Wrap Text
Unaudited condensed consolidated interim financial results for the six months ended 31 December 2014
Texton Property Fund Limited
(formerly Vunani Property Investment Fund Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 2005/019302/06)
A Real Estate Investment Trust, listed on the JSE Limited
JSE share code: TEX
ISIN: ZAE000190542 (formerly ISIN: ZAE000185872)
23 February 2015
Unaudited condensed consolidated interim financial results for the
six months ended 31 December 2014
Financial Highlights
- Dividend per share up by 11.7% from 40 cents to 44.68 cents per
share
- Investment property income up by 36.5% from R124.5 million to
R169.9 million
- Portfolio growth up by 42.6% to R3.140 billion from 30 June 2014
- Net property income up by 44.4% to R119.6 million
- Share price 963 cents
- Net asset value per share up by 0.26% from 993.89 to 996.43 cents
per share
- Loan to value up from 31.3% at 30 June 2014 to 34.7%
Non-financial highlights
- 75.6% Blue chip tenants (based on revenue)
- 3.5% Vacancy (2013: 6.2%)
- 90.1% Tenant retention (based on GLA)
Commentary
Introduction
The Fund is pleased to report another period of strong distribution
growth (11,7%) for H1’2015. The period saw evidence of our stated
strategies in terms of a larger management team, accelerated growth,
sectoral diversification, and our intention to become a meaningful
black empowerment vehicle. Much of this deal flow occurred in late
December and the rerating of the share price post balance sheet
indicates that shareholders are supportive of the strategy. Once
again, we have a solid platform on which to build into the future.
Key performance indicators
Despite a struggling economy, the Fund’s key performance indicators
have remained strong. While the commercial sector average vacancy is
11,1%, ours has improved to 3,5% (June 2014:5,3%) on a total GLA of
322 007m2. The Fund started the reporting period with 25% of its
leases expiring in the 2015 financial year.
Our low vacancy rate and high tenant retention (90,1%) indicates
that we were successful in our leasing strategy. We have had some
rental reversions but on the whole, we are very satisfied with our
progress with an average lease escalation of 7,5%. In addition, we
are already hard at work on those leases expiring in the next 12
months and are confident that we will keep our vacancies well
below country averages. Our high weighting of ‘blue chip’ (listed,
national or government) tenants at 75,6% has protected our income.
However, we have noticed an increase in our smaller tenants that are
finding the sluggish economy difficult to manage. Despite the tough
conditions, our rental collection record is 90% of rent
being collected within the first five days of the month which
indicates that tight management remains the best defence.
The Fund’s diversification into low risk industrial and retail assets
has enabled it to extend its weighted average lease expiry to 4,63
years. Whilst we will always have a strong office weighting, the
industrial and retail assets will reduce the Fund’s risk to the
commercial sector to provide a less cyclical rental profile.
The Fund’s geographic profile will always mirror economic activity
and remains heavily weighted to Gauteng where 80% (June 2014: 68%) of
our properties are located with another 13% (June 2014: 22%) in the
Western Cape. ‘Blue chip’ clients (listed, national or government
tenants) contribute 76% (Jun 2014: 80%) of our revenue per month. 7%
(June 2014: 13%) of our lettable area comprises national companies;
21% (June 2014: 37%) Government; and 44% (June 2014: 26%) listed and
large tenants. We have a 58%/42% split between single and multi-
tenanted buildings based on rental income.
The majority of our tenants are in the commercial sector
comprising 92% (2013: 95%) by rental income.
Greening the portfolio
Our greening initiatives are progressing well although the various
projects have taken second place to the larger transactions
implemented during the period. Nonetheless, the Fund remains
committed to greening from both a corporate responsibility
perspective as well as that of lowering our tenants’ overall cost
of occupation. Similarly, we are equally committed to ensuring our
greening delivers value to our shareholders.
Acquisitions
When we listed the Fund in 2011 our main aim was to provide a
platform for acquisitive growth so that we can grow our asset base
by investing in well priced income and quality enhancing
investment properties. The vast majority of the assets were
commercial which was largely a result of the Fund selling its
industrial developments as soon as they were complete. The board
of Texton gave careful consideration to, and is supportive of, the
need for diversification to smooth out the inevitable cyclical
performance of a commercially focused portfolio and to take advantage
of good acquisition opportunities in other areas. This reporting
period saw the implementation of this strategy, both locally and in
the UK. During the reporting period, we have acquired twelve
excellent SA properties valued at R878,7 million (being R925,1
million less lease liability of R46,4 million – refer to note relating
to acquisitions/business combinations for details of the acquisitions).
The properties improved our lease profile and all represent good value
for the Fund. Management now holds approximately 11% of the Texton
shares in issue, thereby aligning management and shareholder interests.
Much work has been done on implementing our UK strategy and we
anticipate concluding the acquisition of a number of low risk
properties let to blue chip tenants on long leases by March 2015.
Refer to events after the reporting date. The properties are part of
a portfolio, the remainder of which is under due diligence, and are
likely to be acquired in March/April 2015.
BEE transaction
The management and board of the Fund remain committed to the
transformation and empowerment objectives of South Africa. In
September, we concluded an empowerment transaction with PD Naidoo
that placed 6,3% of Texton shares in black hands. In late December,
we announced a second empowerment transaction that will place
another circa 20% (R443 million) of shares in black hands. This
transaction is subject to shareholder voting in March 2015 and, if
successful, the shares will be issued at the 30 day VWAP. The cash
proceeds will be immediately deployed into impending acquisitions.
