MARA DELTA PROPERTY HOLDINGS LIMITED - Unaudited Abridged Consolidated Interim Financial Statements For The Nine Months Ended 31 March 2017

2017-04-21 13:55:00

MDP 201704210025A
Unaudited Abridged Consolidated Interim Financial Statements For The Nine Months Ended 31 March 2017

Mara Delta Property Holdings Limited
(previously Delta Africa Property Holdings Limited)
(Registered by continuation in the Republic of Mauritius)
(Registration number C128881 C1/GBL)
SEM share code: DEL.N0000
JSE share code: MDP ISIN: MU0473N00028
('Mara Delta' or 'the Company' or 'the Group')

Highlights
Transfer of yield enhancing LUX Tamassa Resort and Mall de Tete
New strategic investor: National Pension Fund of Mauritius
Portfolio occupancy maintained at 98%
Cost of funding reduced to 5.80%
20% of total property portfolio sits in Mauritius

Unaudited abridged consolidated interim financial statements
for the nine months ended 31 March 2017 (the 'financial statements')

DIRECTORS' COMMENTARY
NATURE OF THE BUSINESS
Mara Delta is a pan African property income fund focusing on African real estate assets
(excluding South Africa), underpinned by predominantly US Dollar and Euro denominated
medium- to long-term leases with high quality counterparties delivering sustainable income.
Listed in July 2014, the Company holds dual primary listings on the Official Market of the Stock
Exchange of Mauritius Ltd ('SEM') and on the Main Board of the JSE Limited ('JSE').

The Group's strategy remains to expand its property portfolio throughout targeted countries
in Africa, with assets that will provide sustainable long term, hard currency-based income from
high quality counterparties with a core focus on enhancing net asset value and dividend yield.

REVIEW
During the period, the Company has successfully raised capital of US$34.3 million, through
the issue of 21 870 592 shares at an average price of US$1.57 per share. The proceeds of these
issuances were utilised to settle the equity bridge facilities and to part fund the LUX Tamassa
transaction. On 22 March 2017, the Company's subsidiary, Mara Delta (Mauritius) Properties
Limited issued 1 284 non-redeemable preference shares to the National Pension Fund of
Mauritius at an issue price of US$10,000 per share, raising US$12.8 million to partly fund the
LUX Tamassa transaction.

On 6 March 2017, the Company paid its fifth distribution of 6.12 US$ cents per share (for the
six-month period ended 31 December 2016). The Company maintains its distribution growth
forecast of between 2% and 4% on the previous year's full year distribution of 11.75 US$ cents
per share.

Acquisitions transferred during the reporting period
-  A 100% interest in Mall de Tete, a 11 571m2 retail mall in Tete, Mozambique, which transferred
   on 1 March 2017 for a purchase price of US$24.2 million with additional security of a three-
   year net operating income guarantee from the seller. The acquisition was funded via debt of
   US$13.3 million from Bank of China raised at libor + 5.10% and the issue of 7 111 420 shares at
   a price equal to the net asset value per share.

-  LUX Tamassa Resort, a 214 room hotel, located in Bel Ombre, Mauritius, which was transferred
   on 30 March 2017 for a consideration of the Euro equivalent of US$40.0 million (US$43.4
   including costs). The acquisition was funded by a combination of debt (EUR22.3 million at
   Euro libor +  3.75%), preference shares (US$12.8 million at 6.25%) and the balance via the
   issue of shares at US$1.54 per share.

Pending transfers
-  The acquisition of a 44.4% interest in an entity owning three Beachcomber hotel assets
   in Mauritius namely Le Victoria, Le Canonnier and Le Mauricia for a total consideration
   of EUR50.0 million. The initial financial commitments of EUR21.5 million were made in
   December 2016. Conditional regulatory approval has now been obtained and transfer will
   take place during the next quarter.

-  The 13 560m(2) Imperial Health Sciences logistics warehouse located in Nairobi, Kenya. The
   total purchase price is US$19.87 million. During December 2016 Mara Delta paid the deposit
   on the transaction and transfer is expected to be concluded during the next quarter.

