Annual Report 2015 - ShareData A_ar_jun15.pdf · 12 months to 30 June 2015 is 24.81 cents. • 29 buildings at a total value of R3,832 billion at 30 June 2015. Overview Shareholders’

Annual Report2015

200

• Ascension is a Real Estate Investment Trust (“REIT”) listed on the JSE.

• The company has a dual share capital structure consisting of A and B shares.

• A shares have the fi rst right to the net distributable income of the fund, with a distribution of 41.90 cents for the 12 months to 30 June 2015, growing at 5% per annum for the fi rst fi ve years and at the lower of infl ation or 5% thereafter.

• The B shares receive the residual distributable income with a higher anticipated growth in distributions compared to the A shares. The distribution per B shares for the 12 months to 30 June 2015 is 24.81 cents.

• 29 buildings at a total value of R3,832 billion at 30 June 2015.

Overview

Shareholders’ diaryFinancial year end 30 June 2015Annual report posted to shareholders 30 September 2015Annual general meeting 9 December 2015Declaration of distribution 13 August 2015Payment of distribution 31 August 2015

1

Contents

The BusinessOverview IFC Shareholders diary IFCGroup highlights 2

Property portfolioTop 10 properties by value 4Property Schedule 6Property Portfolio 7

Governance and sustainabilityDirectorate 10Corporate governance 12Sustainability report 19Directors’ responsibility and approval 22Declaration by company secretary 22Independent auditor’s report 23Directors’ report 24Audit and risk committee report 27

Financial resultsAnnual Financial Statements 30

ShareholdersShareholder Analysis – A share units 66Shareholder analysis – B share units 67Notice of annual general meeting 68Proxy form attached

Corporate informationDefinitions IBCCorporate information IBC

This annual report has been prepared in accordance with the measurement and recognition requirements of International Financial Reporting Standards and its interpretations adopted by the Independent Accounting Standards Board, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the JSE Listings Requirements and the requirements of the South African Companies Act, 2008.

The financial statements have been audited by Grant Thornton Registered Auditors Chartered Accountants (SA).

2

Group highlights for 2015

Ascension Properties at a glance

12 months ended 12 months ended 30 June 2015 30 June 2014

Revenue (R’000) 412 333 353 101 Total distributable earnings (R’000) 222 796 202 730Total distribution per A share unit (cents) 41.90 39.90Total distribution per B share unit (cents) 24.81 22.59Net asset value per A share unit (cents) 569.3 479.8Net asset value per B share unit (cents) 169.1 239.8Closing price: A share units (cents) 610 485Closing price: B share units (cents) 275 251Market capitalisation (R million) 2 919 2 443Property portfolio (R million) 3 832 3 707Borrowings (R million) 1 502 1 380LTV (%) 38.08% 36.08%

Property portfolio overview

30 June 2015 30 June 2014

Number of properties 29 29Valuation (R’000) ¹ 3 832 400 3 706 700 GLA (m²) ² 316 570 315 670 Geographical spread by GLA Gauteng 56.5% 50.7%Western Cape 40.1% 44.2%Mpumalanga 3.4% 5.1%Government and other BEE sensitive tenants (%) 62.1% 62.5%Non-government (%) 37.9% 37.5%Vacancy % 6.5% 7.4%Average property yield (%) ³ 9.8% 9.1%Average rental m² (R) R115.57 R97.41Weighted average escalation by GLA (%) 8.1% 8.5%

¹ The valuation amount of the properties includes properties under development.

² GLA includes 17 989 m² under development on 30 June 2015

³ The average property yield is based on the net income of the portfolio for the 12 months to 30 June 2015 expressed as a percentage of valuation.

3

4

Top 10 properties by value

Region: GautengSector: B Grade Offi ce

GLA m2: 12 012Valuation (R’m): 224

Region: Western CapeSector: B Grade Offi ce


Region: Western CapeSector: A Grade Offi ce/ Retail






373 Pretorious Street

Atterbury HouseGrand Central

Infi nity Offi ce Park

Game



Schreiner Chambers

5

Top 10 properties by value

Region: Pretoria CBDSector: A Grade Offi ce




Region: GautengSector: Development Property


Region: Western CapeSector: A Grade Offi ce


VWL Building Surrey House

45 on Castle174 Visagie

6

Property Schedule

Property Grade Sector Province GLA m² ValuationAvg rental

per m²

Grand Central A Office/Retail Western Cape 33 424 574 000 000 149.55

45 on Castle A Office Western Cape 9 537 153 000 000 *

Medscheme Building A Office Gauteng 6 792 95 200 000 *

Atterbury House B Office Western Cape 26 240 332 000 000 106.61

Infinity Office Park B Office Gauteng 12 012 224 000 000 172.41

373 Pretorius Street B Office Gauteng 13 340 203 000 000 *

Game Building B Office Gauteng 21 562 195 000 000 94.29

Schreiner Chambers B Office Gauteng 18 815 171 700 000 131.39

Surrey House B Office Gauteng 11 738 197 000 000 *

Bathopele Building B Office Gauteng 11 500 144 000 000 *

174 Visagie Street B Office Gauteng 13 376 168 000 000 *

NBC Building B Office Gauteng 10 000 139 000 000 *

14 Long Street B Office Western Cape 10 246 129 800 000 118.76

238 Roan Crescent B Office Gauteng 9 040 116 000 000 *

Swiss House B Office Gauteng 7 807 101 500 000 100.52

Spectrum House B Office Western Cape 7 550 95 000 000 125.95

Riverview B Office Mpumalanga 4 303 70 074 349 179.68

Mishumo House B Office Gauteng 6 154 74 800 000 *

Matrix House B Office Western Cape 9 001 79 000 000 *

Riverpark B Office Mpumalanga 4 440 59 925 651 *

Prorom Building B Office Mpumalanga 7 038 69 500 000 130.13

Sigma House B Office Western Cape 3 751 50 300 000 *

Nedbank Centre B Office Western Cape 6 332 41 500 000 205.52

Meyersdal Office Park B Office Gauteng 4 841 45 500 000 107.33

Bergstan House B Office Western Cape 2 838 28 500 000 121.05

Kingfisher Office Park B Office Gauteng 1 445 23 600 000 140.40

92 Market Street B Office Gauteng 2 000 6 200 000 –

Island Centre C Industrial Western Cape 23 358 72 800 000 45.78

VWL Building DP # Office Gauteng 17 989 172 500 000 *

Total Investment Property at fair value 30 June 2015

316 570 3 832 400 000

* Denotes single tenanted buildings. A single tenanted building is defined as a building where 90% or more of the GLA is occupied by a single tenant. The weighted average rental per m2 for single tenanted buildings is R111.02

DP# - Development property

7

Property Portfolio Property portfolio analysis as at 30 June 2015

Lease expiry profile by GLA

Va

ca

nt

Mo

nth

ly

30 Jun

e 2016

30 Jun

e 2017

30 Jun

e 2018

30 Jun

e 2019

30 Jun

e 2020

Afte

r 30 Jun

e 2020

0%

5%

10%

15%

20%

25%

20%

6.5%

13.6%

22.7%

7.0%

14.8%15.4%

10.0% 10.0%

Lease expiry profile by GMR

Mo

nth

ly

30 Jun

e 2016

30 Jun

e 2017

30 Jun

e 2018

30 Jun

e 2019

30 Jun

e 2020

Afte

r 30 Jun

e 2020

0%

5%

10%

15%

20%

25%

20% 17.7%

27.5%

5.5%

30%

18.0%

12.7%

8.4%

10.2%

8

Property Portfolio (continued)

Government 62.1%

Non-Goverment 37.9%

Goverment vs Non Goverment

by GLA

Government 63.4%

Non-Goverment 36.6%

Goverment vs Non Goverment GMR

Office 81.0%

Retail 9.3%

Other 9.7%

Sectoral profile by sector by GLA

Office 77.6%

Retail 9.0%

Other 13.4%

SECTORAL PROFILE BY SECTOR GMR

A 61.4%

B 7.0%

C 31.6%

TENANT PROFILE BY SECTOR GLA

A 67.3%

B 6.6%

C 26.1%

TENANT PROFILE BY SECTOR GMR

9

Property Portfolio (continued)

Office R108.55

Retail R124.35

Other R67.98

Average rental per m 2

Gauteng 56.5%

Western Cape 40.1%

Mpumalanga 3.4%

Geographical spread by GLA

Gauteng 55.2%

Western Cape 39.8%

Mpumalanga 5.0%

Geographical spread by GMR

Office 85.9%

Retail 2.5%

Other 11.6%

Vacancy attributable to sector by GLA

Office 8.8%

Retail 7.2%

Other 7.6%

Weighted average escalation by sector

A - Large national tenants, large listed tenants, Government and major franchises including DPW and Telkom

B - National tenants, listed tenants, franchisees and medium to large professional firms

C – Other (193)

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Directorate

Independent non-executive chairman

AC Nissen (57)BA (Honours) / Master of Arts Degree

(appointed 15 November 2011) (Resigned effective 1 October 2015)

Chris was appointed in 1994 as minister of Economic Affairs and Reconstruction and Development Programme (“RDP”) and in 1998 as National Head of Masakhane. Chris has also been awarded the Professional Management Reviewer’s “Political Personality of the Year” award. Chris’s extensive business, government and community networks are invaluable to Ascension.

Independent non-executive director

B Bayvel (39)BComm (Economics)


Bronwyn previously held positions at Zenprop, Dubai World Africa and Investec and has been involved in a number of prominent SA real estate transactions. Bronwyn is a founding shareholder and director of Thirty3degrees Financial Services, recently representing the offshore shareholders in the V&A Waterfront on the disposal to PIC and Growthpoint.


H Takolia (64)CA (SA), MBA

(appointed 15 May 2012)

Haroon heads independent audit practice Takolia and Associates. Haroon is a respected auditor and has varied business interests. He serves on a number of social and educational boards.


M Burton (57)CA (SA)(appointed 15 November 2011 )Mervyn is a Chartered Accountant with extensive General Management and Financial Management experience in various industries including FMCG, Retail, Logistics, Financial Services among other. His fields of expertise are General Management, Business Turnaround Management, Financial Management, Corporate Governance, Accounting, Taxation, Risk management and other related financial skills. He holds various non-executive director positions and audit committee member positions both in the private and public sectors.

Independent non-executive director and chairman

S Ngebulana (49)BJuris, LLB, LLM

(Appointed effective 1 October 2015)

Sisa founded Billion Group in 1998 and Rebosis in 2010. Sisa has won various awards: Entrepreneur of the Year Award (2006), Pioneer Award (2006), Pioneer Award (2014), and African Business Excellence (2014). An admitted attorney of the High Court of South Africa, he practised with Jan S De Villiers Attorneys in commercial litigation before joining Eskom for seven years as legal counsel specialising in property and finance. Sisa has been the non-executive chairman of New Frontier Properties Limited since March 2015. He is the past president of the South African Council of Shopping Centres (SACSC), and has been a director of the Attfund group, Truworths International and the Construction Industry Development Board (CIBD).

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Directorate (continued)


Dr M Renene (45)MB ChB, MMed (Surg)

(Appointed effective 1 October 2015)

Dr Renene is a medical doctor specialising as a surgeon. He has been a director at MxengeRenene Healthcare (Pty) Ltd with interest in private hospital acquisitions from 2003 to date.

Acting chief executive officer

SL Rai (55)CA (SA)

(appointed 22 May 2007) (Resigned effective 1 October 2015)

Shaun is a founding shareholder and director of Ascension Properties. He has extensive experience in the commercial property industry over many years and plays a leading role in shaping the investment and property asset management strategies of the group.

Financial director

HB Dednam (42)CA (SA), HDip (Tax)


Henry has held various positions as financial manager and financial director in the financial services, information technology and investment sectors before joining Ascension as financial director in 2011.

Executive director

FW Arendse (67)Businessman

(appointed 22 May 2007) (Resigned effective 1 October 2015)

Wayne is a founding shareholder and director of Ascension Properties. He has extensive experience in dealing with government tenants.

Company secretary and alternate director to SL Rai

J de Villiers (41)CA (SA), HDip (Tax)


Jeremy is the managing director of Cape Empowerment Ltd, a diversified BEE investment holding group and one of the founding shareholders of Ascension. He is an experienced investment banker and corporate financier.

Company secretary

M Ndema (41)B.Soc.Sci, LLB, PMD(GIBS)

(Appointed effective from 1 October 2015)

Mande is an admitted attorney of the High Court of South Africa having specialized in commercial law. He now specializes in all aspects of corporate governance as a Company Secretary and is responsible for the flow of information to the board and its committees and ensuring compliance with Board procedures, legislation and regulations.

12

Corporate governance reportFor the year ended 30 June 2015

The company continues to practise high corporate governance standards which contribute to the on-going sustainability of the business, enhance long-term shareholder value creation and ensure that other stakeholders benefit from the company’s continuing success.

The Ascension board of directors (“the board”) is the custodian of corporate governance and ultimately responsible for ensuring that the company adheres to sound corporate governance principles. The board is accountable to shareholders while also considering the interests of other stakeholders.

Against a backdrop of the increasing volume and complexity of regulation, the group aims to achieve a balance between the governance expectations of investors and other stakeholders, and the need to continually improve financial performance.

Application of King III principles

The directors confirm that the group has, except where noted otherwise, in all material respects applied the 2009 King Code of Governance principles (King III) and the corporate governance provisions in the JSE Listings Requirements during the 2015 financial period.

The board and management of the group are fully committed to providing stakeholders with relevant, accurate and comparable information on the group’s operations, financial results and the sustainability issues relevant to its business. A list of all King III principles and the company’s application thereof, is available on the company’s website www.ascensionproperties.co.za.

Ethical leadership and corporate citizenship

Governance in the group extends beyond compliance with codes, legislation and regulations. Management strives to create and maintain a culture of good governance across the business which runs parallel to Ascension’s purpose, vision and values.

Directors and management are required to maintain the highest ethical standards, ensuring that business practices are conducted in a manner which in all reasonable circumstances is beyond reproach. All information acquired by directors in the performance of their duties, which is not disclosed publicly, is treated as confidential. Directors may not use, or appear to use, such information for personal advantage or for the advantage of third parties. All directors are required to comply with the JSE Listings Requirements regarding insider information, transactions and disclosure of transactions.

Board of directors

The board is responsible for the strategic direction and control of the company. The board focuses on material issues and risks which impact on shareholder value creation and the long-term sustainable growth of the business. This includes corporate governance, transformation, acquisitions and succession planning, as well as reviewing and monitoring the development and implementation of the strategic plans adopted by the board.

Board charter

A formal board charter outlines the scope of authority, responsibilities, powers, composition and functioning of the board and is reviewed on an annual basis for adequacy. The primary responsibilities of the board are out-lined in the charter, and are as follows:

• act as the focal point for, and custodian of, corporate governance by managing its relationship with management, the shareholders and other stakeholders of the company along sound corporate governance principles;

• be responsible for strategy, risk, performance and sustainability;

• provide effective leadership on an ethical foundation;

• make material investment, disinvestment, re-financing or restructuring decisions;

• ensure that the company’s ethics are managed effectively;

• be responsible for the governance of risk;• ensure that the company has an effective and

independent audit committee; and• ensure that the company complies with applicable

laws and considers adherence to non-binding rules and standards.

The board has complied with its charter for the year.

Board composition

During the year under review, the board comprises 7 directors, and 1 alternate director, representing a balance of executive and non-executive directors. The board has a majority of non-executive directors. The non-executive directors have no fixed-term of office, are independent of management and are selected based on their skills, business experience and qualifications, while gender and racial diversity are also considered in appointing new directors. The executive representation on the board comprises Shaun Rai (Acting CEO), Henry Dednam (FD), Jeremy de Villiers (Company Secretary), and Wayne Arendse. Five of the directors are from historically disadvantaged groups.

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Corporate governance reportFor the year ended 30 June 2015 (continued)

The independence of non-executive directors is assessed annually by the board, as recommended by King lll. The board concluded that these directors remain correctly categorised as independent. The division of responsibilities ensures a balance of authority and power, with no individual director having unrestricted decision making authority.

The role of the chairman is separate from that of the CEO. The CEO takes responsibility for the day-to-day management and provides leadership to the executive team and is also accountable for the effectiveness of governance practices. The chairman leads the board and is responsible for its effectiveness and integrity, while facilitating constructive relations between executive and non-executive directors.

Changes to the board of directors and change of company secretary

Pursuant to the implementation of the B scheme and post the financial year of the company the board has been reconstituted as follows:

• AC Nissen, SL Rai, BC Bayvel, FW Arendse, HB Dednam and J de Villiers have resigned as directors and company secretary of the company respectively, with effect from 1 October 2015.

• Sisa Ngebulana and Dr. Mbulelo Renene have been appointed as non-executive director and chairman of the board and independent non-executive director respectively, with effect from 1 October 2015.

• M Burton and H Takolia, current independent non-executive directors will remain on the board of Ascension.

• Mande Ndema has been appointed as company secretary of Ascension with effect from 1 October 2015.

