Wrap Text
Abridged Consolidated Financial Statements For The Year Ended 31 March 2016 And Notice Of Annual General Meeting
Safari Investments RSA Limited
Registration number: 2000/015002/06
Approved as a REIT by the JSE Limited
JSE share code: SAR
ISIN: ZAE000188280
Republic of South Africa
(“Safari” or the “company” or the “group”)
The abridged consolidated financial statements
for the year ended 31 March 2016 and notice of annual general meeting
The preparation of the abridged consolidated financial
results for the year ended 31 March 2016 was prepared under the
supervision of the financial director, JZ Engelbrecht (MCom, MBA).
2016 Performance Overview
– Number of properties: 19
– 4% vacancy rate*
– R122/m2 monthly weighted average base rental/m2 for retail sector
– R138/m2 monthly weighted average base rental/m2 for health care
sector
– 99% retail sector & 1% health care sector
– 87% national tenants*
– 8,3% weighted average rental escalation for retail sector
– 153 300m2 total built m2 of property portfolio
– R2,2 billion value of portfolio
*The increase in vacancy rate and decrease in national tenancy was
due to an upgrade of our tenant mix and layout at Thabong and Denlyn
centres. In order to maximise the efficiency of our tenant mix and
layout we had to relocate major tenants – this process involved
vacating certain areas of the centre to attend to construction work
and the relocation of tenants on a permanent or temporary basis. As
at the date of this publication the vacancy factor was at 2% with the
abovementioned upgrades still in progress.
Income generating property portfolio
for the year ending 31 March 2016
Atlyn Maunde
Denlyn Atteridge- Atteridge-
Mamelodi, ville, ville,
Geographic Gauteng Gauteng Gauteng
Trading since 2003 2006 2015
Total built area 42 200m2 41 200m2 10 550m2
Occupation levels 99% 100% 83%
National tenants 93% 92% 59%
Number of shops 106 95 31
Annual trading density/m2
for 2016 * R41 700/m2 R28 100/m2 N/A
Soweto
The Day
Thabong Victorian Hospital
Sebokeng, Heidelberg, Soweto,
Geographic Gauteng Gauteng Gauteng
Trading since 2007 1997 2016
Total built area 41 150m2 15 400m2 2 817m2
Occupation levels 95% 93% 100%
National tenants 87% 89% N/A
Number of shops 104 40 N/A
Annual trading density/m2
for 2016 * R23 100/m2 R37 200/m2 N/A
* Annual national average trading density: R28 462/m2 (centres in
category of Atlyn, Denlyn and Thabong) and R33 593/m2 (centres in
category of The Victorian) (Source: IPD December 2015). Maunde has
not traded for the full financial year.
Chairman and Chief Executive Officer’s report
We look back on a successful 2016 financial year as we remained
focused on strengthening and reconditioning our asset portfolio.
We have seen our assets evolve and grow beautifully, the portfolio
reached the R2,2 billion mark – a 23% increase in portfolio value,
while returning R119,9 million to investors in the past year.
In the current economic climate with its unique challenges we have
positioned the company primarily to focus on strengthening and
consolidation of assets. We are set not to deviate from our focus on
prime desirable locations, and to maintain a foundation of
broad and deep competitive advantage.
It is also with careful and objective market research in hand that we
consider all new investment ventures and how to truly optimise our
asset base.
The year has seen our first diversification in a formerly pure retail
portfolio by the acquisition of a day-hospital investment in
partnership with Advanced Health. It has proven to us that Safari is
ready to diversify and strive towards establishing various service
offerings to serve our communities even better.
