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Reviewed provisional financial results for the 15 months ended 30 June 2015 and declaration of 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 ("SPFM") (Registration number 1986/002756/06)
JSE Share code: SYC
ISIN: ZAE000019303
(Approved as a REIT by the JSE)
Reviewed provisional financial results for the fifteen month period ended 30 June 2015 and dividend declaration announcement
The directors of SPFM, the management company of Sycom, submit their report on the results of Sycom for the fifteen months ended 30 June 2015.
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the fifteen months ended 30 June 2015
Reviewed fifteen Audited twelve
months to months to
30 June 2015 31 March 2014
(R'000) (R'000)
Revenue 896 274 685 699
Contractual rental revenue and recoveries 915 335 701 389
Straight-lining of rental revenue adjustment (19 061) (15 690)
Direct property operating expenses (169 690) (133 589)
Loss on disposal of investment property (2 600) (19 431)
Selling costs on investment properties held for sale - (553)
Dividend from listed investment 19 466 19 973
Fair value changes on investment property and listed investment 394 793 517 922
Fair value gain on investment properties 434 502 436 400
Fair value (loss)/gain on listed investment (39 709) 81 522
Administrative expenses (63 704) (42 131)
Profit before net finance costs 1 074 539 1 027 890
Net finance costs (235 566) (128 610)
Interest income 41 521 43 561
Interest expense (265 690) (160 085)
Change in fair value of derivative financial instruments at fair value through
profit and loss (11 397) (12 086)
Profit before taxation 838 973 899 280
Taxation - (556)
Profit for the period 838 973 898 724
Other comprehensive income for the period
Net change in fair value of cash flow hedges * (18 630) 51 897
Other comprehensive income for the period (18 630) 51 897
Total comprehensive income for the period 820 343 950 621
Basic and diluted earnings per unit - cents ** 419.21 378.36
* The fair value movement on the cash flow hedges through other comprehensive income may be reclassified to profit and loss.
** Sycom Property Fund has no dilutionary instruments in place.
Condensed Consolidated Statement of Financial Position
as at 30 June 2015
Reviewed at Audited at
30 June 2015 31 March 2014
ASSETS (R'000) (R'000)
Property assets 8 431 300 8 196 492
Investment properties and related receivables 8 431 300 7 528 383
Investment properties 8 228 243 7 307 028
Non-current straight-lining lease receivable 174 768 182 052
Current straight-lining lease receivable 28 289 39 303
Investment properties held for sale and related receivables - 668 109
Investment properties held for sale - 659 244
Straight-lining lease receivable - 8 865
Other non-current assets 399 062 461 121
Listed investment 379 044 409 224
Derivative financial instruments 20 018 51 897
Current assets 442 324 393 807
Rental and other receivables 119 957 80 185
Dividends receivable - 10 318
Cash and cash equivalents 322 367 303 304
Total assets 9 272 686 9 051 420
UNITHOLDERS' FUNDS AND LIABILITIES
Unitholders' funds 6 119 985 5 776 880
Unitholders' capital 1 947 048 1 947 048
Non-distributable reserves 4 172 937 3 829 832
Non-current liabilities 2 910 095 2 903 795
Borrowings 2 903 795 2 903 795
Derivative financial instruments 6 300 -
Current liabilities 242 606 370 745
Trade and other payables 156 822 125 652
Derivative financial instruments - 54 643
Unitholders for distribution 85 784 190 450
Total unitholders' funds and liabilities 9 272 686 9 051 420
Net asset value per unit - cents * 3 058 2 887
* Net asset value per unit is calculated by dividing unitholders' funds by the number of units in issue at period end.
