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TOWER PROPERTY FUND LIMITED - Provisional reviewed annual results for the year ended 31 May 2015

Release Date: 26/08/2015 08:15
Code(s): TWR     PDF:  
Wrap Text
Provisional reviewed annual results for the year ended 31 May 2015

Tower Property Fund Limited       
(formerly Reftin 1004 Proprietary Limited)              
Incorporated in the Republic of South Africa
Registration number: 2012/066457/06                    
JSE share code: TWR               
ISIN: ZAE000179040                
(Approved as a REIT by the JSE)   
("Tower" or the "Group")

Sectoral Profile by revenue
Retail - 32.29%
Offices - 54.98%
Industrail - 12.73%

Geographical Profile by revenue
KZN - 9.13%
Gauteng - 48.67%
Western Cape - 42.20%

Basis of preparation
The reviewed condensed consolidated annual financial results ("the financial
statements") for the year ended 31 May 2015 have been prepared in accordance with, 
and as a minimum, contain the information required by IAS 34: Interim Financial 
Reporting and have been prepared in accordance with the framework concepts and
measurement and recognition requirements of the International Financial Reporting 
Standards ("IFRS"), the SAICA Financial Reporting Guides as issued by the Accounting 
Practices Committee, the JSE Listings Requirements and in the manner required by 
the Companies Act of South Africa (as amended). The accounting policies and methods 
of computation applied in the preparation of the financial statements are in 
accordance with IFRS and are consistent with those applied in the audited annual 
financial statements for the year ended 31 May 2014, except for the new and amended 
standards and interpretations of IFRS adopted as set out below.

In the current year, the Group has adopted all new and revised IFRSs that are 
relevant to its operations and effective for the reporting period beginning 
on 1 June 2014.

At the reporting date the following amendments were adopted:
- Amendments to IFRS 10, IFRS 11, IFRS 12 and IAS 27 – Investment entities;
- Amendments to IAS 32 – Offsetting Financial Assets and Financial Liabilities;

The Group has also early adopted the following amendment:
- Amendments to IAS 24 - Related party disclosures.

The adoption of the above standards has not had a material impact on the 
financial statements. The early adoption of IAS 24 has however resulted in 
additional disclosures.

This report has been reviewed by the company's auditor, Mazars. Their unmodified 
opinion is available for inspection at the company's registered office. Their 
review was conducted in accordance with ISRE 2410 "Review of interim financial
information performed by the independent auditor of the entity".

The auditor's report does not necessarily report on all of the information contained 
in this report. Shareholders are therefore advised that in order to obtain a full 
understanding of the nature of the auditor's engagement they should obtain a copy of 
the auditor's report, together with the accompanying financial information, from the 
issuer's registered office.

These financial statements were prepared under the supervision of 
Mrs. J Mabin CA(SA) in her capacity as Chief Financial Officer.

The directors are not aware of any matters or circumstances arising subsequent to 
31 May 2015 that require any additional disclosure or adjustment to the financial
statement, other than as disclosed in this announcement.

Error

Following a review by the directors of the Group's annual financial statements for 
the year ended 31 May 2014, the Group has restated the following items in the 2014 
statement of financial position and statement of changes in equity.

Previously the Group accrued for a distribution to shareholders without a dividend 
having been declared based on industry practice at the time. Since there was no legal 
obligation to pay a dividend as at 31 May 2014 the accrual represents an error which 
is corrected as follows:

- Shareholders for dividend decrease of R56,917

- Retained income increase of R56,917

Fair value of financial instruments recognised in the statement of financial position.

The Group measures fair values using the fair value 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 
  (i.e. as prices) or indirectly (i.e. 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.

Fair value of financial instruments recognised in the statement of financial position.

The valuation of interest rate swaps uses observable market data and requires management 
judgement and estimation. The availability of observable market data and model inputs 
reduces the need for management judgement and estimation and also reduces uncertainty 
associated with the determination of fair values. The fair value of the interest rate 
swap is determined by the bank using a valuation technique that maximises the use of 
observable market inputs. Interest rate swaps are valued by discounting future cash 
flows using the interest rate yield curve. Interest rate swaps are classified as 
level 2 financial instruments and the fair value of the interest rate swap liability 
at 31 May 2015 is equal to R679 293 (2014: R1 441 787).

