Wrap Text
Unaudited interim financial results for the six month period ended 31 December 2015 and dividend
declaration
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)
Unaudited interim financial results for the six month period ended 31 December 2015 and dividend
declaration announcement
The directors of SPFM, the management company of Sycom, submit their report on the results of Sycom for the six months ended
31 December 2015.
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the six months ended 31 December 2015
Unaudited six Unaudited six
months to months to
31 Dec 2015 30 Sept 2014
(R'000) (R'000)
Revenue 356,005 368,716
Contractual rental revenue and recoveries 369,734 371,838
Straight-lining of rental revenue adjustment (13,729) (3,122)
Direct property operating expenses (70,403) (70,694)
Selling costs on investment properties held for sale - (1,086)
Dividend from listed investment 10,663 10,145
Fair value changes on investment property and listed investment 104,485 (422)
Fair value gain on investment properties 33,626 3,122
Fair value gain/(loss) on listed investment 70,859 (3,544)
Administrative expenses (24,763) (24,940)
Profit before net finance costs 375,987 281,719
Net finance costs (66,690) (89,827)
Interest income 9,476 11,187
Interest expense (106,725) (104,172)
Fair value gain on derivative financial instruments 30,559 3,158
Profit before taxation 309,297 191,892
Taxation - -
Profit for the period 309,297 191,892
Other comprehensive income for the period
Net change in fair value of cash flow hedges * - (18,630)
Other comprehensive income for the period - (18,630)
Total comprehensive income for the period 309,297 173,262
Basic and diluted earnings per unit - cents ** 154.55 95.88
* 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 31 December 2015
Unaudited at Unaudited at
31 Dec 2015 30 Sept 2014
ASSETS (R'000) (R'000)
Property assets 8,608,065 8,215,123
Investment properties and related receivables 8,608,065 7,540,366
Investment properties 8,418,737 7,321,371
Non-current straight-lining lease receivable 167,297 188,479
Current straight-lining lease receivable 22,031 30,516
Investment properties held for sale and related receivables - 674,757
Investment properties held for sale - 666,654
Straight-lining lease receivable - 8,103
Other non-current assets 493,879 441,709
Listed investment (in Stenham European Shopping Centre Fund) 449,903 407,674
Derivative financial instruments 43,976 34,035
Current assets 379,245 404,832
Rental and other receivables 117,935 112,418
Derivative financial instruments 301 -
Dividends receivable - 10,145
Cash and cash equivalents 261,009 282,269
Total assets 9,481,189 9,061,664
UNITHOLDERS' FUNDS AND LIABILITIES
Unitholders' funds 6,241,300 5,756,778
Unitholders' capital 1,947,048 1,947,048
Non-distributable reserves 4,294,252 3,809,730
Non-current liabilities 2,903,795 2,905,722
Borrowings 2,903,795 2,903,795
Derivative financial instruments - 1,927
Current liabilities 336,094 399,164
Trade and other payables 148,113 155,473
Derivative financial instruments - 50,327
Unitholders for distribution 187,981 193,364
Total unitholders' funds and liabilities 9,481,189 9,061,664
Net asset value per unit - cents 3,119 2,876
Condensed Consolidated Statement of Changes in Unitholders' Funds
for the six months ended 31 December 2015
Unitholders' Non-distributable
Capital reserves Retained earnings Total
(R'000) (R'000) (R'000) (R'000)
Balance at 31 March 2014 1,947,048 3,829,832 - 5,776,880
Total comprehensive income for the period
Profit for the period - - 191,892 191,892
Other comprehensive income for the period - (18,630) - (18,630)
Transfer to non-distributable reserve - (1,472) 1,472 -
Unitholders' distribution - - (193,364) (193,364)
Balance at 30 September 2014 1,947,048 3,809,730 - 5,756,778
Total comprehensive income for the period
Profit for the period - - 647,081 647,081
Transfer to non-distributable reserve - 363,207 (363,207) -
Unitholders' distribution - - (283,874) (283,874)
Balance at 30 June 2015 1,947,048 4,172,937 - 6,119,985
Total comprehensive income for the period
Profit for the period - - 309,297 309,297
Transfer to non-distributable reserve - 121,315 (121,315) -
Unitholders' distribution - - (187,982) (187,982)
Balance at 31 December 2015 1,947,048 4,294,252 - 6,241,300
Condensed Consolidated Statement of Cash Flows
for the six month period ended 31 December 2015
Unaudited six Unaudited six
months to months to
31 Dec 2015 30 Sept 2014
(R'000) (R'000)
Cash flows from operating activities
Profit before taxation 309,297 191,892
Adjusted for:
Interest income (9,476) (11,187)
Interest expense 106,725 104,172
Foreign exchange loss - 67
Dividend from listed investment (10,663) (10,145)