Condensed Consolidated Statement of Changes in Unitholders' Funds
for the fifteen months ended 30 June 2015
Non-
Unitholders' distributable
Capital reserve Retained 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 -
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 year
Profit for the year - - 898 724 898 724
Other comprehensive income for the year - 51 897 - 51 897
Net change in fair value of cash flow hedge recognised
directly in other comprehensive income - 51 897 - 51 897
Total comprehensive income for the year - 51 897 898 724 950 621
Transfer to non-distributable reserve - 469 606 (469 606) -
Unitholders' distribution - - (438 610) (438 610)
Balance at 31 March 2014 1 947 048 3 829 832 - 5 776 880
Total comprehensive income for the period
Profit for the period - - 838 973 838 973
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) 838 973 820 343
Transfer to non-distributable reserve - 361 735 (361 735) -
Unitholders' distribution - - (477 238) (477 238)
Balance at 30 June 2015 1 947 048 4 172 937 - 6 119 985
Condensed Consolidated Statement of Cash Flows
for the fifteen month period ended 30 June 2015
Reviewed at Audited at
30 June 2015 31 March 2014
(R'000) (R'000)
Cash flows from operating activities
Profit before taxation 838 973 899 280
Adjusted for:
Interest income (41 521) (43 561)
Interest expense 265 690 160 085
Foreign exchange loss/(gain) 379 (416)
Dividend income (19 466) (19 973)
Straight-lining of operating leases 19 061 15 690
Fair value gain on investment properties (434 502) (436 400)
Fair value deficit on interest rate and cross currency swaps 11 397 12 086
Fair value loss/(gain) on listed investment 39 709 (81 522)
Loss on disposal of investment properties 2 600 19 431
Change in working capital (37 832) 8 233
(Increase)/decrease in receivables (excluding interest accruals) (40 344) 4 034
Increase in payables (excluding interest accruals) 2 512 4 199
Cash generated from operations 644 488 532 933
Dividend received 20 019 833
Distributions paid (581 904) (503 315)
Interest paid (265 980) (151 928)
Interest received 42 093 42 236
Taxation paid - (556)
Net cash outflow from operating activities (141 284) (79 797)
Cash flows from investing activities
Acquisition of investment properties (286 328) (1 679 596)
Subsequent expenditure on investment properties (172 200) (23 801)
Subsequent expenditure on investment properties held for sale (6 648) (7 918)
Proceeds on disposal of investment properties 679 227 -
Selling costs on disposal of investment properties (7 070) (3 403)
Net cash inflow/(outflow) from investing activities 206 981 (1 714 718)
Cash flows from financing activities
Outflow on settlement of cross currency swap (46 492) -
Gross proceeds from the issue of units - 900 000
Unit issue costs - (11 117)
Share buy-back costs - (1 434)
Borrowings raised - 1 002 987
Net cash (outflow)/ inflow from financing activities (46 492) 1 890 436
Net increase in cash and cash equivalents 19 205 95 921
Cash and cash equivalents at the beginning of the period 303 304 206 745
Effect of exchange rate fluctuations on cash held (142) 638
Cash and cash equivalents at the end of the period 322 367 303 304
NOTES
1. Basis of Preparation and Review Opinion
Sycom has changed its year-end from 31 March to 30 June in order to align with the year-end of its parent company,
Growthpoint Properties Limited. As such, these provisional financial statements are prepared in respect of a fifteen month reporting period.
These provisional condensed consolidated financial statements are prepared in accordance with the requirements of the JSE Limited Listings
Requirements for provisional reports. The Listings Requirements require provisional reports to be prepared in accordance with the framework
concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and to
also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation of
these condensed consolidated financial statements are in terms of IFRS and are consistent with those applied in the previous consolidated annual
financial statements.
These provisional condensed consolidated financial statements for the fifteen month period ended 30 June 2015 have been reviewed by KPMG Inc.,
who expressed an unmodified review conclusion thereon. A copy of the auditor's review report is available for inspection at Sycom's registered
office together with the financial statements identified in the auditor's report.
The condensed consolidated financial statements have been prepared under the supervision of the group's financial director, Craig Kotze, CA(SA).
2. Reconciliation of profit for the period to headline earnings and distributable earnings:
Reviewed fifteen Audited twelve
months to months to
30 June 2015 31 March 2014
(R'000) (R'000)
Profit for the period 838 973 898 724
Fair value adjustment to investment properties (434 502) (436 400)
Loss on disposal of investment property 2 600 19 431
Taxation - 556
Headline earnings 407 071 482 311
Selling costs on investment properties held for sale - 553
Straight-lining rental income accrual 19 061 15 690
Deficit on derivative financial instruments 11 397 12 086
Fair value adjustment to listed investment 39 709 (81 522)
Prepaid distribution - 9 492
Distributable earnings 477 238 438 610
cents cents
Earnings per unit:
Basic and diluted earnings* per unit 419.21 378.36
Headline and diluted headline earnings* per unit 203.40 203.05
Distribution per unit 238.46 183.28
* Sycom does not have any dilutionary instruments in place.