The combined transactions will give Texton a meaningful, sustainable
and commercially driven black economic empowerment shareholding at
the listed level and will ensured that the Fund achieves a Level 3
rating. Our BEE partners comprise a combination of broad based
beneficiaries, women and other well networked and respected business
people.
Summary of financial performance
Unaudited Unaudited Audited
six months to six months to year end
31 December 31 December 30 June
2014 2013 2014
Number of shares/linked
units in issue (’000) 208 498 169 122 160 210*
Weighted average number of
shares/linked units in
issue (’000) 177 454 142 850 157 494
Net asset value per share
(cents) 996,43 268,63 993,89
Net asset value per linked
unit (cents) – 877,81 –
Net tangible asset value
less deferred tax per share
(cents) 994,63 265,78 991,55
Net tangible asset value
less deferred tax per linked
units (cents) – 874,96 –
Basic and diluted earnings
per shares (cents) 52,79 1,17 123,60
Comparable basic and
diluted earnings per
share/linked unit (cents) 52,79 47,00 162,88
Headline earnings per share 45,10 1,17 53,28
(cents)
Comparable headline earnings
per share/linked
unit (cents) 45,10 47,00 92,56
Distribution per
share/linked unit (cents) 44,68 40,00 85,47
Interim distribution – 40,00 40,00
Interim dividend** 44,68 – –
Final dividend** – – 45,47
Share price (cents) 963,00 965,00 965,00
Loan to value (%) 34,7 17,1 31,60
*Includes treasury shares.
**Declared subsequent to period end.
Geographical profile
GLA Rental Rental
percen- per percen-
GLA tage month tage
m2 % R'000 %
31 December 2014
Eastern Cape Province 8 102 2,5 847 3,0
Gauteng Province 257 053 79,9 21 289 74,6
KwaZulu-Natal
Province 4 333 1,3 337 1,2
North West Province 5 362 1,7 631 2,2
Northern Cape
Province 1 181 0,4 106 0,4
Western Cape Province 42 572 13,2 4 900 17,1
Free State 3 404 1,0 427 1,5
322 007 100,0 28 537 100,0
31 December 2013
Eastern Cape Province 7 881 4,8 926 5,4
Gauteng Province 103 147 63,2 10 868 63,5
KwaZulu-Natal 4 333 2,7 302 1,8
Province
North West Province 5 362 3,3 582 3,4
Northern Cape
Province 1 181 0,6 98 0,6
Western Cape Province 41 420 25,4 4 346 25,3
163 324 100,0 17 122 100,0
30 June 2014
Eastern Cape Province 8 102 4,3 825 4,1
Gauteng Province 129 803 68,3 13 799 67,9
KwaZulu Natal
Province 4 333 2,3 334 1,6
North West Province 5 362 2,8 628 3,1
Northern Cape
Province 1 181 0,6 98 0,4
Western Cape Province 41 335 21,7 4 651 22,9
190 116 100,0 20 335 100,0
Sectoral profile
GLA Rental Rental
percen- per percen-
GLA tage month tage
m2 % R'000 %
31 December 2014
Commercial 220 425 68,5 22 768 79,8
Retail 27 575 8,5 3 101 10,9
Industrial 74 007 23,0 2 668 9,3
322 007 100,0 28 537 100,0
31 December 2013
Commercial 149 977 91,8 16 152 94,3
Retail 8 096 5,0 738 4,3
Industrial 5 251 3,2 232 1,4
163 324 100,0 17 122 100,0
30 June 2014
Commercial 176 548 92,9 19 328 95,0
Retail 8 317 4,3 773 3,8
Industrial 5 251 2,8 234 1,2
190 116 100,0 20 335 100,0
Tenant spread
Rent- Rent- Rental Rental
able able per percen-
area area month tage
m2 % R'000 %
31 December 2014
(A) National 21 622 7,0 2 359 8,3
(A) Government 66 009 21,2 8 008 28,0
(B) Listed/large
entities 137 303 44,2 11 206 39,3
(C) Other 85 803 27,6 6 964 24,4
310 737 100,0 28 537 100,0
31 December 2013
(A) National 23 163 15,1 2 523 14,7
(A) Government 55 772 36,4 6 549 38,2
(B) Listed/large
entities 36 996 24,1 4 563 26,6
(C) Other 37 348 24,4 3 487 20,5
153 279 100,0 17 122 100,0
30 June 2014
(A) National 23 572 13,1 2 627 12,9
(A) Government 65 790 36,5 7 878 38,7
(B) Listed/Large
entities 47 152 26,2 5 690 28,0
(C) Other 43 592 24,2 4 140 20,4
180 106 100,0 20 335 100,0
Tenants are classified as follows:
(A) Large national tenants, large listed tenants, government and
major franchises;
(B) National tenants, listed tenants, franchises and medium to
large professional firms; and
(C) Other.
