Ann: FLLYR: AUG: Preliminary Result Announcement

• Release Date: 22/05/12 11:24
• Summary: FLLYR: AUG: Preliminary Result Announcement - Year Ended 31 March 2012
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AUG
22/05/2012 09:24
FLLYR

REL: 0924 HRS Augusta Capital Limited

FLLYR: AUG: Preliminary Result Announcement - Year Ended 31 March 2012

NZX RELEASE - 22 MAY 2012

Augusta Capital Limited Un-audited Preliminary Announcement - Year Ended 31
March 2012

Financial Results

The net loss attributable to shareholders for the year to 31 March 2012 was
$0.65 million compared to a profit of $4.85 million in 2011. This outcome
reflected the $2.0 million fee paid in respect of the termination of the
company's management contract, as well as a revaluation loss of $1.38
million. The revaluation loss was due primarily to abnormally high capital
expenditure for the 2012 financial year of $4.6 million which was not fully
reflected in the March 2012 valuations. The capital expenditure related
principally to the landlord works at the new Countdown Metro Supermarket and
we expect this to be reflected in future valuation assessments.

Normalised distributable profit (net profit after tax, excluding
revaluations, mark to market of interest rate swaps, deferred tax and one off
transactions including the termination fee) for the year was $3.7 million
(2011 $3.8 million). The slight decrease on last year was a reflection of the
reduced portfolio size following the divestment of $8.52 million of non-core
assets during the year. Net rental income reduced from $6.7 million to $6.2
million as a result of the planned asset sales including an adjustment for a
future lease incentive. On a like for like basis the net rental position of
the core portfolio increased by $0.4 million year on year.

Management fees included two quarterly performance fee payments made under
the previous management agreement. General administration costs were slightly
lower on last year, excluding $0.27 million of acquisition costs for the
management agreement termination and the funds management business. Net
funding costs were flat year on year.

FINANCIAL SUMMARY - Year Ended 31 March 2012
  31 March 2012 Group 31 March 2011

Net Revenue $6.24m $6.74m
Unrealised Net Change in Value of Investment Properties ($1.38m) $0.7m
Termination of Management Contract ($2.0m) -
Profit (Loss) and Total Comprehensive Income for the Year  ($0.65m) $4.85m
Distributable Profit $3.7m $3.84m
Total Assets  $104.0m $102.40m
Total Liabilities  $44.2m $38.54m
Shareholders' Equity $59.8m $63.86m
Net Interest Bearing Debt to Investment Assets 36.6% 32.3%
Shares on Issue  81.28m 81.57m
Gross Dividends  4.0 cps 4.25 cps
Net Assets Per Share $0.74 $0.78

Property Portfolio

A further $8.52 million of non-core properties were realised during the
period, with the funds being applied to capital expenditure works on the core
portfolio and $1.5 million of debt repayment. Only $3.6 million of non core
property remains and this will continue to be marketed.

We continued our strategy of re-investing in the core portfolio and capital
expenditure of $4.6 million for the year reflects this. The main component of
this expenditure was the $2.4 million fit-out contribution towards the new
Countdown Supermarket at the Finance Centre in Auckland's CBD. The
supermarket lease commenced in September 2011. A further $700,000 was spent
on a complete elevator upgrade at Brookfields House, adjacent to the Finance
Centre. This is expected to enhance the building's appeal with tenants and
help support future rental growth. We also undertook a significant
refurbishment of levels 12 and 13 at Brookfields House which had been vacant
for some time. This refurbishment has paid off, with both floors now being
fully occupied.

Property  Valuation Net Market Rent Net Yield Occupancy WALE
  March 2012 March 2012 March 2012 March 2012 March 2012
  $m $m % %

Finance Centre Carpark & Podium 47.30 3.72 7.87% 90% 7.6
Brookfields House  24.20 2.21 9.14% 94% 3.1
7 City Road  18.50 1.72 9.31% 96% 2.0
Manukau Business Park 4.52 0.45 10.04% 79% 1.3

TOTALS 94.52 8.11 8.58% 93% 5.10

Leasing and Occupancy

Six new leases and three lease renewals, with an annual rental value of $0.46
million were arranged during the year. Leasing success was partly offset by
two lease expiries, which represented $0.12 million of rent on an annualised
basis. Overall portfolio occupancy was 93% at year end, up from 91% at March
2011. This increased occupancy was driven by new leasing and the divestment
of the vacant Kaimanawa warehouse.

