Wrap Text
Condensed results for the group for the six months ended 31 December 2017
ORION REAL ESTATE LIMITED
Approved as a REIT by the JSE
(Incorporated in the Republic of South Africa)
(Registration number: 1997/021085/06)
Share Code: ORE ISIN: ZAE000075651
("Orion Real Estate" or “the Company”)
CONSOLDIATED RESULTS FOR THE GROUP FOR THE SIX MONTHS ENDED 31 DECEMBER 2017
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited
6 months 6 months Audited
ended Ended Year end
31 December 31 December 30 June
Figures in Rand 2017 2016 2017
ASSETS
Investment property 733,984,000 802,883,351 733,984,000
Fair value of property portfolio 728,882,366 797,701,052 728,882,366
Straight-line rental income adjustment 5,101,634 5,182,299 5,101,634
Property, plant and equipment 5,148,233 5,707,100 5,466,434
Deferred tax asset 651,152 - 651,151
Total non-current assets 739,783,385 808,590,451 740,101,585
Loans to related parties 1,906,611 18,178,337 1,147,195
Loans to shareholders 44,686,474 - 35,204,377
Stock on hand 94,890 149,488 101,949
Trade and other receivables 19,839,985 58,314,305 29,432,459
Cash and cash equivalents 890,147 21,000 2,729,166
67,418,106 76,663,130 68,615,146
Investment properties held for sale 8,400,000 - 8,400,000
Total current assets 75,818,106 76,663,130 77,015,146
Total assets 815,601,491 885,253,581 817,116,731
EQUITY AND LIABILITIES
Capital and reserves
Share capital and share premium 114,336,674 114,336,674 114,336,674
Retained earnings 487,324,779 488,732,918 479,224,908
Total equity attributable to owners of the
parent 601,661,453 603,069,592 593,561,582
Non-controlling interest (291,068) (283,175) (291,068)
Total equity 601,370,385 602,786,417 593,270,514
Borrowings 127,725,818 143,099,409 133,337,025
Deferred tax liabilities - 1,006,350 -
Total non-current liabilities 127,725,818 144,105,759 133,337,025
Current income tax liabilities 12,328,016 8,902,296 12,486,566
Loans from directors 17,508 2,015,561 18,508
Loans from related parties 4,705,029 522,010 20,096
Loans from group companies - 103 -
Loans from shareholders - 6,126,864 -
Tenant deposits 7,609,168 6,848,762 6,984,889
Trade and other payables 45,264,337 96,190,017 54,440,417
Borrowings 14,559,450 14,764,174 14,559,450
Bank overdraft 2,021,780 2,991,618 1,999,266
Current liabilities 86,505,287 138,361,405 90,509,192
Total liabilities 214,231,106 282,467,164 223,846,217
Total equity and liabilities 815,601,491 885,253,581 817,116,731
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited
6 months 6 months Audited
ended Ended Year end
31 December 31 December 30 June
Figures in Rand 2017 2016 2017
Revenue 44,848,701 47,679,767 90,311,864
Property revenue 44,848,701 47,679,767 90,379,208
Straight-line rental income accrual - - (67,344)
Other income 108,568 190,248 6,952,559
Other direct property operating costs (16,265,296) (27,287,500) (43,380,174)
Administrative and management expenses (9,931,661) (8,988,726) (26,951,020)
Repairs and maintenance (4,203,676) (1,174,137) (8,135,014)
Fair value adjustment - - 19,626,092
Gross change in fair value of investment
property - - 19,558,748
Straight-line lease adjustment - - 67,344
Loss of control of subsidiary - - (30,424,170)
Operating profit before interest 14,556,636 10,419,652 8,000,137
Finance income 2,145,863 5,520,421 7,082,805
Finance costs (8,602,628) (12,454,525) (19,014,512)
Profit / (Loss) before taxation 8,099,871 3,485,548 (3,931,570)
Taxation - (837,416) (3,146,407)
Profit / (Loss) after taxation 8,099,871 2,648,132 (7,077,977)
Total comprehensive income /(loss) for the
year 8,099,871 2,648,132 (7,077,977)
Owners of the parent 8,099,871 2,648,132 (7,074,340)
Non-controlling interest - - (3,637)
8,099,871 2,648,132 (7,077,977)
Earnings per share
Basic and diluted earnings per share (cents) 1.29 0.42 (1.13)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited
