Wrap Text
Interim results for the six months ended 30 September 2014 and declaration and finalisation of interim distribution
Sycom Property Fund ("Sycom")
A Collective Investment Scheme in Property registered in
terms of the Collective Investment Schemes Control Act, No. 45 of 2002 and managed by Sycom
Property Fund Managers Limited (Registration number 1986/002756/06)
JSE Share code: SYC ISIN: ZAE000019303
(Granted REIT status with the JSE Limited)
CONDENSED GROUP RESULTS AND DECLARATION AND FINALISATION OF THE INTERIM DISTRIBUTION FOR THE SIX MONTHS ENDED 30 SEPTEMBER
2014
The directors of Sycom Property Fund Managers Limited, the management company of Sycom Property Fund, submit
their report on the results of Sycom for the six months ended 30 September 2014.
CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR
THE SIX MONTHS ENDED 30 SEPTEMBER 2014
Unaudited six Reviewed six Audited twelve
months to months to months to
30 Sep 2014 30 Sep 2013 31 Mar 2014
(R'000) (R'000) (R'000)
Revenue 368 716 369 413 685 699
Contractual rental revenue and recoveries 371 838 367 290 701 389
Straight-lining of rental revenue adjustment (3 122) 2 123 (15 690)
Direct property operating expenses (70 694) (72 972) (133 589)
Loss on disposal of investment property - - (19 431)
Selling costs on investment properties held for sale (1 086) (4 116) (553)
Dividend from listed investment 10 145 9 655 19 973
Fair value changes on investment property and listed
investment (422) 301 262 517 922
Fair value gain on investment properties 3 122 250 897 436 400
Fair value (loss)/gain on listed investment (3 544) 50 365 81 522
Administrative expenses (24 940) (23 452) (42 131)
Service charge (20 530) (21 347) (39 067)
Other administrative expenses (4 410) (2 105) (3 064)
Profit before net finance costs 281 719 579 790 1 027 890
Net finance costs (89 827) (51 869) (128 610)
Interest income 11 187 26 787 43 561
Interest expense (104 172) (68 639) (160 085)
Net change in fair value of derivative
financial instruments at fair value through
profit and loss 3 158 (10 017) (12 086)
Profit before taxation 191 892 527 921 899 280
Taxation - (556) (556)
Profit for the period 191 892 527 365 898 724
Other comprehensive income for the period
Net change in fair value of cash flow hedges * (18 630) 34 881 51 897
Other comprehensive income for the period (18 630) 34 881 51 897
Total comprehensive income for the period 173 262 562 246 950 621
Basic and diluted earnings per unit - cents 95.88 194.48 378.36
*The fair value movement on the cash flow hedges through other comprehensive income may be reclassified to profit
and loss.
RECONCILIATION OF PROFIT FOR THE PERIOD TO HEADLINE EARNINGS AND
DISTRIBUTABLE EARNINGS
Unaudited six Reviewed six Audited twelve
months to months to months to
30 Sep 2014 30 Sep 2013 31 Mar 2014
(R'000) (R'000) (R'000)
Profit for the period 191 892 527 365 898 724
Fair value adjustment to investment properties (3 122) (250 897) (436 400)
Loss on disposal of investment property - - 19 431
Secondary tax on companies - 556 556
Headline Earnings 188 770 277 024 482 311
Selling costs on investment properties held for sale 1 086 4 116 553
Straight-lining rental income accrual 3 122 (2 123) 15 690
Unrealised (gain)/deficit on derivative financial instruments (3 158) 10 017 12 086
Fair value adjustment to listed investment 3 544 (50 365) (81 522)
Prepaid distribution - 9 492 9 492
Distributable earnings 193 364 248 161 438 610
cents cents cents