At the reporting date the Group had entered into interest rate swaps in respect of 
the following borrowings:
                                                                              Notional amount (R'000)
                                                                                    31 May     31 May
                                                                                      2015       2014

Contract 1: 6.04% maturing 20 July 2015. This swap was cancelled 23 March 2015.          -    344 000
Contract 2: 7.41% maturing 3 April 2017. This swap was cancelled 23 March 2015.          -    126 000
Contract 3: 7.20% maturing 8 April 2017.                                           130 000    130 000
                                                                                   130 000    600 000

The interest rate caps have been fair valued externally by the bank using a valuation 
technique that maximises the use of observable market inputs. Interest rate caps are 
valued by discounting future cash flows using the interest rate yield curve. Interest 
rate caps entered into by the group are included in level 2 of the fair value hierarchy.

At the reporting date the Group had purchased two Standard Bank interest rate caps:

1) R200 million, maturing 22 May 2017 with a rate of 8.63% for a premium of R2 109 216 and 

2) R350 million, maturing 22 May 2018 with a rate of 9.01% for a premium of R7 556 629.

Fair value of investment properties
An external, independent valuation company, having appropriate recognised professional 
qualifications and recent experience in the location and category of the property being valued,
values approximately one third of the properties every year. The balance being valued by 
the directors. The fair value is the price that would be received to sell an asset or paid 
to transfer a liability in an orderly transaction between market participants at the 
measurement date and is based on market values where available.

In the absence of current prices in an active market, valuations are prepared that make 
maximum use of relevant observable inputs. Discounted cash flow analysis is applied which 
is prepared by considering the aggregate of the estimated cash flows expected to be received 
from renting out the property. A yield that reflects the specific risks inherent in the net 
cash flows then is applied to the net annual cash flows to arrive at the property valuation.
The valuation process also makes use of the net income method which assumes a rental stream 
into perpetuity and uses the capitalisation rate to account for the risk of projected market, 
business and financial volatility and to adjust for the sustainability of the cash flow going 
forward into perpetuity. Once the capitalisation value has been calculated further 
adjustments are made to the valuations relating to project costs and values.

Changes in discount rates attributable to changes in market conditions can have a 
significant inverse impact on property valuations. In determining future cash flows for 
valuation purposes, vacancies are forecast for each property based on estimated demand.

Dividend distribution
Notice is hereby given that dividend number 4 of 44.81114 cents per share has been declared 
in respect of the year ended 31 May 2015. In accordance with Tower'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 the dividend received by South African tax residents must be included in their
gross income and will not be exempt in terms of the ordinary dividend exemption in section 
10(1)(k)(i) of the Income Tax Act as a result of paragraph (aa) of the proviso thereto which 
provides that dividends distributed by a REIT are not exempt from income tax.

This dividend is however, exempt from dividend withholding tax in the hands of South Africa 
tax resident shareholders, provided that the South African resident shareholders provide 
the following forms to their 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:

a) a declaration that the dividend is subject to a reduced rate as a result of the 
   application of a DTA; and

b) a written undertaking to inform the CSDP or broker, as the case may be, should the 
   circumstances affecting the reduced rate change or the beneficial owner cease to be 
   the beneficial owner, 

both in the form prescribed by the Commissioner for the 
South African Revenue Service. Shareholders are advised to contact their CSDP, broker, 
or the company as the case may be, to arrange for the abovementioned documents to be
submitted prior to the payment of the payment of the dividened if such documents have 
not already been submitted.

Dividends received by non-resident shareholders will be exempt from income tax in terms 
of section 10(1)(k)(i) of the Act, but will be subject to dividend withholding tax.
Dividend withholding tax is levied at a rate of 15%, unless the rate is reduced in terms 
of any applicable agreement for the avoidance of double taxation ("DTA") between 
South Africa and the country of residence of the shareholder.

Should dividend distribution withholding tax be withheld at a rate of 15%, the net 
dividend amount due to non-resident shareholders is 38.08947 cents per share. 
A reduced dividend withholding rate in terms of the applicable DTA may only be
relied on if the non-resident shareholder has provided the following forms to their 
CSDP or broker, as the case may be in respect of uncertificated shares or the company, 
in respect of certificated shares:

a) a declaration that the dividend is subject to a reduced rate as a result of the 
   application of a DTA; and

b) a written undertaking to inform the CSDP or broker, as the case may be, should the 
   circumstances affecting the reduced rate change or the beneficial owner cease to be 
   the beneficial owner, both in the form prescribed by the Commissioner for the 
   South African Revenue Service. Non-resident shareholders are advised to contact their 
   CSDP or broker, as the case may be, to arrange for the abovementioned documents to 
   be submitted prior to the payment of the dividend if such documents have not 
   already been submitted.
    