Following engagement with the JSE regarding the appointment of a new CEO, Kameel Keshav currently the chief financial officer of Rebosis Property Fund Limited, will take on the role as CEO of Ascension. The board will also seek to make two further appointments, including the appointment of a new financial director. A further announcement in this regard will be released on SENS in due course.

Board meetings

The board formally met 4 times during the year to perform its duties. All board meetings are convened by formal notice.

A majority of directors constitute a quorum at board meetings. Decisions taken at board meetings are decided by a majority of votes, with each director having one vote.

Executive management consults regularly with the non-executive directors on relevant issues between board meetings as may be required. Directors have access to all group information and are entitled to obtain independent professional advice at the group’s expense, after consulting with the chairman. Non-executive directors have direct access to management and may meet with management independently of the executive directors.

The attendance at board meetings during the year was as follows:

27/08/14 08/12/2014 23/02/2015 12/08/2015

Chris Nissen (Chairperson) a a a a

Shaun Rai a a a a

Henry Dednam (FD) a a a a

Jeremy de Villiers a a a a

Wayne Arendse a a a a

Bronwyn Bayvel a a a a

Haroon Takolia a a x* a

Mervyn Burton a a a a

* Tendered an apology

14


Directors’ appointment policy

The board appointment policy is contained in the board charter. The board does not currently have a standing nominations committee due to the relatively small size of the board and all new appointments are considered by the board as a whole. The need for a nominations committee will be reassessed from time to time.

Board evaluation

The board, its committees and individual directors are evaluated annually. The board is satisfied that the board and its committees functioned effectively during the year under review.

Conflicts of interest

The group’s policy on conflicts of interests applies to all directors and employees. Directors are required to declare their personal financial interests, and those of related persons, annually, in terms of the Companies Act and the company’s Memorandum of Incorporation.

Company secretary

The company secretary, Jeremy de Villiers, works to ensure that board procedures and relevant legislation and regulation is observed, and is responsible for preparing meeting agendas and recording minutes.

Jeremy de Villiers is sufficiently qualified and skilled to act in accordance with, and update directors in terms of, the recommendations of the King III Report and other relevant regulations and legislation.

Jeremy de Villiers is the alternate director to Shaun Rai and accordingly an arms-length relationship between the company secretary and the board of directors is not present. However, the board is of the opinion that, during the year under review, Jeremy de Villiers remained best placed to ensure good corporate governance is maintained.

The role and functions of the company secretary include:

- providing the directors, collectively and individually, with guidance in respect of their duties, responsibilities and powers;

- providing information on laws, legislation, regulations and matters of ethics and good corporate governance relevant to the company;

- making directors aware of any law or regulation relevant to the company;

- properly recording the minutes of meetings, inter alia, meeting attendance register, resolutions, director’s declarations of personal and financial interest/s and all notice and circulars issued by the company;

- preparing the notice of the annual general meeting; and

- assuming responsibility for filing the annual and other returns in terms of the Companies Act.

It is further the responsibility of the company secretary to keep the board updated in regard of ethics, governance and regulations.

Board committees

The directors have delegated specific responsibilities to committees to assist the board of Ascension in meeting their oversight responsibilities. These committees are chaired by independent non-executive directors (except where the committees perform an executive function) and the directors confirm that the committees have functioned in accordance with their written terms of reference during the year under review. The board committees are regularly evaluated by the board to ascertain their level of performance and effectiveness.

15


Audit and Risk Committee

Audit and Risk Committee

Objectives and functions Composition

Information on the Audit and Risk Committee is included in the Audit and Risk Committee Report.

The objectives and functions of the Audit and Risk Committee are:

- to ensure the maintenance of adequate accounting records and effective financial reporting and internal control systems.

- to ensure compliance of published financial reports with relevant legislation, reporting standards and good governance.

- to ensure group assets are safeguarded.

- has oversight of fraud and IT risks in so far as these impact on the financial reporting process.

- confirms the nomination and appointment of the external auditor, ensuring such appointment is legislatively compliant.

- approves the terms of engagement and fees paid to the external auditor.

- defines and considers the non-audit services that may be rendered by the external auditor.

- considers the findings arising from the annual financial statement audit.

- reviews risk and tax management programmes and initiatives.

- reviews the expertise, resources and experience of the group’s finance function and the expertise and experience of the financial director.

- recommends to the board the approval of the annual report.

- monitors compliance with the company’s risk management policy

Chairman:

Mervyn Burton (Independent non-executive)

Other committee members:

Bronwyn Bayvel (Independent non-executive)

Haroon Takolia (Independent non-executive)

16


Audit and Risk Committee meetings

The attendance at the Audit and Risk Committee meetings during the year was as follows:

10/07/14 27/08/14 23/02/15 29/07/15 12/08/15

Mervyn Burton (chairperson) a a a a a

Bronwyn Bayvel a a a a a

Haroon Takolia a a a a a

The CEO, financial director, senior financial management and the external auditors have a standing invitation to the Audit and Risk Committee meetings.

Internal control

The board is ultimately responsible for the internal controls of the group and to monitor the effectiveness of these controls. Nothing has come to the attention of the directors to cause them to believe that there has been a material breakdown in the internal controls of the group.

Financial director and finance function

Pursuant to the implementation of the B scheme, the current financial director, Mr HB Dednam CA (SA), resigned effective 1 October 2015. The company is in the process of appointing a new financial director and an announcement in this regard will be released in due course. As required by the JSE Listings Requirements, the incoming board will look to satisfy itself that the incoming financial director has appropriate expertise and experience and that the finance function of the group is appropriate in relation to the operations and financial complexities of the group.

External auditor

The external auditor has unrestricted access to the Audit and Risk Committee, which ensures that its independence is in no way impaired. The Audit and Risk Committee has evaluated the independence of Grant Thornton and is satisfied that they have maintained their independence during the year under review.

The Audit and Risk Committee has nominated Grant Thornton as the external auditor for the 2016 financial year for approval at the annual general meeting.

Internal audit

Due to the size of the company, the board does not consider it to be cost effective to maintain a full-time internal audit function. The board has mandated the Audit and Risk Committee to initiate internal audit investigations as and when deemed necessary.

Financial statements

The consolidated financial statements of Ascension and its subsidiaries are prepared by Lebogang Semono CA(SA) of Rebosis Property Fund Limited, who is responsible for their integrity and objectivity and for all other information included in the annual report.

The financial statements comply in all material aspects with International Financial Reporting Standards, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council, the JSE Listings Requirements and in the manner required by the South African Companies Act 2008.

Dealings in shares

In accordance with the JSE Listings Requirements the group has adopted a code of conduct for insider trading. During closed periods directors and employees are prohibited from dealing in the company’s shares whilst trading outside of closed periods may only take place with the written authorisation of the chairman.

17


Social, Ethics and Remuneration Committee

Due to the small size of the board, it was decided to consolidate the Social and Ethics Committee with the Remuneration Committee. The Social, Ethics and Remuneration Committee comprises three independent non-executive directors.

Social, Ethics and Remuneration Committee


The objectives and functions of the Social, Ethics and Remuneration Committee are:

- monitors group activities in relation to social and economic development, good corporate citizenship, the environment, health and public safety, and labour and employment.

- makes recommendations to and brings matters to the attention of the board in relation to such activities.

- reports to shareholders at the company’s AGM in relation to such activities.

- satisfy itself as to the accuracy of recorded performance measures that govern the vesting of incentives;

- ensure that all benefits, including retirement benefits and other financial arrangements, are justified and correctly valued;

- consider the results of the evaluation of the performance of the CEO and other executive directors, both as directors and as executives in determining remuneration;

- regularly review incentive shareholder schemes to ensure continued contribution to shareholder value and that these are administered in terms of the rules; and

- advise on the remuneration of non-executive directors;

Chairperson:

Mervyn Burton (Independent non-executive)

Other committee members:

Bronwyn Bayvel (Independent non-executive)

Chris Nissen (Independent non-executive)

Although King III recommends that the chairman of the remuneration committee not be the same as the chairman of the board, Ascension’s board is satisfied that Chris Nissen is the most qualified and suitable candidate for both positions. These two positions will be reviewed in the coming year.

18


Social, Ethics and Remuneration Committee meetings

There were no meetings held by the Social, Ethics and Remuneration Committee.

Remuneration policy

All executive directors of the company are paid by the manager (Ascension Properties Management Company (Pty) Ltd) and no remuneration is paid by the company other than fees paid to independent non-executive directors. The board determines fees payable to non-executive directors, based on the recommendation of the Social, Ethics and Remuneration Committee and take into account market rates for companies of a similar size and nature. The board considers the proposed remuneration of the non-executive directors of the year to 30 June 2015 as previously approved by shareholders, to be fair and responsible.

The manager pays executive directors of Ascension a market related remuneration package and aims to achieve a balance between short, medium and long term incentives. Remuneration packages are assessed annually.

Due to the absence of remunerated employees, no board recommendation has been made to shareholders, by way of a non-binding advisory vote, in respect of the remuneration policy of the company.

Investment Committee

Investment Committee


The objectives and functions of the Investment Committee are:

- Implementing the strategies approved by the board and for managing the affairs of Ascension.

- The committee does not assume the functions of management, which remain the responsibility of the executive directors, officers and other members of senior management.

- The committee is responsible for the reviews and recommendation of acquisitions and disposal transactions.

- The committee is mandated to approve investment transactions within its mandate.

Committee members:

Shaun Rai (Acting CEO)

Jeremy de Villiers (Company Secretary)

Bronwyn Bayvel (Independent Non-executive)

The Investment Committee meets regularly to discuss issues of strategic importance to the group. These include investment decisions, potential acquisitions, strategic alliances with other companies and capital expenditure projects.

Management reporting

The board has established management reporting structures and disciplines. Their functions include the preparation of annual budgets for the company by the manager for approval by the board. Monthly results are reported against budgets and projections are updated in the light of changing trading and economic circumstances. Cash flow forecasts are prepared and monitored, while working capital and borrowing levels are monitored on an on-going basis.

19

Sustainability reportFor the year ended 30 June 2015

The table below lists the commitments Ascension has made to its stakeholders to ensure financial, economic, socio-economical and environmental sustainability.

Sustainability element Ascension Properties commitments Progress during financial period

Financial and economic

Shareholders Implement the strategic objectives

Meeting the distributable income targets

The board aims to provide shareholders with growing distributions while maintaining a responsible LTV % and all strategic decisions are made with this as the key consideration. The board targets a LTV % of 35-40%. At year end the LTV % was 38.1%.

Employment Continuing investment in training and development

Continuing education of the persons involved in managing the fund’s assets is vital to the company’s performance and improvement. Training and development is encouraged. The manager regularly have staff attend training courses.

Government and other regulatory bodies

Continuing compliance with legislation

Commitment to corporate governance principals and policies

Executive management are provided with training on a regular basis to ensure up-to-date knowledge of amendments to legislation.

There have not been any significant regulatory penalties or fines incurred.

Tenants To be the landlord of choice for empowerment sensitive tenants

Leverage our positive BEE profile to secure long-term leases with Government and other quality tenants

Retention of quality tenants

Reducing vacant space

Continuous improvement and self-assessment in order to increase tenant satisfaction

The company has appointed professional property managers that engage with tenants on a daily basis.

The managers regularly engage with tenants to understand their requirements so that lease renewals can be anticipated effectively.

Suppliers Developing long-term sustainable relationships with quality suppliers

Minimising reputational risks

The company only engages with quality service providers.

20

Sustainability reportFor the year ended 30 June 2015 (continued)

Sustainability element Ascension Properties commitments Progress during financial period

Environmental

Energy and water Reduction in and monitoring of energy usage

The energy and water usage of all properties is carefully monitored on a monthly basis by executive management.

Where building refurbishments are undertaken we have installed energy efficient light fittings and motion sensors, where practical.

Transportation and emissions

Reduction in fuel-consumption and related emissions

Where possible management meetings with regional staff outside of Cape Town will take place via telephone conference, thereby reducing fuel consumption and related emissions.

Properties are concentrated in three major centres, with asset managers and property managers based in close proximity to the assets that they manage, resulting in reduced traveling.

Employment Provide a preferred working environment

Remunerate employees at market related rates

An annual review of remuneration packages is performed to ensure that they are market-related.

Management has an open-door policy with all levels of staff.

Health and safety Compliance with the Occupation Health and Safety Act

The company has policies and procedures to ensure that the company complies with the Act.

21

Sustainability report

22

Directors’ responsibility and approval

Company’s Secretary statement

The directors are required in terms of the Companies Act 71 of 2008 to maintain adequate accounting records and are responsible for the content and integrity of the annual fi nancial statements and related fi nancial information included in this report. It is their responsibility to ensure that the annual fi nancial statements fairly present the state of affairs of the group as at the end of the year and the results of its operations and cash fl ows for the period then ended, in conformity with International Financial Reporting Standards. The external auditors are engaged to express an independent opinion on the fi nancial statements.

The annual fi nancial statements are prepared in accordance with International Financial Reporting Standards and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal fi nancial control established by the group and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the board sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defi ned framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the group and all employees are required to maintain the highest ethical standards in ensuring the group’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the group is on identifying, assessing, managing and monitoring all known forms of risk across the group. While operating risk cannot

be fully eliminated, the group endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The directors are of the opinion, based on the information and explanations given by management that the system of internal control provides reasonable assurance that the fi nancial records may be relied on for the preparation of the annual fi nancial statements. However, any system of internal fi nancial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The directors have reviewed the group’s cash fl ow forecast for the 12 months to 30 June 2016 and, in the light of this review and the current fi nancial position, they are satisfi ed that the group has or has access to adequate resources to continue in operational existence for the foreseeable future.

The board is responsible for the fi nancial affairs of the group.

The external auditors are responsible for independently auditing and reporting on the group’s fi nancial statements. The fi nancial statements have been examined by the group’s external auditors and their report is presented on page 23.

The annual fi nancial statements set out on pages 30 to 65, which have been prepared on the going concern basis, were approved by the board on 22 September 2015 and were signed on its behalf by:

Shuan Rai Henry Dednam

22 September 2015

In my capacity as Company Secretary, I certify that, to the best of my knowledge and belief, Ascension Properties Limited has lodged with the Registrar of Companies, for the year ended 30 June 2015, all such returns as are required by a public company, in terms of the Companies Act (Act 71 of 2008) and that all applicable returns are true, correct and up to date.

J de VilliersCompany Secretary

22 September 2015

23

Independent Auditor’s Report

To the shareholders of Ascension Properties Limited

We have audited the consolidated and separate financial statements of Ascension Properties Limited set out on pages 30 to 65, which comprise the statements of financial position as at 30 June 2015, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

Directors’ responsibility for the consolidated and separate financial statements

The company’s directors are responsible for the preparation and fair presentation of these consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatements, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these consolidated and separate financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated and separate financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of Ascension Properties Limited as at 30 June 2015, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards, and the requirements of the Companies Act of South Africa.

Other reports required by the Companies Act of South Africa

As part of our audit of the consolidated and separate financial statements for the year ended 30 June 2015, we have read the Directors’ Report, the Audit Committee’s Report and the Company Secretary’s Certificate for the purpose of identifying whether there are material inconsistencies between these reports and the audited consolidated and separate financial statements. These reports are the responsibility of the directors. Based on reading these reports we have not identified material inconsistencies between this report and the audited consolidated and separate financial statements. However, we have not audited these reports and accordingly do not express an opinion thereon.

GRANT THORNTONChartered Accountants (SA)Registered Auditors

Per: D D NagarChartered Accountant (SA)Registered Auditor22 September 20152nd Floor 4 Pencarrow CrescentPencarrow ParkLa lucia Ridge Office Park4019

24

Directors’ Report for the year ended 30 June 2015

The directors of Ascension have the pleasure in submitting the consolidated and company annual financial statements for the year ended 30 June 2015.

Main business and operations

Ascension is a black managed Real Estate Investment Trust (“REIT”) that listed on the JSE on 11 June 2012. The company is a property income fund focusing on centrally located commercial office buildings in South Africa with a strong focus towards government and other empowerment sensitive tenants.

The company has converted to a REIT with effect from 1 July 2013.

The financial results are fully set out in the consolidated annual financial statements and do not in our opinion require any further comment.

Net profit of the group was R1 710 million (2014: R210 072 million), after taxation of R nil (2014: Rnil).

Net loss of the company was R61 267 million (2014: net profit of R165 433 million), after taxation of R nil (2014: Rnil).

Distributable income of the group was R222 796 million (2014: R202 730 million).

Events after the reporting period

Implementation of the B scheme

With effect from 17 August 2015, all Ascension B shares held by Ascension B shareholders were transferred into the name of Rebosis. Rebosis accordingly holds 100% of the issued B shares in Ascension and, approximately 59% of the entire issued share capital of Ascension. Ascension is a listed subsidiary of Rebosis. On 17 August 2015, Ascension B shareholders recorded in the Ascension B share register, as consideration for their Ascension B shares disposed of to Rebosis pursuant to the B scheme, received 23.549 Rebosis ordinary shares for every 100 Ascension B shares held on the scheme consideration record date.

