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 three months ended 30 June 2016 EUR1.61 2.62 CENTS 2.7% DILUTED EPRA2 NAV DILUTED ADJUSTED INCREASE ON THE PER SHARE EPRA EARNINGS DILUTED ADJUSTED PER SHARE EPRA EPS AT JUNE 2015 Stenprop Limited, a Bermuda company which has dual primary listings on the Johannesburg Stock Exchange ('JSE') and the Bermuda Stock Exchange ('BSX'), today announces its results for the three months ended 30 June 2016. The company is required to publish financial results for the three months ended 30 June 2016 in terms of the rules of the BSX. Accordingly, this announcement presents the unaudited condensed consolidated financial results of the Group in respect of the financial period from 1 April 2016 to 30 June 2016 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 2016 were EUR6.7 million1 (2015: EUR7.1 million). This equates to a diluted IFRS EPS of 2.35 cents (2015: 2.60 cents). The headline earnings were EUR6.7 million (2015: EUR8.3 million) equating to a diluted headline EPS of 2.35 cents (2015: 3.04 cents). Net operating income for the period was EUR8.7 million, 6.7% higher than the same period in the previous financial year (2015: EUR8.1 million). Income from associates was EUR1.8 million (2015: EUR1.0 million) and income from joint ventures was EUR0.6 million (2015: EUR0.6 million). Net finance costs of EUR2.4 million were 11.8% lower than the previous year (2015: EUR2.8 million). Interest swap rates were significantly lower when compared with the same period last year. The associated fair value adjustment to the Group's interest rate hedges resulted in an expense of EUR1.2 million (2015: EUR0.6 million credit). 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. (1) Average foreign exchange rates in period: GBP1:EUR1.270; CHF1:EUR0.912 (2015: GBP1:EUR1.384; CHF1:EUR0.960). (2) European Public Real Estate Association Adjusted EPRA earnings attributable to shareholders for the three month period were EUR7.4 million (2015: EUR7.0 million), equating to a diluted adjusted EPRA EPS of 2.62 cents (2015: 2.55 cents). Net assets (3) The basic and diluted IFRS NAV per share at 30 June 2016 was EUR1.55 (2015: EUR1.61 basic; EUR1.60 diluted). The basic and diluted EPRA NAV per share was EUR1.62 and EUR1.61 respectively (2015: EUR1.66). REFINANCING On 26 May 2016, two Stenprop subsidiaries, Davemount Properties Limited ('Davemount') and GGP1 Limited ('GGP1') refinanced their loan facilities with Santander. Santander has provided a single facility of GBP12.4 million for a five year period, split GBP4.0 million to Davemount and GBP8.4 million to GGP1. The all-in rate on this facility is 3.46% which compares to 2.7% on the previous Davemount facility and 3.72% on the previous GGP1 facility. DIVIDENDS AND SHARE REPURCHASES On 8 June 2016, the directors declared a final cash dividend of 4.7 cents per share in respect of the year ended 31 March 2016. The final dividend was paid on 29 July 2016. Towards the end of June 2016 the Company began a limited programme of share repurchases and during the period to 30 June 2016, the Company repurchased 471,912 shares for an aggregate purchase price of EUR653,000. In July 2016 the Company repurchased a further 884,655 shares for an aggregate purchase price of EUR1,161,000. The combined average price per share of the repurchased shares was EUR1.337. The shares were purchased with the benefit of the dividend thereby effectively reducing the average price per share to EUR1.290. All shares repurchased are held as treasury shares. PROSPECTS Stenprop published its 2016 Integrated Annual Report (the 'Report') just over a month ago on 10 August 2016. The Report considered, inter alia, the potential impact of Brexit on its base case forecast of a minimum growth of 1.5% per annum on EPRA earnings per share and distributions. This would have resulted in diluted adjusted EPRA earnings per share of at least 10.58 cents for the year ending 31 March 2017. The Report commented that at an exchange rate of EUR1.20:GBP1 and with all other assumptions remaining constant, its forecast adjusted annual EPRA EPS for 2017 would drop from 10.58 cents to 10.29 cents per share. At an exchange rate of EUR1:15:GBP1.00, the number would drop further to 10.15 cents per share. Since the Report was published, Sterling has continued to come under downward pressure and Stenprop's assumptions will be reviewed over time once markets have been given time to absorb and react to the new environment. Stenprop expects to declare an interim dividend in November 2016, which maintains the historic payout ratio of 85% of diluted adjusted EPRA EPS. This general forecast has been based on the Group's forecasts and has not been reported on by the external auditors. 