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