Announcement

INTERIM: AUG: Augusta Capital reports its interim results 08:35a.m. 
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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