Vacancy profile
31 December 2014
Rent- Rent-
able able
area area
m2 %
Commercial 10 830 96,1
Retail 177 1,6
Industrial 264 2,3
11 271 100,0
31 December 2013
Rent- Rent-
able able
area area
m2 %
Commercial 9 744 97,0
Retail 301 3,0
Industrial – –
10 045 100,0
30 June 2014
Rent- Rent-
able able
area area
m2 %
Commercial 9 780 97,7
Retail 230 2,3
Industrial – –
10 010 100,0
Lease expiry profile per annum
Vacant 2015 2016 2017 >2017
% % % % %
31 December 2014
Rentable area 3,5 27,7 21,8 20,6 26,4
Revenue – 26,9 23,8 28,4 20,9
30 June 2014
Rentable area 5,3 28,0 22,6 15,3 28,8
Revenue – 25,6 26,4 8,0 40,0
Lease expiry profile per annum
Vacant 2014 2015 2016 >2016
% % % % %
31 December 2013
Rentable area 6,2 26,2 25,7 7,1 34,8
Revenue – 25,6 26,4 8,1 39,9
At 31 December 2014 the property portfolio reported a vacancy level
of 3,5%.
Vacant Vacant Vacant
Total 31 Dec 31 Dec 30 Jun
GLA 2014 2013 2014
m2 % % %
Commercial 220 425 3,3 6,0 5,1
Retail 27 575 0,1 0,2 0,2
Industrial 74 007 0,1 – –
Total 322 007 3,5 6,2 5,3
The weighted average lease escalation is 7,5% for the portfolio.
Reconciliation of change in GLA of the Fund
Total Total
GLA at Net GLA
30 Jun increase 31 Dec
2014 in GLA 2014
m2 m2 m2
Commercial 176 548 43 877 220 425
Retail 8 317 19 258 27 575
Industrial 5 251 68 756 74 007
Total 190 116 131 891 322 007
Basis of accounting
The condensed financial results for the six months to 31 December
2014 have been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards
(IFRS), the presentation and disclosure requirements of
IAS 34: Interim Financial Reporting, the SAICA Financial Reporting
Guides as Issued by the Accounting Practices Committee, Financial
Pronouncements as issued by the Financial Reporting Standards
Council, the Companies Act 71, of 2008 and the JSE Limited
Listings Requirements.
The accounting policies applied in the preparation of the results for
the period ended 31 December 2014 are in terms of IFRS and consistent
with those adopted in the financial statements for the year ended 30
June 2014. These interim condensed financial results have been
prepared by Marelise de Lange, CA (SA).
The accounting policies as set out in the audited financial
statements for the year ended 30 June 2014 have been consistently
applied. These condensed consolidated interim results incorporate the
financial results of the company and its subsidiaries. Results of
subsidiaries are included from the effective date of acquisition.
Investment property comprises land and buildings held to generate
rental income and capital growth over the long term and are carried
at fair value.
Net property income
The increase in revenue of 39,5% from the prior comparable period was
largely due to the effects of contractual rental escalations and the
property acquisitions 32,2%.
The ratio of net property expenses (property expenses less
recoveries) to rental income for the Group has improved from 18,0% in
December 2013 to 15,1% in the current six months as a result of
tight cost management and the acquisition of properties with triple
net leases. The ratio of gross property expenses to investment
property income (rental income including recoveries from tenants) has
also improved from 35,4% to 33,8%.
Asset management fees
The asset management function is performed by Texton Property
Investments Proprietary Limited and the day-to-day property
management function is performed by JHI Properties Proprietary
Limited and Kuper Legh Property Management Proprietary Limited. The
increase in fees is attributable to the increased enterprise value on
which the fee is calculated as a result of the property acquisitions.
Fair value adjustments
The entire portfolio, with the exception of the acquisitions referred
to below (valued at the date of acquisition), was independently
valued at 30 June 2014 and the board of directors does not believe
that a revaluation of the properties is warranted as there are no
factors that would materially affect the valuation of the portfolio
for the period ended 31 December 2014. Swap agreements were fair
valued using the yield curve at 31 December 2014, resulting in a
decrease in the overall swap liability to R3,6 million (25,8%).
Arrears
Tight management of receivables resulted in total arrears of
R2,1 million (30 June 2014: R1,6 million). Arrears are being
managed carefully with 90% of rental collected within the first
five days of the month.
Finance costs
Finance costs increased by 88,1% to R30,3 million (2013: R16,1
million), as a result of the floating debt being repaid early in the
previous comparable period from the proceeds of the rights issue in
August 2013. In the current period, additional debt of R191,98
million was incurred for acquisitions. The weighted average interest
rate for borrowings is 8,27% (2013: 9,2%).
Acquisitions/business combinations
During the six months to 31 December 2014, the Fund made the
following acquisitions:
Weighted
Acqui- average
sition Acqui- annual
cost/NAV sition escala-
Transfer acquired GLA yield tion
date R'000 m2 % %
Selby, Johannesburg 24 Jul
2014 52 737 10 419 9,0 8,0
Babcock, Bedfordview 12 Sep
2014 48 451 3 865 9,4 9,0
Quintile, Bloemfontein 12 Sep
2014 47 500 3 404 9,6 8,0
Scott Street, Waverley 18 Sep
2014 107 805 4 329 9,5 8,0
St Georges Mall,
Cape Town 18 Sep
2014 21 130 1 242 10,5 8,0
Edcon, Johannesburg 30 Oct
2014 153 948 28 580 9,9 7,5
Discus House Proprie-
tary Limited owning 31 Dec
2014 74 827*
Kempstar Mall,
Kempton Park 6 019 9,4 8,2
Imperial Com Props
Proprietary
Limited owning 31 Dec
2014 65 406*
Woodmead
Commercial Park,
Woodmead 13 086 9,9 7,9
Investage 183
Proprietary
Limited 31 Dec
2014 85 406*
Bompas Road,
Dunkeld 750 9,3 6,5
Blue Strata,
Wierda Valley 1 806 9,3 8,0
Kuper Legh Industrial
Park, Hermanstad 44 029 9,8 8,2
Sable Place
Properties 31 Dec
2014 13 666* 12 909 11,8 9,0
Proprietary
Limited (5 Mini
Industrial units)
670 876 130 438
* These amounts relate to the net asset value acquired.
