Stenprop Limited
(Incorporated in Bermuda)
(Registration number 47031)
BSX share code: STP.BH JSE share code: STP ISIN: BMG8465Y1093
("Stenprop" or "the Company" or "the Group")
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL RESULTS for the six months ended ended 30 June 2015
Stenprop Limited, a Bermuda company which holds a primary listing on the Bermuda Stock Exchange and a secondary listing on the
Alternative Exchange of the Johannesburg Stock Exchange ("JSE"), today announces its results for the three months ended 30 June 2015.
The Company is required to publish financial results for the three months ended 30 June 2015 in terms of the rules of the Bermuda Stock
Exchange ("BSX"). Accordingly, this announcement presents the unaudited condensed consolidated financial results of the Group in
respect of the financial period from 1 April 2015 to 30 June 2015 in a form compliant with the requirements of the BSX.
Financial review
Earnings
The basic earnings attributable to ordinary shareholders for the three month period to 30 June 2015 are EUR7,098,805. This equates to a
diluted EPS of 2.60 cents. The headline earnings are EUR8,306,922 equating to a diluted headline EPS of 3.04 cents.
In accordance with reporting standards widely adopted across the real estate industry in Europe, the board of directors feels it is appropriate
and useful, in addition to providing the IFRS disclosed earnings, to also disclose EPRA* earnings.
Adjusted EPRA earnings attributable to shareholders are EUR6,967,239, equating to a diluted adjusted EPRA EPS of 2.55 cents.
Stenprop intends to declare an interim dividend in December 2015 relating to the six months to 30 September 2015. It expects this
dividend to be 4.2 cents per share.
Prospects
As announced on the JSE News Service in the Forecast Financial Information announcement published on 14 August 2015, the Group
expects adjusted diluted EPRA earnings per share for the year ended 31 March 2016 of 10.32 cents. The Group expects to make two
distributions during the current financial year totalling 8.5 cents per share.
Stenprop intends to migrate to the Main Board of the JSE in the third quarter of the current financial year.
* European Public Real Estate Association.
Net assets
The basic and diluted IFRS NAV per share at 30 June 2015 is EUR1.61 and EUR1.60 respectively. The basic and diluted EPRA NAV per share is
EUR1.66.
The Group's investment properties are stated at their 31 March 2015 valuations. The period end balance sheet includes investment
properties of EUR709.0 million and investments in associates and joint ventures of EUR76.8 million. Loan obligations outstanding, net of
capitalised loan transaction costs, were EUR374.0 million.
Acquisitions
On 20 May 2015, the Group acquired a 50% interest in Regent Arcade House Holdings Limited ("RAHHL"), which owns the property known
as 25 Argyll Street. The acquisition cost of this interest was #18.9 million which was based on a valuation of the property of #75 million.
RAHHL refinanced the property with an interest only bank loan of #37.5 million at an all-in rate of 2.974% per annum, with a term of five
years.
The acquisition of a retail centre known as Hermann Quartier for a purchase price of EUR22.7 million completed on 24 August 2015. The
property is on a high street location of Berlin's central suburb of Neukolln with excellent public transport links, including an underground
station inside the shopping centre. The acquisition was financed 50% by debt at an all-in interest rate of 1.42% per annum. The return on
equity on this investment is expected to exceed 7% per annum at inception.
The purchase of the Victoria retail centre for EUR20.6 million was notarised on 18 June 2015 and is expected to complete later in September.
The property is located in the Lichtenberg district of Berlin, approximately 15 minutes by underground from the city centre. The property
is anchored by Kaufland (a hypermarket chain) on a 17 year lease. Based on indicative five-year swap rates, the return on equity on this
investment is expected to achieve circa. 8% per annum at inception.
Refinancing
On 8 May 2015, the Group refinanced the property known as Euston House on favourable terms with a five year loan to May 2020. The new
facility of #27,540,000 is interest only. A five year interest rate swap agreement was entered into to fix the interest rate at an all-in rate of
3.02% per annum (previous facility: 4.54%). The Group incurred costs of #413,000 to break the former swap agreement.
On 29 May 2015, the Group extended the existing bank loan (which was due to expire in March 2016), on the property known as Pilgrim
Street on favourable terms until March 2019. With effect from signature, the loan became interest only. An interest rate swap agreement
was entered into to fix the interest rate for the period from the prior termination date, being 23 March 2016, until the new termination date,
at an all-in rate of 2.90% per annum. An existing swap agreement results in an all-in rate of 4.11% until 23 March 2016. The previous all-in
rate on the loan was 4.96%.