Earnings per unit:
Basic earnings* per unit 95.88 194.48 378.36
Headline earnings* per unit 94.32 102.16 203.05
Distribution per unit 96.62 88.12 183.28
* Sycom does not have any dilutionary instruments in place
Number of units in issue ('000) 200 132 281 632 200 132
Number of weighted average units in issue ('000) 200 132 271 164 237 531
CONDENSED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2014
Unaudited at Reviewed at Audited at
30 Sep 2014 30 Sep 2013 31 Mar 2014
(R'000) (R'000) (R'000)
ASSETS
Property Assets 8 215 123 8 642 158 8 196 492
Investment properties and related receivables 7 540 366 7 078 258 7 528 383
Investment properties 7 321 371 6 835 209 7 307 028
Non-current straight-lining lease receivable 188 479 213 869 182 052
Current straight-lining lease receivable 30 516 29 180 39 303
Investment properties held for sale and
related receivables 674 757 1 563 900 668 109
Investment properties held for sale 666 654 1 546 704 659 244
Straight-lining lease receivable 8 103 17 196 8 865
Other non current assets 441 709 403 474 461 121
Listed Investment 407 674 368 593 409 224
Derivative financial instruments 34 035 34 881 51 897
Current assets 404 832 1 181 640 393 807
Rental and other receivables 112 418 85 841 80 185
Dividends receivable 10 145 9 655 10 318
Cash and cash equivalents 282 269 1 086 144 303 304
Total assets 9 061 664 10 227 272 9 051 420
UNITHOLDERS' FUNDS AND LIABILITIES
Unitholders' funds 5 756 778 7 880 388 5 776 880
Unitholders' capital 1 947 048 3 428 516 1 947 048
Non-distributable reserves 3 809 730 4 451 872 3 829 832
Non-current liabilities 2 905 722 1 974 463 2 903 795
Borrowings 2 903 795 1 930 284 2 903 795
Derivative financial instruments 1 927 44 179 -
Current liabilities 399 164 372 421 370 745
Trade and other payables 155 473 115 865 125 652
Derivative financial instruments 50 327 8 395 54 643
Unitholders for distribution 193 364 248 161 190 450
Total unitholders' funds and liabilities 9 061 664 10 227 272 9 051 420
Net asset value per unit - cents 2 876 2 798 2 887
CONDENSED STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE SIX MONTHS
ENDED 30 SEPTEMBER 2014
Non-
distributable Retained
Capital reserve earnings Total
(R'000) (R'000) (R'000) (R'000)
Balance at 31 March 2013 2 579 048 4 128 295 - 6 707 343
Transactions with owners, recognised
directly in equity
Issue of 33 027 523 units in May 2013 * 849 468 - 9 492 858 960
Proceeds 900 000 - - 900 000
Capitalised unit issue costs (11 117) - - (11 117)
Prepaid distribution to 31 March 2013 (29 923) - 29 923 -
Payment of prepaid distribution in July 2013 - - (29 923) (29 923)
Prepaid distribution 2014 period (9 492) - 9 492 -
Total comprehensive income for the
period
Profit for the period - - 527 365 527 365
Other comprehensive income for the
period - 34 881 - 34 881
Net change in fair value of cash flow hedge
recognised directly in other comprehensive
income - 34 881 - 34 881
Total comprehensive income for the
period - 34 881 527 365 562 246
Transfer to non-distributable reserve - 288 696 (288 696) -
Unitholders distribution - - (248 161) (248 161)
Balance at 30 September 2013 3 428 516 4 451 872 - 7 880 388
Transactions with owners, recognised
directly in equity
Buyback of 81.5 million units in
October 2013 (1 481 468) (819 966) - (2 301 434)
Reduction in equity as a result of buyback (1 480 034) (819 966) - (2 300 000)
Incremental costs attributable to buyback of
unitholder capital (1 434) - - (1 434)
