Announcement
INTERIM: AUG: Augusta Capital reports its interim results
08:35am
AUG
27/11/2019 08:35
INTERIM
PRICE SENSITIVE
REL: 0835 HRS Augusta Capital Limited
INTERIM: AUG: Augusta Capital reports its interim results
NZX Release
Augusta Capital reports its interim result for the period ended 30 September
2019
Investing in the pipeline
27 November 2019 - Augusta Capital Limited ("Augusta") has today announced
its interim financial results for the six-month period ended 30 September
2019.
Over the past six months, significant progress has been made on the strategic
objectives communicated in May 2019, with activity for the period centred
around creating multiple pipelines for long-term growth, including investment
into the development of new fund initiatives and the acquisition of key
assets.
Material updates during the period included:
o Profit and total comprehensive income after tax of $1.63 million, down 68%
from $5.10 million against the prior corresponding period (pcp).
o Adjusted funds from operations (1) decreased by 92% to $0.37 million as no
capital raisings were completed (two in the pcp).
o Investment income increased by 57% to $1.19 million due to an increase in
investment assets.
o Net management fees increased by 16% to $2.98 million due to growth in
managed funds - with total assets under management of $2 billion.
o Acquisition activity within the Augusta Industrial Fund with $42 million of
properties acquired resulting in increased management fees payable to
Augusta.
o Acquisition of 35 Graham Street by Asset Plus Limited for $58 million
resulted in increased management fees and potential future development
opportunity.
o Secured Radisson Hotel Group as the operator for Man St hotel under
construction in Queenstown.
o Strategic partnership with Ninety-Four Feet in respect to future Lakeview
development in Queenstown over more than ten years.
o Appointment of two new independent Directors to the Board.
As communicated in October's trading update, a materially lower result
against the previously communicated period has been delivered, with Augusta
reporting profit and total comprehensive income after tax of $1.63 million,
down from $5.10 million in the same period last year.
This lower result is due to a number of factors, most notably deal timing and
investment into new funds and assets, as well as the divestment of the
Finance Centre and corporate costs relating to ongoing investment to expand
Augusta's corporate and development teams, in line with the company's growth
strategy.
Augusta Capital's Managing Director, Mark Francis, says: "Augusta is the
manager of a $2 billion portfolio of diversified assets, but we're also a
transactional company. Launching new fund initiatives involves considerable
work in order to ensure they can deliver the target investment fundamentals
and this requires ongoing investment in people and the use of the balance
sheet."
"Furthermore, as our focus is on delivering the best results for our
investors, Augusta has a robust and rigorous due diligence process. It takes
a significant amount of time to get the right deals on the table, and our
investment criteria means we decline significantly more deals than we
accept."
Financial performance
Contributing to the profit and comprehensive income after tax result for the
period of $1.63 million was an increase in the fair value of the Asset Plus
investment.
Net management fees increased by 16% to $2.98 million due to growth in
managed funds, primarily Asset Plus and Augusta Industrial Fund.
No capital raisings were completed, compared to two capital raisings in the
prior corresponding period, which resulted in a material reduction in deal
origination fees by $4.45 million.
Transactional income was lower by $0.67 million or 42% due to a reduction in
divestment activity in the managed portfolio relative to the pcp.
Capital was redeployed from the Finance Centre to the Cook Street, Auckland
and Man Street, Queenstown assets which will seed the Augusta Tourism Fund.
Income will not be drawn until these properties are divested to funds,
resulting in a reduction in net rental of $1.81 million for the period.
Corporate costs increased by $0.68 million during the period to $5.70 million
driven by the level of investment required to set-up and manage the new fund
initiatives.
Dividend
The Board has today resolved to pay a quarterly cash dividend of 1.625 cents
per share. The dividend is fully imputed with imputation credits of 0.632
cents per share attached. Further Resident Withholding Tax will be deducted
unless a Resident Withholding Tax 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
6 December 2019 and the payment date will be 13 December 2019.
The Board expects the dividend for FY20 to be 6.5 cents per share per annum,
subject to quarterly review and unforeseen events.
Appointment of two new independent directors
In October 2019, Augusta announced the appointment of two new independent
directors to its Board, Fiona Oliver and Jonathan Ross. Augusta Chair, Paul
Duffy, says: "The appointments reflect the Board's move to add further
commercial, legal, financial and capital market governance experience -
aligned to the ongoing growth and development of Augusta's business."
"With the substantial structural transformation of Augusta's business model
now complete, the Board has focused on adding a greater depth and diversity
of capability and we are delighted to have appointed directors of Fiona's and
Jonathan's calibre in support of our strategy to be New Zealand's most
diverse and respected institutional grade property funds management business
across multiple sectors in both listed and unlisted platforms.
Outlook
At this point in time, the Board expects earnings for the 12 months ended 31
March 2020 to be materially similar to the prior year, however, these numbers
are contingent on deal flow.
"The pipeline for long-term growth is in good shape with a busy period ahead
as we gear-up to launch the previously signalled Augusta Tourism Fund and
Augusta Diversified Fund. We have the right expertise in place and are
focused on continuing to progress developments prior to these funds launching
- as well as on looking at additional tourism-based opportunities," Mr
Francis concludes.
Near term strategic operating priorities include:
o On track to launch the Tourism and Augusta Diversified Funds by the end of
March 2020
o Asset Plus - pursuing ongoing acquisition opportunities
o Active management - several growth opportunities within the managed
portfolio including Asset Plus and the Industrial Fund
o Building further strategic partners as we broaden our product offerings
(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 interim results presentation on page 16 which has not been
independently reviewed by the auditors.
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
End CA:00344979 For:AUG Type:INTERIM Time:2019-11-27 08:35:40
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