Augusta Capital Annual Result For the year ended 31 March 2016 20 May 2016
KEY HIGHLIGHTS FY2016 Financial Performance Strong overall result NPAT of $13.52m up 30% compared to $10.39m in FY2015 Unrealised gain on revaluation of $7.07 million at the Finance Centre FY2016 Normalised distributable profit increased by 17% to $5.68m (up from $4.86m FY2015) Investment property segment performance up 20% or $0.39m (after tax) Funds management segment performance up 16% or $0.44m (after tax) Net asset value (NAV) increased from 83 cents per share to 94 cents per share Independent funds management valuation provides an additional NAV of 14 to 21 cents per share Cash dividends paid equating to 5 cents per share a pay out ratio of 77% based on a normalised operating earnings of 6.50 cents per share 2
KEY HIGHLIGHTS - continued Funds Management Continued growth Seven new syndication deals completed during the year generating $7.02m of upfront revenue Higher corporate costs due to new resources in team as well as increased levels of compliance, project costs and due diligence incurred on deals not proceeding Augusta subsidiary, Augusta Funds Management Limited, is now licenced under the Financial Markets Conduct Act Independent PwC valuation of the funds management business completed will lead to loss of Portfolio Investment Entity (PIE) status from 1 July 2016 Strong start to FY2017 with the Augusta Value-Add Fund No.1, Ashburton Central and an Australian syndication to be completed in the first quarter Further pipeline of offers being the Graham St buildings in Auckland CBD 3
KEY HIGHLIGHTS - continued Investment Property Future Divestment Higher portfolio occupancy at 97%, up from 94% last year Higher WALE at 6.3 years, up from 5.9 years over the past 12 months Cap rates sharpening from 8.09% to 7.06% - main driver of valuation gain Divestment of 7 City Road returning a capital gain on sale of $0.96 million Balance sheet capacity to fully or partially underwrite new deals 4
Group Profit and Loss FY16 $m FY15 $m Var. % Gross Rental Income 9.0 8.3 8% Funds Management 12.3 9.9 24% Metroclean 0.6 0.4 50% Operating Costs (4.8) (4.8) - Net Revenue 17.1 13.8 24% Corporate Costs (7.2) (6.3) (14%) EBIT 9.9 7.5 32% Finance Costs (2.9) (3.1) 6% NP Before Tax & One-Offs 7.0 4.4 59% One-offs 7.6 3.4 123% Net Profit before tax 14.6 7.8 87% Tax (1.1) 2.6 (142%) Net Profit after tax 13.5 10.4 30% Distributable Profit 5.68 4.86 17% Impact of increased occupancy and increased rents offset by divestment 7 deals completed in FY16 (4 in FY15) Organic growth Property management (Bayleys) and costs associated to transactional income Driven by additional resourcing and compliance/aml, projects and due diligence Lower funding costs primarily due to lower interest rates Includes net revaluation movements and gain on sale FY15 included a deferred tax adjustment on fitout depreciation 5
Segment Reporting Investment Property ($ 000) Funds Management ($ 000) Cleaning ($ 000) Total ($ 000) Total Gross Revenues 8,979 12,336 618 21,933 Total Net Revenues 6,664 10,296 144 17,104 EBIT 5,034 4,838 70 9,942 Net Profit Before Tax 2,563 4,379 70 7,012 Net Profit After Tax (Normalised) 2,360 3,260 62 5,682 NPAT Last year (Normalised) 1,972 2,817 70 4,859 Year on Year 388 443 (8) 823 Year on Year % 20% 16% (11%) 17% Higher occupancy in the directly held portfolio in FY2016 FY17 growth in funds management driven by new deals Note: Corporate and funding costs have been allocated to each business segment 6
Distributable Profit comparison to prior year ($m) AUGUSTA CAPITAL LTD - Distributable Profit ($m) FY15 v FY16 Distributable profit up $0.82m / 17% Directly Owned Portfolio Funds Management 1.14 0.63 0.22-0.41 4.86 1.08 0.32 Up $0.39m Up $0.44m 5.68 Note: The distributable profit - segment view includes an allocation of overheads and funding costs 7
Group Balance Sheet ($m) Total Assets (Tangible Assets $120.4m. Intangible Assets $16.4m) March 2016 May 2016 (pro forma)* March 2015 136.8 126.0 124.4 Year-on-year movements Total assets include $16.5m Kitchener St (warehoused) sold to Value Add Fund on 1 April 2016 as well as deposits on properties of $4.9m Total Liabilities 54.8 44.0 55.2 Debt increased by $3.0m during the year but was offset by settlement of contingent consideration ($3.6m) Equity 82.0 82.0 69.2 Issue of shares ($3.7m) and NPAT ($13.5m) less Dividends paid ($4.4m) Gearing (Group) 36.5% 32.5% 37.6% LVR covenant is now measured on a core debt basis Shares on Issue 87.42m 87.53m 83.78m Further 0.11m shares to be issued, now 87.53m shares on issue post balance date Annual Cash Dividend 5.0cps 5.0cps 4.75cps Net Assets Per Share** $0.94 $0.94 $0.83 * Pro forma post sale of 36 Kitchener St in Value Add Fund No1 ** Includes tangible and intangible assets 8
