Asset Plus : Announces Interim Result to 30 September 2018

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November 28, 2018

Auckland, 28 November 2018 - Asset Plus is pleased to announce its interim financial results for the six months ended 30 September 2018.

Asset Plus Chairman, Bruce Cotterill says: 'The first six months has been a transition period and the 33% increase in net profit after tax is a solid result amidst further changes in the overall Asset Plus portfolio.

'Augusta has been active on portfolio management with a number of key tenants now secured on new lease terms. Good progress has also been made in respect to the redevelopment opportunities within the portfolio, which is expected to generate future upside for shareholders.

'Due diligence was completed on a number of potential growth initiatives during the period, however the Board is prepared to remain patient to find the right acquisitions at the right price in this market,' says Cotterill.

Highlights during the period include:

• Net profit after tax of $3.2 million, an increase of 33% against the prior corresponding period (pcp)
• Adjusted funds from operations were 10% lower than the pcp at $2.78 million, representing a pay-out ratio of 105% for the period
• Rental income reduced by $1.01 million against the pcp as a result of the sale of Print Place and the AA Centre
• Portfolio occupancy is now 97.2%
• The sale of the AA Centre settled on 12 July 2018
• Multiple leasing deals completed at Stoddard Rd and Eastgate
• Transition of the management contract to Augusta Funds Management Limited completed and cost savings generated
• Net tangible assets per share remains at 71 cents
• $34.5 million of debt repaid post the AA Centre sale and interest rate swap arrangements cancelled

Financial summary

The result for the six months ended 30 September 2018 reflects a net profit after tax of $3.20 million, an increase from $2.41 million in the prior corresponding period.

Adjusted Funds from Operations (AFFO - a Non-GAAP disclosure which represents the underlying financial performance) of $2.78 million was down 10% from $3.08 million in the pcp. The half year's AFFO performance was impacted by lower rental income due to the divestment of Print Place and the AA Centre, offset by lower administration and funding costs.

The divestment of both Print Place and AA Centre has reduced rental income by $1.01 million, but it has provided substantial balance sheet capacity for future investment.

In respect to the remaining three assets - net rental income was down by $0.27 million. A small amount of rental growth was offset by increased unrecovered operating costs and property management fees.

Corporate costs reduced by $0.22 million due to the benefits of externalisation and the impact of divestments within the portfolio.

Net funding costs decreased as debt was repaid on the sale of the AA Centre in July 2018. Interest rate swaps were also cancelled in August in order to better align interest rate risk management with future investment strategies. The drawn debt balance is $10 million at balance date representing a Group gearing level (Interest bearing debt / Investment Property) of 8.0%. There was $60 million of undrawn debt facility at 30 September 2018 however post balance date the facility limit has reduced to $20 million. Further funding will be sought as required in conjunction with new acquisition initiatives.

Asset Plus is still to fully complete the legacy stairwell cladding project at the AA Centre. A further provision of $0.4 million has been recorded as a loss on disposal to reflect forecast cost escalation up to the completion of the project.

The portfolio WALE increased post the sale of AA Centre to 5.0 years. Occupancy is now 97.2%.

Net tangible asset backing is currently $0.71 per share which is unchanged from 31 March 2018.

Dividend

A second quarter dividend of 0.9 cents per share has been declared, with the record date set for 12 December 2018 and payment on 19 December 2018. The dividend remains subject to quarterly review and ongoing assessment taking into account potential future acquisitions.

Strategic update

Augusta Managing Director, Mark Francis, says: 'Future operating priorities include concluding the legacy stairwell issue at the AA Centre, progression of the value-add opportunities within the existing portfolio as well as continuing to investigate future opportunities to transform Asset Plus.

'We are prepared to be patient in pursuit of the right opportunity to take Asset Plus in a new direction. We have assessed a number of options and will continue to look until we find the right option(s) to bring to shareholders,' says Francis.

ENDS

For further information please contact:
Bruce Cotterill
Chairman
021 668 881

Simon Woollams
Chief Financial Officer
Augusta Capital
09 300 6161