3 Quarter end foreign exchange rates: GBP1:EUR1.206; CHF1:EUR0.920 (2015: GBP1:EUR1.417; CHF1:EUR0.965). CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Unaudited Unaudited for the for the three months three months ended ended 30 June 30 June 2016 2015 Note EUR'000 EUR'000 Net rental income 9,656 9,768 Management fee income 737 1,192 Operating costs (1,706) (2,821) Net operating income 8,687 8,139 Income from associates 1,829 1,035 Income from joint ventures 586 599 Profit from operations 11,102 9,773 Net (loss)/gain from fair value of financial liabilities (1,228) 564 Net finance costs (2,433) (2,757) Net foreign exchange gains 72 68 Profit for the period before taxation 7,513 7,648 Taxation (782) (502) Profit for the period after taxation 6,731 7,146 Profit attributable to: Equity holders 6,694 7,099 Non-controlling interest 37 47 Other comprehensive income Items that may be reclassified subsequently to profit or loss Fair value movement on interest rate swaps ? 853 Foreign currency translation reserve (9,579) 8,525 Total comprehensive (loss)/profit for the period (2,848) 16,524 Total comprehensive (loss)/profit attributable to: Equity holders (2,885) 16,476 Non-controlling interest 37 48 Earnings per share IFRS EPS (cents) 2 2.36 2.61 Diluted IFRS EPS (cents) 2 2.35 2.60 Results derive from continuing operations CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Unaudited Unaudited Audited as at as at as at 30 June 30 June 31 March 2016 2015 2016 Note EUR'000 EUR'000 EUR'000 ASSETS Investment properties 715,891 708,988 729,782 Investment in associates 41,125 40,952 39,298 Investment in joint ventures 36,243 35,887 37,620 Other debtors 12,677 ? 7,403 Property, plant and equipment 3 1 3 Derivative financial instruments ? 496 ? Total non-current assets 805,939 786,324 814,106 Cash and cash equivalents 41,392 64,420 36,811 Trade and other receivables 6,387 13,320 6,367 Total current assets 47,779 77,740 43,178 Total assets 853,718 864,064 857,284 Equity and liabilities Capital and reserves Share capital and share premium 4 395,141 381,601 389,927 Equity reserve 23 303 480 Retained earnings 56,710 33,008 63,426 Foreign currency translation reserve (7,915) 30,668 1,664 Cash flow hedge reserve ? 334 ? Total equity attributable to equity shareholders 443,959 445,914 455,497 Non-controlling interest 2,169 1,862 2,132 Total equity 446,128 447,776 457,629 Non-current liabilities Bank loans 187,741 362,586 178,708 Derivative financial instruments 5,566 3,959 4,173 Other loan and interest 12 25 12 Deferred tax 9,855 7,627 9,705 Total non-current liabilities 203,174 374,197 192,598 Current liabilities Bank loans 172,457 11,447 188,785 Derivative financial instruments 1,201 1,030 1,769 Accounts payable and accruals 30,758 29,614 16,503 Total current liabilities 204,416 42,091 207,057 Total liabilities 407,590 416,288 399,655 Total equity and liabilities 853,718 864,064 857,284 IFRS net asset value per share 3 1.55 1.61 1.61 EPRA net asset value per share 3 1.62 1.66 1.67 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Share Attri- capital Foreign Cash butable and currency flow to equity Non- share Equity Retained translation hedge share- controlling Total premium reserve earnings reserve reserve holders interest equity EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 Balance at 1 April 2016 389,927 480 63,426 1,664 ? 455,497 2,132 457,629 Issue of share capital 5,214 (72) ? ? ? 5,142 ? 5,142 Credit to equity for equity-settled share based payments ? 268 ? ? ? 268 ? 268 Purchase of treasury shares ? (653) ? ? ? (653) ? (653) Total comprehensive profit/(loss) for the period ? ? 6,694 (9,579) ? (2,885) 37 (2,848) Ordinary dividends ? ? (13,410) ? ? (13,410) ? (13,410) Balance at 30 June 2016 395,141 23 56,710 (7,915) ? 443,959 2,169 446,128 Balance at 1 April 2015 374,127 ? 37,561 22,143 (519) 433,312 1,815 435,127 Issue of share capital 7,474 (25) ? ? ? 7,449 ? 7,449 Credit to equity for equity-settled share based payments ? 328 ? ? ? 328 ? 328 Total comprehensive profit for the period ? ? 