There are land leases in place for the Woodmead and Kempstar
Mall properties. The leases are both renewable for a further
40 years upon maturity on 30 November 2031 and 31 March 2035
respectively.
Net assets acquired
Total
R’000
Investment property 925 077
Trade and other receivables 5 055
Income tax receivable 3 335
Cash and cash equivalents 6 157
Other financial liabilities (214 303)
Lease liability (46 397)
Trade and other payables (8 048)
Net assets acquired 670 876
Cost of investment 670 876
Settlement of cost of investment
Less: Cash paid (191 980)
Less: Shares issued (465 250)
Gain on bargain purchase 13 646
Investment property held for sale
On 30 June 2014, the Brickfield property, valued at R24 million,
was classified as held for sale as a sale agreement was concluded.
The property is expected to transfer in May 2015.
Borrowings
At 31 December 2014 the Fund had a loan to value of 34,7%
(30 June 2014: 31,3%). This is below the board approved 40%
level. The Fund remains capitalised to take advantage of yield-
enhancing acquisitions and has an average cost of debt of 8,27%
with 48,7% of the outstanding debt hedged through the use of
interest rate swaps (30 June 2014: 49,2%).
Unaudited Unaudited Audited
six months to six months to year to
31 December 31 December 30 June
2014 2013 2014
R'000 R'000 R'000
Carried at amortised cost
Standard Bank Limited loan 924 272 358 390 721 101
Investec Bank Limited loan 214 303 – –
1 138 575 358 390 721 101
Carried at fair value through
profit or loss
Interest rate swaps
(Standard Bank Limited) 3 627 4 887 1 465
Total financial liabilities 1 142 202 363 277 722 566
Less: redraw portion of
facilities (67 914) (43 818) –
Less: amount to be settled
within 12 months – – (362 500)
Non-current portion of
financial liabilities 1 074 288 319 459 360 066
Amount to be settled within
12 months* – – 362 500
Less: redraw portion of
facility* – – (25 223)
Current portion of financial
liabilities – – 337 277
* Excess cash paid into the facilities on a monthly basis and when
required for the payment of the dividend, the cash can be accessed
without penalty from the facility.
Change in directors and board sub-committees
The following changes were made to the board committees:
Ms KN Vundla and Ms NV Balfour were appointed to the Remuneration
and Nominations Committee in January 2015.
Prospects
Despite the difficult economic climate, the office dominated
portfolio continues to perform well and we anticipate being able to
deliver above market distribution growth into the future. We will
continue to focus on our core strategy of growing the fund
with yield enhancing assets without compromising on quality. A two
day off-site strategy session in October focussed on identifying
those attributes that have made Texton successful to date and,
importantly, those attributes that are applicable outside of the
South African office sector. The success of the Fund to date has been
based our ability to tightly manage the assets with highly
experienced staff; a disciplined approach to acquisitions; and to
only acquire assets that we are confident we can manage. Further, we
identified other sectors where we have the skills, experience and
networks to be successful.
We have acquired a number of light industrial/warehousing properties
that are well located, low risk, have a stable tenant profile and are
non-specialised. Typically they will be 2 000m2 – 10 000m2 ‘boxes’
with a small office component for which we can identify demand. A key
component of our decision making is our ability to relet the premises
in event of a tenant vacating. Our retail focus will be on the lower
LSM, commuter based centres with a GLA of less than 12 000m2. The
geographic defensiveness of smaller centres is key. We are most
unlikely to acquire an ‘also ran’ neighbourhood centre or a regional
mall as this is well outside of our current expertise.
It has been our stated intention for some time to acquire assets
offshore. It is well known that the top performing funds all have
offshore exposure, it is also important to ensure we can be
successful in another market. We undertook exhaustive research of
countries and particularly our ability to trade successfully in them.
We have identified the UK as our target market and collectively the
management team has 30 years in that market having owned, developed,
funded and traded properties. The Fund is the beneficiary of
management’s school fees. There will of course be other markets that
may offer higher returns. However, it is the compatibility of our
expertise and networks with the target market that will protect the
Fund. Further to the cautionary announcement released this morning,
we are close to concluding a number of acquisitions in the UK,
all of which are low risk, tenanted by AAA corporates on long leases
(+10 years). The properties are predominantly offices, located in
stable secondary nodes (ie outside the M25) in areas that are
becoming increasingly popular with corporates as London rentals and
salaries are multiples of these areas. The assets will be efficiently
funded giving the Fund yield accretion on day 1.
We are very pleased with our two BEE transactions that place 25% of
our shares in black hands. Texton Property Investments Proprietary
Limited have signed operating agreements with each of the four BEE
partners and this closely aligns their interests with those of the
Fund. Apart from achieving our transformation objectives, our new
partners have already added considerable value to the Fund
particularly in tenant negotiations and deal flow. These new
relationships open up doors and networks for the Fund. We look
forward to cementing these relationships and believe they will be
another strong driver for the Fund.