Total comprehensive income for the
period
Profit for the period - - 371 359 371 359
Other comprehensive income for the
period - 17 016 - 17 016
Net change in fair value of cash flow hedge
recognised directly in other comprehensive
income - 17 016 - 17 016
Total comprehensive income for the
period - 17 016 371 359 388 375
Transfer to non-distributable reserve - 180 910 (180 910) -
Unitholders distribution - - (190 449) (190 449)
Balance at 31 March 2014 1 947 048 3 829 832 - 5 776 880
Transactions with owners, recognised
directly in equity - - - -
Total comprehensive income for the
period
Profit for the period - - 191 892 191 892
Other comprehensive income for the
period - (18 630) - (18 630)
Net change in fair value of cash flow hedge
recognised directly in other comprehensive
income - (18 630) - (18 630)
Total comprehensive income for the
period - (18 630) 191 892 173 262
Transfer to non-distributable reserve - (1 472) 1 472 -
Unitholders distribution - - (193 364) (193 364)
Balance at 30 September 2014 1 947 048 3 809 730 - 5 756 778
CONDENSED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED
30 SEPTEMBER 2014
Unaudited at Reviewed at Audited at
30 Sep 2014 30 Sep 2013 31 Mar 2014
(R'000) (R'000) (R'000)
Cash generated from/ (utilised in) operating activities
Cash generated from operations 274 211 279 104 532 933
Dividend received 8 285 833 833
Distribution paid (190 450) (255 155) (503 315)
Interest paid (101 147) (80 226) (151 928)
Interest received 12 187 27 462 42 236
Taxation paid - (556) (556)
Net cash inflow/(outflow) from operating activities 3 086 (28 538) (79 797)
Cash flows utilised in investing activities
Subsequent expenditure on investment properties (16 808) (9 868) (23 801)
Subsequent expenditure on investment properties held for sale (6 200) (1 017) (7 918)
Acquisition of investment properties - - (1 679 596)
Selling costs on investment properties held for sale (1 086) - -
Selling costs on disposal of investment properties - - (3 403)
Subscription to Rights Issue - - -
Net cash outflow from investing activities (24 094) (10 885) (1 714 718)
Cash flows from financing activities
Gross proceeds from the issue of units in May 2013 - 900 000 900 000
Unit issue costs - (11 117) (11 117)
Share buyback costs - - (1 434)
Borrowings raised - 29 476 1 002 987
Net cash inflow from financing activities - 918 359 1 890 436
Net (decrease)/increase in cash and cash equivalents (21 008) 878 936 95 921
Cash and cash equivalents at the beginning of the period 303 304 206 745 206 745
Effect of exchange rate fluctuations on cash held (27) 463 638
Cash and cash equivalents at the end of the period 282 269 1 086 144 303 304
NOTES
1. BASIS OF PREPARATION
The unaudited condensed consolidated interim financial statements are prepared and presented in accordance with
International Financial Reporting Standards, which include International Accounting Standard (IAS) 34 Interim Financial
Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the requirements
of the Collective Investment Schemes Control Act, 2002. The same accounting policies and methods of computation are
followed
in the interim financial report as compared to the most recent annual financial statements. The key estimates and
assumptions used in the interim financial statements are the same as the ones used in the annual financial statements.
The condensed consolidated results have been prepared under the supervision of Sycom's acting financial director,
Craig Kotze.