Straight-lining of rental revenue adjustment 13,729 3,122
Fair value gain on investment properties (33,626) (3,122)
Fair value gain on derivative financial instruments (30,559) (3,158)
Fair value (gain)/loss on listed investment (70,859) 3,544
Selling costs on investment properties held for sale - 1,086
Change in working capital 22,555 (2,060)
Decrease/(increase) in receivables (excluding interest accruals) 1,662 (33,233)
Increase in payables (excluding interest and capital expenditure accruals) 20,893 31,173
Cash generated from operations 297,123 274,211
Dividend received 10,663 8,285
Distributions paid (85,784) (190,450)
Interest paid (114,260) (101,147)
Interest received 9,836 12,187
Net cash inflow from operating activities 117,578 3,086
Cash flows from investing activities
Subsequent expenditure on investment properties (178,936) (16,808)
Subsequent expenditure on investment properties held for sale - (6,200)
Selling costs on disposal of investment properties - (1,086)
Net cash outflow from investing activities (178,936) (24,094)
Cash flows from financing activities - -
Net decrease in cash and cash equivalents (61,358) (21,008)
Cash and cash equivalents at the beginning of the period 322,367 303,304
Effect of exchange rate fluctuations on cash held - (27)
Cash and cash equivalents at the end of the period 261,009 282,269
NOTES
1. Basis of Preparation
These interim financial results for the six months ended 31 December 2015 are prepared in accordance with the JSE Limited Listings Requirements
for interim reports and the requirements of the Collective Investments Schemes Control Act. The Listings Requirements require interim 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 and key estimates and assumptions used in the preparation of these interim financial results are in terms
of IFRS and are consistent with those applied in the previous consolidated annual financial statements for the year ended 30 June 2015. Unitholders
attention is drawn to the fact that Sycom changed its year end from 31 March to 30 June with effect from the financial year ended 30 June 2015. For
this reason, the current interim period reported on is the 6 months ended 31 December 2015, while the comparative period is the 6 months ended
30 September 2014.
The interim results 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:
Unaudited six Unaudited six
months to months to
31 Dec 2015 30 Sept 2014
(R'000) (R'000)
Profit for the period 309,297 191,892
Fair value adjustment to investment properties (33,626) (3,122)
Headline earnings 275,671 188,770
Selling costs on investment properties held for sale - 1,086
Straight-lining rental income accrual 13,729 3,122
Gain on derivative financial instruments (30,559) (3,158)
Fair value adjustment to listed investment (70,859) 3,544
Prepaid distribution - -
Distributable earnings 187,982 193,364
cents cents
Earnings per unit:
Basic and diluted earnings* per unit 154.55 95.88
Headline and diluted headline earnings* per unit 137.74 94.32
Distribution per unit 93.93 96.62
* 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) 200,132 200,132
3. Condensed Segmental Results
for the six month period ended 31 December 2015
Segmental earnings:
Retail Offices Total
(R'000) (R'000) (R'000)
Segment contractual rental revenue and recoveries 154,921 214,813 369,734
Straight-lining of rental revenue adjustment (943) (12,786) (13,729)
Dividend income 10,663 - 10,663
Total revenue 164,641 202,027 366,668
Operating expenditure (30,855) (39,548) (70,403)
Net finance income 320 966 1,286
Segmental net operating income 134,106 163,445 297,551
Fair value adjustments 71,802 32,683 104,485
South Africa 943 32,683 33,626
International 70,859 - 70,859
Segmental earnings 205,908 196,128 402,036
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)
Contractual rental revenue and recoveries 369,734 - 369,734
Straight-lining of rental revenue adjustment (13,729) - (13,729)
Dividend income 10,663 - 10,663
Total revenue 366,668 - 366,668
Operating expenditure (70,403) (24,763) (95,166)
Net finance cost 1,286 (98,535) (97,249)
Net operating income 297,551 (123,298) 174,253
Fair value gain on investment properties 33,626 - 33,626
Fair value gain on listed investment 70,859 - 70,859
Fair value gain on derivative financial instruments - 30,559 30,559
Profit before taxation 402,036 (92,739) 309,297
Taxation - - -
Profit for the period 402,036 (92,739) 309,297
Retail Offices Total
(R'000) (R'000) (R'000)
Investment Property Assets 3,960,273 4,647,792 8,608,065
Segmental Liabilities (29,491) (72,306) (101,797)
for the six months ended 30 September 2014
Segmental earnings:
Retail Offices Total
(R'000) (R'000) (R'000)
Segment contractual rental revenue and recoveries 159,379 212,459 371,838