Dividends
On 11 June 2015, the Company announced a final distribution of 4.2 cents per share in respect of the year ended 31 March 2015
and offered shareholders the option to receive in respect of all or a part of their Stenprop shareholding either a scrip dividend by way
of an issue of new Stenprop shares (of the same class as existing shares) credited as fully paid up, or a cash dividend. On 13 July 2015,
the Company announced a 29.48% take up of the scrip dividend by shareholders, for which 2,257,894 new Stenprop shares have
been issued at an issue price of EUR1.52142 per share.
Condensed consolidated statement of comprehensive income
*Restated **Pro forma
Unaudited Unaudited Unaudited
for the for the for the
three months three months three months
ended ended ended
30/6/2015 30/6/2014 30/6/2014
Note EUR EUR EUR
Net rental income 9,767,807 855,654 8,190,849
Management fee income 1,192,294 ? 33,525
Operating costs (2,820,694) (188,254) (1,300,830)
Net operating income 8,139,407 667,400 6,923,544
Fair value movement of investment properties ? ? 6,248,324
Reversal of provision for selling costs ? ? 2,806,229
Investment in associates 1,034,973 ? 580,485
Investment in joint ventures 599,105 ? 554,174
Impairment of goodwill ? ? (9,687,000)
Profit from operations 9,773,485 667,400 7,425,756
Other gains and losses ? 12,323 11,641
Net gain from fair value of financial liabilities 563,730 ? 106,891
Net finance costs (2,756,874) (142,053) (2,525,391)
Net foreign exchange gain 67,639 ? ?
Profit for the period before taxation 7,647,980 537,670 5,018,897
Taxation (501,513) (80,724) (386,957)
Profit for the period after taxation 7,146,467 456,946 4,631,940
Profit attributable to:
Equity holders 7,098,805 456,946 4,594,619
Non-controlling interest 47,662 ? 37,321
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Fair value movement on interest rate swaps 853,308 39,838 6,714
Foreign currency translation reserve 8,524,597 679,735 1,323,921
Total comprehensive profit for the period 16,524,372 1,176,519 5,962,575
Total comprehensive profit attributable to:
Equity holders 16,476,710 1,176,519 5,949,951
Non-controlling interest 47,662 ? 12,624
Earnings per share
IFRS EPS (cents) 2 2.61 2.86 1.85
Diluted IFRS EPS (cents) 2 2.60 2.86 1.85
EPRA EPS (cents) 2 2.37 2.86 2.20
Diluted EPRA EPS (cents) 2 2.37 2.86 2.20
Adjusted EPRA EPS (cents) 2 2.56 2.86 2.45
Diluted adjusted EPRA EPS (cents) 2 2.55 2.86 2.45
* The comparatives have been restated to reflect the change in presentational currency. See note 1.
** Readers are referred to note 1 where the basis of preparation of the comparative pro forma information is explained.
Condensed consolidated statement of financial position
Unaudited Audited
as at as at
30/6/2015 31/3/2015
Note EUR EUR
ASSETS
Investment properties 708,987,939 695,196,554
Investment in associates 40,952,144 39,651,808
Investment in joint ventures 35,886,843 8,505,605
Property, plant and equipment 906 1,805
Derivative financial instruments 495,865 ?
Total non-current assets 786,323,697 743,355,772
Current assets
Cash 64,420,003 80,430,326
Accounts receivable 1,471,718 2,633,857
Other debtors 10,210,946 3,910,244
Prepayments 1,637,137 1,518,633
Total current assets 77,739,804 88,493,060
Total assets 864,063,501 831,848,832
EQUITY AND LIABILITIES
Capital and reserves
Share capital 4 349 342
Share premium 4 381,601,025 374,126,562
Equity reserve 303,190 ?