7,099 8,525 853 16,477 47 16,524 Ordinary dividends ? ? (11,652) ? ? (11,652) ? (11,652) Balance at 30 June 2015 381,601 303 33,008 30,668 334 445,914 1,862 447,776 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Unaudited Unaudited for the for the three months three months ended ended 30 June 30 June 2016 2015 EUR'000 EUR'000 Operating activities Profit from operations 11,102 9,773 Share of profit in associates (1,829) (1,035) Increase in fair value of joint ventures (586) (599) Exchange rate gains 72 68 (Increase)/decrease in trade and other receivables (20) 783 Increase in trade and other payables 546 502 Interest paid (2,494) (2,713) Interest received 580 8 Net tax (paid)/received (172) 48 Net cash from operating activities 7,199 6,835 Investing activities Dividends received from associates 2 617 Dividends received from joint ventures 100 ? Purchases of investment property (216) ? Acquisition of investment in joint venture ? (26,782) Net cash used in investing activities (114) (26,165) Financing activities New bank loans raised ? 39,019 Repayment of borrowings (1,453) (35,401) Purchase of treasury shares (653) ? Financing fees paid (192) (740) SWAP break fee (63) (571) Net cash (used in)/from financing activities (2,361) 2,307 Net increase/(decrease) in cash and cash equivalents 4,724 (17,023) Effect of foreign exchange rate changes (143) 1,013 Cash and cash equivalents at beginning of the period 36,811 80,430 Cash and cash equivalents at end of the period 41,392 64,420 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PREPARATION These unaudited condensed consolidated financial results (the 'IFRS Statements') for the three months ended 30 June 2016 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'), specifically IAS 34 'Interim Financial Reporting' and the JSE Listings Requirements and the BSX Listing Regulations as applicable. 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 2016 which were audited and reported on by the Group's external auditors, except for the new standards adopted during the period. These financial results have not been audited or reviewed by the Company's external auditors. They have been prepared by, and are the responsibility of, the directors of Stenprop. 2. EARNINGS PER ORDINARY SHARE Reconciliation of profit for the period to adjusted EPRA1 earnings Unaudited Unaudited for the for the three months three months ended ended 30 June 30 June 2016 2015 EUR'000 EUR'000 Earnings per IFRS income statement attributable to shareholders 6,694 7,099 Adjustments to calculate EPRA earnings, exclude: Changes in fair value of financial instruments 1,228 (564) Deferred tax in respect of EPRA adjustments 122 355 Adjustments above in respect of joint ventures and associates Changes in fair value (1,039) (503) Deferred tax in respect of EPRA adjustments 142 75 EPRA earnings attributable to shareholders 7,147 6,462 Further adjustments to arrive at adjusted EPRA earnings Straight-line unwind of purchased swaps 300 505 Adjusted EPRA earnings attributable to shareholders 7,447 6,967 Weighted average number of shares in issue (excluding treasury2 shares) 283,625,775 272,236,146 Share-based payment award 920,287 649,829 Diluted weighted average number of shares in issue 284,546,062 272,885,975 Earnings per share IFRS EPS (cents) 2.36 2.61 Diluted IFRS EPS (cents) 2.35 2.60 EPRA EPS (cents) 2.52 2.37 Diluted EPRA EPS (cents) 2.51 2.37 Adjusted EPRA EPS (cents) 2.63 2.56 Diluted adjusted EPRA EPS (cents) 2.62 2.55 1 The European Public Real Estate Association (EPRA) issued Best Practices Policy Recommendations in December 2014, which provide guidelines for performance measures relevant to real estate companies. Their recommended reporting standards are widely applied across this market, aiming to bring consistency and transparency to the sector. The EPRA earnings measure is intended to show the level of recurring earnings from core operational activities with the purpose of highlighting the Group's underlying operating results from its property rental business and an indication of the extent to which current dividend payments are supported by earnings. The measure excludes unrealised changes in the value of investment properties, gains or losses on the disposal of properties and other items that do not provide an accurate picture of the Group's underlying operational performance. The measure is considered to accurately capture the long term strategy of the Group, and is an indication of the sustainability of dividend payments. 