2. CONDENSED SEGMENTAL RESULTS
for the six months ended 30 September 2014
RETAIL OFFICES TOTAL
(R'000) (R'000) (R'000)
Segment rental revenue and recoveries 159 379 212 459 371 838
Straight-line rental income accrual 602 (3 724) (3 122)
Dividend income 10 145 - 10 145
Total revenue 170 126 208 735 378 861
Operating expenditure (32 164) (38 530) (70 694)
Selling costs on investment properties held for sale (965) (121) (1 086)
Net finance income 429 1 363 1 792
Segmental net operating income 137 426 171 447 308 873
Fair value adjustments
South Africa (602) 3 724 3 122
International (3 544) - (3 544)
Segmental Earnings 133 280 175 171 308 451
Reconciliation of segmental results to profit for the period in the statement of profit or loss and other
comprehensive income
Allocated Unallocated Total
Rental revenue and recoveries 371 838 - 371 838
Straight-line rental income accrual (3 122) - (3 122)
Dividend income 10 145 - 10 145
Total revenue 378 861 - 378 861
Operating expenditure (70 694) (24 940) (95 634)
Selling costs on investment properties held for sale (1 086) - (1 086)
Net finance cost 1 792 (94 777) (92 985)
Net operating income 308 873 (119 717) 189 156
Fair value gain on investment properties 3 122 - 3 122
Fair value loss on listed investment (3 544) - (3 544)
Fair value adjustment on cross currency swaps - 3 158 3 158
Profit before taxation 308 451 (116 559) 191 892
Taxation - - -
Profit for the period 308 451 (116 559) 191 892
RETAIL OFFICES TOTAL
Investment Property Assets (R'000) (R'000) (R'000)
3 641 753 4 573 370 8 215 123
CONDENSED SEGMENTAL RESULTS
for the six months ended 30 September 2013
RETAIL OFFICES TOTAL
(R'000) (R'000) (R'000)
Segment rental revenue and recoveries 167 916 199 374 367 290
Straight-line rental income accrual 1 540 583 2 123
Dividend income 9 655 - 9 655
Total revenue 179 111 199 957 379 068
Operating expenditure (33 105) (39 867) (72 972)
Selling costs on investment properties held for sale (4 100) (16) (4 116)
Net finance cost 305 748 1 053
Segmental net operating income 142 211 160 822 303 033
Fair value adjustments
South Africa 112 117 138 780 250 897
International 50 365 - 50 365
Segmental Earnings 304 693 299 602 604 295
Reconciliation of segmental results to profit for the period in the statement of profit or loss and other
comprehensive income
Allocated Unallocated Total
Rental revenue and recoveries 367 290 - 367 290
Straight-line rental income accrual 2 123 - 2 123
Dividend income 9 655 - 9 655
Total revenue 379 068 - 379 068
Operating expenditure (72 972) (23 452) (96 424)
Selling costs on investment properties held for sale (4 116) - (4 116)
Net finance cost 1 053 (42 905) (41 852)
Net operating income 303 033 (66 357) 236 676
Fair value gain on investment properties 250 897 - 250 897
Fair value gain on listed investment 50 365 - 50 365
Fair value adjustment on interest rate and cross currency swaps - (10 017) (10 017)
Profit before taxation 604 295 (76 374) 527 921
Taxation - (556) (556)
Profit for the year 604 295 (76 930) 527 365
RETAIL OFFICES TOTAL
(R'000) (R'000) (R'000)
Investment Property Assets 4 175 058 4 467 100 8 642 158
3. FAIR VALUE OF FINANCIAL INSTRUMENTS RECOGNISED IN THE STATEMENT OF FINANCIAL POSITION
The fair values of all financial instruments with the exception of interest rate swaps, cross currency swap and the
investment in Stenham are substantially the same as the carrying amounts reflected on the statement of financial
position. The group measures fair values using the following hierarchy that reflects the significance of the inputs used
in
making the measurements:
- Level 1: Quoted prices (unadjusted) in an active market for an identical instrument.
- Level 2: Valuation techniques based on observable inputs, either directly (ie: as prices) or indirectly (ie: derived
from
prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments;
quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation
techniques where all significant inputs are directly or indirectly observable from market data.
- Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the
valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect
on the instrument's valuation. This category also includes instruments that are valued based on quoted prices for similar
instruments where significant unobservable adjustments or assumptions are required to reflect differences between the
instruments.
If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the
fair
value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value
hierarchy as the lowest level input that is significant to the entire measurement.
As the group does not hold financial instruments that are traded in active markets, fair values are not based on quoted
market prices or dealer price quotations. As such, the group determines fair values using valuation techniques. Valuation
techniques include net present value and discounted cash flow models and comparison to similar instruments for which
market observable prices exist. Assumptions and inputs used in valuation techniques include risk-free and benchmark
interest rates, credit spreads and other premia used in estimating discount rates, bond and equity prices, foreign
currency exchange rates, equity and equity index prices and expected price volatilities and correlations. The objective of
valuation techniques is to arrive at a fair value determination that reflects the price of the financial instrument at the
reporting date, that would have been determined by market participants acting at arm's length.