Retained earnings 33,006,736 37,561,379
Foreign currency translation reserve 30,667,933 22,143,336
Cash flow hedge reserve 334,444 (518,864)
Total equity attributable to equity shareholders 445,913,677 433,312,755
Non-controlling interest 1,862,499 1,814,837
Total equity 447,776,176 435,127,592
Non-current liabilities
Bank loans 362,585,582 296,872,794
Derivative financial instruments 3,959,355 5,108,197
Other loan and interest 24,583 22,843
Deferred tax 7,627,145 7,230,161
Total non-current liabilities 374,196,665 309,233,995
Current liabilities
Bank loans 11,446,956 68,057,714
Derivative financial instruments 1,030,189 1,272,534
Accounts payable and accruals 29,613,515 18,156,997
Total current liabilities 42,090,660 87,487,245
Total liabilities 416,287,325 396,721,240
Total equity and liabilities 864,063,501 831,848,832
IFRS net asset value per share 3 1.61 1.59
EPRA net asset value per share 3 1.66 1.65
Condensed consolidated statement of changes in equity
Foreign Cash flow Attributable Non-
Share Share Equity Retained translation hedge to equity controlling Total
capital premium reserve earnings reserve reserve shareholders interest equity
EUR EUR EUR EUR EUR EUR EUR EUR EUR
Balance at
1 April 2015 342 374,126,562 ? 37,561,379 22,143,336 (518,864) 433,312,755 1,814,837 435,127,592
Issue of
share capital 7 7,474,463 (25,444) ? ? ? 7,449,026 ? 7,449,026
Credit to equity
for equity-settled
share based
payments ? ? 328,634 ? ? ? 328,634 ? 328,634
Total
comprehensive
profit for
the period ? ? ? 7,098,805 8,524,597 853,308 16,476,710 47,662 16,524,372
Ordinary
dividends ? ? ? (11,653,448) ? ? (11,653,448) ? (11,653,448)
Balance at
30 June 2015 349 381,601,025 303,190 33,006,736 30,667,933 334,444 445,913,677 1,862,499 447,776,176
Foreign Cash flow Attributable Non-
Share Share Equity Retained translation hedge to equity controlling Total
capital premium reserve earnings reserve reserve shareholders interest equity
EUR EUR EUR EUR EUR EUR EUR EUR EUR
Balance at
1 April 2014 19 21,131,499 ? (37,425) ? 4,501 21,098,594 ? 21,098,594
Total
comprehensive
profit for
the period ? ? ? 456,946 679,735 39,838 1,176,519 ? 1,176,519
Balance at
30 June 2014 19 21,131,499 ? 419,521 679,735 44,339 22,275,113 ? 22,275,113
Condensed consolidated statement of cash flows
*Restated
Unaudited Unaudited
for the for the
three months three months
ended ended
30/6/2015 30/6/2014
EUR EUR
Operating activities
Profit from operations 9,773,485 667,400
Share of profit in associates (1,034,973) ?
Increase in fair value of joint venture (599,105) ?
Exchange rate gains 67,639 ?
Decrease in trade and other receivables 783,032 68,330
Increase/(decrease) in trade and other payables 501,917 (149,429)
Interest paid (2,713,031) (112,053)
Interest received 7,900 34
Net tax received 48,229 ?
Net cash from operating activities 6,835,093 474,282
Investing activities
Dividends received from trading activities ? 7,384
Dividends received from associates 617,423 ?
Acquisition of investment in a joint venture (26,782,133) ?
Net cash (used in)/from investing activities (26,164,710) 7,384
Financing activities
Repayment of borrowings (35,401,162) ?
Financing fees paid (740,095) (54,048)
Unutilised facility fee paid ? (15,744)
Payments made on swap break (571,216) ?
New bank loans raised 39,018,672 ?
Net cash from/(used in) financing activities 2,306,199 (69,792)
Net (decrease)/increase in cash and cash equivalents (17,023,418) 411,874
Effect of foreign exchange rate changes 1,013,095 53,827
Cash and cash equivalents at beginning of the period 80,430,326 1,670,754
Cash and cash equivalents at end of the period 64,420,003 2,136,455
* The comparatives have been restated to reflect the change in presentational currency. See note 1.
Notes to the unaudited condensed consolidated financial results
1. Basis of preparation
These unaudited condensed consolidated financial results (the "IFRS Statements") for the three months ended 30 June 2015 have
been prepared in accordance with the recognition and measurements principles of the International Financial Reporting Standards
("IFRS") and its interpretations adopted by the International Accounting Standards Board ("IASB"). The accounting policies and methods
of computation are consistent with those applied in the preparation of the annual financial statements for the year ended 31 March
2015 which were audited and reported on by the Group's external auditors. Readers are referred to the published Annual Results for the
year ended 31 March 2015 which contain further detail including details regarding events subsequent to that reporting date.
The condensed consolidated financial results prepared in accordance with IFRS and the pro forma statement of comprehensive
income have not been reviewed or reported on by the Group's external auditors. They have been prepared by, and are the responsibility
of the directors of Stenprop who approved the report on 9 September 2015.