The Fund has a solid pipeline of acquisitions. Whilst we will always
be office dominated, the sectoral diversification widens our pool of
potential acquisitions, thereby enabling us to sift out great deals
from good deals. We would be disappointed if we acquired less than
R1,5 billon in the next 12 months. This is always subject to finding
suitable assets. We believe shareholders can look forward to another
busy, successful year ahead.
This prospects statement has not been reviewed or reported on by the
Fund’s independent external auditors.
Cash distribution
The board has approved and notice is hereby given of an interim
dividend (distribution number 8) of 44,68 cents per share for the six
months ended 31 December 2014.
In accordance with Texton’s status as a REIT, shareholders are
advised that the distribution meets the requirements of a “qualifying
distribution” for the purposes of section 25BB of the Income Tax Act,
No. 58 of 1962 (Income Tax Act). Accordingly, qualifying
distributions received by local tax residents must be included in the
gross income of such shareholders (as a non-exempt dividend in terms
of section 10(1)(k)(aa) of the Income Tax Act), with the effect that
the qualifying distribution is taxable as income in the hands of the
shareholder. These qualifying distributions are, however, exempt from
dividend withholding tax in the hands of South African tax resident
shareholders, subject to provision of the required declarations to
the unitholders’ Central Securities Depository Participant (CSDP) or
broker, as the case may be, in respect of uncertificated shares, or
the company, in respect of certificated shares.
Qualifying distributions received by non-resident shareholders will
not be taxable as income and instead will be treated as ordinary
dividends but which are exempt in terms of the usual dividend
exemptions per section 10(1)(k) of the Income Tax Act. It
should be noted that until 30 June 2014 qualifying distributions
received by non-residents were not subject to dividend withholding
tax. From 1 January 2014, any qualifying distribution received by
a non-resident from a REIT will be subject to dividend withholding
tax at 15%, unless the rate is reduced in terms of any applicable
agreement for the avoidance of double taxation between South
Africa and the country of residence of the shareholder. Assuming
dividend withholding tax will be withheld at a rate of 15%, the net
amount due to non-resident shareholders will be 37,978 cents per
share.
Local tax resident shareholders as well as non-resident shareholders
are encouraged to consult their professional advisors should they be
in any doubt as to the appropriate action to take.
Summary of the salient dates relating to the cash distribution are
as follows:
Last date to trade in order to participate in Friday,
the cash distribution 20 March 2015
Shares to trade ex-distribution Monday,
23 March 2015
Record date Friday,
27 March 2015
Payment date Monday,
30 March 2015
Shares may not be dematerialised or rematerialised between Monday,
23 March 2015 and Friday, 27 March 2015, both dates inclusive.
On behalf of the board
PD Naidoo RF Kane
Chairman Chief executive officer
23 February 2015
Statement of financial positionas as at
Unaudited Unaudited Audited
six months six months year to
31 December 31 December 30 June
2014 2013 2014
R'000 R'000 R'000
Assets
Non-current assets 3 157 488 1 856 056 2 219 986
Investment property 3 140 400 1 83 450 2 202 525
Property, plant and
equipment 7 102 6 381 7 925
Other non-current
assets 6 231 6 408 5 781
Deferred tax 3 755 4 817 3 755
Current assets 117 021 56 725 113 501
Trade and other
receivables 54 543 15 211 23 824
Investment property
reclassified as held
for sale 24 000 – 24 000
Income tax receivable 4 563 – 1 228
Cash and cash
equivalents 33 915 41 514 64 449
Total assets 3 274 509 1 912 781 2 333 487
Equity and liabilities
Equity 2 077 541 454 317 1 592 316
Ordinary share capital 1 409 830 422 945 436
Retained earnings
/(accumulated loss) 667 711 (50 252) 646 880
Non-distributable
reserves – 504 147 –
Debentures – 1 031 257 –
Shareholders’ interest 2 077 541 1 485 574 1 592 316
Other liabilities
Other non-current
liabilities 1 120 686 319 459 360 066
Other financial
liabilities 1 074 289 319 459 360 066
Lease liability 46 397 – –
Current liabilities 76 282 107 748 381 105
Current portion of
other financial
liabilities – – 337 277
Trade and other
payables 76 282 40 043 45 828
Linked unitholder for
distribution – 67 649 –
Current tax payable – 56 –
Total liabilities 1 196 968 427 207 741 171
Total equity and
liabilities 3 274 509 1 912 781 2 333 487
Shares/linked units in
issue (‘000) 208 498 169 122 160 210*
Net asset value per
share (cents) 996,43 268,63 993,89
Net asset value per
linked unit (cents) – 877,81 –
Net tangible asset
value less deferred tax
per share (cents) 994,63 265,28 991,55
Net tangible asset
value less deferred tax per
linked unit (cents) – 874,96 –
* Includes treasury shares.