In Atteridgeville the Maunde Centre is gaining momentum while
construction of the new Nkomo Village is underway with Pick n Pay and
Boxer secured as anchors. This development will bring Safari’s
complete offering in Atteridgeville to 75 000m2. A phase 4 is
underway for Thabong Centre in Sebokeng, reaching the 45 000m² mark,
while negotiations are in their final stages for land adjacent to the
centre in Mamelodi that will upon completion of redevelopment bring
Denlyn to 70 000m2, a huge regional retail node. Apart from these
valuable extensions we successfully acquired 13 000m2 of land on the
intersection of Lynnwood and Roderick Roads in Lynnwood, Pretoria.
The strategic value of this property is fantastic and we are very
positive about the prospects for this land.
We look forward with great anticipation to the grand opening in
September 2016 of Safari’s first investment across border, the new
Platz am Meer Waterfront development on the coast of Swakopmund in
Namibia. We are extremely proud of this beautiful development on the
coastline and of contractor Namibia Construction who successfully
took on the tremendous task of its construction. We welcome the
prestigious anchors Woolworths, Checkers, Dis-Chem and Edgars who
share our confidence and partnered with us here.
We are pleased with the following highlights for the year:
– The total assets increased in value from R1,8 billion in 2015, to
R2,2 billion in 2016, a 23% increase;
– Revenue year on year increased by 22% (2016: R172 million;
2015: R140 million);
– We achieved an 8,3% growth in weighted average rental income per
square metre across the retail portfolio;
– Retail trading density across the portfolio outperformed the IPD
national average for the relevant category of each shopping centre
(Source: IPD December 2015). The portfolio achieved an impressive
weighted annual average trading density of R31 719 p/m2; and
– We distributed R119,9 million in distributions to shareholders,
with the current distribution due end of June 2016 at 32 cents per
share.
We successfully continued with the option of reinvestment of
distributions as shares, with most institutional investors preferring
the shares. Former Chairman Dr Tsolo retired in February 2016 due
to health reasons. He has served as the Chairman of Safari in a key
period of our history. As Chairman he has seen the company through
a tremendous stage of growth and was part of a Board who with
determination and vigour steered Safari all the way to its
proud place on the JSE today. We extend our best wishes to him as he
retires from the corporate industry to focus on his family and
personal interests. We are grateful for the years that he served as
director and Chairman, he will always remain a dear friend and
benefactor to Safari.
We want to thank our shareholders for their continued support and
confidence. Our appreciation further extends to our business
partners, advisers, customers and suppliers for their ongoing
support. It is a privilege to us to head a company with such
bright prospects, and where management shares collective values of
loyalty and perseverance. We look forward to taking hold of yet
another year of opportunities to unlock value and potential.
Dr JP Snyman Mr FJJ Marais
Chairman Chief Executive Officer
Approved on 14 June 2016
Abridged consolidated statement of financial position
as at 31 March 2016
2016 2015
Notes R R
Assets 2 082 513 839 1 732 927 674
Non-current assets
Investment property 1 2 054 690 350 1 706 427 026
Fair value of investment
property 2 088 583 790 1 737 745 309
Operating lease asset (33 893 440) (31 318 283)
Intangible assets 14 208 25 575
Operating lease asset 2 27 809 281 26 475 073
Current assets 136 854 591 64 868 815
Inventories 3 96 905 412 36 632 037
Trade and other
receivables 5 28 828 500 8 691 904
Operating lease asset 2 6 084 793 4 843 210
Current tax receivable 1 638 134 5 933 521
Cash and cash equivalents 3 397 752 8 768 143
Total assets 2 219 368 430 1 797 796 489
Equity and liabilities 1 556 031 936 1 509 420 702
Equity