-  The Vale accommodation compound, consisting of 83 villas and 40 apartments, in Tete,
   Mozambique, at a consideration of US$33.1 million and is expected to take transfer pending
   final payment at the date of the rights offer.

-  Cosmopolitan Mall in Lusaka, Zambia is a 26 512m2 retail centre anchored by Shoprite and
   Game. All regulatory approvals have now been obtained. The initial deposit of US$3.0 million
   was paid in June 2016 and transfer will be concluded pending final payment.

Results
Rental income together with income from associates has increased by 21% versus the first nine
months of the 2016 financial year. The rental income increase included the impact of the new
acquisitions, US Dollar-based rental escalations, as well as the impact of the concessions and
vacancies linked to the Anfa Place Shopping Centre refurbishment. Operating costs (including
properties in associated companies) at 31 March 2017 decreased to 25.7% from the 27.6%
reported for the year ended at 30 June 2016.

The Company continues to focus on reducing its cost of borrowings with the weighted average
cost of debt at 31 March 2017 decreasing to 5.80% from 6.22% reported for the year ended
30 June 2016. Mara Delta has initiated the process to obtain new Euro denominated debt that
provides a natural balance sheet hedge to the new Euro-based investments and provides scope
to further reduce the cost of debt. The Company's loan to value ('LTV') ratio at 31 March 2017
was 53.02%, up from 48.85% reported in June 2016. The increase in LTV is due to equity bridge
facilities pending the rights offer which will be completed within the next quarter.

Mara Delta's net asset value per share ('NAVPS') decreased from 163.27 US$ cents per share at
30 June 2016 to 158.77 US$ cents per share at 31 March 2017. The positive increase in valuations
of the assets in Mozambique and Mauritius of US$4.4 million was offset by exchange differences
in the value of the Anfa Place Shopping Centre in Morocco of US$2.4 million (this movement
is related to the Euro's decline versus the US Dollar and its impact on the Moroccan Dirham).

Other factors influencing the NAVPS growth was the issue of 21 870 592 shares at an average
price of US$1.57 (a 3.9% discount to NAVPS) as well as the distribution of US$12.2 million paid
during the period.

Overall portfolio vacancies remain at 2% as at 31 March 2017. These vacancies are largely due
to the redevelopment of Anfa Place Shopping Centre.

Despite ongoing economic and liquidity challenges in Mozambique, Mara Delta's assets are
performing as expected. Vacancies remained at zero and no bad debts have originated from
the Mozambican portfolio. The improvement in the USD liquidity within Mozambique and the
recovery in the Meticais versus the USD (MZN 70.6:US$1 on 31 March 2017 from its peak of
MZN78.5 in September 2016) are positive signs of improvement of the macroeconomic situation
in Mozambique. The Company remains confident about the long-term growth prospects in its
Mozambican portfolio.

Funds from operations ('FFO')
Funds from operations is determined as the total cash generated from all property investments
(profit from operations adjusted for non-cash items, including any realised exchange gains
or loss, less net finance costs and taxation), expressed as US$ cents per share (based on the
weighted number of shares in issue).

                                                Unaudited       Unaudited
                                                  for the         for the          Audited
                                              nine months     nine months          for the
                                                    ended           ended       year ended
                                                 31 March        31 March          30 June
                                                     2017            2016             2016
                                                      US$             US$              US$
Operating profit                               15,742,777      15,295,420       19,623,873
Adjusted for non-cash items:
 Property fair value adjustment included
 in income from associates                      (742,551)               -                -
 Depreciation and amortisation                    501,834          16,619           36,142
 Straight-line rental income accrual            (930,776)     (1,909,275)      (2,217,399)
Realised foreign exchange gains                 1,793,087         937,673        3,489,058
Interest income                                   887,645          59,816          170,158
Interest expense                              (7,257,746)     (6,699,435)      (9,698,267)
Taxation                                        (159,163)       (498,320)      (1,493,959)
Total funds from operations                     9,835,107       7,202,498        9,909,606
Weighted average number of shares             106,301,518      76,669,861       81,725,430
FFO per share                                        9.25            9.39            12.13

FFO decreased by 1.5% to 9.25 US$ cents for the nine months ended 31 March 2017 
(31 March 2016: 9.39 US$ cents). The decrease is attributable to the concessions provided 
to relocate tenants during the refurbishment at Anfa Place Shopping Centre which amounted 
to US$0.9 million (or 0.86 US$ cents decrease in FFO).