Directors’ interest in contracts and shares

None of the directors of the company had an interest in any contract of significance during the financial year.

None of the directors had any interest in the A shares at 30 June 2015.

The influence of directors in the B shares are as follows:

Directors

Beneficial interest

Total %Direct Indirect

SL Rai - - - 0.00%

FW Arendse - - - 0.00%

H Takolia 3 000 000 - 3 000 000 0.80%

J de Villiers - - - 0.00%

HB Dednam - - - 0.00%

M Burton 55 440 - 55 440 0.01%

Total 3 055 440 - 3 055 440 0.81%

25

Directors’ Report (continued)

The interests of the directors in the B share of Ascension Properties at 30 June 2014 were as follows:

DirectorsBeneficial interest

Total %Direct IndirectSL Rai - - - 0.00%

FW Arendse - - - 0.00%

H Takolia 3 000 000 - 3 000 000 0.80%

J de Villiers - - - 0.00%

HB Dednam - - - 0.00%

M Burton 55 440 - 55 440 0.01%

Total 3 055 440 - 3 055 440 0.81%

Changes in director shareholding

Pursuant to an offer that was made by Rebosis to acquire the entire issued B share capital of Ascension that Rebosis does not already own, the directors disposed of their shares under the B scheme on 17 August 2015, i.e. an exchange of 23.549 new Rebosis ordinary shares for every 100 Ascension B shares held by way of a scheme of arrangement.

Authorised and issued stated capital

As set out more fully in the circular issued to Ascension shareholders on 22 May 2015, Ascension has converted its capital structure from a linked unit capital structure to an all-share capital structure, comprising Ascension A ordinary shares and Ascension B ordinary shares. A new Memorandum of Incorporation was adopted to give effect to the change in Ascension’s capital structure; and Ascension’s Debenture Trust Deed was subsequently terminated. The effective date of conversion was 20 July 2015.

The company’s authorised share capital consists of 1 000 000 000 A shares 1 000 000 000 B shares. Refer to notes 11 & 12 for a reconciliation of the shares issued during the 2015 financial year.

Distributions

The following distributions were declared per share for the year ended 30 June 2015:

The company paid distributions of 20.95 cents per A share and 11.28 cents per B share for the 6 month period ended 31 December 2014.

The company has declared distributions of 20.95 cents per A share and 13.53 cents per B share for the 6 month period ended 30 June 2015.

The total distribution per share, for the year ended 30 June 2015, are 41.90 cents per A share and 24.81 cents per B share. Refer to note 27 for the detailed analysis.

Directors

The directors of the company at the date of this report were as follows:Name Designation CommentA C Nissen Chairman Resigned with effect from 1 October 2015S L Rai Acting Chief Executive Officer Resigned with effect from 1 October 2015F W Arendse Independent non-executive Resigned with effect from 1 October 2015H B Dednam Financial Director Resigned with effect from 1 October 2015M Burton Independent non-executive Remains on the boardB Bayvel Independent non-executive Resigned with effect from 1 October 2015H Takolia Independent non-executive Remains on the boardJ de Villiers Alternate to S L Rai Resigned with effect from 1 October 2015

The following directors will be appointed to the board:

Name Designation CommentS Ngebulana Chairman Appointed with effect from 1 October 2015Dr M Renene Independent non-executive Appointed with effect from 1 October 2015K Keshav Chief Executive Officer Appointed with effect from 1 October 2015

The board will seek to make two further appointments, including the appointment of a new financial director. A further announcement in this regard will be released in due course.

26

Directors’ Report (continued)

Secretary

J de Villiers is the company secretary of Ascension and has resigned with effect from 1 October 2015. M Ndema has been appointed as company secretary of Ascension with effect from 1 October 2015.

Interest in subsidiaries

Details of the company’s interest in subsidiaries are set out in note 5.

Interest of the group in the profits and losses of its subsidiaries for the year ended 30 June 2015 are as follows:

Subsidiaries2015

R’0002014

R’000

Cape Horizon Properties 125 (Pty) Ltd 22 630 11 906

Mainstreet 1119 (Pty) Ltd 40 347 62 058

Snoopy Investments (Pty) Ltd 10 132 5 055Total 73 109 79 019

Auditors

The board recommends that Grant Thornton continue in office in accordance with section 90 of the Companies Act 71 of 2008.

Going concern

The directors consider that the group has adequate resources to continue operating for the foreseeable future and that it is appropriate to adopt the going concern basis in preparing the group financial statements. The company has reasonably satisfied the liquidity and solvency tests as required by the Companies Act and the directors have satisfied themselves that the group is in a sound financial position and that it has access to sufficient funding facilities to meet its foreseeable cash requirements.

Borrowing Limitations

In terms of the Memorandum of Incorporation of the company, the directors may exercise all the powers of the company to borrow money as they consider appropriate. Refer to note 13 for details.

27

Report of the Audit and Risk Committee for the year ended 30 June 2015

The Audit and Risk Committee (the committee) is required to report to shareholders in terms of section 94(7)(f) of the Companies Act, 71 of 2008 (Companies Act”) on:

how the committee carried out its functions;

the independence of the auditor of the company; and

commenting on the financial statements, the accounting practices and internal control of the company.

The committee considers that it has adequately performed its duties in terms of its mandate, King III and the Companies Act.

Composition of the committee

The committee is comprised of three independent non-executive directors; refer to page 15 for further detail.

The members of the committee are all financially literate and have sufficient skills and expertise to fulfil their duties and obligations as members of the committee. Refer to pages 10 to 11 for the details on the qualifications of the members.

All members of the committee make themselves available for re-election as set out in the notice of annual general meeting to shareholders.

Meetings

The committee met 3 times during the financial year to discharge its duties. Details of attendance at meetings are set out on page 16.

External Auditor

The committee is satisfied with the independence of the external auditors, Grant Thornton, and compliance with the group policy in this regard which is reviewed annually.

Fees paid to external auditors, terms of engagement and non-audit services

The committee, in consultation with executive management, agreed to the engagement letter, audit plan and budgeted audit fees for the 2015 financial period. The committee considers the fee to be fair and appropriate.

The committee determines the nature and extent of any non-audit services that the auditor may provide to the company from time to time.

Finance function

The committee is satisfied with the overall expertise and adequacy of resources in the finance function, as well as the experience and expertise of the financial director and of the senior members of management

responsible for the proper functioning of the finance department.

Annual financial statements

The committee reports to the board on the financial statements, the accounting practices and the internal financial controls of the group.

The committee confirms that they have reviewed and discussed the annual financial statements with the independent external auditors and financial director.

The external auditor has unrestricted access to the group’s records and management.

The auditor furnishes a written report to the committee on significant findings, arising from the annual audit and is able to raise matters of concern directly with the chairman of the committee. There were no limitations imposed on the scope of the external audit.

The committee has reviewed the consolidated and separate financial statements of the group, and is satisfied that they comply with International Financial Reporting Standards and the JSE Listings Requirements in respect of REITS.

The committee did not receive any concerns or complaints, within or outside the company, relating to the accounting practices and internal audit of the company, the content or auditing of the group’s financial statements, the internal financial controls of the group, or any related matter.

The committee has recommended the approval of the annual financial statements by the board.

Going Concern

The committee through its review of the 2016 budget and discussions with executive management reported to the board that it supports management’s view that the group will continue to operate as a going concern for the foreseeable future.

Risk management

The committee confirms that the group’s risk management, mitigation and monitoring processes have been effective in limiting the impact of risks on the business during the 2015 financial period.

The committee has monitored compliance with Ascensions’s risk management policy which policy has been drafted in accordance with industry practice and is satisfied the Ascension has in all material respect, complied with the policy during the year

28

Report of the Audit and Risk Committee (continued)

Risk Business Impact Control

Liquidity Risk • Inability to pursue value enhancing investment opportunities

• Inability to meet debt obligations

• Management accounts are prepared and scrutinised on a monthly basis to determine liquidity requirements.

• Pipeline management is performed regularly in order to determine / monitor cash requirements.

• Emphasis is placed on sustaining a conservative LTV ratio.

• Management maintains spare capacity on facilities where possible;

• Funds are held with numerous financial institutions to ensure diversification.


Credit Risk • Reduction in cash flow• Increase in bad debt

write-offs• Decrease in

distributable income and unit-holder value

• Robust due diligence procedures are performed prior to purchasing a property.

• Credit checks are performed on prospective tenants.• Tenants are required to provide a deposit or bank

guarantee as security for its lease obligations.• Debtors arrears are monitored constantly and

appropriate follow up procedures performed on tenants which fall outside of their credit terms.

Interest Rate Risk • Increase in interest rates will result in increased borrowing costs, thereby reducing distributable income

• Approximately 35% of variable borrowings are fixed through interest rate swaps to minimise the impact of interest rate fluctuations on the distributions, whilst approximately an additional 36% of variable borrowings are hedged through an interest rate cap.

Significant increases in electricity costs and other municipal rates

• Increased total cost of occupation adds to financial pressure in tenants

• Reduction in distributable income

• Conservative and well informed assumptions are applied when forecasting.

• Tenant recoveries are reviewed and monitored on a regular basis.

• Emphasis is placed on achieving electricity savings and energy efficiency.

Concentration Risk

• Significant erosion of income

• Irreparable reputational damage

• Tenant relationships are valued and are a key focus area for management.

• The quality of leased space is constantly monitored.

Vacancy Risk • Decrease in distributable income

• Lease agreements are concluded with tenants for varying periods and with different lease expiry dates.

• Management monitors lease expiries and renewals proactively.

Reputational Risk • Damage to the Company’s reputation can result in lost revenue or destruction of unit holder value

• The company subscribes to good corporate governance principles.

Retention of key personnel

• The loss of key management personnel would negatively impact the Company’s ability to achieve strategic and operational goals.

• The Social, Ethics and Remuneration Committee determines the remuneration packages of individual directors, to attract and retain high quality people.

29

Report of the Audit and Risk Committee (continued)


Valuation Risk • Acquisitions at inflated prices will results in lower returns

• Undervaluing the property portfolio may impact on loan covenants

• Extensive due diligence procedures are performed prior to the acquisition of a property.

• Superior financial modelling procedures have been implemented by management.

• Properties are valued by external independent registered valuers on a rotational basis at least every three years.

Refinancing Risk • Inability to pursue valuable investment opportunities

• Increased interest payments leading to the erosion of distributable income

• Debt facilities are regularly assessed and appropriate action taken to refinance debt timeously.

• The company has no debt expiries in the next 12 months.

• The company aims to stagger the renewal profile of debt facilities.

Reporting Risk • Revenue is understated/overstated

• Liabilities are understated

• Financial management have established systems of internal control to provide reasonable assurance of the validity, accuracy, completeness and timely accumulation of financial data.

• Reliance is placed on external auditors to ensure the fair presentation of the financial information at a statutory reporting level.

• Thorough analytical and detailed review of management accounts by management.

• Periodic review by the Audit and Risk Committee.

Compliance / Legal Risk

• Legal or regulatory sanctions

• Reputational damage due to non-compliance

• Loss and distribution erosion due to ambiguity, error or omissions in lease agreements

The company employs experienced individuals with a highly refined set of expertise who remain up to date with:• Building and property regulations;• Occupational Health and Safety/Compensation for

Occupational Injuries and Diseases Acts;• Fire compliance; and• The company utilises the services of experienced

external professionals and advisors where appropriate.

Compliance with BEE codes and regulations is fundamental to the sustainability of the Company

• Erosion of distributable income

• Management actively manages the BEE level of the company.

The committee reviews the analysis of the critical risks facing the company on an annual basis, and it is satisfied, to the extent possible, that the compensating controls in place to mitigate the identified key risks are adequate.

Mervyn Burton

Chairman of the Audit and Risk Committee

30

Statements of financial position for the year ended 30 June 2015

Group CompanyR’000 Notes 2015 2014 2015 2014

Assets Non-current assets Investment property 3 3 832 400 3 706 700 3 440 400 3 349 700Property, plant & equipment 4 12 24 12 24Investments in subsidiaries 5 - - 29 465 29 326Loans to group companies 6 - - 273 016 311 887Interest rate derivative 7 4 532 16 173 4 532 16 173

3 836 944 3 722 897 3 747 425 3 707 110

Current assets Trade and other receivables 8 58 320 61 793 28 824 38 522Cash and cash equivalents 9 50 276 39 162 50 265 29 872

108 596 100 955 79 089 68 394

Total assets 3 945 540 3 823 852 3 826 514 3 775 504

Equity and Liabilities Equity Stated Capital 11 322 603 322 603 322 603 322 603Retained income 551 841 550 131 444 225 505 493

874 444 872 734 766 828 828 096

Non-current liabilities – Debenture capital 12 1 404 543 1 403 815 1 404 543 1 403 815

Total linked shareholders’ interest 2 278 987 2 276 549 2 171 371 2 231 911

Liabilities Other non-current liabilities Other financial liabilities 13 1 499 981 1 377 259 1 499 981 1 377 259

1 499 981 1 377 259 1 499 981 1 377 259

Current liabilities Trade and other payables 14 50 936 62 330 39 526 58 620Shareholders for distribution 115 636 107 714 115 636 107 714

166 572 170 044 155 162 166 334

Total liabilities 3 071 096 2 951 118 3 059 686 2 947 408

Total equity and liabilities 3 945 540 3 823 852 3 826 514 3 775 504

Number of A shares in issue 308 860 859 308 860 859 Number of B shares in issue 376 359 014 376 359 014 TNAV and NAV per A share (cents) 569.3 479.8 TNAV and NAV per B share (cents) 169.1 239.8

31

Statement of profit or loss and other comprehensive income for the year ended 30 June 2015


Revenue 16 412 333 353 101 364 528 330 428

Contractual rental income 365 895 335 110 326 802 310 764Straight-line lease income adjustment 46 438 17 991 37 726 19 664Property operating expenses net of recoveries 17 (35 481) (42 570) (33 940) (29 807)

Net property rental and related income 376 852 310 531 330 588 300 621Other income 1 039 567 400 567Operating expenses (4 233) (3 704) (4 228) (3 704)Asset management fees (18 535) (15 857) (18 535) (15 857)

Operating profit 355 123 291 537 308 225 281 627Finance income 18 3 563 1 765 3 555 1 501Fair value adjustments 20 (42 368) 194 535 (54 217) 160 070Finance costs 19 (91 812) (75 035) (96 034) (75 035)

Profit before distribution to shareholders and taxation 224 506 412 802 161 529 368 163Distribution to shareholders 23 (222 796) (202 730) (222 796) (202 730)

Profit/(loss) before taxation 1 710 210 072 (61 267) 165 433Taxation 25 - - - -

Profit/(loss) for the year 1 710 210 072 (61 267) 165 433

Other comprehensive income - - - -

Total comprehensive income/(loss) for the year 1 710 210 072 (61 267) 165 433

Total comprehensive income/(loss) attributable to shareholders 1 710 210 072 (61 267) 165 433

Basic and diluted earnings per share (cents) 27 0.25 31.31 Basic and diluted earnings per A share (cents) 27 42.15 71.25 Basic and diluted earnings per B share (cents) 27 25.06 53.90

The reconciliation between earnings and headline earnings and distributable earnings is disclosed in note 27.

32

Statements of changes in equity for the year ended 30 June 2015

Stated Retained Total R’000 capital income equity

Group Balance at 1 July 2013 304 381 340 060 644 441Total comprehensive income for the year ended 30 June 2014 - 210 071 210 071Issue of shares 21 952 - 21 952Transaction costs (3 730) - (3 730)

Balance at 30 June 2014 322 603 550 131 872 734

Total comprehensive income for the year ended 30 June 2015 - 1 710 1 710

Balance at 30 June 2015 322 603 551 841 874 444

Company Balance at 1 July 2013 304 381 340 060 644 441Total comprehensive income for the year ended 30 June 2014 - 165 432 165 432Issue of shares 21 952 - 21 952Transaction costs (3 730) - (3 730)

Balance at 1 July 2014 322 603 505 492 828 095

Total comprehensive loss for the year ended 30 June 2015 - (61 267) (61 267)

Balance at 30 June 2015 322 603 444 225 766 828

33

Statements of cash flows for the year ended 30 June 2015


Cash generated from operations 22 300 656 289 029 260 994 297 009Finance income 18 3 563 1 765 3 555 1 501Finance costs 19 (89 452) (72 581) (93 674) (72 581)

Net cash from operating activities 214 767 218 213 170 875 225 929

Purchase of investment property and cost improvements 3 (109 989) (946 307) (95 550) (622 099)Purchase of financial assets 7 - (13 173) - (42 499)Net movement in subsidiary - - (139) -

Net cash from investing activities (109 989) (959 480) (95 689) (664 598)

Proceeds on issue of shares - 360 746 - 360 746Proceeds from other financial liabilities 121 210 581 245 121 210 581 245Distributions paid 23 (214 874) (188 277) (214 874) (188 277)Loans (advanced to)/repaid by group companies 6 - - 38 871 (311 887)

Net cash from financing activities (93 664) 753 715 (54 793) 441 827

Total cash movement for the period 11 114 12 448 20 393 3 159Cash at the beginning of the period 9 39 162 26 715 29 872 26 715

Total cash at the end of the period 9 50 276 39 162 50 265 29 874

34

Notes to the consolidated annual financial statements for the year ended 30 June 2015

Presentation of Financial Statements

The consolidated annual financial statements have been prepared in accordance with International Financial Reporting Standards, and the Companies Act 71 of 2008, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the JSE Listings Requirements. The annual financial statements have been prepared on the historical cost basis, except for the measurement of investment properties and certain financial instruments at fair value, and incorporate the principal accounting policies set out below. They are presented in South African Rand.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 1.2.