Number of units in issue ('000) 200 132 200 132
Number of weighted average units in issue ('000) 200 132 237 531
3. Condensed Segmental Results
for the fifteen month period ended 30 June 2015
Segmental earnings:
RETAIL OFFICES TOTAL
(R'000) (R'000) (R'000)
Segment rental revenue and recoveries 387 243 528 092 915 335
Straight-line rental income accrual (2 404) (16 657) (19 061)
Dividend income 19 466 - 19 466
Total revenue 404 305 511 435 915 740
Operating expenditure (75 781) (93 909) (169 690)
Profit or (loss) on sale of investment property 5 018 (7 618) (2 600)
Net finance income 980 3 269 4 249
Segmental net operating income 334 522 413 177 747 699
Fair value adjustments 214 739 180 054 394 793
South Africa 254 448 180 054 434 502
International (39 709) - (39 709)
Segmental earnings 549 261 593 231 1 142 492
Reconciliation of segmental results to profit for the period in the statement of profit or loss and other comprehensive income
Allocated Unallocated Total
(R'000) (R'000) (R'000)
Rental revenue and recoveries 915 335 - 915 335
Straight-line rental income accrual (19 061) - (19 061)
Dividend income 19 466 - 19 466
Total revenue 915 740 - 915 740
Operating expenditure (169 690) (63 704) (233 394)
Loss on sale of investment property (2 600) - (2 600)
Net finance cost 4 249 (228 418) (224 169)
Net operating income 747 699 (292 122) 455 577
Fair value gain on investment properties 434 502 - 434 502
Fair value loss on listed investment (39 709) - (39 709)
Fair value adjustment on interest rate and cross currency swaps - (11 397) (11 397)
Profit before taxation 1 142 492 (303 519) 838 973
Taxation - - -
Profit for the period 1 142 492 (303 519) 838 973
RETAIL OFFICES TOTAL
(R'000) (R'000) (R'000)
Investment Property Assets 3 814 600 4 616 700 8 431 300
Segmental Liabilities (56 905) (66 020) (122 925)
Condensed segmental results
for the twelve months ended 31 March 2014
Segmental earnings:
RETAIL OFFICES TOTAL
(R'000) (R'000) (R'000)
Segment rental revenue and recoveries 297 783 403 606 701 389
Straight-line rental income accrual 888 (16 578) (15 690)
Dividend income 19 973 - 19 973
Total revenue 318 644 387 028 705 672
Operating expenditure (56 350) (77 239) (133 589)
Loss on disposal of investment property (19 431) - (19 431)
Selling costs on investment properties held for sale (362) (191) (553)
Net finance cost 2 461 1 683 4 144
Segmental net operating income 244 962 311 281 556 243
Fair value adjustments 274 155 243 767 517 922
South Africa 192 633 243 767 436 400
International 81 522 - 81 522
Segmental earnings 519 117 555 048 1 074 165
Reconciliation of segmental results to profit for the period in the statement of profit or loss and other comprehensive income
Allocated Unallocated Total
(R'000) (R'000) (R'000)
Rental revenue and recoveries 701 389 - 701 389
Straight-line rental income accrual (15 690) - (15 690)
Dividend income 19 973 - 19 973
Total revenue 705 672 - 705 672
Operating expenditure (133 589) (42 131) (175 720)
Loss on disposal of investment property (19 431) - (19 431)
Selling costs on investment properties held for sale (553) - (553)
Net finance cost 4 144 (120 668) (116 524)
Net operating income 556 243 (162 799) 393 444
Fair value gain on investment properties 436 400 - 436 400
Fair value gain on listed investment 81 522 - 81 522
Fair value adjustment on interest rate and cross currency swaps - (12 086) (12 086)
Profit before taxation 1 074 165 (174 885) 899 280
Taxation - (556) (556)
Profit for the year 1 074 165 (175 441) 898 724
RETAIL OFFICES TOTAL
(R'000) (R'000) (R'000)
Investment Property Assets 3 633 092 4 563 400 8 196 492
Segmental Liabilities (37 592) (55 454) (93 046)
4. Fair value of financial instruments recognised in the Statement of Financial Position
The fair values of all financial instruments with the exception of the interest rate swaps 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 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
(R'000) (R'000) (R'000) (R'000)
30 June 2015
Financial assets
Listed investment - - 379 044 379 044
Interest rate swaps - 20 018 - 20 018
Financial liabilities
Interest rate swaps - (6 300) - (6 300)
31 March 2014
Financial assets
Listed investment - - 409 224 409 224
Interest rate swaps - 51 897 - 51 897
Financial liabilities
Cross currency and interest rate swaps - (54 643) - (54 643)
A reconciliation of the opening balances to the closing balances for the level 3 valuations is disclosed as follows:
Reviewed at Audited
30 June 2015 31 March 2014
(R'000) (R'000)
Balance as at beginning of period 409 224 310 722
Scrip shares acquired 9 529 16 980
Revaluation of investment recognised in profit or loss (39 709) 81 522
Fair value (loss)/gain on listed investment (39 709) 81 522
Carrying value at end of period 379 044 409 224
Level 2 fair values - Interest rate 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 Capital Not applicable - observable inputs are used in
using mark to market mid market values. the valuation
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 swap* Fair valued bi-annually by Nedbank Capital Not applicable - observable inputs are used in
using mark to market valuation the valuation
methodology. This involves, inter alia,
calculating the present value of the future
cross currency swap cash flows
* The cross currency swap agreement ended and was settled in November 2014.