The dividend is payable to Tower shareholders in accordance with the timetable 
set out below:
                                                    2015
Last day to trade cum dividend distribution         Friday, 11 September
Shares trade ex dividend distribution               Monday, 14 September
Record date                                         Friday, 18 September
Payment date                                        Monday, 21 September

Share certificates may not be dematerialised or rematerialised between Monday, 
14 September and Friday, 18 September 2015, both days inclusive.

Shares in issue at date of declaration (excluding treasury shares): 240 132 451

Tower's income tax reference number: 9607/564/16/9

By order of the Board
Tower Property Fund Limited
26 August 2015

PROVISIONAL REVIEWED ANNUAL RESULTS
for the year ended 31 May 2015

Tower owns a diversified portfolio of 48 commercial, industrial and retail properties valued 
at R3.8 billion (as at 31 July 2015), located in the Western Cape (34% by value), Gauteng 
(45% by value) and KZN (13% by value). Tower recently embarked on an offshore strategy and 
acquired its first property in Zagreb, Croatia. The Zagreb acquisition increases Tower's off 
shore exposure to 8%. The fund aims to add value through active property asset management and 
the cost-effective greening of  properties in the portfolio.

The investment strategy is to expand the portfolio by targeting well located, mainly 
medium-sized (R80 million to R300 million) properties with strong cash flows and to ensure a 
diversified sectoral and geographic portfolio. The longer-term objective is for the portfolio
to comprise approximately 50% in retail space, followed by office (30%) and industrial (20%).

- Distribution of 86.8 cents per share exceeds forecast
- Headline earnings of R125 million
- Market capitalisation increased by 33% to R1.6 billion (50% to R2.4 billion at 
  end July 2015)
- R500 million raised through accelerated book build (June 2015)
- Portfolio expanded to 44 properties (48 properties July 2015)
- Portfolio value increased by 52% to R3.1 billion (88% to R3.8 billion, July 2015)
- First offshore property acquired in Zagreb, Croatia (August 2015)
- Greening program rolled out to key properties

Financial performance
Tower performed well for the year ended 31 May 2015 ("the period") in an increasingly
difficult trading environment. Revenue increased by 30% to R248 million and operating
profit by 24% to R201 million on the prior year figures.

Distributable earnings for the period totalled R137 million and the directors are pleased
to declare a total distribution of 86.8 cents per share for the year ended 31 May 2015,
reflecting an outperformance of the pre-listing forecast of 86.6 cents.

The net asset value per share grew from R9.48 as at 31 May 2014 to R10.08 at
31 May 2015.

The board is satisfied that the Group has passed the solvency and liquidity tests as set
out in Section 4 of the Companies Act of South Africa.

Operating performance
During the period fourteen properties totalling R1 billion were acquired, increasing the
value of the portfolio by 52% to R3.1 billion. The properties are as follows:

- Medscheme head office property in Florida Glen (R111 million)
- Whitby Manor, a multi-tenant office property in Midrand (R51 million)
- Three Shoprite anchored lower LSM shopping centres in Gauteng (R238 million)
- Sections of the well-known Sun Clare Office Block in Claremont (R193 million)
- An industrial portfolio of eight properties in Gauteng and KwaZulu-Natal ("KZN")
  (R375 million). This has been included in amounts owing for the acquisition of 
  investment property in the consolidated statement of financial position and 
  has been settled post year end by the issuance of shares and debt.

Active asset management of the portfolio has continued to reduce operating costs, with
the succesful greening programme initiated in 2013 continuing to be rolled out to suitable
properties. All projects (both lighting retrofits in key properties and solar installations)
are outperforming management's expectations. Five new projects (lighting and solar
photo voltaic "PV") are currently underway in 382 Jan Smuts Drive (lighting and solar), De
Ville Shopping Centre (solar), 308 Kent Avenue (lighting and solar) 73 Hertzog Boulevard
(lighting) and 6-8 Sturdee Avenue (lighting and solar).