Statement of comprehensive income for the period ended
Unaudited Unaudited Audited
six months six months year to
31 December 31 December 30 June
2014 2013 2014
R'000 R'000 R'000
Investment property
income 169 918 124 534 271 759
Straight-line rental
adjustment 7 093 2 380 1 839
Revenue 177 011 126 914 273 598
Property expenses (57 406) (44 133) (89 571)
Net property income 119 605 82 781 184 027
Other income 14 695 5 800 5 444
Other operating
expenses (2 811) (2 231) (4 89)
Asset management fees (6 313) (4 502) (9 588)
Operating profit 125 176 81 848 175 194
Finance income 1 441 1 107 8 299
Finance costs (30 541) (16 110) (41 421)
Fair value adjustments (2 163) 909 114 827
Capital items (114) – (9)
93 799 67 754 256 890
Debenture interest – (67 649) (64 022)
93 799 105 192 868
Amortisation of
debenture premium – 2 159 2 159
Profit before income
tax 93 799 2 264 195 027
Income tax (120) (593) (370)
Profit for the period 93 679 1 671 194 657
Total comprehensive
income for the period 93 679 1 671 194 657
52,79 1,17 123,60
Comparable basic and
diluted earnings per
share/linked unit
(cents)* 52,79 47,00 162,88
Headline earnings per
share (cents)* 45,10 1,17 53,28
Comparable headline
earnings per share/linked
unit(cents)* 45,10 47,00 92,56
Distribution per share/
linked unit(cents) 44,68 40,00 85,47
Interim distribution – 40,00 40,00
Interim dividend** 44,68 – –
Final dividend** – – 45,47
* Comparable basic and diluted earnings per share/linked unit and
comparable headline and diluted headline earnings per share/linked
unit have been included to enable shareholders to compare the current
period figures to those previously reported which related to linked
units.
** Declared subsequent to period end.
Statement of changes in equity for the period ended
Non-
Ordinary distrub-
share Stated able
capital capital reserve
R'000 R'000 R'000
Balance at 31 December 2013 422 – 504 147
Transactions with owners
of the company recognised
directly in equity
Treasury shares acquired – (86 060) –
Transfer from non-
distributable reserve – – (504 147)
Conversion of debentures to
shares (422) 1 031 496
Total comprehensive income
for the period
Profit for the period – – –
Balance at 30 June 2014 – 945 436 –
Transactions with owners
of the company recognised
directly in equity
Issue of shares – 464 394 –
Dividends paid – – –
Total comprehensive income
for the period
Profit for the period – – –
Balance at 31 December 2014 – 1 409 830 –
(Accu-
mulated
loss)/
Retained
earnings Total
R'000 R'000
Balance at 31 December 2013 (50 252) 454 317
Transactions with owners
of the company recognised
directly in equity
Treasury shares acquired – (86 060)
Transfer from non-distributable
reserve 504 147 –
Conversion of debentures to shares 1 031 074
Total comprehensive income for the
period
Profit for the period 192 985 192 985
Balance at 30 June 2014 646 880 1 592 316
Transactions with owners of
the company recognised directly
in equity
Issue of shares – 464 394
Dividends paid (72 848) (72 848)
Total comprehensive income for the
period
Profit for the period 93 679 93 679
Balance at 31 December 2014 667 711 2 077 541
Statement of cash flows for the period ended
Unaudited Unaudited Audited
six months six months year to
31 December 31 December 30 June
2014 2013 2014
R'000 R'000 R'000
Cash flows from operating
activities
Cash generated by
operations 124 054 81 155 170 771
Finance income
received 1 441 1 107 8 299
Finance costs paid (23 911) (16 110) (41 200)
Distributions to
shareholders/linked
unit holders (67 649) (47 339) (111 361)
Income tax paid (103) (757) (335)
Net cash inflow from
operating activities 33 832 18 056 26 174
Net cash outflow from
investing activities (678 040) (270 362) (364 914)
Net cash inflow from
financing activities 613 674 270 265 379 634
Net (decrease)/increase
in cash and cash
equivalents (30 534) 17 959 40 894
Cash and cash equivalents
at the beginning of the year 64 449 23 555 23 555
Cash and cash equivalents at
the end of the year 33 915 41 514 64 449
Segmental analysis
Gauteng
Commercial Retail Industrial Total
R’000 R’000 R’000 R’000
Extracts from the
statement of compre-
hensive income
31 December 2014
Investment property
income 118 108 2 281 2 863 123 252
Property expenses (41 760) (1 396) (767) (43 923)
Segment results 76 348 885 2 096 79 329
Extracts from the
statement of
financial position as
at 31 December 2014
Investment property
Opening balance
(June 2014) 1 579 102 20 255 – 1 599 357
Additions through
business combinations 288 410 327 907 239 744 856 061
Other additions 2 031 – – 2 031
Straight-line rental
adjustment 3 483 68 558 4 109
Closing balance 1 873 026 348 230 240 302 2 461 558
Western Cape
Commercial Retail Industrial Total
R’000 R’000 R’000 R’000
Extracts from the
statement of compre-
hensive income
31 December 2014
Investment property
income 31 210 535 1 109 32 854
Property expenses (9 892) (344) (85) (10 321)
Segment results 21 318 191 1 024 22 533
Extracts from the
statement of financial
position as at
31 December 2014
Investment property
Opening balance
(June 2014) 399 743 5 126 – 404 869
Additions through
business combinations 21 130 – – 21 130
Other additions 247 – – 247
Straight-line rental
adjustment 2 656 (29) (12) 2 615