OUTLOOK
Following these first nine months, the Board remains confident that the forecasted distribution 
growth of 2% to 4% on previous year's full year distribution will be achieved. This confidence 
is supported by Mara Delta's portfolio which is proving to be resilient during macro-economic 
challenges in markets like Mozambique, due to the strength of its underlying tenant base and 
together with the pending rights offer where the company will be in a position to fund other high 
yielding properties.  

Any forecast included above has been based on the assumption of stable regional, political and 
economic environments as well as a stable global macroeconomic environment. This forecast is the 
responsibility of the Mara Delta Board and has not been reviewed or reported on by the auditors of 
the Company.

                           Unaudited     Unaudited       Unaudited     Unaudited        Audited
                             for the       for the    for the nine  for the nine        for the
                             quarter       quarter          months        months           year
CONSOLIDATED                   ended         ended           ended         ended          ended
STATEMENT OF                31 March      31 March        31 March      31 March        30 June
COMPREHENSIVE                   2017          2016            2017          2016           2016
INCOME                           US$           US$             US$           US$            US$
Gross rental income        6,039,704     6,601,119      16,739,651    16,991,077     20,878,458
Straight-line rental
income accrual               155,156       256,678         930,776     1,909,275      2,217,399
Revenue                    6,194,860     6,857,797      17,670,427    18,900,352     23,095,857
Income from associates     2,493,797       782,015       5,021,449     1,061,130      3,219,866
Property operating
expenses                 (1,369,552)   (1,291,099)     (4,305,955)   (3,065,908)    (5,769,024)
Net property income        7,319,105     6,348,713      18,385,921    16,895,574     20,546,699
Pre-transfer rental
accrued                      544,766       854,601       1,703,415     1,139,468      1,987,335
Other income                       -        37,881         219,252       353,028        946,447
Administrative expenses  (1,530,576)   (1,266,736)     (4,565,811)   (3,092,650)    (3,856,608)
Profit from operations     6,333,295     5,974,468      15,742,777    15,295,420     19,623,873
Acquisition fees           (827,936)     (134,977)       (830,365)     (893,390)      (990,338)
Set-up costs               (168,833)             -       (254,771)             -      (848,462)
Fair value adjustment on 
investment property      (2,293,604)     9,757,813       1,996,956    26,331,475    (3,759,543)
Fair value adjustment on 
financial instruments       (12,972)     (331,970)         114,048     (525,839)       (99,198)
Gain from bargain 
purchase                           -             -               -             -        250,515
Foreign currency gains/ 
(losses)                      19,328     1,139,573     (2,622,242)  (10,526,980)      2,763,774
 
Profit before interest
and taxation               3,049,278    16,404,907     14,146,403     29,680,686     16,940,621
Interest income              582,693        94,262        887,645         59,816        170,158
Finance costs            (2,994,140)   (1,407,851)    (7,257,746)    (6,699,435)    (9,698,267)
Profit for the period
before tax                   637,831    15,091,318      7,776,302     23,041,067      7,412,512
Current tax expense          771,216     (230,373)      (159,163)      (498,320)    (1,493,959)
Deferred tax income/
(expense)                   (46,446)     (537,137)      1,367,255      (457,604)    (3,944,764)
Profit for the period
after tax                  1,362,601    14,323,808      8,984,394     22,085,143      1,973,789
Profit/(loss) on
translation of functiona 
currency                     503,980  (10,670,163)        450,795   (20,715,479)        783,491
Other comprehensive
income                             -             -              -              -              -
Total comprehensive
income                     1,866,581     3,653,645      9,435,189      1,369,664      2,757,280
Reconciliation of basic
earnings and headline
earnings
Basic earnings                                          8,984,394     22,085,143      1,973,789
Less: Fair value 
adjustments on 
investment property (net 
of deferred taxation)                                 (1,996,956)   (26,331,475)      3,759,543
Gain from bargain
purchase                                                        -              -      (250,515)
Share of value
adjustment on
investment property
accounted by associate                                (1,744,625)              -    (1,418,401)
Fair value adjustments
on financial instruments                                (114,048)              -         99,198
Headline earnings/
(loss) attributable to
shareholders                                            5,128,765    (4,246,332)      4,163,614
Number of shares in
issue                                                 121,931,722     90,608,538    100,061,130
Weighted average
number of shares                                      106,301,518     76,669,861     81,725,430
Earnings per share
Basic and diluted
earnings per share
(cents)                                                       8.45         28.81           2.42
Headline and diluted
headline earnings/(loss)
per share (cents)                                             4.82        (5.54)           5.09