The group uses widely recognised valuation models and techniques for determining the fair value of common and more
simple financial instruments, like the interest rate and currency swaps that use only observable market data and require
little management judgement and estimation. Observable prices and model inputs are usually available in the market for
listed debt and equity securities, exchange traded derivatives and simple over the counter derivatives like interest rate
swaps. Availability of observable market prices and model inputs reduces the need for management judgement and
estimation and also reduces the uncertainty associated with determination of fair values.
The table below analyses financial instruments carried at fair value, by valuation method.
Level 1 Level 2 Level 3 Total
30 September 2014
Financial assets
Listed investment - - 407 674 407 674
Interest rate swaps - 34 035 - 34 035
Financial liabilities
Cross currency swap - (50 327) - (50 327)
Interest rate swaps - (1 927) - (1 927)
30 September 2013
Financial assets
Listed investment - - 368 593 368 593
Interest rate swaps - 34 881 - 34 881
Financial liabilities
Cross currency and interest rate swaps - (52 574) - (52 574)
A reconciliation of the opening balances to the closing balances for the level 3 valuation is disclosed as follows:
Unaudited at Reviewed at
30 Sep 2014 30 Sep 2013
(R'000) (R'000)
Balance as at beginning of period 409 224 310 722
Scrip shares acquired 1 994 7 506
Revaluation of investment recognised in profit or loss (3 544) 50 365
Fair value (loss)/gain on listed investment (3 544) 50 365
Carrying value at end of period 407 674 368 593
Level 2 fair values - Interest rate swaps and cross currency swaps
The following table shows the valuation techniques used in measuring level 2 fair values:
Type Valuation technique Significant unobservable inputs
Interest rate swaps Fair valued monthly by Nedbank Not applicable - observable inputs
Capital using mark to market mid are used in the valuation
market values. This involves, inter
alia, discounting the future cash flows
using the curves at the reporting date
and the credit risk inherent in the
contract
Cross currency swaps Fair valued bi-annually by Nedbank Not applicable - observable inputs
Capital using mark to market are used in the valuation
valuation methodology. This involves,
inter alia, calculating the present
value of the future cross currency swap
cash flows
Level 3 fair value - Investment in Stenham European Shopping Centre Fund
The investment in Stenham European Shopping Centre Fund is an investment in a closed fund without an actively traded
price. The significant underlying asset per the statement of financial position of Stenham is the investment property
balance, which is valued using a discounted cash flow model (refer valuation technique below). Sycom's valuation in
Stenham is based on the net asset value per share of the investment translated at the period end ruling exchange rate.
The investment property has been valued at 30 September 2014 by Jones Lang LaSalle, who are independent and
qualified in accordance with the Appraisal and Valuation Manual published by the Royal Institute of Chartered Surveyors
(RICS). The valuation was prepared in accordance with the RICS Valuation - Professional Standards published by the
Royal Institute of Chartered Surveyors as well as the International Valuation Standards (IVS) on the basis of Market
Value.
