green (Chairman)*, K Anastasiadis (CEO), S le Roux (FD), M Hlobo*, 
PD Sekete*, T Jali*, HN Bila* 
(*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 Bierman Avenue, Rosebank, 2192

Sponsor: Nedbank Corporate and Investment Banking

Company secretary: MWRK Accountants and Auditors Incorporated

Date: 29/05/2019 05:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Share This Story