6 months 6 months Audited
ended Ended Year end
31 December 31 December 30 June
Figures in Rand 2017 2016 2017
Cash inflow from operating activities 9,344,446 (19,000,475) 12,208,624
Cash generated by operations 16,384,697 8,672,029 45,369,628
Interest received 2,145,863 5,520,421 7,082,805
Interest paid (8,602,628) (12,454,525) (19,014,512)
Taxation paid (583,466) (360,581) (1,061,684)
Dividends paid - (20,377,819) (20,167,613)
Cash outflows from investing activities (10,278,725) 19,998,201 (703,191)
Loans repaid / (advanced) by related
parties (759,416) 5,906,427 (11,124,715)
Loans repaid / (advanced) to shareholder (9,482,097) 10,147,464 (25,056,913)
Proceeds on sale of investment property - 4,500,000 14,000,000
Purchases of property, plant and
equipment (37,212) (555,690) (797,993)
Cash (outflows) / inflow from financing
activities (927,273) (5,936,333) (18,402,409)
Loans (repaid) / raised from related parties 4,684,933 500,746 (1,168)
Loans (repaid) / raised from directors (1,000) 1,612,032 (385,021)
(Repayment of) / Increase in interest
bearing borrowings (5,611,206) (8,049,112) (18,016,220)
Net increase in cash, cash equivalents and
bank overdrafts (1,861,533) (4,938,608) (6,923,976)
Cash, cash equivalents and bank
overdrafts at the beginning of the year 729,900 7,653,876 7,653,876
Cash, cash equivalents and bank
overdrafts at the end of the year (1,131,632) 2,715,268 729,900
CONDENSED STATEMENTS OF CHANGES IN EQUITY
Share Retained Non-controlling Total
Figures in Rands Capital Earnings Total Interest equity
Balance at 30 June 2016 114,336,674 506,466,861 620,803,535 (287,431) 620,516,104
Total comprehensive loss for the year - (7,074,340) (7,074,340) (3,637) (7,077,977)
Dividends paid - (20,167,613) (20,167,613) - (20,167,613)
Balance at 30 June 2017 114,336,674 479,224,908 593,561,582 (291,068) 593,270,514
Total comprehensive income for the year - 8,099,871 8,099,871 - 8,099,871
Balance at 31 December 2017 114,336,674 487,324,779 601,661,453 (291,068) 601,370,385
CALCULATION OF HEADLINE EARNINGS AND DISTRIBUTABLE EARNINGS
Unaudited Unaudited
6 months 6 months Audited
ended Ended Year end
31 December 31 December 30 June
Figures in Rand 2017 2016 2017
Shares in issue 630,698,688 630,698,688 630,698,688
Number of shares for basic earnings 630,698,688 630,698,688 630,698,688
Less: treasury shares (3,688,866) (3,688,866) (3,688,866)
Number of shares for net asset and diluted
earnings per share 627,009,822 627,009,822 627,009,822
Number of shares for diluted earnings per
share 627,009,822 627,009,822 627,009,822
Weighted average number of shares in
issue 627,009,822 627,009,822 627,009,822
Headline earnings reconciliation:
Basic earnings / (loss) 8,099,871 2,648,132 (7,074,340)
Fair value adjustment to investment
properties - - (19,558,748)
Loss of control of subsidiary - - 30,424,170
Net profit on disposal of investment
properties - - (500,000)
Headline earnings 8,099,871 2,648,132 3,291,082
Reconciliation of net asset value:
Total equity attributable to equity holders of
the parent 601,661,453 603,069,592 593,561,582
Total net asset value 601,661,453 603,069,592 593,561,582
Earnings per share (cents)
Basic and diluted earnings / (loss) per share 1.29 0.42 (1.13)
Headline earnings per share (cents)
Headline and diluted headline earnings per
share 1.29 0.42 0.52
Net asset value per share
Net asset value per share at year-end
(cents) 95.96 96.18 94.67
SEGMENT REPORT
31 December 31 December
2017 2016
R % R %
Revenue (excluding recoveries)
Commercial 11,376,854 38 13,542,341 38
Industrial 4,853,407 16 4,202,728 12
Retail 12,228,967 42 16,185,160 45
Hospitality 1,228,811 4 1,348,968 4
Residential - - 243,671 1
29,688,039 100 35,522,868 100
The Group does not have any inter-segment revenue.