Straight-lining of rental revenue adjustment 602 (3,724) (3,122)
Dividend income 10,145 - 10,145
Total revenue 170,126 208,735 378,861
Operating expenditure (32,164) (38,530) (70,694)
Selling costs on investment properties held for sale (965) (121) (1,086)
Net finance income 429 1,363 1,792
Segmental net operating income 137,426 171,447 308,873
Fair value adjustments (4,146) 3,724 (422)
South Africa (602) 3,724 3,122
International (3,544) - (3,544)
Segmental earnings 133,280 175,171 308,451
Reconciliation of segmental results to profit for the period in the statement of profit or loss and other comprehensive income
Allocated Unallocated Total
(R'000) (R'000) (R'000)
Contractual rental revenue and recoveries 371,838 - 371,838
Straight-lining of rental revenue adjustment (3,122) - (3,122)
Dividend income 10,145 - 10,145
Total revenue 378,861 - 378,861
Operating expenditure (70,694) (24,940) (95,634)
Selling costs on investment properties held for sale (1,086) - (1,086)
Net finance cost 1,792 (94,777) (92,985)
Net operating income 308,873 (119,717) 189,156
Fair value gain on investment properties 3,122 - 3,122
Fair value loss on listed investment (3,544) - (3,544)
Fair value gain on derivative financial instruments - 3,158 3,158
Profit before taxation 308,451 (116,559) 191,892
Taxation - - -
Profit for the year 308,451 (116,559) 191,892
Retail Offices Total
(R'000) (R'000) (R'000)
Investment Property Assets 3,641,753 4,573,370 8,215,123
Segmental Liabilities (30,742) (63,402) (94,144)
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)
31 December 2015
Financial assets - 44,277 449,903 494,180
Listed investment - - 449,903 449,903
Interest rate swaps - 44,277 - 44,277
30 September 2014
Financial assets - 34,035 407,674 441,709
Listed investment - - 407,674 407,674
Interest rate swaps - 34,035 - 34,035
Financial liabilities
Cross currency and interest rate swaps - (52,254) - (52,254)
A reconciliation of the opening balances to the closing balances for the level 3 valuations is disclosed as follows:
Unaudited at Unaudited at
31 Dec 2015 30 Sept 2014
(R'000) (R'000)
Balance as at beginning of period 379,044 409,224
Scrip shares acquired - 1,994
Revaluation of investment recognised in profit or loss 70,859 (3,544)
Carrying value at end of period 449,903 407,674
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. Based on discussions with the valuers, the Directors have reduced the value of the property in order to incorporate a provision for selling
costs, a shorter lease expiry profile for the property and negative rental reversions on certain lease renewals.
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 The fair value would increase/(decrease)
cash flow (DCF) calculation method. The valuation takes into account the agreed based on:
rent for the signed leases, the market rent for currently vacant space and a) Financial (1) increases/(decreases) in the net operating
estimated rents for re-letting of the space after lease term expiry. In all instances, information used to income,
the valuers calculated the DCF for a 10-year period and assumed a capitalised calculate rental (2) (decreases)/increases in the yield used to
value based on a stabilised rental income thereafter. After the DCF period of 10 growth forecasts calculate the terminal value indication
years, the valuers calculate a stabilised rental income. The capitalised value takes b) Net initial yield (3) (decreases)/increases in the discount rate
this stabilised rental income and subtracts the stabilised expenses, resulting in the (6.27%) used to calculate the gross capital value
stabilised net operating income. This result is capitalised into perpetuity applying c) Discount rate
an equivalent (growth implicit) yield and produces the terminal value indication. (6.70%)
The resulting value is then discounted to the valuation date using the discount d) Terminal
rate from term years 1-10. Discounting the remaining cash flows for years 1 to 10 capitalisation rate
and the terminal value for year 11 to the valuation date (i.e. the net present value) (6.40%)
produces the gross capital value. After deductions for purchaser’s costs, the e) Non recoverable
market value is obtained. expenses
f) Market lease
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 31 December 2015
would have decreased/increased by R 4 499 029 (2014: R 4 077 146) 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
Growthpoint Properties Limited The ultimate parent of Acucap Properties Limited and Sycom
Property Fund
Sycom Property Fund Managers Limited The management company of Sycom and a wholly owned
subsidiary of Growthpoint 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 and Ellerine Bros Proprietary Limited.