                                                         
                                                  Unaudited       Unaudited                   
                                                      as at           as at             Audited
                                                   31 March        31 March               as at
CONSOLIDATED STATEMENT OF                              2017            2016        30 June 2016
FINANCIAL POSITION                                      US$             US$                 US$
Assets
Non-current assets
Total property investments                      398,990,819     284,695,031         294,491,004
 Fair value of property portfolio               321,608,124     239,984,588         243,705,971
 Straight-line rental income accrual              5,662,567       4,137,196           4,839,694
 Investment in associates                        48,525,662      40,573,247          45,945,339
 Other financial assets                          23,194,466               -                   -
Property, plant and equipment                     1,890,014         319,566             803,240
Intangible assets                                 5,315,776          26,903           5,699,199
Related party loans                               1,988,767               -             978,277
Goodwill                                                  -         126,514                   -
Deferred tax                                      6,937,863         139,773           5,984,142
Total non-current assets                        415,123,239     285,307,787         307,955,862
Current assets    
Trade and other receivables                      15,968,603      19,491,527          18,101,466
Cash and cash equivalents                         6,477,960      23,714,985          17,771,821
Total current assets                             22,446,563      43,206,512          35,873,287
Total assets                                    437,569,802     328,514,299         343,829,149
Equity and liabilities
Total equity attributable to equity holders
Share capital                                   203,951,569     156,562,686         171,995,297
Foreign currency translation reserve                448,897    (21,500,868)             (1,898)
Antecedent dividend reserve                         390,758               -             635,547
Retained (loss)/profit                         (11,200,194)      10,854,856         (9,256,498)
Total equity attributable to equity holders     193,591,030     145,916,674         163,372,448
Liabilities
Non-current liabilities
Preference shares: Non-redeemable                12,840,000               -                   -
Interest-bearing borrowings                     147,028,377     130,781,305         127,070,183
Secured finance leases                              179,597               -                   -
Deferred tax                                        797,204       1,214,438             835,646
Total non-current liabilities                   160,845,178     131,995,743         127,905,829
Current liabilities
Interest-bearing borrowings                      70,226,815      40,161,618          34,548,386
Secured finance leases                               47,409               -                   -
Trade and other payables                         10,589,928       9,809,816          15,029,154
Related party loans                               1,365,000               -           1,365,000
Current tax payable                                  66,742         126,323           1,054,118
Financial instruments                                55,049         504,125             554,212
Cash and cash equivalents                           782,651               -                   -
Total current liabilities                        83,133,594      50,601,882          52,550,870
Total liabilities                               243,978,772     182,597,625         180,456,699
Total equity and liabilities                    437,569,802     328,514,299         343,829,149
Loan to value %                                       53.02           51.71               48.85
Net asset value per share (cents)                    158.77          161.04              163.27
Net asset value per share (excluding deferred
taxation) (cents)                                    153.73          162.23              158.13
 