Leasing success has been achieved at Brookfields House which is due in part
to the significant capital expenditure invested in refurbishing the building.
The stated intention last year was to actively seek to lease vacant space and
to this extent that goal has been achieved which is a pleasing result.

The company had a weighted average lease expiry (WALE) of 5.1 years at 31
March 2012, a slight decrease on the 5.2 years at March 2011.

Rent Reviews

Eight rent reviews were concluded during the financial year, across leases
representing $1.24 million of annual net rent. An average increase of 4.9%
was achieved. The best results were where fixed CPI rent review mechanisms
were in place. Growth in office rents remained subdued during this financial
year.

Portfolio Valuations

Under NZIFRS accounting standards, the company's investment properties are
re-valued to fair market value at the end of each financial year. Independent
valuers CB Richard Ellis and Colliers International NZ provided valuations of
the company's portfolio as at 31 March 2012.

These valuations resulted in our investment properties being revalued
downwards by $1.38 million. As stated earlier, this assessment reflected $4.6
million of capital expenditure which was greater than the $3.27 million
increase in the value of the core portfolio. The average cap rate for the
portfolio as at 31 March 2012 was 8.58% (2011 9.08%). This was a substantial
firming in the average cap rate which reflected higher occupancy at year end,
the quality of the new supermarket lease covenant, and the disposal of $8.52
million of non-core properties.

Net asset backing per share was $0.74 as at 31 March 2012. (2011 $0.78) The
termination of the management contract accounted for $0.025 of this net asset
backing reduction on a per share basis, while the balance was due to
revaluation losses on the property portfolio.

Balance Sheet and Treasury
Total assets were $104.0 million at year end compared to $102.4 million as at
March 2011. $8.5 million of assets were divested during the year. For the
Kaimanawa warehouse sale, a vendor loan of $2.5 million was provided to an
owner occupier, with the $2.5 million first charge on the property now
recorded principally as a non-current asset on our balance sheet.

In addition to the capital expenditure works of $4.6 million, $3.0 million
was spent on the acquisition of AFM Management Limited's (formerly Augusta
Funds Management Limited) business assets.

Liabilities in turn increased from $38.5 million to $44.2 million mainly due
to the drawdown of $5.0 million of additional bank debt to fund the
management internalisation and funds management assets acquisition.

The company's constitution limits borrowings to a ratio of 50% of the gross
asset value (GAV), and the company's lenders (ASB) require borrowings to not
exceed 45% of GAV. Our Internal treasury policy is for a long term target
ratio of approximately 35%. At balance date this ratio was 36.6% following
settlement of the acquisitions on 30 March 2012.

The company's banking facility renewal through to June 2015 with ASB provides
long term funding visibility and is a reflection of the improved financial
position that the company has achieved over the past two years.

Share Buyback

The company undertook a very small on-market share buyback during the year
which has now concluded. 291,899 shares were purchased and immediately
cancelled at an average share price of $0.612, and cost of $178,588.

Augusta Funds Management Limited

The acquisition of the assets of AFM Management Limited (formerly Augusta
Funds Management Limited) was completed on 30 March 2012, in conjunction with
the termination of the management contract. The addition of Augusta Funds
Management's property syndication business has added an exciting new
component to your company. As well as a diversification of our earnings from
rental income into funds management fees, the acquisition will potentially
enable us to deliver higher earnings growth, without the requirement to raise
additional share capital.

The funds management business is off to a good start to the year, with the
Farmer's Hastings offer on track for settlement in August, and the new JB
Hi-Fi offer in Hamilton now fully subscribed and due to settle on 31 May
2012. Management is confident of establishing further syndication offerings
within the financial year.

Outlook

While global headwinds remain, the domestic property market is showing clear
signs of improvement, with robust sales evidence and reasonable leasing
activity. The property syndication market is also performing well in the
current environment. There is healthy investor demand for Augusta's
syndicated properties; however being able to source quality investment
properties for syndication remains the challenge.

The Company plans to hold its annual general meeting at the Northern Club, 19
Princes Street, Auckland on Friday 10th August 2012 at 2pm.

-ENDS-

For further information please contact:

Christopher Francis
General Manager
Augusta Capital Limited
T (09) 300 6161
F (09) 300 6162
E [email protected]
End CA:00223105 For:AUG    Type:FLLYR      Time:2012-05-22 09:24:51