Profit before taxation
Commercial 3,103,979 38 1,669,577 48
Industrial 1,324,169 16 599,514 17
Retail 3,336,463 42 742,422 21
Hospitality 335,260 4 456,607 13
Residential - - 20,913 1
8,099,871 100 3,489,033 100
Property values (including properties held for
sale, before adjustment for straight-lining of
leases)
Commercial 348,369,404 47 417,343,659 52
Industrial 82,044,512 11 82,229,907 10
Retail 205,680,677 28 158,183,376 19
Hospitality 96,289,407 13 90,876,169 11
Residential - - 4,350,240 1
Land 10,000,000 1 53,400,000 7
742,384,000 100 806,383,351 100
Borrowings (excluding instalment sales and loans)
Commercial 59,985,012 4 126,319,879 80
Industrial 21,501,595 1 22,285,317 14
Retail 34,996,839 2 6,530,380 4
Hospitality 24,628,049 17 2,606,293 2
141,111,494 10 157,741,869 100
Rating of tenants (rental income)
Commercial A 2,832,929 10 A 3,868,362 11
B 475,546 2 B 321,714 1
C 8,068,379 27 C 9,352,265 26
Industrial A 390,670 1 A - -
B 2,118,630 7 B 2,150,953 6
C 2,344,107 8 C 2,051,775 6
Retail A 5,454,384 18 A 5,774,914 16
B 1,131,541 4 B 552,056 2
C 5,643,041 19 C 9,858,190 27
Hospitality A - - A - -
B 1,228,811 4 B 1,348,968 4
Residential C - - C 243,671 1
29,688,038 100 35,522,868 100
A: Represents major listed companies
B: Represents smaller listed companies and big unlisted companies
C: Represents smaller unlisted companies and private businesses
1. Commentary
The Group revenue reduced from R47.7 million in December 2016 to R44.8 million in
December 2017.
This is as a result of the liquidation of the Erf 195 Elma Park building as previously
announced as well as the sale of 67 Seventh Street Linden building.
Other direct, operating and management costs reduced from R36.3 million to R26.2
million. This represents a reduction of 27.8%. The majority of the reduction in the Other
direct, operating and management costs is as a result of a reduction in utilities of R4.6
million where previously logged disputes with council have resulted in some credit notes
being passed while other disputes remain pending. Further to this there was a reduction
in levies of R3.7 million.
Repairs and Maintenance increased from R1.2 million to R4.2 million. This is due to a drive
to improve the state of buildings within the property portfolio.
The reduction in the finance income relates to a reduction in the balance of long
outstanding debtors.
The reduction in the finance cost is as a result of a number of the bonds maturing to a
level such that the repayments now consist of a higher capital portion as opposed to
interest, as well as a reduction in the interest rate of 0.25% at the beginning of the current
period.
The operating profit improved by 132.4% from R3.5 million to R8.1 million. The total
comprehensive income for the period improved from R2.6 million in December 2016 to
R8.1 million in December 2017 constituting an improvement of 205.9%.
2 Basis of preparation
The condensed unaudited consolidated results have been prepared in accordance with
the framework concepts and the measurement and recognition requirements of the
International Financial Reporting Standards, containing information required by the
IAS 34 Interim Financial Reporting, the AC 500 standards as issued by the Accounting
Practices Board and in the manner required by the Companies Act and the JSE Listing
Requirements. The accounting policies applied, are consistent with those applied in the
annual financial statements for the year ended 30 June 2017.
These results were prepared by D. Dabideen BCom (Hons) Accounting.
3. Investment property disposed
There was a disposal of a building owned by Orion Property Holding Trust for the value of
R8.25 million.
4. Related party transactions
Related party transactions similar to those disclosed in the Group's annual financial
statements for the year ended 30 June 2017 took place during the financial year and
separate disclosure thereof is not considered material to the interpretation of these
results.
5. Subsequent events
There has been an acquisition of eight properties as detailed in two SENS
announcements dated the 20 March 2018 with reference numbers ORE 201803200004A
and ORE 201803200003A.
Shareholders are asked to please refer to these SENS announcements for the details of
the acquisitions made and to take note that these acquisitions are subject to conditions
as stipulated in the SENS announcements.
6. Dividends
No dividends have been declared for the six months ended 31 December 2017.
7. Future prospects
While trading conditions remained tight during the reporting period, the future prospects
has improved due to the benefit of cost savings and tighter controls coming through as
well as the probable acquisition of ten properties subsequent to year end which will result
in an improved revenue going forward.
Orion Real Estate is a JSE main board listed Real Estate Investment Trust (REIT) listed under the
diversified
REIT’s sector. Its primary focus is on long-term investment in quality, rental generating properties
situated in strategic nodes.
By Order of the Board
27 March 2018
Directors
RS Wilkinson*, MDK Mthembu*, AC Gmeiner+, F Gmeiner (MD)~, D Dabideen (Financial
Director)~
*Independent non-executive
+Non-executive
~Executive
Company secretary and registered office
Corporate Governance Facilitators CC
Registered office
Registered office and business address
16th Floor, Orion House
49 Jorissen Street
Braamfontein
Johannesburg, 2017
Sponsor
Arbor Capital Sponsors Proprietary Limited
Transfer office
Computershare Investor Services Proprietary Limited
Date: 27/03/2018 04:08:00 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.
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