These accounting policies are consistent with the previous period, other than as disclosed in note 2.

1.1 Consolidation

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the company and entities controlled by the company (its subsidiaries). Control is achieved where the company has power over an entity; is exposed, or has rights, to variable returns from its involvement with the entity; and has the ability to use its power to affect its returns. The company reassesses whether or not it controls an entity if facts and circumstances indicate that there are changes to one or more of the three elements of control.

The results of subsidiaries are included in the consolidated financial statements from the effective date of acquisition to the effective date of disposal.

Adjustments are made when necessary to the financial statements of subsidiaries to bring their accounting policies in line with those of the group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

1.2 Significant judgements and sources of estimation uncertainty

In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the financial statements.

Estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events, and are believed to be reasonable under the circumstances. Areas in which estimates are made include the following:

Trade and other receivables

The group assesses its receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in profit or loss, the group makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.

The impairment for receivables is calculated as a combination of specific provisions and a general provision on a portfolio basis, based on historical loss ratios, adjusted for national and industry-specific economic conditions and other indicators present at the reporting date that correlate with defaults on the portfolio.

35


1.2 Significant judgements and sources of estimation uncertainty (continued)

Fair value estimation

The carrying value of trade receivables less impairment provision and trade payables are assumed to approximate their fair values.

The fair value of investment property is determined using a combination of the discounted cash flows method and the income capitalisation valuation method, using assumptions that are based on market conditions existing at the period end date.

Impairment testing

The carrying value of assets are reviewed for impairment at each reporting date. Assets are impaired when events or changes in circumstances indicate that the carrying amount may not be recoverable.

If such indication exists and where the carrying values exceed the estimated recoverable amounts, the assets are written down to their recoverable amounts.

Impairment losses and the reversal of impairments losses are recognised in profit or loss other than those relating to re-valued assets, in which case the impairment or reversal of impairment is accounted for as a revaluation decrease or increase respectively.

Provisions

Provisions were raised and management determined an estimate based on the information available.

Derivatives

The fair values of the interest rate swap and interest rate cap is determined based on judgements, estimates and assumptions approved by the management of the group.

Payment for the acquisition of investment properties

In the prior year, the acquisitions were treated as property acquisitions in terms of IAS 40. In the opinion of the directors these properties did not constitute a business as defined in terms of IFRS 3, as there were not adequate processes identified with these properties to warrant classification as businesses.

Taxation

Impact of REIT legislation

Ascension’s application to the JSE Limited for REIT status was approved in June 2013 and became effective from 1 July 2013. As such, the group will not be liable for capital gains tax from 1 July 2013.

Deferred tax is no longer calculated on the straight-line rental income accrual as the rental accrual will form part of the group’s distributions in the future. Given the conversion to a REIT, such distributions are fully deductible for income tax purposes and hence no tax liability will arise on straight-line rental income accruals.

Debentures

The group classifies debentures issued as a liability, and the interest that accrues as an interest expense through profit or loss. The debentures issued are initially recognised at fair value. At the initial date of issue the directors considered the fair value of the A debentures to be 399 cents and the fair value of the B debentures to be 50 cents. This value is in line with the issue of the debentures in terms of the original debenture trust deed and this established the issue price/fair value of the debenture portion of the linked unit. The remaining amount received was recognised as equity as this represents the shareholders’ residual interest in the net assets of the company

36


1.3 Investment property

Investment property is initially recognised at cost. Transaction costs are included in the initial measurement. Subsequent expenditure to add or to replace a part of the property is capitalised at cost.

Tenant installations and lease commissions are carried at cost less accumulated amortisation. Amortisation is provided to write down the cost, less residual value, by equal instalments over the period of the lease.

Fair value

Subsequent to initial measurement investment property is measured at fair value.

Investment properties are valued annually and adjusted to fair value as at the reporting date. Independent valuations are obtained on a rotational basis, ensuring that every property is valued at least every 3 years. The directors value the remaining properties annually on an open market basis. The calculations are prepared by considering the aggregate of the net annual rentals receivable from the properties and, where relevant, associated costs. The net income capitalisation rate method is applied to the estimated rentals and a fair value derived.

At the discretion of the directors the entire portfolio can be externally valued by an independent valuer.

Any gain or loss arising from a change in the fair value of investment property is included in profit or loss for the period to which it relates. Changes in fair value are excluded from the calculation of distributable earnings.

Development properties

Properties under development comprises the costs of the land and development and is stated at fair value. If the fair value cannot be reasonably determined it is stated at cost and is not depreciated. Investment property acquired that required development is transferred from investment properties to properties under development when development commences. On completion of the development these properties will become part of the investment properties.

1.4 Investments in subsidiaries

Company financial statements

In the company’s separate financial statements, investments in subsidiaries are carried at cost less any accumulated impairment.

The cost of an investment in a subsidiary is the aggregate of:

the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the company; plus

any costs directly attributable to the purchase of the subsidiary.

An adjustment to the cost of a business combination contingent on future events is included in the cost of the combination if the adjustment is probable and can be measured reliably.

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1.5 Financial instruments

Classification

The group classifies financial assets and financial liabilities into the following categories:

Loans and receivables;

Financial liabilities measured at amortised cost; and

At fair value through profit and loss

Classification depends on the purpose for which the financial instruments were obtained / incurred and takes place at initial recognition.

Initial recognition and measurement

Financial instruments are recognised initially when the group becomes a party to the contractual provisions of the instruments. The group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

Financial instruments are measured initially at fair values.

For financial instruments which are not at fair value through profit or loss, transaction costs are included in the initial measurement of the instrument.

Subsequent measurement

Loans and receivables are subsequently measured at amortised cost, using the effective interest method, less accumulated impairment losses.

Financial liabilities at amortised cost are subsequently measured at amortised cost, using the effective interest method.

De-recognition

Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership.

Trade and other receivables

Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired.

The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in profit or loss within operating expenses. When a trade receivable is uncollectable, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against operating expenses in profit or loss.

Trade and other receivables are classified as loans and receivables.

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1.5 Financial instruments (continued)

Trade and other payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially and subsequently recorded at fair value.

Bank overdraft and borrowings

Bank overdrafts and borrowings are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the group’s accounting policy for borrowing costs.

Interest rate derivatives

The group uses interest rate swaps and interest rate caps to hedge its exposure to interest rates. It is the policy of the group not to trade in interest rate derivatives for speculative purposes.

Derivative financial instruments are initially and subsequently recognised at fair value.

Impairment of financial assets

Where financial assets are impaired through use of an allowance account, the amount of the loss is recognised in profit or loss within operating expenses. When such assets are written off, the write off is made against the relevant allowance account. Subsequent recoveries of amounts previously written off are credited against operating expenses.

1.6 Lease costs

Initial direct costs incurred in negotiating and arranging operating leases including but not limited to commissions and tenant installations are deferred and recognised as an expense over the lease term on the same basis as the lease income.

39


1.7 Tax

Tax expenses

Current and deferred taxes are recognised as income or an expense and included in profit or loss for the period, except to the extent that the tax arises from:

• a transaction or event which is recognised, in the same or a different period, directly in equity; or

• a business combination.

Current tax and deferred taxes are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity.

1.8 Leases

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

Operating leases - lessor

An adjustment is made to contractual rental income earned to bring to account in the current period the difference between the rental income that the group is currently entitled to and the rental for the period calculated on a straight-line basis. The difference between the straight-line rental income and contractual income is shown as an operating lease asset in the statement of financial position.

Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as the lease income.

Income for leases is disclosed under revenue in profit or loss.

1.9 Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Non-current assets held for sale are measured at the lower of its carrying amount and fair value less costs to sell.

A non-current asset is not depreciated (or amortised) while it is classified as held for sale.

40


1.10 Impairment of assets

The group assesses at each end of the reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the group estimates the recoverable amount of the asset. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined.

The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use.

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in profit and loss.

An entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for assets other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of those assets are estimated.

The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods.

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill is recognised immediately in profit or loss. Any reversal of an impairment loss of a revalued asset is treated as a revaluation increase.

1.11 Stated capital and equity

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

41


1.12 Provisions and contingencies

Provisions are recognised when:

the group has a present obligation as a result of a past event;

it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

a reliable estimate can be made of the obligation.

The amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement shall be treated as a separate asset. The amount recognised for the reimbursement shall not exceed the amount of the provision.

Provisions are not recognised for future operating losses.

If an entity has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision.

After their initial recognition contingent liabilities recognised in business combinations that are recognised separately are subsequently measured at the higher of:

the amount that would be recognised as a provision; and

the amount initially recognised less cumulative amortisation.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 26.

1.13 Revenue

Rental income

Property portfolio revenue comprises operating lease income and operating cost recoveries from the letting of investment properties. Operating lease income is recognised on a straight-line basis over the term of the lease.

Income from investments

Interest is recognised, in profit or loss, using the effective interest rate method.

42


1.14 Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset until such time as the asset is ready for its intended use. The amount of borrowing costs eligible for capitalisation is determined as follows:

Actual borrowing costs on funds specifically borrowed for the purpose of obtaining a qualifying asset less any temporary investment of those borrowings.

Weighted average of the borrowing costs applicable to the entity on funds generally borrowed for the purpose of obtaining a qualifying asset. The borrowing costs capitalised do not exceed the total borrowing costs incurred.

The capitalisation of borrowing costs commences when:

expenditures for the asset have occurred;

borrowing costs have been incurred; and

activities that are necessary to prepare the asset for its intended use or sale are in progress.

Capitalisation is suspended during extended periods in which active development is interrupted.

Capitalisation ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.

All other borrowing costs are recognised as an expense in the period in which they are incurred.

1.15 Debentures

Debentures are designated as financial liabilities measured at amortised cost. Any debenture discount is amortised over the period in which the debentures will be repaid. The portion recorded in profit and loss for the amortisation of debentures is added back for distribution purposes.

1.16 Operating Segments

An operating segment is a component of the group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the group’s other components. An operating segment’s operating results are reviewed regularly by the group’s executive committee to make decisions about resources to be allocated to the segment and assess its performance, and for which distinct financial information is available.

Operating segments are categorised according to the type of property either as Retail property, Commercial property, or Industrial property. The group currently only has one operating segment, namely commercial property.

2. New Standards and Interpretations

At the date of approval of these annual financial statements, certain new accounting standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the entity.

Management anticipates that all of the pronouncements will be adopted in the entity’s accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the entity’s financial statements is provided below. Certain other new standards and interpretations have been issued but are not yet expected to have a material impact on the entity’s financial statements.

43


2.1 Standards and interpretations effective and adopted in the current year

In the current year, the group has adopted the following standards and interpretations that are effective for the current financial year and that are relevant to its operations:

Amendment to IAS 24 Related-party Disclosure

The amendment clarifies that a management entity – an entity that provides key management personnel services – is a related party subject to the related-party disclosures. In addition, an entity that uses a management entity is required to disclose the expenses incurred for management services.

The effective date of the amendment is for years beginning on or after 1 July 2014.

The amendments have not had a material impact on the financial statements.

Amendment to IFRS 8 Operating Segments

The amendment requires entities to disclose the judgements made in identifying their reportable segments when operating segments have been aggregated, including a brief description of the operating segments that have been aggregated and the economic indicators that determine the aggregation criteria. It also clarifies that the entity is required to provide a reconciliation between the total reportable segments’ assets and the entity’s assets only if the segment assets are regularly reported to the chief operating decision-maker.


The amendment has not impacted the disclosure in the group’s annual financial statements.

Amendment to IAS 40 Investment Property

The description of ancillary services in IAS 40 differentiates between investment property and owner-occupied property.

The amendment clarifies that IFRS 3, not the description of ancillary services in IAS 40, is used to determine if the transaction is the purchase of an asset or business combination.


The amendments have not had a material impact on the financial statements.

44


2.2 Standards and interpretations not yet effective

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s consolidated financial statements are disclosed below:

IFRS 9 Financial Instruments

This new standard is the first phase of a three phase project to replace IAS 39 Financial Instruments: Recognition and Measurement. To date, the standard includes chapters for classification, measurement and de-recognition of financial assets and liabilities. The following are main changes from IAS 39:

Financial assets will be categorised as those subsequently measured at fair value or at amortised cost.

Financial assets at amortised cost are those financial assets where the business model for managing the assets is to hold the assets to collect contractual cash flows (where the contractual cash flows represent payments of principal and interest only). All other financial assets are to be subsequently measured at fair value.

Under certain circumstances, financial assets may be designated as at fair value.

For hybrid contracts, where the host contract is an asset within the scope of IFRS 9, then the whole instrument is classified in accordance with IFRS 9, without separation of the embedded derivative. In other circumstances, the provisions of IAS 39 still apply.

Voluntary reclassification of financial assets is prohibited. Financial assets shall be reclassified if the entity changes its business model for the management of financial assets. In such circumstances, reclassification takes place prospectively from the beginning of the first reporting period after the date of change of the business model.

Financial liabilities shall not be reclassified.

Investments in equity instruments may be measured at fair value through other comprehensive income. When such an election is made, it may not subsequently be revoked, and gains or losses accumulated in equity are not recycled to profit or loss on de-recognition of the investment. The election may be made per individual investment.

IFRS 9 does not allow for investments in equity instruments to be measured at cost.

The classification categories for financial liabilities remains unchanged. However, where a financial liability is designated as at fair value through profit or loss, the change in fair value attributable to changes in the liabilities credit risk shall be presented in other comprehensive income. This excludes situations where such presentation will create or enlarge an accounting mismatch, in which case, the full fair value adjustment shall be recognised in profit or loss.

The effective date of the standard is for years beginning on or after 1 January 2018.

The group expects to adopt the standard for the first time in the 2018 financial statements.

Management have yet to assess the impact of this standard on its results.

IFRS 15 Revenue from Contracts with Customers

This new standard provides guidance on recognition of revenue that requires recognition of revenue in a manner that depicts the transfer of goods or services to customers at an amount that reflects the consideration the entity expects to be entitled to in exchange for these goods or services.

The effective date of the amendment is for years beginning on or after 1 January 2018.

The group expects to adopt the standard for the first time in the 2018 financial statements.

It is unlikely that the amendments will have a material impact on the group’s annual financial statements.

45


Group CompanyR’000 2015 2014 2015 2014

3. Investment property

Balance at beginning of year 3 706 700 2 544 500 3 349 700 2 544 500Movement for the year Acquisitions at cost - 805 843 - 537 831Improvements at cost 107 501 134 116 93 062 77 920Upfront lease costs 2 488 6 348 2 488 6 348Straight-line rental income adjustment 46 438 17 991 37 726 19 664Fair value adjustment (30 727) 197 902 (42 576) 163 437

Balance at end of year 3 832 400 3 706 700 3 440 400 3 349 700

Reconciliation to fair value Investment properties at valuation at year end 3 547 760 3 481 485 3 164 964 3 124 977Straight-line rental income accrual 100 397 53 959 91 193 53 467Unamortised upfront lease costs 11 743 9 256 11 743 9 256

Fair value at 30 June 2014 3 659 900 3 544 700 3 267 900 3 187 700Development properties 172 500 162 000 172 500 162 000

Total investment property 3 832 400 3 706 700 3 440 400 3 349 700

Details of valuation

The investment properties of the group on 30 June 2015 were valued externally by an independent valuer, Mr Peter Parfitt (Professional Associated Valuer, Dip.val, Miv (SA) Registration number: 2712/2), of Quadrant Properties (Pty) Ltd. Quadrant Properties (Pty) Ltd is not connected to the group and has recent experience in the location and category of the investment property being valued.

The valuer took into account prevailing market rentals, occupancy levels, forecasted future vacancies, based on historical trends and capitalisation rates. The range of capitalisation rates applied to the property portfolio is between 8,5% and 13% with a weighted average of 9,59%. Properties under development are valued by applying a capitalisation rate that is adjusted for capital expenditure to be incurred and vacancy periods. There have been no material changes to the information used and assumptions applied by the registered valuer.

It is the policy of the group and a JSE Listings Requirement that every property be valued every three years. As at 30 June 2015, the entire portfolio was externally valued by an independent registered valuer.

Pledged as security

First mortgage bonds have been registered over investment properties with a fair value of R3,8 billion as security for secured interest-bearing liabilities as described in note 13.

