Augusta Capital delivers record FY19 result

NZX RELEASE 24 May 2019 Augusta Capital delivers record FY19 result Augusta Capital Limited is pleased to announce its financial results for the year ended 31 March 2019. The financial result is the strongest in the Company's history delivering record operating earnings. The period under review saw the Company continue to gain momentum with the launch of new funds as well as build strong pipelines for further growth. Key points from the last financial year: o Profit and Total Comprehensive Income After Tax was $6.95 million, representing a 116% increase on FY18. o 47% increase in recurring management fee income to $9.32 million o 94% increase in transactional income to $4.13 million o Adjusted funds from operations (1) delivered an increase of 34% to $7.74 million. o $255 million in equity raised, a 102% increase on FY18 o Launch of the Augusta Industrial Fund raising $171 million of new equity across two capital raises. o Two new single asset funds launched raising $84 million of equity o All four offers were over-subscribed o Sale of the Finance Centre o Net assets per share increased to $0.98 from $0.96 in the prior year, primarily driven by retained earnings o $19 million investment in Augusta Industrial Fund - 10% long-term stake. o Secured seed assets for the Augusta Tourism Fund and a future pipeline of opportunities. o 4th quarter dividend of 1.625 cents per share which is supported by the increase in recurring earnings Augusta Capital Chairman, Paul Duffy, said the record result for Augusta was delivered in the final period of major transition to a specialist and diversified funds management model - and the stronger return on investment shows the move is paying off. "The result was delivered with a very different revenue profile to previous years as we redeployed capital to support our strategic plan. Profit and Total Comprehensive Income After Tax more than doubled for the reporting period, driven by strong income growth in a period with a large number of transactions and a significant increase in recurring fund management fees". Adjusted funds from operations delivered an increase of 34% to $7.74 million from $5.79 million in FY18. In FY19, $255 million of equity was raised and $70 million of equity was underwritten by Augusta. The managed portfolio now stands at $1.8 billion across 58 funds, two multi-asset property funds and 56 managed schemes across NZ and Australia. Net funds management income increased by over 40% in FY19 from $11.48 million to $17.30 million. The Industrial Fund was a key contributor to this increase. Rental income reduced from $5.65 million to $2.98 million in line with the phased exit of the Finance Centre. Managing Director, Mark Francis says the allocation of capital to drive growth and the relevant return on capital was outlined as the key strategic objective for Augusta in FY19. "The Company has again demonstrated the ability to deliver on the strategic plan by continuing to launch and grow new fund initiatives, delivering an increase in recurring earnings and building strong pipelines for the launch of future funds". Corporate costs were higher in FY19 due to ongoing investment in specialist talent. Mr. Francis explains, "Augusta Capital is a fund management and people business - the right talent is essential to delivering on strategic objectives and stimulate increased revenue. We continue to invest in people to create growth opportunities and the future Tourism Fund is evidence of this". Funds Management Mr. Francis said FY19 saw Augusta continue to deliver a range of new property investment products with the Industrial Fund making a significant contribution to the financial result through the completion of two compelling capital raises. "Four over-subscribed offers were completed during the year, raising $255 million of external equity. In addition, Augusta also committed $19 million to the Industrial Fund, equaling a 10% long-term stake". $5.6 million of earnings were derived from the Industrial Fund in FY19 and the balance sheet played a role in the Fund's establishment and growth. Transaction fees were derived in respect to the establishment of the Fund and subsequent acquisitions. Recurring annualised management fees now stand at approximately $1.8 million in respect to the Industrial Fund. Investment asset income of $1.75 million was realised from investments in Asset Plus and the Industrial Fund. This is expected to increase over time as co-investment into managed product continues. Balance sheet composition to support growth Mr. Francis commented that aside from investing, warehousing and underwriting, the balance sheet dynamics now also consist of development exposures that enable Augusta Capital to generate opportunities in the fund management business. o The Finance Centre was fully exited in late March 2019 freeing up the balance sheet to support the purchase and development of the two Tourism assets before the Fund is launched later this calendar year. o The realised capital was also invested into the Industrial Fund. The fair value of investments in managed product now stands at $41.9 million across both the Industrial Fund and Asset Plus. There are some short-term holdings in the Industrial Fund which will be exited in the near term. o The Value-Add Fund was concluded during the year generating an 11.75% internal rate of return for investors. As a 10% shareholder, Augusta was aligned with the investors and a $1.1 million performance fee was earned on the back of the Fund's success. Group gearing was 11% of gross asset value as at 31 March 2019, compared to 31.2% on 31 March 2018. Dividend The Board has today resolved to pay a final cash dividend of 1.625 cents per share, which is an increase from 1.5 cents in the prior quarters of the year. The dividend is fully imputed with imputation credits of 0.632 cents per share attached. Further resident withholding tax will be deducted unless a RWT 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 10 June 2019 and the payment date is 17 June 2019. The fourth quarter dividend will take cash dividends for the year to 6.125 cents per share, an increase from 5.625 cents per share over the prior year. The dividend pay-out ratio was 70% (2018: 85%). The Board expects the dividend for FY20 to be a minimum of 6.5 cents per share per annum, subject to quarterly review and unforeseen events. This represents an increase of 8.3% per annum. Outlook The 2020 financial year for Augusta Capital is so far shaping up to be another strong period. In line with our strategic growth plan, the pipeline is well stocked with future funds and we see several material opportunities on the horizon. We have available balance sheet capability and carry a very low-level of debt, leaving the business well positioned to deliver continued growth. Current market conditions remain supportive, but competitive. Management are investigating and completing due diligence on a wide range of potential opportunities across both single and multi-asset funds. The strength of the results in FY20 will be subject to successful agreement and completion of those initiatives. Update on progress of Tourism Fund Significant work continues to be completed on the initial seed assets for the Tourism Fund. The development at Cook St, Auckland of a Jucy Snooze Hotel continues to progress with a preferred contractor appointed and the building consent process nearing to a close. At Man Street, Queenstown, a procurement process for the hotel operator has been completed and negotiations are now being moved forward with the preferred operator. A contractor is also likely to be engaged on an early contractor involvement basis in the near term. It is currently expected that the Tourism Fund will be launched in the third quarter, subject to the above key milestones being successfully completed. In addition, a number of other potential assets continue to be investigated and the Lakeview development is expected to provide stock for the Tourism Fund in the medium to long term. Near term strategic operating priorities include: o Tourism fund launch - progress developments prior to fund launch and look for additional tourism based opportunities o Progress Lakeview negotiations as we move towards development o Launch of Value Add Fund No. 2 - a potential residential land development o Asset Plus - seek further acquisitions in line with strategy o Continuous improvement in how we operate and engage with investors o Active management - a number of opportunities within the managed portfolio o Building further strategic partners as we broaden our product offerings o Continue to seek further acquisition opportunities for existing funds and / or the establishment of new schemes. Change in senior management Augusta Capital also advises that Bryce Barnett's title has been changed to Executive Director moving forward as his funds management responsibilities have shifted to Joel Lindsey (Chief Operating Officer). Bryce continues to remain focused on opportunities in Australia, investor relations (including roadshows to retail investors) and certain key tenant relationships. In addition, Augusta is pleased to advise that Adelle McBeth, Head of Operations, has been appointed as a member of the senior management team reflecting the company's focus and investment in its people. 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 FOOTNOTES 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 annual report on page 23 which has not been independently reviewed by the auditors. End CA:00334975 For:AUG Type:FLLYR Time:2019-05-24 08:39:07