Funds Management Completion of 7 deals - Southgate, Birmingham Drive, Shands Rd, Peachgrove Rd and Hugo Johnston, as well as Evans Rd and Sherbrooke Rd in Brisbane $7.02m of upfront Offeror & Underwriting fees Annualised recurring management fees currently stand at $5.1m* with additional $1.2m of transactional fees (leasing, project management) Sale of 11 properties under management during the period combined directly owned and managed portfolio is now approximately $1.45b Strong pipeline for FY2017 Quinns Rd (Brisbane), Buildings A & B - Graham St (Auckland CBD) and Ashburton Central (resyndication) Southgate Shands Rd Evans Rd Birmingham Dr Peachgrove Rd Sherbrooke Rd * Including management fees derived from the Value Add Fund No.1 Hugo Johnston 9
Directly Owned Portfolio Summary Valuation Net Market Rent Net Market Rental Yield Occupancy March 16 WALE Property Mar 16 Mar 16 Mar 16 Mar 16 Mar 16 $ 000 $ 000 % % Years Finance Centre Carpark 28,700 1,851 6.45% 100.0 11.3 Finance Centre Podium 9,900 858 8.67% 95.0 4.3 19 Victoria Street West 28,800 2,171 7.54% 94.0 3.3 Retail Title 21,500 1,399 6.51% 100.0 5.7 TOTAL (as at 31 March 2015) 88,900 6,279 7.06% 97.0 6.3 18 Hibiscus Highway - held for sale 1,400 36 Kitchener St held for sale 16,500 TOTAL 106,800 Portfolio Movement for the Year ($ 000) Property March 2015 Capex Revaluation* Acq / (Disp) March 2016 Finance Centre & 19 Victoria St West 80,500 698 7,702-88,900 7 City Road 19,600 30 - (19,630) - 36 Kitchener St - - - 16,500 16,500 Silverdale Property 1,600 - (200) - 1,400 Total 101,700 728 7,502 (3,130) 106,800 * Revaluation movement differs from the unrealised gain on revaluation of $7.07m due to adjustments made for capitalised rental incentives 10
Looking Ahead Dividend level is currently under review DRP remains suspended Directly Owned Portfolio Positioning the Finance Centre for future exit A sale will create material balance sheet capacity for: 1. Warehousing of assets for future syndication 2. Enabling greater levels of underwriting with respect to new deals 3. Ability to make direct investment in new fund initiatives Funds Management Investor appetite for syndicated product remains strong the challenge continues to be securing quality product in a competitive market Product diversification - considering a range of new fund opportunities and will continue to develop new fund initiatives Growth in recurring earnings from the funds management business 11
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DISCLAIMER Important Notice This presentation contains not only a review of operations, but may also contain some forward looking statements (including forecasts and projections) about Augusta Capital Limited (AUG) and the environment in which AUG operates. Because these statements are forward looking, AUG s actual results could differ materially. Please read this presentation in the wider context of material previously published by AUG and announced through New Zealand Exchange Limited. No representation, warranty or undertaking, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information contained, referred to or reflected in this presentation or supplied or communicated orally or in writing to you (or your advisers or associated persons) in connection with it, as to whether any forecasts or projections will be met, or as to whether any forward looking statements will prove correct. You will be responsible for forming your own opinions and conclusions on such matters. No person is under any obligation to update this presentation at any time after its release to you. To the maximum extent permitted by law, none of AUG, Augusta Funds Management Limited nor any of their officers, employees or agents or any other person shall have any liability whatsoever to any person for any loss (including, without limitation, any liability arising from any fault or negligence on the part of AUG, Augusta Funds Management Limited, their officers, employees or agents or any other person) arising from this presentation or any information contained, referred to or reflected in it or supplied or communicated orally or in writing to you (or your advisers or associated persons) in connection with it. Acceptance of this presentation constitutes acceptance of the terms set out above in this Important Notice. 13