Significant Inter-relationship between
key
unobservable unobservable inputs and fair
Valuation technique inputs value measurements
The Market Value of the property has been assessed using the The fair value would
increase/
Discounted Cash Flow (DCF) calculation method. The valuation a) Financial (decrease) based on (1)
takes into account the agreed rent for the signed leases, the information used increases/(decreases) in the
market rent for currently vacant space and estimated rents for to calculate rental stabilised net operating
income,(2)
re-letting of the space after lease term expiry. In all instances, growth forecasts (decreases)/increases in the
yield
the valuers calculated the DCF for a 10-year period and assumed a used to calculate the
Terminal
capitalised value based on a stabilised rental income of the b) Net initial yield Value Indication, (3)
property thereafter. After the DCF-period of 10 years, the (6.39%) (decreases)/increases in the
valuers calculate a stabilised rental income. The capitalised value discount rate used to
calculate the
takes this stabilised rental income and subtracts the stabilised c) Discount rate Gross Capital Value
expenses, resulting in the Stabilised Net Operating Income. This (6.85%)
result is capitalised into perpetuity applying an equivalent
(growth implicit) yield and produces the Terminal Value d) Terminal
Indication. The resulting value is then discounted to the valuation capitalisation rate
date using the discount rate from years 1-10. Discounting (6.5%)
the remaining Cash Flows for years 1 to 10 and the Terminal
Value for year 11 to the valuation date (i.e. the Net Present e) Non
Value) produces the Gross Capital Value. After deductions for recoverable
Purchaser's Costs, the Market Value is obtained. expenses
f) Market lease
assumptions for
contract expiry/
vacant space
COMMENTARY
1. REVIEW OF RESULTS AND OPERATIONS
The Board of SPFM is pleased to report a distribution of 96.62 cents per unit (cpu) for the six
months ended 30 September 2014. This represents an increase of 9.7% over the corresponding
period in the previous financial year.
2. CORPORATE ACTION
Merger with Acucap Properties Limited ("Acucap")
Acucap made a general offer, and a subsequent follow-on offer, to Sycom unitholders in terms
of which Sycom unitholders were offered 0.58 Acucap shares in exchange for every Sycom unit
held. The follow-on offer closed on 26 September 2014, and resulted in Acucap increasing it's
holding in Sycom to 83.4%. Growthpoint Properties Limited holds 15.6% of Sycom's units in issue,
and minorities hold the residual 1%.
3. PORTFOLIO INVESTMENT ACTIVITY
Vaal Mall
The 14,000m(2) expansion of Vaal Mall commenced in September 2014, at an estimated cost of R439
million (Sycom's share being R341 million) at an expected initial yield of 8.4%. The project will
result in expanded Woolworths, Truworths, Foschini Group and Edcon stores and a new 2,400m(2)
Ster-Kinekor. The majority of stores are expected to be trading by mid-2016, with project
completion planned for November 2016. The expansion will include an upgrade of the existing
mall.
Paarl Mall
The 2,850m(2) expansion of Paarl Mall has been approved and will commence in January 2015. The
estimated cost of the expansion is approximately R68 million at an anticipated initial yield of 8%.
The project is driven largely by a 2,000m(2) expansion of Woolworths. Additional land has been
acquired adjacent to the Mall and once re-zoned, it will provide the necessary bulk to permit an
expansion that will allow a large format discounter to be introduced into the tenant mix.
Greenacres
Phase 1 of the Greenacres redevelopment is underway and is expected to be complete by April
2015. This phase comprises the construction of 3,340m(2) of additional retail space which will
link the current Woolworths entrance to that of the Shoprite Hyper. The estimated total cost of
phase 1 is R86 million, of which Sycom's contribution is R43 million. The anticipated first year
return on phase 1 is 13.9%. Phase 1 will reflect the modern and contemporary standard to which
the rest of the mall will be upgraded. The total capital commitment for the Greenacres project,
including all non-income producing refurbishment work and mall revitalisation, is in the order of
R296 million (Sycom's share being R148 million) with an anticipated yield of 7,5%, and is expected
to be complete by June 2016.
Fourways Crossing
The upgrade and expansion of Fourways Crossing has commenced with the anticipated completion
being the end of 2014. The total capital cost of the project is R80 million with Sycom's share being
R40 million.
Roggebaai Place
This building, located in the Cape Town Foreshore, has reached practical completion and is in the
process of being transferred from the developer to Sycom. The developer has provided a cash
underpin for the full rental for the first two years after Sycom takes transfer of the building.
The estimated yields disclosed above are based, inter alia, on costing reports received from the
professionals involved in the respective projects and managements forecast of achievable rentals
assuming the projects are fully let.
4. BORROWINGS
Sycom has an approved total facility of R2.9 billion. At the end of the reporting period, Sycom's
gearing level was 34.1%, with 42.8% of its borrowings being covered by interest rate swap
agreements. This will increase to 71.3% of current borrowings once all contracted forward
starting interest rate swaps become effective over the next 15 months.