Comparative pro forma
In the interests of consistency in those areas of reporting that are seen to be of most relevance to investors, and of providing a
meaningful basis of comparison for users of the financial information, the Group has prepared for the comparative period an unaudited
pro forma statement of comprehensive income for the three months ended 30 June 2014.
The main difference between the comparative pro forma statement of comprehensive income and the comparative IFRS statements
is that the comparative pro forma statement of comprehensive income has been prepared as if completion of the acquisition of the
property owning companies had taken place on 1 April 2014, which was the effective date on which risk and reward passed to Stenprop
in the purchase of the various property companies, while the comparative IFRS statements use the completion date of the acquisition
(date that control passes), being 2 October 2014, to account for these investments.
The comparative pro forma statement of comprehensive income therefore separately shows trading profits, property revaluations and
other adjustments for the three months ended 30 June 2014. This has been calculated by halving the pro forma unaudited results for
the six month period to 2 October 2014, as disclosed in the 2014 Interim Results. In addition, the comparative pro forma statement of
comprehensive income discloses the notional goodwill arising on the purchase of the management companies, the gain arising on the
purchase of the property companies (which under IFRS is treated as one linked transaction), and the recognition of the amount of the
deferred consideration which is reasonably expected to become payable.
Comparative presentational currency
The functional currency of the Group is the Euro and all amounts referred to in this announcement are, unless otherwise stated, in
Euros. The change from GBP to Euro was implemented with effect from 1 October 2014 as from this date the Euro was considered to
be the currency which best reflects the primary economic environment in which the Group operates. All prior period comparatives have
been restated at a rate of #1:EUR1.2492 being the exchange rate prevailing at 30 June 2014. For the purposes of changing the currency
denomination of the share capital of the Company, a GBP:EUR exchange rate of #1:1.2102 was used at 31 March 2014.
2. Earnings per ordinary share
*Restated **Pro forma
Unaudited Unaudited Unaudited
for the for the for the
three months three months three months
ended ended ended
30/6/2015 30/6/2014 30/6/2014
Reconciliation of profit for the period to adjusted EPRA earnings EUR EUR EUR
Earnings per IFRS income statement attributable to shareholders 7,098,805 456,946 4,594,619
Adjustments to calculate EPRA earnings, exclude: ?
Changes in fair value of investment properties ? ? (6,248,324)
Reversal of provision for selling costs ? ? (2,806,229)
Reversal of impairment of goodwill ? ? 9,687,000
Changes in fair value of financial instruments (563,730) ? (106,891)
Deferred tax in respect of EPRA adjustments 354,809 ? 286,775
Adjustments above in respect of joint ventures and associates:
Changes in fair value (503,143) ? 72,888
Deferred tax in respect of EPRA adjustments 75,471 ? (10,933)
EPRA earnings attributable to shareholders 6,462,212 456,946 5,468,905
Further adjustments to arrive at Adjusted EPRA earnings
Straight-line unwind of purchase swaps 505,027 ? 636,421
Adjusted earnings attributable to shareholders 6,967,239 456,946 6,105,326
Weighted average number of shares in issue 272,236,146 15,986,003 248,902,812
Share-based payment awards 649,829 ? ?
Diluted weighted average number of shares in issue 272,885,975 15,986,003 248,902,812
Earnings per share
IFRS EPS (cents) 2.61 2.86 1.85
Diluted IFRS EPS (cents) 2.60 2.86 1.85
EPRA EPS (cents) 2.37 2.86 2.20
Diluted EPRA EPS (cents) 2.37 2.86 2.20
Adjusted EPRA EPS (cents) 2.56 2.86 2.45
Diluted adjusted EPRA EPS (cents) 2.55 2.86 2.45
Straight-line unwind of purchase swaps
A further adjustment was made to the EPRA earnings attributable to shareholders and relates to the straight-line unwind of the value
as at 1 April 2014 of the swap contracts in the property companies acquired. When the property companies were acquired by Stenprop
with effect from 1 April 2014, it also acquired the bank loans and swap contracts which were in place within these property companies.
As a result, Stenprop took over loans with higher swap interest rates than would have been the case had new loans and swaps been
put in place at 1 April 2014. To compensate for this, the value of the swap break costs was calculated at 1 April 2014 and the purchase
consideration for the property companies was reduced accordingly to reflect this liability.