Level 3 fair value - Investment in Stenham European Shopping Centre Fund ("Stenham")
The investment in Stenham 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 of the investment as per the most recent publically available financial
information, translated at the period end ruling exchange rate.
The investment property is valued by Jones Lang LaSalle, who are independent and qualified in accordance with the Appraisal and Valuation
Manual published by the Royal Institution of Chartered Surveyors (RICS). The valuation is 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. There have been no changes in valuation techniques from the prior year.
Significant Inter-relationship between key
unobservable unobservable inputs and fair
Valuation technique inputs value measurements
The market value of the investment property is assessed using the discounted a) Financial The fair value would increase/(decrease)
cash flow (DCF) calculation method. The valuation takes into account the information used to based on:
agreed rent for the signed leases, the market rent for currently vacant space and calculate rental (1) increases/(decreases) in the net
estimated rents for re-letting of the space after lease term expiry. In all instances, growth forecasts operating income,
the valuers calculated the DCF for a 10-year period and assumed a capitalised b) Net initial yield (2) (decreases)/increases in the yield used to
value based on a stabilised rental income thereafter. After the DCF period of 10 (6.27%) calculate the terminal value indication
years, the valuers calculate a stabilised rental income. The capitalised value c) Discount rate (3) (decreases)/increases in the discount rate
takes this stabilised rental income and subtracts the stabilised expenses, resulting (6.70%) used to calculate the gross capital value
in the stabilised net operating income. This result is capitalised into perpetuity d) Terminal
applying an equivalent (growth implicit) yield and produces the terminal value capitalisation rate
indication. The resulting value is then discounted to the valuation date using the (6.40%)
discount rate from term years 1 to 10. Discounting the remaining cash flows for e) Non-recoverable
years 1 to 10 and the terminal value for year 11 to the valuation date (i.e. the net expenses
present value) produces the gross capital value. After deductions for purchaser's f) Market lease
costs, the market value is obtained. assumptions for
contract expiry/
vacant space
Sensitivity analysis for Level 3 fair value - Investment in Stenham
Price risk sensitivity analysis
The price risk sensitivity analysis has been determined based on Sycom's shareholding percentage and the Euro value per share of the investment as
per the most recent publically available financial information and assumes a fixed exchange rate in order to isolate price sensitivity. If the price per
share of the investment were to increase/decrease by 1% and all other variables were held constant, profit for the period ended 30 June 2015 would
have decreased/increased by R3 790 437 (2014: R 4091 582) and closing equity would have increased/decreased by the same amount. As this
surplus/deficit movement arises on a fair value measurement, it would be transferred from retained earnings to the non-distributable reserve and
consequently would have no impact on distributable earnings.