A register containing the information required by Regulation 25(3) of the Companies Regulations, 2011 is available for inspection at the registered office of the company.

46


Group CompanyR’000 2015 2014 2015 2014

3. Investment property

Borrowing costs capitalised Borrowing costs capitalised to qualifying assets 22 236 17 630 22 236 17 630Capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation during the year (8.5% since February 2014) 8.5% 8,5% 8.5% 8,50%

Straight-line rental income accrual Balance at beginning of year 53 959 35 968 53 467 33 802Straight-line rental income adjustment during the year 46 438 17 991 37 726 19 665

Balance at end of year 100 397 53 959 91 193 53 467

Properties under development Balance at beginning of year 162 000 152 000 162 000 152 000Transferred (from) / to development properties - (52 700) - (52 700)Development costs 46 689 17 698 46 689 17 698Fair value adjustment (36 189) 45 002 (36 189) 45 002


A detailed list of investment properties is set out on page 6 of the annual report.

Disposal of portfolio of letting property

Subject to certain conditions precedent, management concluded an agreement of sale to dispose the 92 Market street property. At 30 June 2015 the investment property is held at a fair value of R5 million.

4. Property, plant and equipment

Furniture and fixtures 12 21 12 21

Cost 52 52 52 52Accumulated depreciation (40) (31) (40) (31)

Other property, plant and equipment - - - -


IT equipment - 3 - 3


Balance at end of year 12 24 12 24

Movement for the year Balance at beginning of year 24 59 24 59Depreciation (12) (35) (12) (35)

Furniture and fixtures (9) (8) (9) (8)IT equipment (3) (10) (3) (10)Other property, plant and equipment - (17) - (17)

Balance at end of year 12 24 12 24

A register containing the information required by Regulation 25(3) of the Companies Regulations, 2011 is available for inspection at the registered office of the company.

47


Group CompanyR’000 2015 2014 2015 2014

5. Investments in subsidiaries R R

Percentage voting power - - 100% 100%Percentage holding - - 100% 100%Carrying value (in Rand) - - Cape Horizon Properties 107 (Pty) Ltd¹ - - 100 100Cape Horizon Properties 119 (Pty) Ltd¹ - - 100 100Cape Horizon Properties 122 (Pty) Ltd¹ - - 100 100Umuthi Trade and Invest 7 (Pty) Ltd¹ - - 100 100 Cape Horizon Properties 125 (Pty) Ltd - - 100 100Snoopy Investments (Pty) Ltd - - 100 100 Mainstreet 1119 (Pty) Ltd - - 29 465 000 29 325 703

Balance at end of year - - 29 465 600 29 326 303

¹ These subsidiaries were dormant at year end 30 June 2015.

6. Loan to group companies R’000 R’000

SubsidiariesSnoopy Investments (Pty) Ltd - - 520 950Cape Horizon Properties 125 (Pty) Ltd - - 168 320 176 567Mainstreet 1119 (Pty) Ltd - - 104 176 134 370

Balance at end of year - - 273 016 311 887

The loans are unsecured, interest free and are repayable by mutual consent, with payments not expected within 12 months.

7. Interest rate derivative

At fair value through profit and lossInterest rate swap 1 610 6 763 1 610 6 763Interest rate cap 2 922 9 410 2 922 9 410

4 532 16 173 4 532 16 173

The interest rate swap is a 3-month JIBAR swap at a fixed rate of 5.55% for a nominal amount of R483 million and cover the loan from Standard Bank (refer note 13). The swap expires on 1 December 2015.

The interest rate cap is capped at a 3-month JIBAR of 6,72% for a nominal amount of R500 million. The cap expires 13 January 2017.

Interest rate swaps are valued by discounting the future cash flows using the market rate indicated on the interest rate curve at the dates when the cash flows will take place.

The interest rate cap is valued by taking into account the prevailing market conditions, the shape of the interest rate curve, the volatility of interest rates and the period remaining till maturity of the cap.

48


Group CompanyR’000 2015 2014 2015 2014

8. Trade and other receivables

Trade receivables (net of impairment allowance) 34 909 11 950 15 607 11 393Debtors accruals (including consumption charges not yet invoiced) 9 650 20 786 7 179 18 124Deposits 1 548 1 366 1 244 1 266Adjustment accounts 827 7 483 827 7 565Prepayments and sundry debtors 11 386 174 3 967 174VAT - 20 034 - -


Trade and other receivables past due but not impaired

Trade and other receivables which are less than 30 days past due are not considered to be impaired. At 30 June 2015, R11 221 780 (2014: R2 649 811) were past due but not impaired.

Ageing of amounts due but not impaired is as follows:

1 month past due 6 127 1 848 6 127 1 8482 months past due 2 959 610 2 959 6103 months past due 2 135 191 2 135 191

Total 11 221 2 649 11 221 2 649

Allowance for impairment of trade and other receivables

The amount of the allowance was R2 284 126 as at 30 June 2015 (2014: R14 845 646)

The ageing of these debtors is as follows:

Current 37 12 356 37 2571 to 3 months 272 438 272 436Over 3 months 1 975 2 052 1 975 2 052

Total 2 284 14 846 2 284 2 745

Reconciliation of allowance for impairment of trade and other receivables

Balance at the beginning of year 14 846 3 376 2 745 3 376Allowance for impairment (12 562) 11 470 (461) (632)


49


Group CompanyR’000 2015 2014 2015 2014

9. Cash and cash equivalents

Cash on hand 4 4 4 4Bank balances 36 640 5 247 36 629 4 289Short-term deposits 70 66 70 66Property managers’ trust accounts 13 562 33 845 13 562 25 514


Credit quality of cash at bank and short term deposits, excluding cash on hand

The credit quality of cash at bank and short term deposits, excluding cash on hand that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or historical information about counterparty default rates:

F1+(ZAF) 36 710 5 313 36 699 4 355

F1+(ZAF) ratings are considered to be of high quality and are subject to low credit risk.

10. Financial assets by category

The accounting policies for financial instruments have been applied to the line items below. The carrying amounts of the financial assets of each category are as follows:

Loans and receivables

Trade and other receivables 58 320 41 585 28 824 38 347Cash and cash equivalents 50 276 39 162 50 265 29 873Interest rate derivative 4 532 16 173 4 532 16 173Loans to group companies - - 273 016 311 887

Total financial assets 113 128 96 920 356 637 396 280

50


Group Company 2015 2014 2015 2014

11. Stated capital

Authorised (number)1 000 000 000 No par value A shares 1 000 000 000 1 000 000 000 1 000 000 000 1 000 000 0001 000 000 000 No par value B shares 1 000 000 000 1 000 000 000 1 000 000 000 1 000 000 000

Total authorised shares 2 000 000 000 2 000 000 000 2 000 000 000 2 000 000 000

Issued (number)No par value A shares 308 860 859 308 860 859 308 860 859 308 860 859No par value B shares 376 359 014 376 359 014 376 359 014 376 359 014

Total issued at end of year 685 219 873 685 219 873 685 219 873 685 219 873

Reconciliation of shares issued (number):Balance at beginning of year 685 219 873 602 231 367 685 219 873 602 231 367Issue of no par value A shares - 82 988 506 - 82 988 506Issue of no par value B shares - - - -


Reconciliation of shares issued (R’000): Balance at beginning of year 322 603 304 381 322 603 304 381Issue of no par value A shares - 38 876 - 38 876Issue of no par value B shares - - - -Transaction cost - (3 730) - (3 730)Interest on shares issued cum distribution - (16 924) - (16 924)

Total issued at end of year 322 603 322 603 322 603 322 603

51


Group CompanyR’000 2015 2014 2015 2014

12. Debenture capital

The A shares have a first right to the net distributable income of the company. The B shares receive the residual net distributable income after settlement of the A share distribution entitlement. For the period under review, there was a dual debenture structure with one share linked to one debenture, for both the A and B debentures. Subsequent to year end the capital structure was converted to an all share structure.

Authorised

1 000 000 000 A debentures of R3.99 each 3 990 000 3 990 000 3 990 000 3 990 0001 000 000 000 B debentures of R0.50 each 500 000 500 000 500 000 500 000

Total authorised debentures 4 490 000 4 490 000 4 490 000 4 490 000

Issued

308 860 859 (2014: 225 872 353) A debentures 1 215 635 1 215 635 1 215 635 1 215 635376 359 014 (2014: 376 359 014) B debentures 188 179 188 179 188 179 188 179


Reconciliation of debentures issued

Opening balance 1 403 815 1 071 962 1 403 815 1 071 962Issue of A debentures - 331 125 - 331 125Amortisation of discount on A debentures 728 728 728 728

Closing balance at end of year 1 404 543 1 403 815 1 404 543 1 403 815

52


Group CompanyR’000 2015 2014 2015 2014

13. Other financial liabilities

Held at amortised cost

Investec Bank Limited 1

Rate: Prime - 0.50% Capital repayment date: 13 March 2018Secured by bonds over investment property valued at R1,559 billion 461 249 439 798 461 249 439 798

Standard Bank 1 3 4

Rate: 3-month JIBAR +1.80%Capital repayment date: 31 August 2017Secured by bonds over investment property valued at R1,078 billion 395 642 486 083 395 642 486 083

Standard Bank 1 3 4

Rate: Prime - 1.50%Capital repayment date: 31 August 2017Secured by bonds over investment property valued at R1,078 billion 160 034 - 160 034 -

Nedbank 1 2 4

Rate: Prime - 1.50%Capital repayment date: 7 March 2019Secured by bonds over investment property valued at R392 million 152 811 122 017 152 811 122 017

Nedbank 1 2 4

Rate: Prime - 1.50%Capital repayment date: 12 September 2016Secured by bonds over investment property valued at R332 million 150 982 150 375 150 982 150 375

Nedbank 1 2 5

Rate: Prime - 1.50%Capital repayment date: 30 August 2016Secured by bonds over investment property valued at R72.8 million 26 208 26 130 26 208 26 130

Nedbank 1 2 4

Rate: Prime - 0.85%Capital repayment date: 23 April 2018Secured by bonds over investment property valued at R101 million 45 083 45 000 45 083 45 000

Nedbank 1 2 4

Rate: Prime - 1.50%Capital repayment date: 28 June 2016Secured by bonds over investment property valued at R168 million 50 146 50 125 50 146 50 125

53


Group CompanyR’000 2015 2014 2015 2014

13. Other financial liabilities (continued)

Nedbank 1 2 4

Rate: 3-month JIBAR +1.90%Capital repayment date: 30 August 2016Secured by bonds over investment property valued at R130 million 34 187 34 180 34 187 34 180

Nedbank 1 2 4

Rate: 3-month JIBAR +1.90%Capital repayment date: 18 July 2016Secured by bonds over investment property valued at R130 million 25 976 25 970 25 976 25 970

Unamortised bond raising fee (2 336) (2 418) (2 336) (3 044)

Total other financial liabilities 1 499 981 1 377 260 1 499 981 1 376 634

(1) Interest only facility with capital repayment on the capital repayment date.

The borrowings are subject to terms and conditions that are normal for commercial property loans, including the following specific terms:

(2) LTV not to exceed 50%.

(3) LTV not to exceed 58%.

(4) Interest cover ratio may not be less than 2 times.

(5) Interest cover ratio may not be less than 2,5 times.

Non-current liabilities At amortised cost 1 499 981 1 377 260 1 499 981 1 376 634Current liabilities At amortised cost - - - -

Total 1 499 981 1 377 260 1 499 981 1 376 634

54


Group CompanyR’000 2015 2014 2015 2014

14. Trade and other payables

Trade payables 11 001 16 533 3 038 16 385Tenant rentals received in advance 8 197 8 517 8 197 8 516Tenant deposits 8 767 8 221 8 767 8 155VAT 2 100 3 105 1 303 3 105Accrued expenses (including consumption charges not yet invoiced) 20 271 25 354 17 621 21 860Provision 600 600 600 600


15. Financial liabilities by category

The accounting policies for financial instruments have been applied to the line items below. The carrying amounts of the financial liabilities in each category are as follows:

Financial liabilities Debenture capital 1 404 543 1 403 815 1 404 543 1 403 815Other financial liabilities 1 502 317 1 379 677 1 502 317 1 379 677Trade and other payables * 50 336 58 625 38 926 54 916Shareholders’ for distribution 115 636 107 714 115 636 107 714

Total financial liabilities at end of year 3 072 832 2 949 831 3 061 422 2 946 122

* Trade and other payables excluding provisions

16. Revenue

Contractual rental income 365 895 335 110 326 802 310 764Straight-line lease income adjustment 46 438 17 991 37 726 19 664

Total 412 333 353 101 364 528 330 428

17. Property operating expenses net of recoveries

Property operating expenses (120 881) (131 467) (116 837) (112 321)Recoveries from tenants 85 400 88 897 82 897 82 513

Total property operating expenses net of recoveries (35 481) (42 570) (33 940) (29 808)

18. Finance income

Interest received on cash invested 1 145 1 017 1 145 1 017Interest earned on tenant arrears 8 498 - 484Other interest 2 410 250 2 410 -

Total finance income 3 563 1 765 3 555 1 501

55


Group CompanyR’000 2015 2014 2015 2014

19. Finance costs

Non-current borrowings 89 452 72 529 93 674 72 529Amortisation of discount on A debentures 728 728 728 728Amortisation of bond raising fees 1 632 1 727 1 632 1 727Other interest - 51 - 51

Total finance cost 91 812 75 035 96 034 75 035

20. Fair value adjustment

Net fair value adjustment on investment property (30 727) 197 902 (42 576) 163 437

Fair value adjustment 15 711 215 893 (4 850) 183 101Fair value adjustment due to straight-lining of leases (46 438) (17 991) (37 726) (19 664)

Fair value adjustment on interest rate derivative (11 641) (3 367) (11 641) (3 367)

Total fair value adjustments (42 368) 194 535 (54 217) 160 070

21. Auditors’ remuneration

Fees 600 600 600 600

Total auditors’ remuneration for the year 600 600 600 600

22. Cash generated from operations

Profit before taxation 1 710 210 072 (61 267) 165 433Adjustments for: Depreciation 12 36 12 36Interest received (3 563) (1 765) (3 555) (1 501)Finance costs 89 452 72 581 93 674 72 581Fair value adjustments 42 368 (194 535) 54 217 (160 070)Straight-line lease adjustment (46 438) (17 991) (37 726) (19 664)Distributions declared 222 796 202 730 222 796 202 730Amortisation of bond raising fees 1 632 1 726 1 632 1 726Amortisation of debenture discount 728 728 728 728

Changes in working capital: 308 698 273 582 270 511 261 999Trade and other receivables 3 474 (17 030) 9 698 6 242Trade and other payables (11 516) 32 478 (19 215) 28 768

Cash generated from operations for the year 300 656 289 030 260 994 297 009

23. Distributions to shareholders

Distributions payable at beginning of year (107 714) (81 861) (107 714) (81 861)Distributions declared (222 796) (214 130) (222 796) (214 130)Distributions payable at end of year 115 636 107 714 115 636 107 714

Distributions paid during the year (214 874) (188 277) (214 874) (188 277)

56


24. Fair value information

Fair value hierarchy

The fair value hierarchy reflects the significance of the inputs used in making fair value measurements. The fair value measurement is categorised in its entirety and is determined in the basis of the lowest level input that is significant to the fair value measurement in its entirety.

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: Inputs from the asset or liability that is not based on observable market data (unobservable inputs).

Level 1 Level 2 Level 3 Total

Group2015 Recurring fair value measurements Investment properties - - 3 832 400 3 832 400Interest rate derivative - 4 532 - 4 532

Total - 4 532 3 832 400 3 836 932

Group 2014 Recurring fair value measurements Investment properties - - 3 706 700 3 706 700Interest rate derivative - 16 174 - 16 174

Total - 16 174 3 706 700 3 722 874

Company2015 Recurring fair value measurements Investment properties - - 3 440 400 3 440 400Interest rate derivative - 4 532 - 4 532

Total - 4 532 3 440 4400 3 444 932

Company 2014 Recurring fair value measurements Investment properties - - 3 349 700 3 349 700Interest rate derivative - 16 174 - 16 174

Total - 16 174 3 349 700 3 365 874

The fair value gains and losses are included in the fair value adjustment line in profit and loss. There were no significant changes in the assumptions used to determine the fair value of the investment properties.

Estimation of fair value

The following summarises the major methods and assumptions used in estimating the fair values of financial instruments.

57


24. Fair value information (continued)

Investment property

The company adopts the fair value model to measure investment properties with fair value adjustments being recorded through profit and loss. The value is estimated using prevailing market rentals, occupancy levels, forecasted future vacancies, based on historical trends and capitalisation rates. The range of capitalisation rates applied to the property portfolio is between 8,5% and 13% with a weighted average of 9,59%.