Closing balance 423 776 5 097 (12) 428 861
North West
Commercial Retail Industrial Total
R’000 R’000 R’000 R’000
Extracts from the
statement of compre-
hensive income
31 December 2014
Investment property
income 4 282 – – 4 282
Property expenses (865) – – (865)
Segment results 3 417 – – 3 417
Extracts from the
statement of financial
position as at
31 December 2014
Investment property
Opening balance
(June 2014) 62 409 – – 62 409
Straight-line rental
adjustment (171) – – (171)
Closing balance 62 238 – – 62 238
Eastern Cape
Commercial Retail Industrial Total
R’000 R’000 R’000 R’000
Extracts from the
statement of compre-
hensive income
31 December 2014
Investment property
income 3 072 2 340 – 5 412
Property expenses (1 035) (465) – (1 500)
Segment results 2 037 1 875 – 3 912
Extracts from the
statement of financial
position as at
31 December 2014
Investment property
Opening balance
(June 2014) 54 955 41 311 – 96 266
Straight-line rental
adjustment 211 208 – 419
Closing balance 55 166 41 519 – 96 685
KwaZulu-Natal
Commercial Retail Industrial Total
R’000 R’000 R’000 R’000
Extracts from the
statement of compre-
hensive income
31 December 2014
Investment property
income 1 882 161 – 2 043
Property expenses (441) (44) – (485)
Segment results 1 441 117 – 1 558
Extracts from the
statement of financial
position as at
31 December 2014
Investment property
Opening balance
(June 2014) 27 295 2 331 – 29 626
Straight-line rental
adjustment (37) (6) – (43)
Closing balance 27 300 2 325 – 29 625
Northern Cape
Commercial Retail Industrial Total
R’000 R’000 R’000 R’000
Extracts from the
statement of compre-
hensive income
31 December 2014
Investment property
income 630 – – 630
Property expenses (119) – – (119)
Segment results 511 – – 511
Extracts from the
statement of financial
position as at
31 December 2014
Investment property
Opening balance
(June 2014) 9 998 – – 9 998
Straight-line rental
adjustment (32) – – (32)
Closing balance 9 996 – – 9 996
Free State
Commercial Retail Industrial Total
R’000 R’000 R’000 R’000
Extracts from the
statement of compre-
hensive income
31 December 2014
Investment property
income 1 445 – – 1 445
Property expenses (193) – – (193)
Segment results 1 252 – – 1 252
Extracts from the
statement of financial
position as at
31 December 2014
Investment property
(June 2014)
Opening balance – – – –
Additions through
business combinations 47 639 – – 47 639
Other additions – – – –
Straight-line rental
adjustment 197 – – 197
Closing balance 47 836 – – 47 836
Total Portfolio
Commercial Retail Industrial Total
R’000 R’000 R’000 R’000
Extracts from the
statement of compre-
hensive income
31 December 2014
Investment property
income 160 629 5 317 3 972 169 918
Property expenses (54 305) (2 249) (852) (57 406)
Segment results 106 324 3 068 3 120 112 512
Extracts from the
statement of financial
position as at
31 December 2014
Investment property
(June 2014)
Opening balance 2 133 502 69 023 – 2 202 525
Additions through
business combinations 357 179 327 907 239 744 924 830
Other additions 2 278 – – 2 278
Straight-line rental
adjustment 6 307 241 546 7 094
Closing balance 2 499 266 397 171 240 290 3 136 727
Total
31 December
2014
R’000
Reconciliation from segment
results to profit for the period
Segment results 112 512
Straight-line rental adjustment 7 093
Other income 14 695
Other operating expenses (2 811)
Asset management fees (6 313)
Finance income 1 441
Finance costs (30 307)
Finance cost amortisation (234)
Fair value adjustments (2 163)
Capital items (114)
Income tax (120)
Profit for the period 93 679
Gauteng
Commercial Retail Industrial Total
R’000 R’000 R’000 R’000
Extracts from the
statement of compre-
hensive income
31 December 2013
Investment property
income 79 860 2 158 – 82 018
Property expenses (30 212) (1 217) – (31 429)
Segment results 49 648 941 – 50 589
Extracts from the
statement of financial
position as at
31 December 2013
Investment property
Opening balance
(June 2013) 954 374 19 517 – 973 891
Additions through
business combinations 264 276 – – 264 276
Straight-line rental
adjustment 7 727 72 – 7 799
Closing balance 1 226 377 19 592 – 1 245 966
Western Cape
Commercial Retail Industrial Total
R’000 R’000 R’000 R’000
Extracts from the
statement of compre-
hensive income
31 December 2013
Investment property
income 27 956 497 1 375 29 828
Property expenses (8 973) (293) (749) (10 015)
Segment results 18 983 204 626 19 813
Extracts from the
statement of
financial position as
at 31 December 2013
Investment property
Opening balance
(June 2013) 373 746 5 429 23 400 402 575
Additions through
business combinations – – – –
Straight-line rental
adjustment 3 444 – (25) 3 419
Closing balance 377 190 5 429 23 375 405 994
North West
Commercial Retail Industrial Total
R’000 R’000 R’000 R’000
Extracts from the
statement of compre-
hensive income
31 December 2013
Investment property
income 3 957 – – 3 957
Property expenses (738) – – (738)
Segment results 3 219 – – 3 219
Extracts from the
statement of financial
position as
at 31 December 2013
Investment property
Opening balance
(June 2013) 59 719 – – 59 719
Straight-line rental
adjustment 125 – – 125
Closing balance 59 844 – – 59 844
Eastern Cape
Commercial Retail Industrial Total
R’000 R’000 R’000 R’000
Extracts from the
statement of compre-