Interest rate hedging
Notional
Amount Effective
Start Date Maturity Date Fixed Rate Rm rate
31-Mar-14 31-Mar-17 5.790% 200 7.290%
17-Mar-14 17-Mar-17 5.785% 200 7.285%
9-Apr-14 9-Apr-18 6.095% 100 7.595%
30-Sep-14 29-Sep-17 6.045% 200 7.545%
30-Sep-14 30-Sep-16 7.180% 500 8.680%
31-Mar-15 29-Mar-18 6.305% 300 7.805%
30-Sep-15 28-Sep-18 7.650% 300 9.150%
31-Mar-16 31-Mar-20 8.150% 100 9.650%
31-Mar-16 31-Mar-21 8.340% 100 9.840%
Total 2 000
5. LEASE EXPIRIES
The lease expiry profile by rental income is reflected in the table below. The lease with Deloitte
at The Woodlands has been extended to 31 March 2020.
Total Retail Offices
Mar-15 10.3% 3.6% 6.7%
Mar-16 15.8% 12.2% 3.6%
Mar-17 28.0% 12.7% 15.3%
Mar-18 8.6% 4.2% 4.4%
Mar-19 13.0% 3.4% 9.6%
thereafter 24.3% 4.5% 19.8%
100.0% 40.6% 59.4%
There are no individually significant lease expiries in this profile following the renewal of the
Deloitte lease and the disposal of Discovery House.
6. VACANCIES
The table below provides details of Sycom's vacancies at September 2014, March 2014 and
March 2013, expressed by gross lettable area.
Sept-14 Mar-14 Mar-13
Retail vacancy 1.0% 3.0% 1.6%
Office vacancy 1.5% 4.4% 2.7%
Total vacancy 1.3% 3.8% 2.2%
The low vacancy level reflects the high quality of Sycom's property assets, in particular its office
portfolio, which has performed strongly in market conditions that remain difficult.
7. EVENTS AFTER THE REPORTING DATE
Other than the Corporate Action detailed above there have been no events after the reporting date that
require disclosure.
8. PROSPECTS
Given that minorities hold only 1% of Sycom's units in issue, steps will be taken to acquire these units
and a process will be initiated to de-list the Fund. However, these steps are not expected to be
complete before the end of the current financial year.
The board expects Sycom's distribution growth for the full financial year to be in the order of 8% to 9%.
The growth in distributions is based on the following key assumptions:
- forecast investment property income is based on contractual rental escalations and market related renewals;
- appropriate allowances for vacancies have been incorporated into the forecast; and
- no major corporate failures will occur.
This guidance has not been reviewed or reported on by Sycom's auditors.
9. PAYMENT OF DISTRIBUTION
Notice is hereby given of the declaration of distribution number 59 in respect of the six months
to 30 September 2014. The interim distribution of 96.62 (ninety six comma six two) cents per unit
has been approved in respect of the six month period ended 30 September 2014. The last date to
trade the units cum distribution is Friday, 28 November 2014 and the record date will be Friday,
5 December 2014. The units will start trading ex-distribution from Monday, 1 December 2014.
Distributions will be made to unitholders on Monday 8 December 2014.
Sycom’s tax number is 9592332846 and it has no STC credits available.
Unit certificates may not be dematerialised or rematerialised between Monday 1 December 2014
and Friday 5 December 2014 both days inclusive.
TAX TREATMENT OF DISTRIBUTION
The information in this announcement is provided as a general guide to the potential South African tax
consequences pertaining to the distribution for unitholders that are subject to South African tax. The
information provided in this announcement is not intended as comprehensive tax advice, nor does it
purport to take into account all of the considerations that may be relevant to unitholders in relation to
the distribution. Unitholders should consult their tax advisors for advice on the particular tax
consequences applicable to them.