Group CompanyR’000 2015 2014 2015 2014

Reconciliation to fair valueInvestment properties at valuation at year end 3 547 760 3 481 485 3 164 964 3 124 978Straight-line rental income accrual 100 397 53 959 91 193 53 467Unamortised upfront lease costs 11 743 9 256 11 743 9 256

Fair value at 30 June 3 659 900 3 544 700 3 267 900 3 187 700Development properties 172 500 162 000 172 500 162 000

Total investment property 3 832 400 3 706 700 3 440 400 3 349 700

Interest rate derivative

Interest rate derivatives consist of an interest rate swap and interest rate cap. Interest rate swaps are valued by discounting the future cash flows using the market rate indicated on the interest rate curve at the dates when the cash flows will take place.

Interest rate caps are valued by taking into account the prevailing market conditions, the shape of the interest rate curve, the volatility of interest rates and the period remaining till maturity of the cap.

25. Income Tax Expense

No provision has been made for 2015 income tax expense (2014: R nil) due to the company’s REIT status and compliance with the requirements of section 25 BB of the Income Tax Act 58, 1962

26. Commitments

Group CompanyR’000 2015 2014 2015 2014

Capital commitments Contracted Capital improvements on investment properties 76 743 71 726 67 853 68 340

Total capital commitments at end of year 76 743 71 726 67 853 68 340

Minimum lease payments receivable - within one year 288 007 281 026 245 621 281 501- in second to fifth year inclusive 690 465 633 848 572 722 631 657- later than five years 52 918 134 096 52 918 134 095

1 031 390 1 048 970 871 261 1 047 253

Minimum lease payments comprise contractual rental income due in terms of signed lease agreements on investment properties. These figures exclude the straight-line rental adjustments.

58


GroupR’000 2015 2014

27. Basic, diluted, headline earnings and distribution per share

The directors are of the view that the disclosure of earnings per share set out below, while obligatory in terms of IAS 33 Earnings per Share and the JSE Listings Requirements, is not meaningful to investors as the shares are traded as part of a share and practically all the revenue earnings are distributed in the form of debenture interest. In addition, headline earnings include fair value adjustments for listed property investments and accounting adjustments required to account for lease income on a straight-line basis as well as other non-cash accounting adjustments that do not affect distributable earnings. The calculation of distributable earnings and the distribution per linked unit as shown below are more meaningful.

Basic and diluted earnings per share (cents) 0.25 31.31Basic and diluted headline earnings / (loss) per share (cents) 4.84 1.92Basic and diluted earnings per A share (cents) 42.15 71.25Basic and diluted earnings per B share cents) 25.06 53.90Headline and diluted headline earnings per A share (cents) 46.74 41.87Headline and diluted headline earnings per B share (cents) 29.65 24.51

Reconciliation between earnings, headline earnings and distributable earnings Profit for the period 1 710 210 072Amortisation of discount on debentures 728 728Fair value adjustment to investment properties 30 727 (197 902)

Headline earnings attributable to shareholders 33 165 12 898Adjusted for: Debenture Interest 222 796 202 730

Headline earning attributable to shareholders 255 961 215 628Adjusted for: Straight-line lease income adjustment (46 438) (17 991)Fair value adjustment on interest rate derivatives 11 641 3 367Amortisation of bond raising fees 1 632 1 726

Distributable earnings attributable to shareholders 222 796 202 730Less: dividend declared A share (129 405) (117 711)B share (93 391) (85 019)

Earnings not distributed Total distribution per share for the period Distribution per A share (cents) 41.90 39.90Distribution per B share (cents) 24.81 22.59Number of shares at 30 June 308 860 859 308 860 859Number of shares at 30 June 376 359 014 376 359 014Weighted average number of A shares in issue 308 860 859 294 675 376Weighted average number of B shares 1in issue 376 359 014 376 359 014

- The calculation of basic and diluted earnings per share is based on earnings of R1.71 million (2014: R210.1 million) and a weighted average number of 685 219 873 shares (2014: 671 034 390) in issue throughout the financial period.

- The calculation of headline earnings and diluted headline earnings per share is based on a headline earnings of R33.17 million (2014: R12.9 million) and a weighted average number of 685 219 873 shares (2014: 671 034 390) in issue throughout the financial period.

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28. Risk management

Capital risk management

The group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The capital structure of the group consists of debentures disclosed in note 12, borrowings disclosed in note 13, cash and cash equivalents disclosed in note 9, and equity as disclosed in the statement of financial position.

In order to maintain or adjust the capital structure, the group may issue new units or sell assets to reduce debt.

Consistent with others in the industry, the group monitors capital on the basis of the loan to value ratio. In order to limit exposure to the risks attributable to interest-bearing borrowings, the group has set a long-term goal of a maximum exposure ratio of 35 – 40%. At 30 June 2015 the loan to value ratio was 38.1% (2014: 36.1%).

R’000 R’000

Total borrowings (see note 13.) 1 502 317 1 379 677Total assets 3 945 317 3 823 852Net loan to value ratio 38.1% 36.1%

The following financial covenants apply in respect of the consolidated financial position of the group:

Standard Bank of SA limited

• The loan to value shall not exceed 58%.

• The group’s overall debt shall not exceed 55% of total assets.

• The ratio of EBITDA shall not be less than 2 times gross interest payable

• The ratio of net rental to all interest payable shall not be less than 2 times

Nedbank Group limited

• The loan to value shall not exceed 50%

• The ratio of net rental to all interest payable shall not be less than 2 times

• The ratio of net rental to all interest payable shall not be less than 2,5 times

The group’s interest cover ratio was 3,9 times at year end (2014: 3,9 times)

There have been no changes to what the entity manages as capital, the strategy for capital maintenance or externally imposed capital requirements from the previous year.

Expiry details of secured loans:

Loan expiry (R’000) Interest rate Maturity Date Nominal amount

Investec Bank Limited 13 March 2018 461 249 Prime – 0.50%Standard Bank of SA 31 August 2017 160 034 Prime – 1.50%Standard Bank of SA 31 August 2017 395 642 3-month JIBAR + 1.80%Nedbank 7 March 2019 152 811 Prime – 1.50%Nedbank 12 September 2016 150 982 Prime – 1.50%Nedbank 18 July 2016 26 208 Prime – 1.50%Nedbank 23 April 2018 45 083 Prime – 0.85%Nedbank 30 August 2016 34 187 Prime – 1.50%Nedbank 30 August 2016 25 976 Prime – 1.50% Nedbank 28 June 2016 50 146 Prime – 1.50%

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28. Risk management (continued)

Financial risk management

The group’s activities expose it to a variety of financial risks: market risk (including interest rate risk), credit risk and liquidity risk. The group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the group’s financial performance. The board provides written principles for overall risk management, as well as written policies covering specific areas, interest rate risk, credit risk, and investment of excess liquidity

Credit risk

Credit risk arises mainly in respect of cash deposits, cash equivalents and trade receivables. The company only deposits cash with major banks with high-quality credit standing and limits exposure to any one counterparty. Trade receivables consist of a large spread of tenants. The group monitors the arrears of its tenants on an ongoing basis. An allowance has been made for tenants where legal steps have been initiated and for tenants in arrears for longer than 30 days.

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash resources and the availability of funding through an adequate amount of committed credit facilities.

The group’s risk to liquidity is a result of the funds available to cover future commitments. The group manages liquidity risk through an on-going review of future commitments and credit facilities.

Cash flow forecasts are prepared and adequate un-utilised borrowing facilities are monitored.

The table below analyses the group’s financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

Less than Between Between Over 1 year 1 and 2 years 2 and 5 years 5 years

GroupAt 30 June 2015Debenture capital - - - 1 404 543Interest-bearing borrowings 50 147 282 435 1 169 736 -Trade and other payables 50 936 - - -Distribution to shareholders 115 636 - - -

CompanyAt 30 June 2015Debenture capital - - - 1 404 543Interest-bearing borrowings 50 147 282 435 1 169 736 -Trade and other payables 39 526 - - -Distribution to shareholders 115 636 - - -

GroupAt 30 June 2014Debenture capital - - - 1 403 815Interest-bearing borrowings 109 509 1 029 393 438 700 -Trade and other payables 62 330 - - -Distribution to shareholders 107 714 - - -

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Less than Between Between Over 1 year 1 and 2 years 2 and 5 years 5 years


CompanyAt 30 June 2014Debenture capital - - - 1 403 815Interest-bearing borrowings 109 509 1 029 393 438 700 -Trade and other payables 58 620 - - -Distribution to shareholders 107 714 - - -

Interest rate risk and derivatives

The group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the group to cash flow interest rate risk. Borrowings issued at fixed rates expose the group to fair value interest rate risk. The group’s borrowings at variable rate were denominated in Rand.

Investments balances at variable rates were insignificant during the year.

An increase in interest rates of 100 basis point during the year would have resulted in a decrease in distributable income of R13,02 million and a decrease in interest rates of 100 basis points would have resulted in an increase in distributable income for the year of R15.02 million.

The group utilises interest rate swaps and interest rate caps to manage its exposure to interest rate risk. At year end 67% of borrowings were hedged with expiry in December 2015 and January 2017 as further disclosed in note 7.

2015 2014 Interest Interest Nominal rate Nominal rate Maturity amount per amount amount per Group and Company date R’000 annum R’000 annum

Cash flow interest rate risk Financial instrumentInterest rate swap 1 December 2015 483 000 3-month 483 000 3-month JIBAR 5,55% JIBAR 5,55%

Interest rate cap 13 January 2017 500 000 3-month 500 000 3-month JIBAR 6,72% JIBAR 6,72%

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Current Due in Due in Due in Due Nominal interest Due in 1-2 2-3 3-4 after Financial instrument amount rate < 1 year years years years years

GroupAt June 2015Trade and other receivables 58 230 - 58 230 - - - - Cash in banking institutions 50 276 5,90% 50 276 - - - - Bond finance – Investec 461 249 8,50% - - - 461 249 - Bond finance – Standard Bank 1 160 034 7.75% - - 160 034 - - Bond finance – Standard Bank 2 395 642 7.95% - - 395 642 - - Bond finance – Nedbank 1 152 811 7.75% - - - 152 811 - Bond finance – Nedbank 2 150 982 7.75% - 150 982 - - -Bond finance – Nedbank 3 26 208 7,75% - 26 208 - - - Bond finance – Nedbank 4 45 083 7.75% - - 45 083 - - Bond finance – Nedbank 5 50 146 7.75% 50 146 - - - - Bond finance – Nedbank 6 34 187 7.75% - 34 187 - - - Bond finance – Nedbank 7 25 976 7.75% - - 25 976 - -

CompanyAt June 2015Trade and other receivables 28 824 - 28 824 - - - - Cash in banking institutions 50 265 5,49% 50 265 - - - - Bond finance – Investec 461 249 8,50% - - - 461 249 - Bond finance – Standard Bank 1 160 034 7.75% - - 160 034 - - Bond finance – Standard Bank 2 395 642 7.95% - - 395 642 - - Bond finance – Nedbank 1 152 811 7.75% - - - 152 811 - Bond finance – Nedbank 2 150 982 7.75% - 150 982 - - -Bond finance – Nedbank 3 26 208 7,75% - 26 208 - - - Bond finance – Nedbank 4 45 083 7.75% - - 45 083 - - Bond finance – Nedbank 5 50 146 7.75% 50 146 - - - - Bond finance – Nedbank 6 34 187 7.75% - 34 187 - - - Bond finance – Nedbank 7 25 976 7.75% - - 25 976 - -


GroupAt June 2014Trade and other receivables 64 540 - 64 540 - - - - Cash in banking institutions 39 162 5,40% 39 162 - - - - Bond finance – Investec 439 798 8,50% - 439 798 - - - Bond finance – Standard Bank 486 082 7,70% - 486 082 - - - Bond finance – Nedbank 1 150 375 7,60% - - 150 375 - - Bond finance – Nedbank 2 122 017 7,60% - - - - 122 017Bond finance – Nedbank 3 50 125 7,50% - 50 125 - - - Bond finance – Nedbank 4 45 000 8,15% - - - 45 000 - Bond finance – Nedbank 5 34 180 7,67% - - 34 180 - - Bond finance – Nedbank 6 26 130 7,50% - - 26 130 - - Bond finance – Nedbank 7 25 970 7,67% - - 25 970 - -

63




CompanyAt June 2014Trade and other receivables 48 138 - 48 138 - - - - Cash in banking institutions 29 872 5,40% 29 872 - - - - Bond finance – Investec 439 798 8,50% - 439 798 - - - Bond finance – Standard Bank 486 082 7,70% - 486 082 - - - Bond finance – Nedbank 1 150 375 7,60% - - 150 375 - - Bond finance – Nedbank 2 122 017 7,60% - - - - 122 017Bond finance – Nedbank 3 50 125 7,50% - 50 125 - - - Bond finance – Nedbank 4 45 000 8,15% - - - 45 000 - Bond finance – Nedbank 5 34 180 7,67% - - 34 180 - - Bond finance – Nedbank 6 26 130 7,50% - - 26 130 - - Bond finance – Nedbank 7 25 970 7,67% - - 25 970 - -

29. Operating segments

The group classifies segments based on the type of property i.e. commercial, retail, industrial, and other. Properties can be mixed use properties. In this instance, the property will be classified according to its predominant use.

Accordingly, the group only has one reporting segment, namely commercial property as the predominant use of all properties in the portfolio is for commercial office space. Most of the buildings do have a small retail component (normally at street level), but seldom exceeds 10% of the total GLA of the building.

30. Related parties

Subsidiaries Cape Horizon Properties 107 (Pty) LtdCape Horizon Properties 119 (Pty) LtdCape Horizon Properties 122 (Pty) LtdCape Horizon Properties 125 (Pty) LtdUmuthi Trade and Invest 7 (Pty) LtdMainstreet 1119 (Pty) LtdSnoopy Investments (Pty) Ltd

Subsidiaries of group companies African Alliance Properties (Pty) Ltd

Asset management company Ascension Property Management Company (Pty) Ltd

Key management Refer to page 10 for directors

Entities controlled by key management Cape Empowerment Group (CEL) controlled by SL Rai

Related party balances

Investment in subsidiaries Refer to note 5.

Loans to (from) group companies Refer to note 6.

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30. Related parties (continued)

Group CompanyR’000 2015 2014 2015 2014

Amounts included in Trade Receivables

Snoopy Investments (Pty) Ltd - - 159 -

Related party transactions (R’000)Asset Management fees paid

Ascension Property Management Company (Pty) Ltd 18 535 15 857 18 535 15 857

Rental received (R’000)

Cape Horizon Properties 114 Pty Ltd (a subsidiary of CEL) 1 524 930 1 524 930Snoopy Investments (Pty) Ltd - - 10 133 5 055

Pension Compensation paid or for loss of Consultation R’000 Emoluments receivable office fees Total

31. Directors’ emoluments

Group – 2015ExecutiveF W Arendse - - - - -S L Rai - - - - -J de Villiers - - - - -H Dednam - - - - -

Total - - - - -

Non-executiveAC Nissen 363 - - - 363M Burton 240 - - - 240B Bayvel 240 - - - 240H Takolia 240 - - - 240

Total 1 083 - - - 1 083

Company – 2015Executive -F W Arendse - - - - -S L Rai - - - - -J de Villiers - - - - -H Dednam - - - - -

Total - - - - -

Non-executiveAC Nissen 363 - - - 363M Burton 240 - - - 240B Bayvel 240 - - - 240H Takolia 240 - - - 240

Total 1 083 - - - 1 083

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31. Directors’ emoluments (continued)

Pension Compensation paid or for loss of Consultation R’000 Emoluments receivable office fees Total

Group - 2014ExecutiveA M Mohamed 1 008 - - - 1 008F W Arendse 484 - - - 484S L Rai 280 - - - 280J de Villiers 120 - - - 120H Dednam 700 - - - 700

Total 2 592 - - - 2 592

Non-executiveAC Nissen - - - - -M Burton 200 - - - 200B Bayvel 200 - - 380 580H Takolia 200 - - - 200

Total 600 - - 380 980

Company - 2014Executive -A M Mohamed - - - - -F W Arendse - - - - -S L Rai - - - - -J de Villiers - - - - -H Dednam - - - - -

Total - - - - -

Non-executiveAC Nissen - - - - -M Burton 200 - - - 200B Bayvel 200 - - 380 580H Takolia 200 - - - 200

Total 600 - - 380 980

The directors do not have service contracts with the company. The executive directors are paid by the asset manager, Ascension Property Management Company (Pty) Ltd.