2 As at 30 June 2016, the Company held 471,912 treasury shares (June 2015: nil). Straight-line unwind of purchased swaps A further adjustment was made to the EPRA earnings attributable to shareholders relating 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. Reconciliation of profit for the period to headline earnings Unaudited Unaudited for the for the three months three months ended ended 30 June 30 June 2016 2015 EUR'000 EUR'000 Earnings per IFRS income statement attributable to shareholders 6,694 7,099 Adjustments to calculate headline earnings, exclude: Changes in fair value of financial instruments ? 853 Deferred tax in respect of headline earnings adjustments ? 355 Headline earnings attributable to shareholders 6,694 8,307 Earnings per share Headline EPS (cents) 2.36 3.05 Diluted headline EPS (cents) 2.35 3.04 3. NET ASSET VALUE PER SHARE Unaudited Unaudited Audited as at as at as at 30 June 30 June 31 March 2016 2015 2016 EUR'000 EUR'000 EUR'000 Net assets attributable to equity shareholders 443,959 445,914 455,497 Adjustments to arrive at EPRA net asset value: Derivative financial instruments 6,767 4,493 5,942 Deferred tax 9,855 7,627 9,705 Adjustments above in respect of non-controlling interests 3,110 2,401 2,838 EPRA net assets attributable to shareholders 463,691 460,435 473,982 Number of shares in issue (excluding treasury shares) 286,209,968 277,463,048 282,984,626 Share-based payment award 920,287 649,829 647,806 Diluted number of shares in issue 287,130,255 278,112,877 283,632,432 Net asset value per share (basic and diluted)1 IFRS net asset value per share (cents) 1.55 1.61 1.61 Diluted IFRS net asset value per share (cents) 1.55 1.60 1.61 EPRA net asset value per share (cents) 1.62 1.66 1.67 Diluted EPRA net asset value per share (cents) 1.61 1.66 1.67 1 As at 30 June 2016, the Company held 471,912 treasury shares (June 2015 and March 2016: nil). Unaudited Unaudited Audited as at as at as at 30 June 30 June 31 March 2016 2015 2016 EUR'000 EUR'000 EUR'000 4. SHARE CAPITAL Authorised 1,000,000,000 ordinary shares with a par value of EUR0.000001258 each 1 1 1 Unaudited Unaudited Audited as at as at as at 30 June 30 June 31 March 2016 2015 2016 Issued share capital Opening balance 282,984,626 272,236,146 272,236,146 Issue of new shares 3,697,254 5,226,902 10,748,480 Closing number of shares issued 286,681,880 277,463,048 282,984,626 Share capital Share premium (EUR'000) 397,999 384,459 392,785 Less: Acquisition/transaction costs (EUR'000) (2,858) (2,858) (2,858) Total share premium (EUR'000) 395,141 381,601 389,927 There were no changes made to the number of authorised shares of the Company during the period under review. Stenprop Limited has one class of share; all shares rank equally and are fully paid. The Company had 286,681,880 (March 2016: 282,984,626) ordinary shares in issue at the reporting date. On 9 June 2016, 3,687,191 and 10,063 new ordinary shares were issued on the JSE and the BSX at an issue price of EUR1.41 per share in respect of the Share Purchase Plan and Deferred Share Bonus Plan respectively. As at 30 June 2016, the Company held 471,912 treasury shares (June 2015 and March 2016: nil). 5.EVENTS AFTER THE REPORTING PERIOD On 8 June 2016, the directors declared a final cash dividend of 4.7 cents per share in respect of the year ended 31 March 2016. The final dividend was paid on 29 July 2016. The Company began a limited programme of share repurchases towards the end of June 2016 and, during the period to 30 June 2016, the Company repurchased 471,912 shares for an aggregate purchase price of EUR653,000. In July 2016 the Company repurchased a further 884,655 shares for an aggregate purchase price of EUR1,161,000. The combined average price per share of the repurchased shares was EUR1.337. The shares were purchased with the benefit of the dividend thereby effectively reducing the average price per share to EUR1.290. All shares repurchased are held as treasury shares. On 4 April 2016 David Brown resigned from the Board as non-executive director. On the same date Peter Hughes was appointed as a non-executive director. Stenprop has dual primary listings on the BSX and the JSE. Date: 15 September 2016 JSE sponsor Java Capital BSX sponsor Estera Securities (Bermuda) Limited www.stenprop.com