5. Related Party Transactions
Identity of the related parties with whom significant transactions have occurred (Group only)
Entity Relationship
Acucap Properties Limited Sycom is a subsidiary of Acucap Properties Limited
Sycom Property Fund Managers Limited The management company of Sycom and a wholly owned
subsidiary of Acucap Properties Limited
Acucap Management Services Proprietary Limited The entity is a wholly owned subsidiary of Acucap Properties Limited
FC Property Management Company Proprietary Limited The entity is jointly controlled by Sycom Property Fund Managers Limited
Reviewed Audited
30 June 2015 31 March 2014
Significant related party transactions (Group only) (R'000) (R'000)
Asset management fees paid to Sycom Property Fund Managers Limited
in terms of the Trust Deed:
Service charge 55 247 39 067
Initial charge on new units issued - 9 000
Property management fees:
Acucap Management Services Proprietary Limited 26 493 18 102
Sycom Property Fund Managers Limited 658 1 032
FC Property Management Company Proprietary Limited 2 000 1 594
Somerset Mall Property Management Company Proprietary Limited - 967
Letting commissions fees:
Acucap Properties Limited 1 139 1 128
Acucap Management Services Proprietary Limited 23 170 6 437
Asset acquisition & capital development fees:
Acucap Properties Limited 1 427 16 580
COMMENTARY
1. REVIEW OF RESULTS AND OPERATIONS
The Board of SPFM is pleased to report a distribution of 42.86 cents per unit for the three
months ended 30 June 2015, resulting in a total distribution of 238.46 cents per unit for the 15-
month period ended 30 June 2015. Sycom changed its year end from 31 March to 30 June during
the financial period under review in order to align with that of Growthpoint.
Due to the cyclical nature of certain sources of income, such as the dividends received from Sycom's
investment in Stenham (which is declared in March and September each year) and turnover rental
(which is based on lease periods and tenant year-ends), and certain expense items, the distribution
for the 3-month period to June 2015 is not comparable with prior distributions.
2. CORPORATE ACTION
Merger with Acucap Properties Limited ("Acucap")
In terms of a general and subsequent follow-on offer to Sycom unitholders during the first half of
the 2014 financial year, Acucap increased its holding in Sycom to 83.4%. Starting in April 2014,
Growthpoint built up a 15.6% interest in Sycom, and this, together with the corporate action
referred to in the next paragraph, resulted in the proposed merger between Acucap and Sycom
not proceeding as anticipated.
Merger of combined Acucap and Sycom with Growthpoint Properties Limited ("Growthpoint")
Growthpoint acquired a 34.9% interest in Acucap in April 2014, and subsequently increased its
shareholding in Acucap to 100% by way of a scheme of arrangement which was implemented on
28 April 2015. The scheme of arrangement has resulted in Growthpoint directly and indirectly
holding approximately 99% of the Sycom units in issue, and 100% of SPFM.
3. CHANGE IN DIRECTORATE
In terms of the implementation agreement entered into between Acucap and Growthpoint,
certain changes were made to the SPFM board of directors. These changes will only become
effective once approved by the Financial Services Board. Unitholders are referred to the SENS
announcement dated 18 May 2015 wherein these changes are detailed.
4. PORTFOLIO INVESTMENT ACTIVITY
Vaal Mall
The 15,000m2 expansion of Vaal Mall commenced in September 2014 at an estimated cost of R439
million (Sycom's share being R341 million). The project will result in expanded Woolworths,
Truworths, The Foschini Group and Edcon stores and a new 2,400m2 Ster-Kinekor. The majority of
stores are expected to be trading by mid-2016, with project completion planned for the end of
2016. The expansion will include an upgrade of the existing mall.
Paarl Mall
The first phase of the 2,850m2 expansion of Paarl Mall, including the 2,000m2 enlargement of
Woolworths, is currently underway. It is anticipated that Woolworths will trade from the enlarged
premises by October 2015. The estimated cost of the expansion is R68 million. 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
The first phase of the R296 million redevelopment and extension of Greenacres was opened to the
public on 30 April 2015. Sycom's half share of the development cost is R148 million. The opening was
well supported by shoppers and the food court and adjacent retailers have to date traded beyond
their expectations. This phase successfully showcases the contemporary standard and modern look
and feel of the next phase. Phase 2 is underway and includes non-income producing refurbishment
work and mall revitalisation. In addition, national retailers like Jet, Identity, YDE, The Foschini Group
and Standard Bank will be adding to their existing footprint as well as bringing new brands to
Greenacres while several independent line shops are also being introduced.
The full redevelopment is anticipated to be completed by March 2017.
Fourways Crossing
The upgrade and minor expansion of Fourways Crossing has commenced and is progressing well.
The project is scheduled for completion in April 2016. The total capital cost of the project is
estimated to be R85 million with Sycom's share being R42.5 million.
Roggebaai Place
This building, located in the Cape Town Foreshore, was transferred from the developer to Sycom in
December 2014 with a rental underpin that will secure the first two years post transfer.
There has been encouraging interest from potential tenants.
Discovery Building, Southgate Mall and Southgate Value Market
The sale of the Discovery Building, Southgate Mall and Southgate Value Market became effective
in October 2014.