66

Ascension Properties Ltd - A Shares

Analysis of A Shareholders as at 30 June 2015

Size of Holdings Number of Shareholdings

% of Total Shareholdings

Number of Shares

% of Shares In Issue

1 - 1000 shares 397 55.52% 19 046 0.01%1001 - 10 000 shares 38 5.31% 212 190 0.07%10 001 - 100 000 shares 111 15.52% 4 868 356 1.57%100 001 - 1 000 000 shares 121 16.92% 45 525 634 14.74%1 000 001 shares and over 48 6.71% 258 235 633 83.61%Total 715 100.00% 308 860 859 100.00%

Distribution of Shareholders Number of Shareholdings


Number of Shares


Collective Investment Schemes 89 12.41% 173 271 896 56.10%Retirement Benefit Funds 77 10.74% 53 686 915 17.38%Public Companies 2 0.28% 28 334 191 9.16%Assurance Companies 17 2.37% 21 129 824 6.84%Organs of State 2 0.28% 13 113 879 4.25%Insurance Companies 5 0.70% 6 662 898 2.16%Medical Aid Funds 10 1.38% 4 489 530 1.45%Trusts 31 4.32% 2 234 224 0.72%Managed Funds 7 0.98% 1 943 993 0.63%Retail Shareholders 447 62.62% 1 545 378 0.50%Foundations & Charitable Funds 6 0.84% 819 980 0.27%Public Entities 2 0.28% 696 587 0.23%Private Companies 7 0.98% 302 535 0.10%Hedge Funds 1 0.14% 301 743 0.10%Scrip Lending 4 0.56% 288 631 0.09%Investment Partnerships 1 0.14% 20 000 0.01%Stockbrokers & Nominees 6 0.84% 17 155 0.01%Close Corporations 1 0.14% 1 500 0.00%Total 715 100.00% 308 860 859 100.00%

Shareholder Type Number of Shareholdings


Number of Shares


Non-Public Shareholders 1 0.14% 30 886 086 10.00%Directors and Associates (Direct Holding) - - 0.00%Strategic Holdings > 10%Coronation Capital Plus Fund 1 30 886 086 10.00%Public Shareholders 714 99.86% 277 974 773 90.00%Total 715 100.00% 308 860 859 100.00%BENEFICIAL SHARES WITH A HOLDING OF 5% OR GREATER OF THE SHARES IN ISSUE

Number of Shares


Coronation Fund Managers 77 572 558 25.12%Sanlam Group 32 447 970 10.51%Investment Solutions 31 937 313 10.34%Rebosis Property Fund Limited 28 001 628 9.07%Stanlib 22 168 044 7.18%Total 192 127 513 62.22%FUND MANAGERS WITH A HOLDING OF 5% OR GREATER OF THE SHARES IN ISSUE

Number of Shares


Coronation Fund Managers 165 971 681 53.74%Sanlam Investment Management 31 808 449 10.30%Stanlib Asset Management 25 730 578 8.33%Total 223 510 708 72.37%Total number of Shareholdings 715Total number of Shares in issue 308 860 859

67

Ascension Properties Ltd - B Shares

Analysis of B Shareholders as at 30 June 2015

Size of HoldingsNumber of

Shareholdings% of Total

ShareholdingsNumber of

Shares% of Shares

In Issue1 - 1000 shares 1 052 63.34% 144 713 0.04%1001 - 10 000 shares 249 14.99% 998 723 0.27%10 001 - 100 000 shares 212 12.76% 8 474 014 2.24%100 001 - 1 000 000 shares 108 6.50% 30 392 476 8.08%1 000 001 shares and over 40 2.41% 336 349 088 89.37%Total 1 661 100.00% 376 359 014 100.00%

Distribution of ShareholdersNumber of



Shares% of Shares

In IssueAssurance Companies 7 0.43% 3 569 431 0.95%Close Corporations 14 0.85% 1 386 840 0.37%Collective Investment Schemes 48 2.93% 64 970 025 17.26%Control Accounts 1 0.06% 1 200 0.00%Custodians 4 0.24% 2 816 759 0.75%Foundations & Charitable Funds 7 0.43% 4 814 007 1.28%Hedge Funds 5 0.31% 3 943 380 1.05%Insurance Companies 2 0.12% 123 513 0.03%Investment Partnerships 5 0.31% 21 895 0.01%Managed Funds 3 0.18% 52 039 0.01%Medical Aid Funds 1 0.06% 91 155 0.02%Organs of State 3 0.18% 44 416 146 11.80%Private Companies 36 2.20% 7 484 356 1.99%Public Companies 3 0.18% 193 631 853 51.45%Public Entities 1 0.06% 6 805 0.00%Retail Shareholders 1 382 82.98% 20 499 840 5.45%Retirement Benefit Funds 51 3.11% 11 552 251 3.07%Scrip Lending 3 0.18% 2 867 548 0.76%Stockbrokers & Nominees 21 1.28% 3 539 836 0.94%Trusts 56 3.42% 10 478 180 2.78%Unclaimed Scrip 8 0.49% 91 955 0.03%Total 1 661 100.00% 376 359 014 100.00%

Shareholder TypeNumber of



Shares% of Shares

In IssueNon-Public Shareholders 4 0.24% 234 076 302 62.19%Directors and Associates (Direct Holding) 2 0.12% 3 055 440 0.01%Strategic Holdings > 10% Rebosis Property Fund Ltd 1 0.06% 191 939 001 51.00%Government Employees Pension Fund 1 0.06% 39 081 861 10.38%Public Shareholders 1 657 99.76% 142 282 712 37.81%Total 1 661 100.00% 376 359 014 100.00%BENEFICIAL SHARES WITH A HOLDING 5% OR GREATER OF THE SHARES IN ISSUE

Number of Shares


Government Employees Pension Fund 41 039 398 10.90%Rebosis Property Fund Ltd 191 939 001 51.00%Stanlib 32 614 499 8.67%Total 265 592 898 70.57%FUND MANAGERS WITH A HOLDING GREATER THAN 5% OF THE SHARES IN ISSUE

Number of Shares


Public Investment Corporation 42 458 609 11.28%Stanlib Asset Management 42 361 215 11.26%Total 84 819 824 22.54% Total number of Shareholdings 1 661 Total number of Shares in issue 376 359 014

68

Notice of annual general meeting

ASCENSION PROPERTIES LIMITED(Incorporated in the Republic of South Africa)

(Registration number 2006/026141/06)JSE share code: “AIA” ISIN: ZAE000204566

(Approved as a REIT by the JSE)(“Ascension” or “the Company” or “the group”)

Directors

Chris Nissen (Independent non-executive chairman)Shaun Rai (Acting chief executive officer)Henry Dednam (Financial director)Wayne Arendse (Executive director)Mervyn Burton (Independent non-executive director)Bronwyn Bayvel (Independent non-executive director)Haroon Takolia (Independent non-executive director)Jeremy de Villiers (Alternate director and Company secretary)

Notice is hereby given that the annual general meeting of shareholders of the Company will be held at the offices of the Company at 3rd Floor, Palazzo Towers West, Montecasino Boulevard, Fourways, 2191 at 10h00 on Wednesday, 9 December 2015 (the “annual general meeting” or “AGM”), for the purpose of:

• presenting the audited annual financial statements of the Company and the group, the directors’ report for the year ending 30 June 2015 and the audit committee report to shareholders. A copy of the complete annual financial statements for the preceding financial year may be obtained from the Company’s registered office at 3rd Floor, Palazzo Towers West, Montecasino Boulevard, Fourways, 2191 or on the Company’s website; www.ascensionproperties.co.za;

• transacting any other business as may be transacted at an annual general meeting of linked shareholders of the Company; and

• considering and, if deemed fit, passing with or without modification, the resolutions set out below:

Important dates to note 2015

Record date to receive this notice of AGM Friday, 25 September

Last day to trade to be recorded in the register on the record date Friday, 27 November

Record date to participate in and vote at the annual general meeting Friday, 4 December

In terms of section 62(3)(e) of the Companies Act, 2008:

• a shareholder who is entitled to attend and vote at the annual general meeting is entitled to appoint a proxy or two or more proxies to attend and participate in and vote at the annual general meeting in the place of the Ascension shareholder, by completing the proxy in accordance with the instructions set out therein;

• a proxy need not be an Ascension shareholder;

• meeting participants (including shareholders and proxies) are required to provide reasonably satisfactory identification before being entitled to attend or participate in shareholders’ annual general meeting: in this regard, all meeting participants will be required to provide identification satisfactory to the chairman of the meeting. Forms of identification include valid identity documents, driver’s licenses and passports.

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1 Appointment of auditors

Ordinary resolution number 1

“Resolved that Grant Thornton, as nominated by the audit and risk committee, be reappointed as independent auditors of the Company, to hold office until the conclusion of the next annual general meeting of the Company. It is noted that Mr P Badrick will be the individual and designated auditor who will undertake the audit of the Company for the financial year ending 31 August 2016”

The percentage of voting rights required for Ordinary Resolution number 1 to be adopted: More than 50% (fifty percent) of the voting rights exercised on the resolution.

2 Re-appointment of directors of the Company

Pursuant to the implementation of the B scheme, the board has been reconstituted and accordingly it is hereby resolved to appoint or re-appoint, as the case may be, by separate resolutions the following directors: Mr S Ngebulana, Dr M Renene and Mr H Takolia. Abridged curriculum vitae for these directors is included in the annual report of which this notice forms part.

The board of directors has assessed the performance of the directors standing for appointment and re-appointment, as the case may be, and has found them suitable for appointment and re-appointment.

Ordinary resolution number 2.1

“Resolved that Mr S Ngebulana is hereby elected as non-executive director of the Company and Chairman of the board of directors.”

The percentage of voting rights required for Ordinary resolution number 2.1 to be adopted: More than 50% (fifty percent) of the voting rights exercised on the resolution.


“Resolved that Dr M Renene is hereby elected as independent non-executive director of the Company.”

The percentage voting rights required for Ordinary resolution number 2.2 to be adopted: More than 50% (fifty percent) of the voting rights exercised on the resolution.


“Resolved that Mr H Takolia is hereby elected as independent non-executive director of the Company.”


3 Appointment of audit and risk committee

The board recommends that the following two independent non-executive directors be reappointed each by way of a separate vote as members of the audit and risk committee of the Company. The board is satisfied that they have the necessary qualifications and experience in the areas required to fulfil their responsibilities as members of the audit and risk committee. An additional member of the audit committee will be appointed in due course.

3.1 Mervyn Burton

An abridged curriculum vitae is included in the integrated annual report of which this notice forms part.

3.2 Haroon Takolia

An abridged curriculum vitae is included in the integrated annual report of which this notice forms part.

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3 Appointment of audit and risk committee (continued)


“Resolved that independent non-executive director Mervyn Burton is re-elected as a member of the audit and risk committee of the Company until the next annual general meeting of the Company.”



“Resolved that independent non-executive director Haroon Takolia is re-elected as a member of the audit and risk committee of the Company until the next annual general meeting of the Company.”


4 Authority to repurchase shares in the Company

Special resolution number 1

“Resolved that the Company hereby approves, as a general approval in terms of the Company’s Memorandum of Incorporation, the acquisition by the Company or any of its subsidiaries from time to time of the issued shares of the Company, upon such terms and conditions and in such amounts as the directors of the Company may from time to time determine. All such acquisitions of shares will be subject to: the Memorandum of Incorporation of the Company; the provisions of the Companies Act 2008 and the JSE Listings Requirements (as presently constituted and which may be amended from time to time); and provided that:

– any such acquisition of shares shall be effected through the order book operated by the JSE trading system and done without any prior understanding or arrangement between the Company or any of its subsidiaries and the counter party (reported trades are prohibited);

– this general authority shall only be valid until the Company’s next annual general meeting provided that it shall not extend beyond 15 (fifteen) months from the date of passing of this special resolution;

– an announcement will be published as soon as the Company or its subsidiaries has/have acquired shares constituting, on a cumulative basis, 3% (three percent) of the number of shares in issue, prior to the granting of the repurchase authority and prior to the acquisition pursuant to which the 3% (three percent) threshold is reached, and in respect of every 3% (three percent) thereafter, which announcement shall contain full details of such acquisitions;

– acquisitions by the Company of shares in any one financial year may not exceed 20% (twenty percent) of the Company’s issued ordinary share capital from the date of the grant of this general authority (or 10% (ten percent) where acquisitions are effected by a subsidiary);

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– in determining the price at which the Company’s shares are acquired by the Company or any of its subsidiaries in terms of this general authority, the maximum price at which such ordinary shares may be acquired will be at a premium of no more than 10% (ten percent) of the weighted average of the market price at which such shares are traded on the JSE, as determined over the 5 (five) business days immediately preceding the date of repurchase of such shares by the Company or any of its subsidiaries;

– the Company may at any point in time only appoint one agent to effect any repurchase(s) on its behalf;

– a resolution has been passed by the board of directors of the Company or its subsidiaries authorising the acquisition, and the Company has passed the solvency and liquidity test as set out in section 4 of the Companies Act, 2008 and that since the application of the solvency and liquidity test by the board there have been no material changes to the financial position of the group; and

– the Company or any of its subsidiaries may not repurchase shares during a prohibited period, as defined in the JSE Listings Requirements, unless they have in place a repurchase programme where the dates and quantities of shares of shares to be traded during the relevant period are fixed (not subject to any variation) and full details of the programme have been by been submitted to the JSE in writing prior to the commencement of the prohibited period.”

Reason for and effect of Special resolution number 1

The reason for Special resolution number 1 is to afford directors of the Company a general authority for the Company (or a subsidiary of the Company) to effect a repurchase of the Company’s shares on the JSE. The effect of the resolution will be that the directors will have the authority, subject to the JSE Listings Requirements and the Companies Act, 2008 as amended, to effect acquisitions of the Company’s shares on the JSE.

The percentage voting rights required for Special resolution number 1 to be adopted: At least 75% (seventy five percent) of the voting rights exercised on the resolution.

Additional information required by the JSE Listings Requirements with regard to authority to repurchase shares.

Information required in terms of the JSE Listings Requirements with regard to this general authority for the Company or any of its subsidiaries to repurchase the Company’s shares appears in the annual financial statements, to which this notice of annual general meeting is annexed as indicated below:

• Major beneficial shareholders: pages 66 and 67

• Share capital: page 50

The directors, whose names are given on page 10 of the annual report collectively and individually accept full responsibility for the accuracy of the information given to this resolution and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the annual report and notice of annual general meeting contains all information required by law and the JSE Listings Requirements.

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There has been no material change in the financial or trading position of the Company or any of its subsidiaries that has occurred since the date of signature of the audit report for the year ended 30 June 2015. There are no legal or arbitration proceedings, either pending or threatened against the Company or its subsidiaries, of which the directors are aware, which may have, or have had in the last 12 months, a material effect on the financial position of the Company or its subsidiaries. Pursuant to and in terms of the JSE Listings Requirements, the directors of the Company hereby state:

– that the intention of the Company and or any of its subsidiaries is to utilise the authority if at some future date the cash resources of the Company are in excess of its requirements. In this regard the directors will take into account, inter alia, an appropriate capitalisation structure for the Company, the long–term cash needs of the Company, and will ensure that any such utilisation is in the interest of shareholders;

– that the method by which the Company and or any of its subsidiaries intends to repurchase its shares and the date on which such repurchase will take place, has not yet been determined;

– that after considering the effect of a maximum permitted repurchase of shares, they are of the opinion that for a period of 12 months after the date of the notice of the annual general that:

o The Company and the group will be able in the ordinary course of business to pay its debts;

o The assets of the Company and the group will be in excess of the liabilities of the Company and the group. For this purpose, the assets and liabilities will be recognised and measured in accordance with the accounting policies used in these audited annual group financial statements;

o The share capital and reserves of the Company and the group will be adequate for ordinary business purposes; and

The working capital of the Company and the group will be adequate for ordinary business purposes;

5. General authority of directors to control unissued shares


“Resolved that, subject to the company’s Memorandum of Incorporation, the authorised but unissued A shares and B shares of the company be and are hereby placed under the control of the directors of the company, provided that the number of shares which may be allotted and issued or disposed of under this authority does not exceed 5% of the company’s issued share capital as at the date of the passing of this resolution and that such allotment, issue or disposal is subjected to a maximum discount of 5% of the weighted average traded price on the JSE of A shares and B shares over the 10 business days prior to the date that the price of the issue is agreed between the company and the party subscribing for the shares, adjusted for a divided where the “ex” date of the divided occurs during the 10 business day period in question.”

The percentage of voting rights required for Ordinary Resolution number 4 to be adopted: More than 50% (fifty percent) of the voting rights exercised on the resolution.

6. General authority of directors to issue shares for cash


“Resolved that, subject to the restrictions set out below, the directors be and are hereby authorised, pursuant, inter alia, to the company’s Memorandum of Incorporation and subject to the provisions of the Companies Act and the JSE Listings Requirements, until this authority lapses which shall be at the next annual general meeting or 15 months from the date hereof, whichever is the earliest, to allot and issue shares of the company for cash on the following basis:

1. the allotment and issue of shares must be made to persons qualifying as public shareholders and not to related parties, as defined in the JSE Listings Requirements;

2. the shares which are the subject of the issue for cash must be of a class already in issue or, where this is not the case, must be limited to such shares or rights that are convertible into a class already in issue;

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3. the total aggregate number of shares which may be issued for cash in terms of this authority may not exceed 34 260 994 shares, being 5%of the company’s issued shares as at the date of notice of this annual general meeting. Accordingly, any shares issued under this authority prior to this authority lapsing shall be deducted from the 34 260 994 shares the company is authorised to issue in terms of this authority for the purpose of determining the remaining number of shares that may be issued in terms of this authority;

4. In the event of a sub-division or consolidation of shares prior to this authority lapsing, the existing authority shall be adjusted accordingly to represent the same allocation ratio;

5. the maximum discount at which the shares may be issued is 10% (ten percent) of the weighted average traded price of such shares measured over the 30 business days prior to the date that the price of the issue is agreed between the company and the party subscribing for the shares; and

6. after the company has issued shares for cash which represent, on a cumulative basis, within the period that this authority is valid, 5% (five percent) or more of the number of shares in issue prior to that issue, the company shall publish an announcement containing full details of the issue, including the number of shares issued, the average discount to the weighted average trade price of the shares over the 30 days prior to the date that the issue is agreed in writing and an explanation, including supporting documentation (if any), of the intended use of the funds.”