                                                  Unaudited       Unaudited
                                                    for the         for the             Audited
                                                nine months     nine months             for the
                                                      ended           ended          year ended
                                                   31 March        31 March             30 June
CONDENSED CONSOLIDATED                                 2017            2016                2016
STATEMENT OF CASH FLOWS                                 US$             US$                 US$
Cash generated from operating activities          4,872,757       5,141,616           7,101,620
Changes in working capital                      (2,309,940)         423,833           2,523,677
Dividends paid                                 (12,238,903)     (8,469,702)         (8,469,704)
Net cash utilised in investing activities      (89,870,986)    (48,853,387)        (62,116,830)
Net cash generated from financing activities     87,470,560      69,249,734          72,510,167
Net movement in cash and cash equivalents      (12,076,512)      17,492,094          11,548,930
Cash at the beginning of the year                17,771,821       6,222,891           6,222,891
Total cash at the end of the period               5,695,309      23,714,985          17,771,821
Represented by:     
Cash at bank                                      6,477,960      23,714,985          17,771,821
Bank overdraft                                    (782,651)               -                   -
Total cash at the end of the period               5,695,309      23,714,985          17,771,821

                                                   Foreign
CONSOLIDATED                                      currency       Antecedent                              Total
                                     Share     translation         dividend      Retained               equity
STATEMENT OF                       capital         reserve          reserve      earnings              holders
CHANGES IN EQUITY                      US$             US$              US$           US$                  US$
Balance as at 1 July 2015      127,958,793       (785,389)                -   (2,760,581)          124,412,823
Profit for the period                    -               -                -    22,085,143           22,085,143
Dividends paid                           -               -                -   (8,469,706)          (8,469,706)
Foreign currency translation           
reserve movement                         -    (20,715,479)                -             -         (20,715,479)
Shares issued                   28,756,446               -                -             -           28,756,446
Share issue expenses             (152,553)               -                -             -            (152,553)
Balance as at 31 March 2016    156,562,686    (21,500,868)                -    10,854,856          145,916,674
Loss for the period                      -               -                -  (20,111,354)         (20,111,354)
Dividends paid                           -               -                -             -                    -
Foreign currency translation              
reserve movement                         -      21,498,970                -             -           21,498,970
Shares issued                   16,073,860               -                -             -           16,073,860
Share issue expenses               (5,702)               -                -             -              (5,702)
Antecedent dividend              (635,547)               -          635,547             -                    -
Balance as at 30 June 2016     171,995,297         (1,898)          635,547   (9,256,498)          163,372,448
Unaudited for the nine           
months ended 31 March 2017           
Profit for the period                    -               -                -     8,984,394            8,984,394
Dividends paid                           -               -      (1,310,813)  (10,928,090)         (12,238,903)
Foreign currency translation           
reserve movement                         -         450,795                -             -              450,795
Shares issued                   34,320,135               -                -             -           34,320,135
Share issue expenses           (1,297,839)               -                -             -          (1,297,839)
Antecedent dividend            (1,066,024)               -        1,066,024             -                    -
Balance as at 31 March 2017    203,951,569         448,897          390,758  (11,200,194)          193,591,030

CONDENSED
CONSOLIDATED
SEGMENTAL
ANALYSIS                      Morocco      Mozambique         Zambia      Kenya     Mauritius            Total
Geographical location
31 March 2017 - US$
Gross rental income         6,785,721       9,052,036              -          -       901,894       16,739,651
Straight-line rental 
income accrual                134,421         646,022              -          -       150,333          930,776
Pre-transfer rental  
accrued                             -       1,703,415              -          -             -        1,703,415
Property operating 
expenses                  (3,463,076)       (730,360)              -          -     (112,519)      (4,305,955)
Income from associates              -               -      5,026,733    (5,284)             -        5,021,449
Net property rental and
related income              3,457,066      10,671,113      5,026,733    (5,284)       939,708       20,089,336
Fair value adjustment     (2,417,681)       3,537,000              -          -       877,637        1,996,956
Investment Property
vehicles                   98,633,346     165,276,489     47,006,091  6,507,171    81,567,722      398,990,819
 Investment property   
 at fair value             96,324,766     162,375,021      3,000,000  1,987,600    57,920,737      321,608,124
 Straight-line rental  
 income accrual             2,308,580       2,901,468              -          -       452,519        5,662,567
 Investment in 
 associates                         -               -     44,006,091  4,519,571             -       48,525,662
 Other financial assets             -               -              -          -    23,194,466       23,194,466