hensive income
31 December 2013
Investment property
income 4 167 2 159 – 6 326
Property expenses (978) (455) – (1 433)
Segment results 3 189 1 704 – 4 893
Extracts from the
statement of financial
position as
at 31 December 2013
Investment property
Opening balance
(June 2013) 55 000 37 499 – 92 499
Straight-line rental
adjustment 60 281 – 341
Closing balance 55 060 37 780 – 92 840
KwaZulu-Natal
Commercial Retail Industrial Total
R’000 R’000 R’000 R’000
Extracts from the
statement of compre-
hensive income
31 December 2013
Investment property
income 1 677 147 – 1 824
Property expenses (369) (38) – (407)
Segment results 1 315 102 – 1 417
Extracts from the
statement of financial
position as at
31 December 2013
Investment property
(June 2013)
Opening balance 26 973 2 264 – 29 237
Straight-line rental
adjustment (40) (3) – (43)
Closing balance 26 933 2 261 – 29 194
Northern Cape
Commercial Retail Industrial Total
R’000 R’000 R’000 R’000
Extracts from the
statement of compre-
hensive income
31 December 2013
Investment property
income 581 – – 581
Property expenses (111) – – (111)
Segment results 470 – – 470
Extracts from the
statement of financial
position as at
31 December 2013
Investment property
(June 2013)
Opening balance 9 746 – – 9 746
Straight-line rental
adjustment 7 – – 7
Closing balance 9 753 – – 9 753
Total Portolio
Commercial Retail Industrial Total
R’000 R’000 R’000 R’000
Extracts from the
statement of compre-
hensive income
31 December 2013
Investment property
income 118 198 4 961 1 375 124 534
Property expenses (41 381) (2 003) (749) (44 133)
Segment results 76 817 2 958 626 80 401
Extracts from the
statement of financial
position as at
31 December 2013
Investment property
Opening balance
(June 2013) 1 479 558 64 709 23 400 1 567 667
Additions through
business combinations 264 276 – – 264 276
Straight-line rental
adjustment 11 324 350 25 11 699
Closing balance 1 755 158 65 059 23 425 1 843 642
Total
31 December
2013
R’000
Reconciliation from segment
results to profit for the period
Segment results 80 401
Straight-line rental adjustment 2 380
Other income 5 800
Other operating expenses (2 231)
Asset management fees (4 502)
Finance income 1 107
Finance costs (16 110)
Fair value adjustments 909
Debenture interest (67 649)
Amortisation of debenture premium 2 159
Income tax (593)
Profit for the period 1 671
Basic, diluted, headline earnings and distribution
per sharefor the period ended
31 December 31 December 30 June
2014 2013 2014
R'000 R'000 R'000
Earnings
Earnings attributable to
shareholders: 93 679 1 671 194 657
Adjust for:
Debenture interest – 67 649 64 022
Amortisation of debenture
interest – (2 159) (2 159)
Comparable earnings
attributable to share-
holders/linked
unitholders 93 679 67 161 256 520
Headline earnings
Profit attributable to
shareholders: 93 679 1 671 194 657
Adjust for:
Gain on bargain purchase (13 646) – –
Gross revaluation of – – (110 743)
investment property
Headline earnings
attributable to
shareholders 80 033 1 671 83 914
Adjust for:
Debenture interest – 67 649 64 022
Amortisation of debenture
interest – (2 159) (2 159)
Comparable headline
earnings attributable to
shareholders/linked
unitholders 80 033 67 161 145 777
Distributable earnings
Investment property income 169 918 124 534 271 759
Property expenses (57 406) (44 133) (89 571)
Other income 14 695 5 800 5 444
Other operating expenses (2 811) (2 231) (4 689)
Asset management fees (6 313) (4 502) (9 588)
Net finance cost (28 866) (15 003) (32 901)
Finance income 1 441 1 107 8 299
Finance cost (30 541) (16 110) (41 421)
Finance cost amortisation 234 – 221
Deconsolidation of
treasury shares 4 052 – 3 626
Taxation (120) (823) 462
Distributable earnings 93 149 63 642 144 542
Reconciliation of comparable
earnings to distributable
earnings
Comparable earnings
attributable to share-
holders/linked
unitholders 93 679 67 161 256 520
Straight-line rental
adjustment (7 093) (2 380) (1 839)
Finance cost amortisation 234 – 221
Fair value adjustments 2 163 (909) (114 827)
Deconsolidation of
treasury shares 4 052 – 3 626
Capital items 114 – 9
Deferred tax – (230) 832
Distributable earnings 93 149 63 642 144 542
Distributable earnings
(R’000) 193 149 63 641 144 542
Shares in issue (’000) 208 498 169 122 169 122
Weighted average number of
shares in issue (’000) 177 454 142 850 157 494
Available for distribution
per share (cents) 44,68 37,63 85,47
Dividend for share subsequent
to period end
(cents) 44,68 – 45,47
Distribution per linked
unit (cents) 44,68 40,00 40,00
Corporate information
Board of directors
PD Naidoo (Chairman)
RF Kane (Chief Executive Officer)
M de Lange (Financial Director)
NV Balfour
JR Macey
PM Tau-Sekati
TS Sishuba
KN Vundla
AN Du Hecquet de Rauville
JA Legh
MJ van Heerden
Company secretary
CIS Company Secretaries Proprietary
Limited (N Toerien)
Sponsor
Investec Bank Limited
Transfer secretary
Computershare Investor Services
Proprietary Limited, 70 Marshall Street, Johannesburg, 2001
Physical/Registered and postal address
54 Bompas Road, Dunkeld West, 2196
PO Box 41394, Craighall Park, 2024
Telephone number: +27 11 731 1980
www.texton.co.za
Date: 23/02/2015 08:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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