The above mentioned acquisitions, together with outstanding adjustment account balances
(which were settled post year end), have resulted in a significant increase in trade and 
other receivables at year end when compared to the prior year.

Portfolio vacancies have reduced to 4% (31 May 2015), November 2014 was 10%. 9000m² of
new space has been let in the period with 10000m² of space renewing. Tenant retention has
been enhanced by the greening and cost reduction programmes.

Selected properties held since listing will be sold when an appropriate opportunity arises as
the Group focuses increasingly on well-located properties with value add potential to ensure
maximum returns for shareholders. The development opportunities at the Cape Quarter
precinct are being rolled out, including the pilot project of new commercial and residential
units at 32 Napier Street resulting in a 12% yield for the Fund.

Offshore acquisition strategy
Tower has identified Croatia as a region offering strong growth potential for the Group.
Croatia finds itself at opposite ends of the property cycle to South Africa after the country
experienced a number of years of recession after the 2008 global financial crisis. Property
prices are lower than they have been for some time allowing Tower to purchase premium
grade investment opportunities at attractive pricing. After the reporting date, the Fund
acquired 15 floors of the premium grade VMD KVART office property in Zagreb for Euro
23.7 million. The property will be held in the 100% Tower subsidiary, Tower Europe d.o.o.
(incorporated on 1 May 2015) 20% of the equity of Tower Europe d.o.o is being sold to the
VMD Grupa d.o.o (the developers of VMD KVART and one of the regions most respected
developers and property owners). Property management is being undertaken by a VMD
Grupa subsidiary, VMD Services d.o.o. The relationship provides Tower with strong 
in-country partners to grow its asset base.

The Group has considered whether the above transaction constitutes a business
combination or an asset acquisition. The decision as to what constitutes a business requires
significant judgment, which includes consideration of whether the integrated activities
deemed necessary to generate a business are capable of being conducted and managed
as a business by a market participant and whether it has employees who are required to
follow policies and processes related to relevant activities. The group has determined that
the above transaction constitutes an asset acquisition.

Acquisitions (post period end)
After the end of the reporting period Tower concluded the acquisition of four properties,
valued at R730 million:

- 15 Wellington Road (R81m), a recently refurbished mixed-use property in Parktown
- Evagold Shopping Centre (R110m), a lower LSM shopping centre in Evaton anchored
  by Cambridge Food
- Link Hills Shopping Centre (R217m), a convenience shopping mall in the new Waterfall 
  node of KZN
- The office property in Zagreb, Croatia, detailed above.

The properties were acquired either through the settlement of the purchase price in cash
or by a combination of cash and the issuance of Tower shares.

Borrowings
Tower has loan facilities totaling R1.14 billion at 31 May 2015. Interest rates are hedged
on 60% of the total loan facility (70% as at 31 July 2015) and the weighted average rate of
interest is 7.73% for the portfolio as at 31 May 2015. Based on investment properties valued
at R3.1 billion, the loan to value ("LTV") ratio of the Group was 36% at the end of the period.
The Group has a targeted LTV of 40%. The Group entered into an agreement in March 2015
with Standard Bank to refinance R475 million of debt with other institutions, which has
reduced rates by 87 basis points and results in a R4.15 million interest saving per annum.

Prospects
Management continues to focus on the acquisition of strategic properties and other assets
to ensure the sustainability of the Group and to enhance returns for investors. Management
has a strong pipeline of properties in South Africa, valued at over R1.5bn which it is 
currently in negotiations on. These properties are well located with strong cash flows. 
A pipeline of a further R1.5bn worth of properties exists in Croatia which management is 
carefully evaluating. Management anticipates 6-8% growth in earnings for the full year 
end 31 May 2016 subject to tenancies and market conditions remaining stable.

