Announcement

FLLYR: APL: Steady year finishes with dividend maintained 08:31a.m. 
APL  
29/05/2019 08:31  
FLLYR  
PRICE SENSITIVE  
REL: 0831 HRS Asset Plus Limited  
 
FLLYR: APL: Steady year finishes with dividend maintained  
 
NZX Release  
 
29 May 2019  
 
Steady year finishes with dividend maintained  
 
Asset Plus Limited is pleased to announce its financial results for the year  
ended 31 March 2019, reporting net profit after tax of $3.80 million, up from  
$3.095 million in the previous year.  
 
Operating performance over the past year was steady on a like for like basis  
for the three existing assets. When combined with the effect of the sale of  
the AA Centre in July 2018, this resulted in adjusted funds from operations  
decreasing to $4.74 million for the year compared to $6.15 million in the  
previous year. This decrease was due to an underutilised balance sheet  
following the sale of the AA Centre but partially offset by savings from the  
externalisation of management.  
 
Asset Plus Chairman, Bruce Cotterill said "The last 12 months has been a  
period of ongoing transition for the company, including the change to an  
external manager, Augusta Funds Management, but also the shift in focus to a  
value-add strategy. The first step in implementing that strategy has now  
been taken with the 35 Graham St acquisition. Our patience has been rewarded  
with what we consider to be a quality acquisition and we look forward to  
discussing this further with shareholders at the special meeting on 17 June  
2019."  
 
Other key points from the year are:  
 
o A final dividend of 0.9 cents per share has been declared, maintaining  
dividends for the 2019 financial year at 3.6 cents per share.  
o Portfolio occupancy is 96.7% which is reduced from 97.4% due to the sale of  
AA Centre.  
o The WALT is 5.5 years which is increased from 4.4 years at 31 March 2018  
due to the 8 year Countdown renewal at Eastgate, the sale of AA Centre and  
leasing completed at Stoddard Road.  
o Loan to value ratio is 8.5% (26.6% at 31 March 2018).  
o Net tangible assets (NTA) of 69.4 cents per share are reduced from 70.6 cps  
due to an unrealised loss on revaluation of investment property and a  
realised loss on disposal.  
o $34 million of debt was repaid post the AA Centre sale, providing balance  
sheet capacity. Interest rate swap contracts were also cancelled.  
 
Strategic update  
 
The Board is committed to growing the portfolio in a disciplined manner, with  
a primary focus to close the gap between share price and NTA.  
 
The proposed 35 Graham Street acquisition fits within Asset Plus' "value-add"  
investment strategy. The purchase price represents a strong initial yield of  
6.85% but the property has considerable potential for re-positioning at the  
end of the two-year lease term. Potential re-development options range from a  
simple refurbishment and re-leasing of the existing floors through to the  
addition of a further two to three levels of office space. A notice of  
meeting to vote on the proposed acquisition has also been released today.  
 
An off market approach to acquire the Heinz Watties' property has recently  
been received and a period of exclusivity has been granted for the purposes  
of due diligence. A further announcement will be made following the expiry  
of the exclusivity period if a sale and purchase agreement is entered into.  
The potential effect of this sale is discussed further in the notice of  
meeting released today.  
 
The Board remains patient in the current market to ensure Asset Plus finds  
the best investments which it believes provide appropriate risk-adjusted  
returns and align with the new strategy.  
 
Portfolio update  
 
Seven lease renewals were completed at Stoddard Road, covering 21.5% of the  
rental income. As a result, the WALT for the property increased to 4.02  
years (from 3.76 a year ago) and the valuation increased to $39.5 million  
(from $38.0 million a year ago).  
 
The Heinz Watties Distribution Centre in Hastings saw an increase in  
valuation to $29.1 million following a rent review during the year (from  
$27.3 million a year ago). There remains 7.9 years to run on the lease to  
Heinz.  
 