Unaudited Unaudited
6 months to 6 months to
31 Dec 2015 30 Sept 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 22,554 20,530
Property management fees
Acucap Management Services Proprietary Limited 10,906 10,554
Sycom Property Fund Managers Limited 268 280
FC Property Management Company Proprietary Limited 945 593
Letting commissions
Acucap Properties Limited 705 435
Acucap Management Services Proprietary Limited 6,250 16,437
Capital development fees
Acucap Properties Limited 1,287 -
COMMENTARY
1. REVIEW OF RESULTS AND OPERATIONS
Sycom changed its year end from 31 March to 30 June during the 2015 financial period in order
to align with that of Growthpoint Properties Limited (“Growthpoint”). The current interim period
on which the Fund is now reporting therefore covers the 6 months ended 31 December 2015,
while the comparative period relates to the 6 months ended 30 September 2014.
The distribution for the 6 months ended 31 December 2015 is 93.93 cents per unit, 2.8% below
the distribution for the 6 months ended 30 September 2014. The reduction is largely due to:
- an increase in overall vacancy levels from 1.3% at 30 September 2014 to 5.4% at 31
December 2015, and
- The renewal of a R950 million loan facility in December 2014 at a rate which is 0.75%
higher than the expiry rate.
2. CORPORATE ACTION
Sycom unitholders (“Unitholders”) are referred to the joint announcement released by Sycom and
Growthpoint on SENS on 8 February 2016.
The announcement sets out the terms of a proposed transaction whereby:
- Growthpoint will acquire all Sycom’s assets and liabilities,
- Unitholders will become Growthpoint shareholders,
- Sycom’s listing on the JSE will thereafter be terminated, and
- Sycom will be wound up in due course.
A circular containing, inter alia, the details of the transaction and notices of the required
Unitholder meetings to approve the transaction, was posted to Unitholders on 12 February 2016
and can be downloaded from Sycom’s website www.sycom.co.za.
3. CHANGE IN DIRECTORATE
Messrs EK de Klerk, SA le Roux, RG Pienaar and G Völkel have been appointed to the board of
directors of SPFM. Their appointments will be effective from the date of receipt of approval
thereof from the Registrar of Collective Investment Schemes.
Mr PA Theodosiou’s resignation from the board of directors of SPFM will become effective on
the day after Mr Völkel's appointment becomes effective.
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 77.86% 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 early 2017.
The expansion will include an upgrade of the existing mall.
Sycom has entered into an agreement to sell a 11.195% undivided share in Vaal Mall to the current
co-owner, thereby reducing its share in Vaal Mall from 77.86% to 66.67%. The disposal will be
effective on or about 1 April 2016. Unitholders are referred to the announcement released on SENS
on 4 December 2015 for further details of the disposal.
Greenacres
Phase 2 of the R296 million redevelopment and extension of Greenacres started in April 2015, and is
due for completion in October 2016. The northern extension, forming part of this phase, was launched
in December 2015 and included a new entrance and a relocated Ackermans. The common area
refurbishment and mall revitalisation is progressing well and completed areas are attracting positive
responses from tenants and customers.
Fourways Crossing
The upgrade and minor expansion of Fourways Crossing is progressing well, and will be completed
by June 2016. The total capital cost of the project is estimated to be R105 million with Sycom’s
share being R52.5 million.
Paarl Mall
The 2,850m2 expansion of Paarl Mall, which added 2,000m2 to the existing Woolworths store, was
successfully completed towards the end of 2015. The additional land acquired adjacent to the mall
is in the process of being re-zoned, and this will provide the necessary bulk to introduce a large
format retailer to the mall.
5. BORROWINGS
Sycom has an approved total facility of R2.9 billion. At the end of the reporting period, Sycom’s
gearing level was 31.5%, with 66.4% of its borrowings being covered by interest rate swap
agreements. This will increase to 73.8% of current borrowings once all contracted forward
starting interest rate swaps become effective over the next 12 months.
Interest rate hedging
Notional Approximate
Maturity Contracted Amount Effective Rate –
Start Date Date Rate Rm 31 Dec 2015
31-Mar-14 31-Mar-17 5.790% 200 7.192%
17-Mar-14 17-Mar-17 5.785% 200 7.187%
9-Apr-14 9-Apr-18 6.095% 100 7.497%
30-Sep-14 29-Sep-17 6.045% 200 7.447%
30-Sep-14 30-Sep-16 7.180% 500 8.582%
31-Mar-15 29-Mar-18 6.305% 300 7.707%
30-Sep-15 28-Sep-18 7.650% 300 9.052%
31-Mar-16 31-Mar-20 8.150% 100 9.552%
31-Mar-16 31-Mar-21 8.340% 100 9.742%
Total 2,000
The weighted average borrowing cost as at 31 December 2015 is 8.02%.