Consolidated statement of profit and loss and comprehensive income

                                                              Reviewed year     Audited year ended
                                                          ended 31 May 2015            31 May 2014
                                                                      R'000                  R'000
Revenue
Contractual rental income                                           230 929                174 168
Straight line rental income accrual                                  16 792                 17 102
                                                                    247 721                191 270
Net property operating expenses                                    (34 928)               (19 785)
Net property income                                                 212 793                171 485
Administration expenses                                            (14 952)               (10 273)
Other income                                                          2 914                    480
Net operating profit                                                200 755                161 692
Fair value adjustments on investment properties                     101 740               (11 740)
Fair value adjustments on interest rate derivatives                     762                (1 442)
Profit from operations                                              303 257                148 510
Finance income                                                        2 093                  3 066
Finance costs                                                      (78 776)               (53 456)
Indirect capital raising expenses                                     (206)               (11 487)
Profit before taxation                                              226 368                 86 633
Taxation                                                                  -                      -
Total comprehensive income for the period                           226 368                 86 633
Basic and diluted earnings per share                                  149,9                   82,0

Consolidated statement of financial position                  Reviewed year           Audited year
                                                          ended 31 May 2015      ended 31 May 2014
                                                                                        (restated)
Assets                                                                R'000                  R'000
Non-current assets
Investment properties                                             3 107 097              2 043 745
Straight line rental accrual                                         33 893                 17 102
                                                                  3 140 990              2 060 847
Current assets
Trade and other receivables                                          68 852                 36 882
Cash and cash equivalents                                            15 458                 38 171
                                                                     84 310                 75 053
Investment property held for sale                                    14 485                      -
Total assets                                                      3 239 785              2 135 900
Equity and liabilities
Equity
Stated capital                                                    1 519 601              1 251 034
Treasury capital                                                    (1 212)                      -
Retained income                                                     146 650                 46 713
                                                                  1 665 039              1 297 747
Liabilities
Non-current liabilities
Other financial liabilities                                         857 341                769 518
                                                                    857 341                769 518
Current liabilities
Other financial liabilities                                         289 471                      -
Trade and other payables                                             52 184                 68 635
Amounts owing for the acquisition of investment property            375 750                      -
Shareholders for dividend                                                 -                      -
                                                                    717 405                 68 635
Total equity and liabilities                                      3 239 785              2 135 900

Consolidated statement of cash flows                          Reviewed year           Audited year
                                                          ended 31 May 2015      ended 31 May 2014
                                                                      R'000                  R'000
Cash generated from operations                                      132 423                164 597
Investment income                                                     2 093                  3 066
Finance costs                                                      (77 130)               (53 456)
Net cash from operating activities                                   57 386                114 207
Acquisition of investment property                                (349 741)            (1 228 082)
Proceeds on sale of investment property                              11 310                      -
Net cash from investing activities                                (338 431)            (1 228 082)
Proceeds from issue of shares                                             -                440 031
Capital raising expenses                                               (13)               (16 142)
Loans raised                                                        859 302                768 076
Loans repaid                                                      (474 585)                      -
Acquisition of treasury shares                                      (1 212)                      -
Acquisition of interest rate derivatives                            (9 133)                      -
Dividends paid                                                    (116 027)               (39 919)
Net cash from financing activities                                  258 332              1 152 046
Net movement in cash and cash equivalents                          (22 713)                 38 171
Cash and cash equivalents at beginning of period                     38 171                      -
Cash and cash equivalents at end of period                           15 458                 38 171

Consolidated statement of changes in equity
                                                                      Stated      Treasury      Retained
                                                                     Capital       Capital        Income          Total
                                                                       R'000         R'000         R'000          R'000
Balance at 1 June 2013                                                     8             -           (1)              7
Shares issued during the year                                      1 267 168             -             -      1 267 168
Share issue expenses                                                 16 142)             -             -       (16 142)
Profit for the year                                                        -             -        86 633         86 633
Dividends paid and declared                                                -             -      (39 919)       (39 919)
Balance at 31 May 2014 (restated)                                  1 251 034             -        46 713      1 297 747
Issue of 361 678 shares effective 1 July 2014                          2 938             -             -          2 938
Issue of 12 941 543 shares effective 1 September 2014                110 615             -             -        110 615
Issue of 12 421 520 shares effective 9 February 2015                 119 122             -             -        119 122
Issue of 2 684 211 shares effective 20 February 2015                  25 500             -             -         25 500
Share issue expenses                                                    (13)             -             -           (13)
Antecedent interest                                                   10 405             -             -         10 405
Acquisition of treasury shares                                             -       (1 212)             -        (1 212)
Profit for the year                                                        -             -       226 368        226 368
Dividends paid and declared                                                -             -     (126 431)      (126 431)
Balance at 31 May 2015                                             1 519 601       (1 212)       146 650      1 665 039