Countdown has exercised a 4 year right of renewal (RoR). A further 4 year RoR  
has been agreed subject to payment of the landlord contribution towards works  
within the tenancy. This contribution has been accrued in FY19. Other key  
lease renewals during the year include Postie Plus, Paper Plus, Sushi Time,  
Number One Shoes and Westpac. However, two tenants (NZ Post and McDonalds)  
also left the Centre. As a result the WALT was 5.07 years (up from 4.70  
years) and the valuation decreased from $58 million to $54.5 million.  
 
Financial result  
 
Net profit after tax for the year ended 31 March 2019 is $3.80 million  
($3.095 million in the prior year). The prior year was impacted by larger  
portfolio valuation write-downs and losses on disposal. Adjusted funds from  
operations for the year were $4.74 million ($6.15 million in the prior  
year). The reduction in operating earnings was driven by the sale of the AA  
Centre, offset against reduced funding costs and lower corporate costs under  
external management. There was also an increase in leasing incentives  
payable.  
 
Net revenues from the property portfolio have again been flat with no  
material rental growth in respect to the like for like portfolio. Net rental  
income reduced by $2.55 million primarily due to the impact of property  
divestment (AA Centre in July 2018 and 17 Print Place in March 2018). The  
income reduction was offset against a reduction in funding costs of $1.74  
million as $34 million of debt was repaid and the facility limit reduced from  
$70 million to $20 million.  
 
Administration costs reduced due to the impact of externalisation and the  
property divestments.  
 
A loss on revaluation of investment property of $1.77 million was recorded,  
driven primarily by a reduction in the market rental at Eastgate, partially  
offset by growth at Stoddard Rd and Heinz.  
 
A formal agreement has now been reached with the purchaser of the AA Centre  
to complete the outstanding stairwell works and a loss on disposal of $0.91  
million has been recorded for the year.  
 
Balance Sheet  
 
Debt is currently drawn to $10.5 million which represents a LVR of 8.5%  
(26.6% in the prior year). Gearing is expected to increase to 38% post the 35  
Graham Street acquisition.  
 
NTA is now 69.4 cents per share (down from 70.6 cps in the pcp) driven by the  
unrealised revaluation loss as well as the realised loss on disposal of AA  
Centre.  
 
Interest rate swap contracts were terminated during the year as $34 million  
of debt was repaid on the back of the AA Centre divestment.  
 
Dividend  
 
A final quarter dividend of 0.9 cents per share has been declared, with the  
record date set for 13 June 2019 and payment on 20 June 2019.  
 
Total dividends paid for the year are 3.60 cents per share which is  
consistent with guidance.  
 
The dividend is subject to quarterly review, and ongoing assessment taking  
into account potential future acquisitions, balance sheet utilisation and  
funding for future developments.  
 
Outlook  
 
The potential acquisition of 35 Graham Street fits with the value-add  
strategy and restores near term earnings as the balance sheet is more  
effectively utilised. Management will remain focused on securing further  
acquisition opportunities and continue to identify opportunities to optimise  
the existing assets.  
 
The Board is pleased with Augusta's performance as manager and the progress  
they have made on formulating and executing a new strategy for the Company.  
The ultimate aim is to provide sustainable growth in total return for  
shareholders over the longer term.  
 
ENDS  
 
For further information please contact:  
 
Bruce Cotterill  
Chairman, Asset Plus Limited  
021 668 881  
 
Mark Francis  
Managing Director  
Augusta Funds Management Limited, manager of Asset Plus Limited  
(09) 300 6161  
 
Simon Woollams  
Chief Financial Officer  
Augusta Funds Management Limited, manager of Asset Plus Limited  
(09) 300 6161  
 
(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. Asset Plus 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 accompanying results presentation. The independent auditors  
have confirmed that the AFFO calculations have been fairly extracted from the  
audited Group financial statements for the year ended 31 March 2019.  
End CA:00335195 For:APL Type:FLLYR Time:2019-05-29 08:31:48