Interim Results - 2014

Statement of results for Real Estate Investments Zambia PLC and its subsidiaries (“the Group”) for the six months ended

30th

June 2014

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE

INCOME

K’ 000

6 months

to

30.06.2014

K’ 000

6 months

to

30.06.2013

Unaudited Unaudited

Turnover 19,101 22,509

Operating Profit before Finance Income /(Expense) 10,934 14,747

Interest expense on long term loans (3,838) (7,007)

Interest income 157 65

Profit before exchange gain/(loss) 7,253 7,805

Change in fair value of investment property 24,150 0

Exchange loss (6,739) (7,379)

Profit /(loss) from equity accounted investee (2,451) (511)

Profit/(Loss) before Taxation (attributable to

Shareholders)

22,213 (85)

Taxation (1,974) (1,803)

Profit/(Loss) after tax 20,239 (1,888)

Dividend on Ordinary shares (Kwacha per share)

- Interim

0

0

Headline Earnings per share (on Profit before

exchange gain/(loss)):

0.128

0.138

Earnings per share before tax: 0.393 (0.002)

Earnings per share after tax: 0.358 (0.033)

Weighted average number of ordinary shares

56,460,198

56,460,198

In compliance with the requirements of the Securities

(Registration of Securities) Rules, 1993, and the listing rules of

the Lusaka Stock Exchange, Real Estate Investments Zambia PLC

announces the results of the Group for the six months ended 30th

June 2014. These interim results are derived from the Group’s

management accounts, which have been approved by the

Directors, but have not been audited.

Group Performance

The Directors are pleased to present the Interim Results for the

period ending 30th June 2014. The Board reports that the Group’s

financial performance has been positively affected by the

revocation of Statutory Instrument No. 33 – The Bank of Zambia

(Currency) Regulation Number 33 of 2012. With the repayment of

a large part of the Group’s foreign exchange debt in 2013 the

charge for interest expense has been substantially reduced from

K7m in 2013 to K3.8m in 2014. The Kwacha has depreciated

during the first half of the year from K5.5185 at 31st December

2013 to K6.256 as at 30th June 2013, but seems to have settled at

the K6 - $1 range in the last months. The results therefore show a

year on year Profit before exchange losses of K7.25m against

K7.80m in 2013.

The policy of the Board in prior years in respect to International

Accounting Standard No. 40 has been to revalue properties on an

annual basis. However, with the dramatic depreciation of the

Kwacha in the six month reporting period the Directors

unanimously determined that an independent valuation of

Investment Properties should be undertaken as at 30th June 2014.

This was intended to match the valuation of Dollar denominated

liabilities to the valuation of the Group’s assets. As a result the

interim statement shows a revaluation of investment properties by

K24.15m and an exchange loss of (K6.74m) at 30/06/2014. The

Directors have resolved to consistently apply this policy in future

years.

Shareholders will also note the dramatic change in the income tax

expense between the 2013 financial year and the six months

results to June 2014. As explained in the 2013 Annual Report the

Government of the Republic of Zambia has introduced a ‘Final

Tax’ on Gross Rental Income at 10% of invoice value. This

resulted in the write back of deferred tax previously shown in the

Balance Sheet as liability and therefore a credit to the Income

statement of K76.85m. The income tax expense shown in the

2014 Interim Statement reflects the final 10% tax on rental

income with certain minor adjustments for income tax on separate

sources of revenue such as interest earnings.

Interim Dividend

In view of the foregoing, the Directors have resolved that the

Group defers the declaration of an interim dividend. The

Directors will review the results for the full year and will

recommend a final dividend that will take into account the

undeclared interim dividend on those results for approval by

Shareholders at the Annual General Meeting (AGM) that is

required to be held before the 31st March 2015. Shareholders are

alerted that the date of the AGM is set as 26th March 2015.

The Directors, therefore, wish to announce that no interim

dividend for the year ending 31st December 2014 has been

declared payable to Ordinary Shareholders as at the date of this

notice to the public.

STATEMENT OF FINANCIAL POSITION

K’ 000

30.06.2014

K’ 000

30.06.2013

Unaudited Unaudited

Assets

Plant and equipment 2,454 4,395

Investment property 359,268 439,988

Investment property under development 43,531 39,660

Lease straight-lining receivable 1,057 10,458

Other investments 13,703 9,464

Amounts due from equity accounted investee 13,587 11,549

Goodwill 32,607 32,607

Current assets 13,247 10,741

Total assets 479,454 558,862

Equity and liabilities

Total equity 389,212 272,788

Non-current liabilities 83,228 152,480

Deferred tax liabilities - 124,111

Current liabilities 7,014 9,483

Total equity and liabilities 479,454 558,862

BY ORDER OF THE BOARD SPONSORING BROKER

STOCKBROKERS ZAMBIA LIMITED

Sydney E Popota

Company Secretary

19th

September 2014

Robin P.S. Miller

Managing Director

Lusaka