Announcement
FLLYR: AUG: Augusta Capital delivers record FY19 result
08:39am
AUG
24/05/2019 08:39
FLLYR
PRICE SENSITIVE
REL: 0839 HRS Augusta Capital Limited
FLLYR: AUG: Augusta Capital delivers record FY19 result
NZX RELEASE
24 May 2019
Augusta Capital delivers record FY19 result
Augusta Capital Limited is pleased to announce its financial results for the
year ended 31 March 2019.
The financial result is the strongest in the Company's history delivering
record operating earnings. The period under review saw the Company continue
to gain momentum with the launch of new funds as well as build strong
pipelines for further growth.
Key points from the last financial year:
o Profit and Total Comprehensive Income After Tax was $6.95 million,
representing a 116% increase on FY18.
o 47% increase in recurring management fee income to $9.32 million
o 94% increase in transactional income to $4.13 million
o Adjusted funds from operations (1) delivered an increase of 34% to $7.74
million.
o $255 million in equity raised, a 102% increase on FY18
o Launch of the Augusta Industrial Fund raising $171 million of new equity
across two capital raises.
o Two new single asset funds launched raising $84 million of equity
o All four offers were over-subscribed
o Sale of the Finance Centre
o Net assets per share increased to $0.98 from $0.96 in the prior year,
primarily driven by retained earnings
o $19 million investment in Augusta Industrial Fund - 10% long-term stake.
o Secured seed assets for the Augusta Tourism Fund and a future pipeline of
opportunities.
o 4th quarter dividend of 1.625 cents per share which is supported by the
increase in recurring earnings
Augusta Capital Chairman, Paul Duffy, said the record result for Augusta was
delivered in the final period of major transition to a specialist and
diversified funds management model - and the stronger return on investment
shows the move is paying off.
"The result was delivered with a very different revenue profile to previous
years as we redeployed capital to support our strategic plan. Profit and
Total Comprehensive Income After Tax more than doubled for the reporting
period, driven by strong income growth in a period with a large number of
transactions and a significant increase in recurring fund management fees".
Adjusted funds from operations delivered an increase of 34% to $7.74 million
from $5.79 million in FY18.
In FY19, $255 million of equity was raised and $70 million of equity was
underwritten by Augusta. The managed portfolio now stands at $1.8 billion
across 58 funds, two multi-asset property funds and 56 managed schemes across
NZ and Australia.
Net funds management income increased by over 40% in FY19 from $11.48 million
to $17.30 million. The Industrial Fund was a key contributor to this
increase.
Rental income reduced from $5.65 million to $2.98 million in line with the
phased exit of the Finance Centre.
Managing Director, Mark Francis says the allocation of capital to drive
growth and the relevant return on capital was outlined as the key strategic
objective for Augusta in FY19.
"The Company has again demonstrated the ability to deliver on the strategic
plan by continuing to launch and grow new fund initiatives, delivering an
increase in recurring earnings and building strong pipelines for the launch
of future funds".
Corporate costs were higher in FY19 due to ongoing investment in specialist
talent. Mr. Francis explains, "Augusta Capital is a fund management and
people business - the right talent is essential to delivering on strategic
objectives and stimulate increased revenue. We continue to invest in people
to create growth opportunities and the future Tourism Fund is evidence of
this".
Funds Management
Mr. Francis said FY19 saw Augusta continue to deliver a range of new property
investment products with the Industrial Fund making a significant
contribution to the financial result through the completion of two compelling
capital raises.
"Four over-subscribed offers were completed during the year, raising $255
million of external equity. In addition, Augusta also committed $19 million
to the Industrial Fund, equaling a 10% long-term stake".
$5.6 million of earnings were derived from the Industrial Fund in FY19 and
the balance sheet played a role in the Fund's establishment and growth.
Transaction fees were derived in respect to the establishment of the Fund and
subsequent acquisitions. Recurring annualised management fees now stand at
approximately $1.8 million in respect to the Industrial Fund.
Investment asset income of $1.75 million was realised from investments in
Asset Plus and the Industrial Fund. This is expected to increase over time as
co-investment into managed product continues.
Balance sheet composition to support growth
Mr. Francis commented that aside from investing, warehousing and
underwriting, the balance sheet dynamics now also consist of development
exposures that enable Augusta Capital to generate opportunities in the fund
management business.
o The Finance Centre was fully exited in late March 2019 freeing up the
balance sheet to support the purchase and development of the two Tourism
assets before the Fund is launched later this calendar year.
o The realised capital was also invested into the Industrial Fund. The fair
value of investments in managed product now stands at $41.9 million across
both the Industrial Fund and Asset Plus. There are some short-term holdings
in the Industrial Fund which will be exited in the near term.
o The Value-Add Fund was concluded during the year generating an 11.75%
internal rate of return for investors. As a 10% shareholder, Augusta was
aligned with the investors and a $1.1 million performance fee was earned on
the back of the Fund's success.