Calculation of headline earnings and distributable earnings reconciliation
                                                                                 Reviewed        Audited
                                                                               year ended     year ended
                                                                              31 May 2015     1 May 2014
                                                                                              (restated)
                                                                                    R'000          R'000
Total comprehensive income for the period                                         226 368         86 633
Adjusted for:
Change in fair value of investment properties                                   (101 740)         11 740
Headline earnings                                                                 124 628         98 373
Adjusted for:
Straight line rental income accrual                                              (16 792)       (17 102)
Antecedent interest                                                                10 405              -
Change in fair value of interest rate derivatives                                   (762)          1 442
Distributable profit                                                              117 479         82 713
Adjusted for:
Indirect capital raising expenses                                                     206         11 487
Contracted adjustment                                                              10 640              -
Debt cancellation fees                                                              4 183              -
Amortisation of debt raising fees                                                   4 554          2 636
Distributable earnings                                                            137 062         96 836
Distributable income                                                              137 062         96 836
Taxable dividend (declared on 26 August 2015)                                      74 055              -
Taxable dividend (declared on 4 February 2015)                                     63 007              -
Taxable dividend (declared on 22 August 2014)                                           -         59 516
Taxable dividend (declared on 21 January 2014)                                          -         37 320

Weighted average number of shares in issue                                    150 970 113    105 709 677
Number of shares in issue at year end (including treasury shares)             165 261 949    136 852 996
Number of shares in issue at year end (excluding treasury shares)             165 117 691    136 852 996

Distribution per share                                                               86,8           74,6
Six months ended 31 May                                                              44,8           41,6
Six months ended 30 November                                                         42,0           33,0
Headline and diluted headline earnings per share -
weighted average shares in issue (cents)                                             82,6           93,1
Distributable earnings per share - weighted average shares in issue (cents)          90,8           91,6
Net Asset Value per share - shares in issue at year end (rands)                     10,08           9,48

Segmental analysis
For the year ended 31 May 2015 (R'000)                               Retail        Office     Industrial          Total
Property assets                                                     953 115     2 161 045         26 830      3 140 990
Segment liabilities                                                 445 371       689 540         11 901      1 146 812
 
Revenue (excluding straight line lease adjustments)                  82 742       145 772          2 415        230 929
Net operating costs                                                (12 979)      (21 462)          (487)       (34 928)
Segment profit                                                       69 763       124 310          1 928        196 001
Straight line lease adjustment                                                                                   16 792
Non-property related expenses                                                                                  (14 952)
Other income                                                                                                      2 914
Net operating profit                                                                                            200 755
 
For the year ended 31 May 2014 (R'000)                               Retail        Office     Industrial          Total
Property assets                                                     557 355     1 478 492         25 000      2 060 847
Segment liabilities                                                 245 655       512 073         11 790        769 518
 
Revenue (excluding straight line lease adjustments)                  47 302       125 856          1 010        174 168
Net operating costs                                                 (5 480)      (14 229)           (76)       (19 785)
Segment profit                                                       41 822       111 627            934        154 383
Straight line lease adjustment                                                                                   17 102
Non-property related expenses                                                                                  (10 273)
Other income                                                                                                        480
Net operating profit                                                                                            161 692

Note:
Related party transactions included:
Asset management fees paid to Tower Asset Managers Proprietary Limited (R'000)                    11 449          8 353
Property management fees paid to Spire Property Management Proprietary Limited (R'000)            14 643          6 400
Relationship: Key management personnel services entities   

The contracted adjustment relates to the net operating income earned between the effective 
date and the transfer date of properties which transferred during the period.



Registered address      2nd Floor, Spire House, Tannery Park, 23 Belmont Road,
                        Rondebosch, 7700 (PO Box 155, Rondebosch, 7701)
Contact details         +27 (0)21 685 4020 / info@towerpropertyfund.co.za

Company secretary       Ovland Management Services Proprietary Limited

Auditors                Mazars

Sponsor                 Java Capital

Transfer secretaries    Link Market Services South Africa Proprietary Limited

Directors               A Dalling* (Chairman), M Edwards (Chief Executive Officer),
                        J Bester*, K Craddock, M Evans*, J Mabin**
                        (Chief Financial Officer), B Kerswill, A Magwentshu*, N Milne*,
                        R Naidoo* *non-executive directors; **Appointed 1 January 2015

Date: 26/08/2015 08:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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