In terms of the JSE Listings Requirements, the percentage of voting rights required for Ordinary resolution number 5 to be adopted: more than 75% (seventy five percent) of the voting rights exercised on the resolution.

7. Provison of financial assistance to related and inter-related parties


“Resolved that to the extent required by the Companies Act, the board of directors of the company may, subject to compliance with the requirements of the company’s Memorandum of Incorporation, the Companies Act and the JSE Listings Requirements, authorise the company to provide direct or indirect financial assistance, as contemplated in section 45 of the Companies Act by way of loans, guarantees, the provision of security or otherwise, to any of its present or future subsidiaries and/or any other company or corporation that is or becomes related or inter-related (as defined in the Companies Act) to the company for any purpose or in connection with any matter, such authority to endure for a period of not more than 2 years, and further provided that inasmuch as the company’s provision of financial assistance to its subsidiaries will at any and all times be in excess of one-tenth of 1% of the company’s net worth, the company hereby provides notice to its shareholders of that fact.”

Reasons for and effect of special resolution number 2

The company would like the ability to provide financial assistance, in appropriate circumstances and if the need arises, in accordance with section 45 of the Companies Act. This authority is necessary for the company to provide financial assistance in appropriate circumstances. Under the Companies Act, the company will, however, require the special resolution referred to above to be adopted, provided that the board of directors of the company are satisfied that the terms under which the financial assistance is proposed to be given are fair and reasonable to the company and, immediately after providing the financial assistance, the company would satisfy the solvency and liquidity test contemplated in the Companies Act. In the circumstances and in order to, inter alia, ensure that the company’s subsidiaries and other related and inter-related companies and corporations have access to financing and/or financial backing from the company (as opposed to banks), it is necessary to obtain the approval of shareholders, as set out in special resolution number 2. Therefore, the reason for, and effect of, special resolution number 2 is to permit the company to provide direct or indirect financial assistance (within the meaning attributed to that term in section 45 of the Companies Act) to the entities referred to in special resolution number 2 above.

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Notice in terms of section 45(5) of the Companies Act in respect of special resolution number 2

Notice is hereby given to shareholders of the company in terms of section 45(5) of the Companies Act of a resolution adopted by the board authorising the company to provide such direct or indirect financial assistance as specified in the special resolution above -

a) by the time that this notice of annual general meeting is delivered to shareholders of the company, the board will have adopted a resolution (“section 45 board resolution”) authorising the company to provide, at any time and from time to time during the period of 2 years commencing on the date on which the special resolution is adopted, any direct or indirect financial assistance as contemplated in section 45 of the Companies Act to any 1 or more related or inter-related companies or corporations of the company and/or to any 1 or more members of any such related or inter-related company or corporation and/or to any 1or more persons related to any such company or corporation;

b) the section 45 board resolution will be effective only if and to the extent that the special resolution under the heading “special resolution number 2” is adopted by the shareholders of the company, and the provision of any such direct or indirect financial assistance by the company, pursuant to such resolution, will always be subject to the board being satisfied that (i) immediately after providing such financial assistance, the company will satisfy the solvency and liquidity test as referred to in section 45(3)(b)(i) of the Companies Act, and that (ii) the terms under which such financial assistance is to be given are fair and reasonable to the company as referred to in section 45(3)(b)(ii) of the Companies Act; and

c) in as much as the section 45 board resolution contemplates that such financial assistance will in the aggregate exceed one–tenth of one percent of the company’s net worth at the date of adoption of such resolution, the company hereby provides notice of the section 45 board resolution to shareholders of the company.

The percentage of voting rights required for Special resolution number 2 to be adopted: At least 75% (seventy five percent) of the voting rights exercised on the resolution.

8. Approval to issue shares in terms of section 41(1) of the companies Act


“Resolved that, in accordance with sections 41(1) of the Companies Act 71 of 2008 and subject to the JSE Listings Requirements, the issue by the company of shares to any director, future director, prescribed officer or future prescribed officer of the company, or to a person related or inter-related to the company, or to a person related or inter-related to a director or prescribed officer of the company, or to any nominee of such person, in terms of any placement, offer, book-build or similar capital raising, at the same price and at the same terms as those upon which shares are issued to other investors in terms of such capital raising, be and is hereby approved.”

Reason for special resolution 3

The reason for and effected of special resolution number 3 is to authorise the issue of shares in terms of capital raisings, if any, and to the extent that such shares are issued to directors of the company or related persons.

The percentage of voting rights required for Special resolution number 3 to be adopted: At least 75% (seventy five percent) of the voting rights exercised on the resolution.

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9. General authority of directors to do all such things as are necessary to implement the resolutions in this notice


“Resolved that the directors of the Company be and are hereby authorised to do all such things and sign all such documents and take all such action as they consider necessary to implement the resolutions set out in this notice convening the annual general meeting at which this ordinary resolution number 6 will be considered.

Further to transact any other business that may be transacted at the annual general meeting.

Quorum

A quorum for the purposes of considering the resolutions above shall consist of three shareholders of the Company personally present (and if the shareholder is a body corporate, the representative of the body corporate) and entitled to vote at the annual general meeting. In addition, a quorum shall comprise 25% of all voting rights entitled to be exercised by shareholders in respect of the resolutions above.

The date on which shareholders must be recorded as such in the register maintained by the transfer secretaries, Computershare Investor Services Proprietary Limited (Ground Floor, 70 Marshall Street, Johannesburg), for the purposes of being entitled to attend, participate in and vote at the annual general meeting is Friday, 4 December 2015.

Forms of proxy

A form of proxy is attached for the convenience of any Ascension shareholder holding certificated shares who cannot attend the general meeting of Ascension shareholders or who wishes to be represented thereat. Forms of proxy may also be obtained on request from the Company’s registered office. The completed forms of proxy must be deposited at or posted to the office of the transfer secretaries of the Company to be received by not later than Monday, 7 December 2015. Alternatively the form of proxy may be handed to the Chairman of the annual general meeting at the annual general meeting at any prior to the commencement of the annual general meeting. Any shareholder who completes and lodges a form of proxy will nevertheless be entitled to attend and vote in person at the annual general meeting should the member subsequently decide to do so.

Ascension shareholders who have already dematerialised their Ascension shares through a CSDP or broker and who wish to attend the general meeting of Ascension shareholders must instruct their CSDP or broker to issue them with the necessary letter of representation to attend.

Dematerialised Ascension shareholders, who have elected own-name registration in the sub-register through a CSDP and who are unable to attend but who wish to vote at the annual general meeting of Ascension shareholders must complete and return the attached relevant form of proxy and lodge it with the transfer secretaries, by Monday, 7 December 2015. Alternatively the form of proxy may be handed to the Chairman of the annual general meeting at the annual general meeting at any prior to the commencement of the annual general meeting.

Dematerialised Ascension shareholders, who have not elected own-name registration in the sub-register through a CSDP and who are unable to attend but who wish to vote at the annual general meeting of Ascension shareholders should ensure that the person or entity (such as a nominee) whose name has been entered into the sub-register maintained by a CSDP or broker completes and returns the attached relevant forms of proxy in terms of which they appoint a proxy to vote at the annual general meeting of Ascension and returns the attached relevant forms of proxy in terms of which they appoint a proxy to vote at the annual general meeting of Ascension shareholders.

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Electronic participation

Shareholders or their proxies may participate in the meeting by way of telephone conference call. Shareholders or their proxies who wish to participate in the annual general meeting via the teleconference facility will be required to advise the Company thereof by no later than 10:00 on Wednesday, 2 December 2015 by submitting, an email to Mande Ndema at [email protected], or by fax to +27 (0)11 511 5626, for the attention of Mande Ndema. Please include the relevant contact details including email address, cellular number and landline, as well as full details of the shareholder’s title to the shares issued by the Company and proof of identity, in the form of copies of identity, in the form of copies of identity documents and share certificates (in the case of certificated shareholders), and (in the case of dematerialised shareholders) written confirmation from the shareholder’s CSDP confirming the shareholder’s title to the dematerialised shares. Upon receipt of the required information, the shareholder concerned will be provided with a secure code and instructions to access the electronic communication during the annual general meeting.

Shareholders who wish to participate in the annual general meeting by way of telephone conference call must note that they will not be able to vote during the annual general meeting. Such shareholders, should they wish to have their vote counted at the annual general meeting, must, to the extent applicable, (i) complete the form of proxy; or (ii) contact their CSDP or broker, in both instances, as set out above.

By order of the board

Ascension Properties LimitedRegistered office3rd FloorPalazzo Towers WestMontecasino BoulevardFourways2191

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Proxy Form

ASCENSION PROPERTIES LIMITED (Registration number 2006/026141/06)

(Incorporated in the Republic of South Africa)JSE share code: “AIA” ISIN: ZAE000204566

(Approved as a REIT by the JSE)(“Ascension” or “the Company” or “the fund” or “the group”)

Form of Proxy for certificated and own-name registered dematerialised Ascension shareholders.

For use by Ascension shareholders holding certificated Ascension shares, dematerialised Ascension shareholders who have elected own – name registration, nominee companies of CSDP’s and brokers’ nominee companies (“Ascension shareholders”) at the annual general meeting of Ascension shareholders to be held at 10h00 on Wednesday, 9 December 2015 at the registered office of the Company at 3rd Floor, Palazzo Towers West, Montecasino Boulevard, Fourways, 2191.

I/We (full name in block letters)

of (address)

being the holder(s) of Ascension share, appoint

or failing him/her,

or failing him/her,

the chairman of the annual general meeting of Ascension shareholders,

as my/our proxy to attend and speak and to vote for me/us and on my/our behalf at the annual general meeting of Ascension shareholders and at any adjournment thereof, in the following manner:

Number of votesFor Against Abstain

Ordinary resolution number 1 to appoint the auditorsOrdinary resolution number 2.1 to appoint Sisa Ngebulana as a director of the Company and Chairman of the board of directorsOrdinary resolution number 2.2 to appoint Dr Mbulelo Renene as a director of the CompanyOrdinary resolution number 2.3 to re-appoint Haroon Takolia, who retires by rotation, as a director of the Company Ordinary resolution number 3.1 to reappoint Mervyn Burton to the audit and risk committeeOrdinary resolution number 3.2 to reappoint Haroon Takolia to the audit and risk committeeSpecial resolutions number 1 to authorise the Company to repurchase sharesOrdinary resolution number 4 control over unissued sharesOrdinary resolution number 5 general authority to issue shares for cashSpecial resolution number 2 financial assistance to related and inter-related parties Special resolution number 3 approval to issues share in terms of section 41(1) of the companies actOrdinary resolution number 6 to give general authority to the board to implement all resolutions passed

*Mark “For”, “Against” or “Abstain” as required. If no options are marked the proxy will be entitled to vote as he/she thinks fit.

Unless otherwise instructed, my/our proxy may vote or abstain from voting as he/she thinks fit.

Signed at on this day of 2015

Signature(s)

Capacity

An Ascension shareholder entitled to attend and vote at the abovementioned annual general meeting is entitled to appoint a proxy to attend, vote and speak in his/her stead. A proxy need not be a member of the Company.

Forms of proxy must be deposited at Computershare Investor Services Proprietary Limited, Ground Floor, 70 Marshall Street, Johannesburg, or posted to PO Box 61051, Marshalltown, 2107 so as to arrive by no later than Monday, 7 December 2015.

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Notes

An Ascension shareholder may insert the name of a proxy or the names of two alternative proxies of the Ascension shareholder’s choice in the space provided above. The person whose name stands first on the form of proxy and who is present at the annual general meeting of Ascension shareholders will be entitled to act as proxy to the exclusion of those whose names follow. An Ascension shareholder may appoint more than one proxy to exercise voting rights attached to different shares held by that shareholder, in which case the shareholder should complete a separate form of proxy for each such appointment.

A proxy appointed by an Ascension shareholder in terms hereof may not delegate his authority to act on behalf of the Ascension shareholder to any other person.

An Ascension shareholder’s instructions to the proxy must be indicated by means of a tick or a cross in the appropriate box provided. Failure to comply with the above will be deemed to authorise the proxy to vote or to abstain from voting at the general meeting as he/she deems fit in respect of all the Ascension shareholder’s votes exercisable thereat relating to the resolutions proposed in this form of proxy.

The forms of proxy should be lodged at Computershare Investor Services (Proprietary) Limited, Ground Floor, 70 Marshall Street, Johannesburg, 2001 or posted to PO Box 61051, Marshalltown, 2107 so as to be received by not later than Monday, 7 December 2015. Alternatively the form of proxy may be handed to the Chairman of the annual general meeting at the annual general meeting at any prior to the commencement of the annual general meeting.

The completion and lodging of this form of proxy will not preclude the relevant Ascension shareholder from attending the general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such Ascension shareholder wish to do so. In addition to the aforegoing, an Ascension shareholder may revoke the proxy appointment by (i) cancelling it in writing, or making a later inconsistent appointment of a proxy; and (ii) delivering a copy of the revocation instrument to the proxy, and to the Company. The revocation of a proxy appointment constitutes a complete and final cancellation of the proxy’s authority to act on behalf of the Ascension shareholder as at the later of the date stated in the revocation instrument, if any; or the date on which the revocation instrument was delivered in the required manner.

The chairman of the annual general meeting may reject or accept any form of proxy which is completed and/or received, other than in compliance with these notes.

Any alteration to this form of proxy, other than a deletion of alternatives, must be initialled by the signatory/ies.

Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy unless previously recorded by the Company.

Where there are joint holders of Ascension shares:

any one holder may sign the form of proxy; and

the vote of the senior (for that purpose seniority will be determined by the order in which the names of shareholders appear in the register of members) who tenders a vote (whether in person or by proxy) will be accepted to the exclusion of the vote(s) of the other joint holder(s) of Ascension shares.

This form of proxy may be used at any adjournment or postponement of the annual general meeting, including any postponement due to a lack of quorum, unless withdrawn by the Ascension linked shareholder.

The aforegoing notes contain a summary of the relevant provisions of section 58 of the Companies Act, 2008, as required in terms of that section.

Definitions

A share an Ascension A share

Ascension or the Company or the group

Ascension Properties Limited, registration number 2006/026141/06, a public Company registered and incorporated in South Africa

Companies Act the Companies Act, No. 71 of 2008, as amended

DPW National Department of Public Works

GLA Gross lettable area

GMR Gross monthly rental

IFRS International Financial Reporting Standards

JSE Johannesburg Stock Exchange

King III King Report on Corporate Governance for South Africa and the King Code of Governance Principles

LTV Loans to value

REIT Real Estate Investment Trust

VAT Value Added Tax as defined in the Value Added Tax Act No 89 of 1991), as amended

Corporate InformationAscension Properties Limited Transfer secretariesIncorporated in the Republic of South AfricaRegistration number: 2006/026141/06Registered office and business address:3rd Floor, Palazzo Towers West, Montecasino Boulevard, Fourways, 2191PO Box 2972, North Riding, 2162Telephone: +27 (0) 11 511 5335Fax: +27 (0) 11 511 5626www.ascensionproperties.co.za

Computershare Investor Services Proprietary LimitedGround Floor, 70 Marshall Street, Johannesburg, 2001

Corporate advisor and sponsor Independent valuerJava Capital2nd Floor, 6A Sandown Valley Cresent,Sandton, 2196

Quadrant Properties Proprietary Limited16 North Road, Cnr Jan Smuts, Dunkeld West, 2196

Independent auditors Legal advisorGrant Thornton Registered Auditors (Chartered Accounts S.A.)2nd Floor, 4 Pencarrow Crescent, Pencarrow ParkLa Lucia Ridge Office Estate, 4019

Cliffe Dekker Hofmeyr Inc11 Buitengracht Street, Cape Town, 8001

Company secretaryMande NdemaAscension Properties Limited3rd Floor, Palazzo Towers West, Montecasino Boulevard, Fourways, 2191Telephone: +27 (0) 11 511 5335

Our website is regularly updated to provide the latest information on the companywww.ascensionproperties.co.za

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www.ascensionproperties.co.za

Documents

Annual Report 2015 - ShareData A_ar_jun15.pdf · 12 months to 30 June 2015 is 24.81 cents. • 29 buildings at a total value of R3,832 billion at 30 June 2015. Overview Shareholders’