Group gearing was 11% of gross asset value as at 31 March 2019, compared to
31.2% on 31 March 2018.
Dividend
The Board has today resolved to pay a final cash dividend of 1.625 cents per
share, which is an increase from 1.5 cents in the prior quarters of the year.
The dividend is fully imputed with imputation credits of 0.632 cents per
share attached. Further resident withholding tax will be deducted unless a
RWT exemption certificate has been provided. This is equivalent to 0.1128
cents per share. The Company will also pay a supplementary dividend of 0.2868
cents per share in relation to non-resident shareholders.
The record date for the dividend is 10 June 2019 and the payment date is 17
June 2019. The fourth quarter dividend will take cash dividends for the year
to 6.125 cents per share, an increase from 5.625 cents per share over the
prior year. The dividend pay-out ratio was 70% (2018: 85%).
The Board expects the dividend for FY20 to be a minimum of 6.5 cents per
share per annum, subject to quarterly review and unforeseen events. This
represents an increase of 8.3% per annum.
Outlook
The 2020 financial year for Augusta Capital is so far shaping up to be
another strong period.
In line with our strategic growth plan, the pipeline is well stocked with
future funds and we see several material opportunities on the horizon. We
have available balance sheet capability and carry a very low-level of debt,
leaving the business well positioned to deliver continued growth. Current
market conditions remain supportive, but competitive.
Management are investigating and completing due diligence on a wide range of
potential opportunities across both single and multi-asset funds. The
strength of the results in FY20 will be subject to successful agreement and
completion of those initiatives.
Update on progress of Tourism Fund
Significant work continues to be completed on the initial seed assets for the
Tourism Fund.
The development at Cook St, Auckland of a Jucy Snooze Hotel continues to
progress with a preferred contractor appointed and the building consent
process nearing to a close.
At Man Street, Queenstown, a procurement process for the hotel operator has
been completed and negotiations are now being moved forward with the
preferred operator. A contractor is also likely to be engaged on an early
contractor involvement basis in the near term.
It is currently expected that the Tourism Fund will be launched in the third
quarter, subject to the above key milestones being successfully completed.
In addition, a number of other potential assets continue to be investigated
and the Lakeview development is expected to provide stock for the Tourism
Fund in the medium to long term.
Near term strategic operating priorities include:
o Tourism fund launch - progress developments prior to fund launch and look
for additional tourism based opportunities
o Progress Lakeview negotiations as we move towards development
o Launch of Value Add Fund No. 2 - a potential residential land development
o Asset Plus - seek further acquisitions in line with strategy
o Continuous improvement in how we operate and engage with investors
o Active management - a number of opportunities within the managed portfolio
o Building further strategic partners as we broaden our product offerings
o Continue to seek further acquisition opportunities for existing funds and /
or the establishment of new schemes.
Change in senior management
Augusta Capital also advises that Bryce Barnett's title has been changed to
Executive Director moving forward as his funds management responsibilities
have shifted to Joel Lindsey (Chief Operating Officer). Bryce continues to
remain focused on opportunities in Australia, investor relations (including
roadshows to retail investors) and certain key tenant relationships.
In addition, Augusta is pleased to advise that Adelle McBeth, Head of
Operations, has been appointed as a member of the senior management team
reflecting the company's focus and investment in its people.
ENDS
For further information please contact:
Mark Francis
Managing Director Augusta Capital (09) 300 6161
Simon Woollams
Chief Financial Officer Augusta Capital
(09) 300 6161
Paul Duffy Chairman Augusta Capital
FOOTNOTES
1 Adjusted funds from operations (AFFO) is non-GAAP financial information and
is a common investor metric, calculated based on guidance issued by the
Property Council of Australia. Augusta considers that AFFO is a useful
measure for shareholders and management because it assists in assessing the
Company's underlying operating performance. This non- GAAP financial
information does not have a standardised meaning prescribed by GAAP and
therefore may not be comparable to similar financial information prescribed
by other entities. A reconciliation of the net profit after tax to AFFO is
included in the annual report on page 23 which has not been independently
reviewed by the auditors.
End CA:00334975 For:AUG Type:FLLYR Time:2019-05-24 08:39:07
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