In accordance with Sycom's status as a REIT, unitholders are hereby advised that the interim distribution
will meet the requirements of a "qualifying distribution" for the purposes of section 25BB of the
Income Tax Act, No.58 of 1962 ("Income Tax Act"). The distribution will therefore be deemed to be a
dividend for South African tax purposes, in terms of section 25BB of the Income Tax Act.
South African tax resident unitholders
The distribution received by or accrued to South African tax residents must be included in the gross
income of such unitholders and will not be exempt from income tax (in terms of the exclusion to the
general dividend exemption, contained in paragraph (aa) of section 10(1)(k)(i) of the Income Tax Act)
as a result of it being a dividend distributed by a REIT. This distribution may, however, be exempt from
dividend withholding tax in the hands of South African tax resident unitholders in which case the net dividend
amount will be equal to the gross dividend amount disclosed above, provided that the South African resident
unitholders provided the following forms to their CSDP or broker, as the case may be, in respect of uncertificated
units, or Computershare Investor Services Proprietary Ltd ("Computershare") (at the details contained below), in
respect
of certificated units:
- a declaration that the distribution is exempt from dividends tax; and
- a written undertaking to inform the CSDP, broker or, in respect of certificated unitholders only,
Computershare, should the circumstances affecting the exemption change or the beneficial
owner cease to be the beneficial owner,
in the form prescribed by the Commissioner for the South African Revenue.
Non-resident unitholders
Distributions received by non-resident unitholders will not be taxable as income and instead will be
treated as an ordinary dividend which is exempt from income tax in terms of the general dividend
exemption in section 10(1)(k)(i) of the Income Tax Act. It should be noted that, up to 31 December
2013, distributions received by non-residents from a REIT were not subject to dividend withholding
tax. From 1 January 2014, any distribution received by a non-resident from a REIT is subject to
dividend withholding tax at 15% in which case the net dividend amount will be 82.127 cents per unit,
unless the rate is reduced in terms of any applicable Double Taxation Agreement ("DTA") between South
Africa and the country of residence of the unitholder.
A reduced dividend withholding rate in terms of the applicable DTA may only be relied upon if the non-
resident unitholder has provided the following forms to its CSDP or broker, as the case may be, in
respect of uncertificated units, or, Computershare, in respect of certificated units:
- a declaration that the distribution is subject to a reduced rate as a result of the application of a
DTA; and
- a written undertaking to inform its CSDP, broker or Computershare, as the case may be, should
the circumstances affecting the reduced rate change or the beneficial owner cease to be the
beneficial owner,
in the form prescribed by the Commissioner for the South African Revenue Service.
Submissions
Dematerialised unitholders
Dematerialised unitholders are advised to contact their CSDP or broker as the case may be, to arrange
for the abovementioned documents to be submitted prior to payment of the distribution, if such
documents have not already been submitted.
Certificated unitholders
Certificated unitholders, who have not already submitted the above-mentioned documents, may
submit these documents to Computershare
By post to: By hand to:
Computershare Dividends Tax Project Computershare Dividends Tax Project
PO Box 62212 70 Marshall Street
Marshalltown Johannesburg
2107 2001
By email to: By fax to:
DividendTax@computershare.co.za +27 11 688 5266
Any queries by certificated unitholders regarding the abovementioned submission
may be directed to Computershare at +27 11 373 0004
On behalf of the Board
G K EVERINGHAM PA THEODOSIOU
Chairman CEO
Sycom Property Fund Managers Ltd Sycom Property Fund Managers Ltd
13 November 2014
Registered Office
Suite A11 Westlake Square
Westlake Drive
Westlake
CAPE TOWN
Transfer secretaries:
Computershare Investor Services Proprietary Limited
70 Marshall Street
JOHANNESBURG
Sponsor:
Questco Proprietary Limited
http://www.sycom.co.za
Directors: GK Everingham (Chairman), MS Moloko (Deputy Chairman), FM Berkeley, JPD Flanagan,
BM Stocks, PA Theodosiou*# (CEO), CB Marlow, GR Jones*
Company Secretary: H H-O Steyn
* Executive , # British
Date: 13/11/2014 05:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