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
Dec-16 31.0% 15.4% 15.6%
Dec-17 9.1% 4.8% 4.3%
Dec-18 18.6% 6.8% 11.8%
Dec-19 9.2% 4.1% 5.1%
Dec-20 27.8% 9.0% 18.8%
thereafter 4.3% 3.2% 1.1%
Total 100.0% 43.3% 56.7%
A lease over office space of approximately 18,800m2 expires at the end of September 2016. This
lease will not be renewed, and management is actively seeking replacement tenants for these
premises. Apart from this lease, there are no individually significant lease expiries in this profile
following the renewal of the Deloitte lease.
7. VACANCIES
The table below provides details of Sycom’s vacancies at December 2015, June 2015 and September
2014 expressed by gross lettable area.
Dec-15 June-15 Sept-14
Retail vacancy 2.3% 3.1% 1.0%
Office vacancy 7.4% 5.8% 1.5%
Total vacancy 5.4% 4.7% 1.3%
The office market remains under pressure, which has resulted in an increase in vacancies in this
sector. Reducing this vacancy level is a key focus of management. 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
Apart from the corporate action referred to in 2 above, there have been no significant events after the
reporting date that require disclosure.
9. PROSPECTS
Should the proposed transaction referred to in 2 above receive the necessary approvals and become
unconditional, Sycom will be delisted on or about 19 April 2016 and thereafter will be wound up in due
course.
10. PAYMENT OF DISTRIBUTION
Notice is hereby given of the declaration of distribution number 62 in respect of the six months
to 31 December 2015. The interim distribution of 93.93 (ninety three point nine three) cents per
unit has been approved in respect of the six month period ended 31 December 2015. The last
date to trade the units cum distribution is Wednesday, 23 March 2016 and the record date will
be Friday, 1 April 2016. The units will start trading ex-distribution from Thursday, 24 March 2016.
Distributions will be made to Unitholders on Monday, 4 April 2016.
For Unitholders subject to dividends withholding tax, the net local dividend amount, after
deducting 15% dividend withholding tax is 79.8405 (seventy nine point eight four zero five) cents
per unit.
Sycom’s tax number is 9592332846.
Unit certificates may not be dematerialised or rematerialised between Wednesday, 23 March
2016 and Friday, 1 April 2016 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 Real Estate Investment Trust (“REIT”), unitholders are advised
that the interim 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”). The distribution will therefore
be deemed to be a taxable dividend for South African tax purposes in terms of section 25BB of the
Income Tax Act.
South African 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 section 10(1)(k)(i)(aa) of the Income Tax Act, as a result of it
being a dividend distributed by a REIT. This distribution is, however, exempt from dividend withholding
tax in the hands of South African tax resident unitholders provided that such unitholders have
provided to the Central Securities Depository Participant (“CSDP”) or broker, as the case may be, in
respect of uncertificated units, or Computershare Investor Services Proprietary Limited
(“Computershare”), in respect of certificated units, a DTD(EX) (Dividends Tax: Declaration and
undertaking to be made by the beneficial owner of a share) form to prove their status as South African
tax residents.
Non-resident unitholders
Distributions received by non-resident unitholders from a REIT will not be taxable as income and
instead will be treated as ordinary dividends which are exempt from income tax in terms of the
general dividend exemption in section 10(1)(k) of the Income Tax Act. With effect from 1 January
2014, any dividend received by a non-resident from a REIT is subject to dividend withholding tax at
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 non-resident unitholder.
Assuming dividend withholding tax of 15%, the net distribution amount due to non-resident
unitholders is 79.8405 cents per unit. A reduced dividend withholding tax rate in terms of the
applicable DTA may only be relied on if the non-resident unitholder has provided the following forms
to their CSDP or broker, as the case may be, in respect of uncertificated units, or Computershare, in
respect of certificated units:
- a declaration that the distribution is subject to a reduced rate as a result of the application of a
DTA; and
- a written undertaking to inform its CSDP, broker or Computershare, as the case may be, should
the circumstances affecting the reduced rate change or the beneficial owner cease to be the
beneficial owner, both in the form prescribed by the Commissioner of the South African
Revenue Services.
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
2 March 2016
Registered Office: Transfer secretaries:
The Place Computershare Investor Services Proprietary Limited
1 Sandton Drive 70 Marshall Street
Sandton Johannesburg
2196
Sponsor:
Questco Proprietary Limited
http://www.sycom.co.za
Directors: GK Everingham (Chairman), FM Berkeley, BM Stocks, PA Theodosiou*# (CEO), C Kotze*
Company Secretary: H H-O Steyn
* Executive
# British
Date: 02/03/2016 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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