*Restated **Pro forma
Unaudited Unaudited Unaudited
for the for the for the
three months three months three months
ended ended ended
30/6/2015 30/6/2014 30/6/2014
Reconciliation of profit for the period to headline earnings EUR EUR EUR
Earnings per IFRS income statement attributable to shareholders 7,098,805 456,946 4,594,619
Adjustments to calculate headline earnings, exclude:
Changes in fair value of investment properties ? ? (6,248,324)
Reversal of provision for selling costs ? ? (2,806,229)
Reversal of gain on acquisition ? ? 9,687,000
Changes in fair value of financial instruments 853,308 39,838 6,714
Deferred tax in respect of headline earnings adjustments 354,809 ? 286,775
Adjustments above in respect of joint ventures and associates:
Changes in value of investment properties ? ? 72,888
Deferred tax ? ? (10,933)
Headline earnings attributable to shareholders 8,306,922 496,784 5,582,510
Earnings per share
Headline EPS (cents) 3.05 3.11 2.24
Diluted headline EPS (cents) 3.04 3.11 2.24
* The comparatives have been restated to reflect the change in presentational currency. See note 1.
** Readers are referred to note 1 where the basis of preparation of the pro forma information is explained.
3. Net asset value per ordinary share
Unaudited Audited
30/6/2015 31/3/2015
Net asset value per share EUR EUR
Net assets attributable to equity shareholders 445,913,677 433,312,755
Adjustments to arrive at EPRA net asset value:
Derivative financial instruments 4,493,679 6,380,731
Deferred tax 7,627,145 7,230,161
Adjustments above in respect of non-controlling interests 2,401,412 2,504,354
EPRA net assets attributable to shareholders 460,435,913 449,428,001
Number of shares in issue 277,463,048 272,236,146
Share-based payment awards 649,829 291,563
Diluted number of shares in issue 278,112,877 272,527,709
Net asset value per share
IFRS net asset value per share (cents) 1.61 1.59
Diluted IFRS net asset value per share (cents) 1.60 1.59
EPRA net asset value per share (cents) 1.66 1.65
Diluted EPRA net asset value per share (cents) 1.66 1.65
4. Share capital
Unaudited Audited
as at as at
30/6/2015 31/3/2015
EUR EUR
Authorised
1,000,000,000 ordinary shares with a par value of EUR0.000001258 each 1 258 1 258
Unaudited
for the Audited
three months for the
ended year ended
30/6/2015 31/3/2015
Issued share capital
Opening balance 272,236,146 15,986,003
Issue of new shares 5,226,902 256,250,143
Closing number of shares issued 277,463,048 272,236,146
Share capital (EUR) 349 342
Share premium (EUR) 384,459,860 376,985,397
Less: Acquisition/transaction costs (EUR) (2,858,835) (2,858,835)
Total share premium (EUR) 381,601,025 374,126,562
There were no changes made to the number of authorised shares of the Company during the period under review. Stenprop has one
class of share; all shares rank equally and are fully paid.
The Company had 277,463,048 (March 2015: 272,236,146) ordinary shares in issue at the reporting date which have a primary listing
on BSX and a secondary listing on JSE. On 30 June 2015, 5,209,109 and 17,793 new ordinary shares were issued on the BSX and JSE at
an issue price of EUR1.43 per share in respect of the Share Purchase Plan and Deferred Share Bonus Plan respectively.
5. Events after the reporting period
The acquisition of a retail centre known as Hermann Quartier for a purchase price of EUR22.7 million completed on 24 August 2015.
The property is on a high street location of Berlin's central suburb of Neukolln with excellent public transport links, including an
underground station inside the shopping centre. Based on indicative five-year swap rates, the return on equity on this investment is
expected to exceed 7% per annum at inception.
On 11 June 2015, the Company announced a final distribution of 4.2 Euro cents per share in respect of the year ended 31 March 2015
and offered shareholders the option to receive in respect of all or a part of their Stenprop shareholding either a scrip dividend by way
of an issue of new Stenprop shares (of the same class as existing shares) credited as fully paid up, or a cash dividend. On 13 July 2015,
the Company announced a 29.48% take up of the scrip dividend by shareholders, for which 2,257,894 new Stenprop shares have been
issued at an issue price of EUR1.52142 per share, resulting in the number of shares in issue, at the date of this announcement, being
279,720,942.
Stenprop has a primary listing on the Bermuda Stock Exchange and a secondary listing on the Alternative Exchange of the Johannesburg
Stock Exchange.
Date: 10 September 2015
South African corporate advisor and JSE sponsor
Java Capital
BSX sponsor
Appleby Securities (Bermuda) Limited