                                                                          Light       Corporate
                          Hospitality          Retail         Office industrial   accommodation          Total
Type of property 
31 March 2017 - US$ 
Gross rental income            17,204       7,903,381      7,986,673    832,393               -     16,739,651
Straight-line rental   
income accrual                      -         107,460        823,316          -               -        930,776
Pre-transfer rental  
accrued                             -               -              -          -       1,703,415      1,703,415
Property operating  
expenses                            -     (3,584,217)      (638,368)   (13,455)        (69,915)    (4,305,955)
Income from  
associates                          -       5,021,449              -          -               -      5,021,449
Net property rental  
and related income             17,204       9,448,073      8,171,621    818,938       1,633,500     20,089,336
Fair value adjustment               -     (2,517,681)      4,577,637   (63,000)               -      1,996,956
Investment property
vehicles                   66,541,240     185,328,972    130,745,668 10,587,600       5,787,339    398,990,819
Investment property a 
fair value                 43,346,774     134,396,687    127,489,724 10,587,600       5,787,339    321,608,124
Straight-line rental  
income accrual                      -       2,406,623      3,255,944          -               -      5,662,567
Investment i   
associates                          -      48,525,662              -          -               -     48,525,662
Other financial assets     23,194,466               -              -          -               -     23,194,466

NOTES
The Group is required to publish interim reports in accordance with the Listing Rule 12.19 of the SEM.
Accordingly, this announcement presents the financial results of the Group in respect of the nine
months period from 1 July 2016 to 31 March 2017.

The accounting policies which have been applied are consistent with those used in the preparation
of the audited financial statements for the year ended 30 June 2016.

The financial statements for the nine months ended 31 March 2017 have been prepared in accordance
with the measurement and recognition requirements of IFRS, the requirements of IAS 34: Interim
Financial Reporting, the SEM Listing Rules, the JSE Listings Requirements, the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee, the Financial Reporting
Pronouncements as issued by the Financial Reporting Accountants Council and the Securities Act
of Mauritius 2005.

The financial statements have not been reviewed or reported on by the Group's external auditors.

These financial statements were approved by the Board on 21 April 2017. Copies of the financial
statements and the Statement of direct and indirect interests of each officer of the Group, pursuant
to rule 8(2)(m) of the Securities (Disclosure Obligations of Reporting Issuers) Rules of Mauritius 2007,
are available free of charge, upon request at the Company's registered office address.

By order of the board
21 April 2017

JSE sponsor and corporate advisor       SEM authorised representative
to Mara Delta                           and sponsor to Mara Delta
PSG CAPITAL                             Perigeum Capital

Directors: Sandile Nomvete (chairman), Bronwyn Corbett*, Peter Todd (lead independent),
Chandra Gujadhur, Ian Macleod, Leon van de Moortele*, Jacqueline van Niekerk, Matshepo More
and Maheshwar Doorgakant# (*executive director) (#alternate to Mr Gujadhur)

Company secretary: Intercontinental Fund Services Limited

Registered address: c/o Intercontinental Fund Services Limited, Level 5, Alexander House,
35 Cybercity, Ebène, 72201, Mauritius

Transfer secretary (South Africa): Computershare Investor Services Proprietary Limited

Registrar and transfer agent (Mauritius): Intercontinental Secretarial Services Limited

Corporate advisor and JSE sponsor: PSG Capital Proprietary Limited

Sponsoring Broker: SBM Securities Limited

SEM authorised representative and sponsor: Perigeum Capital Limited

Mara Delta investor relations: +2782 480 4541 or +230 5859 0418

This communiqué is issued pursuant to SEM Listing Rules 11.3 and 12.20 and Section 88 of the
Securities Act of Mauritius 2005. The Board accepts full responsibility for the accuracy of the
information contained in this communique. The directors of the Company are not aware of any
matters or circumstances arising subsequent to the period ended 31 March 2017 that require any
additional disclosure or adjustment to the financial statements.

www.maradelta.com

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