5. BORROWINGS
Sycom has an approved total facility of R2.9 billion. At the end of the reporting period, Sycom's
gearing level was 31.3%, with 57.1% of its borrowings being covered by interest rate swap
agreements. This will increase to 76.2% of current borrowings once all contracted forward
starting interest rate swaps become effective over the next 12 months.
Interest rate hedging
Notional Approximate
Maturity Amount Effective Rate
Start Date Date Fixed Rate Rm 30 June 2015
31-Mar-14 31-Mar-17 5.790% 200 7.143%
17-Mar-14 17-Mar-17 5.785% 200 7.138%
9-Apr-14 9-Apr-18 6.095% 100 7.448%
30-Sep-14 29-Sep-17 6.045% 200 7.398%
30-Sep-14 30-Sep-16 7.180% 500 8.533%
31-Mar-15 29-Mar-18 6.305% 300 7.658%
30-Sep-15 28-Sep-18 7.650% 300 9.003%
31-Mar-16 31-Mar-20 8.150% 100 9.503%
31-Mar-16 31-Mar-21 8.340% 100 9.693%
Total 2,000
The weighted average borrowing cost as at 30 June 2015 is 7.648%
6. 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
June-16 28.8% 20.0% 8.8%
June-17 19.4% 6.3% 13.1%
June-18 12.8% 5.1% 7.7%
June-19 12.9% 5.2% 7.7%
June-20 22.9% 2.8% 20.1%
thereafter 3.2% 2.4% 0.8%
100.0% 41.8% 58.2%
There are no individually significant lease expiries in this profile following the renewal of the
Deloitte lease and the disposal of Discovery House in October 2014.
7. VACANCIES
The table below provides details of Sycom's vacancies at June 2015, March 2015 and March 2014
expressed by gross lettable area.
Jun-15 Mar-15 Mar-14
Retail vacancy 3.1% 1.9% 3.0%
Office vacancy 5.8% 4.9% 4.4%
Total vacancy 4.7% 3.6% 3.8%
The increase in the retail vacancy level is largely a result of planned vacancies at Vaal Mall,
Greenacres and Fourways Crossing due to the expansion projects referred to above.
8. EVENTS AFTER THE REPORTING DATE
There have been no significant events after the reporting date that require disclosure.
9. PROSPECTS
Given that minority unitholders hold only 1% of Sycom's units in issue, steps will be taken to acquire
these units and a process will be initiated with a view to de-listing Sycom in due course.
10. PAYMENT OF DISTRIBUTION
Notice is hereby given of the declaration of distribution number 61 in respect of the three
months to 30 June 2015. The final distribution of 42.86 (forty two comma eight six) cents per unit
has been approved in respect of the three month period ended 30 June 2015. The last date to
trade the units cum distribution is Friday, 11 September 2015 and the record date will be Friday,
18 September 2015. The units will start trading ex-distribution from Monday, 14 September
2015. Distributions will be made to unitholders on Monday, 21 September 2015.
For unitholders subject to dividends withholding tax, the net local dividend amount, after
deducting 15% dividend withholding tax is 36.431 (thirty six comma four three one) cents per
unit.
Sycom's tax number is 9592332846, and it has no STC credits available.
Unit certificates may not be dematerialised or rematerialised between Monday, 14 September
2015 and Friday, 18 September 2015, 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 final 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 have provided the following forms to their CSDP or broker, as the case may be,
in respect of uncertificated units, or Computershare Investor Services Proprietary Limited
("Computershare") (at the details contained below), in respect of certificated units, in the form
prescribed by the Commissioner for the South African Revenue Service:
- 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.
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 36.431 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 tax 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, in the form
prescribed by the Commissioner for the South African Revenue Service:
- 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.
Submissions
Dematerialised unitholders
Dematerialised unitholders are advised to contact their CSDP or broker as the case may be, to arrange
for the above-mentioned 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
PO Box 62212 Project
Marshalltown 70 Marshall Street
2107 Johannesburg
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 Limited Sycom Property Fund Managers Limited
26 August 2015
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
GK Everingham (Chairman), MS Moloko (Deputy Chairman), FM Berkeley, JPD Flanagan, BM Stocks,
PA Theodosiou*# (CEO), C Kotze*, CB Marlow, GR Jones*
Company Secretary: H H-O Steyn
* Executive
# British
Date: 26/08/2015 03:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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