Stated capital 4 1 116 565 828 1 031 570 468
Retained income 439 466 108 477 850 234
Liabilities 645 710 961 213 997 633
Non-current liabilities
Interest bearing
borrowings 6 627 232 996 197 319 609
Deferred tax 18 477 965 16 678 024
Current liabilities 17 625 533 74 378 153
Trade and other payables 5 11 095 837 8 305 007
Interest bearing
borrowings 6 6 529 696 66 073 147
Total liabilities 663 336 494 288 375 787
Total equity and
liabilities 2 219 368 430 1 797 796 489
Abridged consolidated statement of profit or loss and other
comprehensive income for the year ended 31 March 2016
2016 2015
Notes R R
Revenue 171 630 938 140 433 022
Property revenue 7 169 055 147 140 398 218
Operating lease 2 2 575 791 34 804
Other income 1 184 914 2 663 181
Operating expenses 8 (48 686 601) (38 156 921)
Operating profit 124 129 251 104 939 282
Interest income 464 734 600 382
Fair value adjustments 1 (4 996 946) 114 589 608
Gross fair value
adjustments (2 421 155) 114 624 412
Operating lease (2 575 791) (34 804)
Finance costs 6 (36 254 375) (9 417 667)
Profit before taxation 83 342 664 210 711 605
Taxation 9 (1 799 940) (3 884 706)
Profit for the year 81 542 724 206 826 899
Other comprehensive
income – –
Total comprehensive
income for the year 81 542 724 206 826 899
Basic earnings per share
(cents) 46 122
Diluted earnings per
share (cents) 45 120
Abridged consolidated statement of changes in equity
for the year ended 31 March 2016
Total
attributable
Share to equity
capital/ holders of
stated Retained the group/
capital/ income company
R R R
Balance at
1 April 2014 644 152 383 362 823 335 1 006 975 718
Profit for the year - 206 826 899 206 826 899
Other comprehensive
income – – –
Total comprehensive
income for the year - 206 826 899 206 826 899
Capital raising
through JSE listing 374 562 748 – 374 562 748
Capital raising fee
on shares paid for
in the prior year
and issued in the
current year (1 478 927) – (1 478 927)
Capital raising fee
on shares paid for
and issued in the
currentyear (3 924 978) – (3 924 978)
Shares issued through
capitalisation
dividend 18 259 242 – 18 259 242
REIT distribution – (91 800 000) (91 800 000)
Total contributions by
and distributions to
owners of company
recognised directly
in equity 387 418 085 (91 800 000) 295 618 085
Balance at
1 April 2015 1 031 570 468 477 850 234 1 509 420 702
Profit for the year – 81 542 724 81 542 724
Other comprehensive
income – – –
Total comprehensive
income for the year – 81 542 724 81 542 724
Capital raising fee
on shares paid for
and issued in the
current year (717 858) – (717 858)
Shares issued through
capitalisation dividen 16 410 225 – 16 410 225
Shares issued through
capitalisation
dividend 15 214 019 – 15 214 019
Shares issued through
rights offer 54 088 974 – 54 088 974
REIT distribution – (119 926 850) (119 926 850)
Total contributions by
and distributions to
owners of company
recognised directly in
equity 84 995 360 (119 926 850) (34 931 490)
Balance at
31 March 2016 1 116 565 828 439 466 108 1 556 031 936
Shares paid
for and Total
issuable equity
R R
Balance at 1 April 2014 104 365 747 1 111 341 465
Profit for the year - 206 826 899
Other comprehensive income – –
Total comprehensive income
for the year - 206 826 899
Capital raising through
JSE listing (104 365 747) 270 197 001
Capital raising fee on
shares paid for in the
prior year and issued
in the current year – (1 478 927)
Capital raising fee
on shares paid for and
issued in the current year – (3 924 978)
Shares issued through
capitalisation dividend – 18 259 242
REIT distribution - (91 800 000)
Total contributions by and
distributions to owners
of company recognised
directly in equity (104 365 747) 191 252 338
Balance at 1 April 2015 – 1 509 420 702
Profit for the year – 81 542 724
Other comprehensive income – –
Total comprehensive income
for the year – 81 542 724
Capital raising fee on shares paid
for and issued in the current year – (717 858)
Shares issued through
capitalisation dividend – 16 410 225
Shares issued through
capitalisation dividend – 15 214 019
Shares issued through rights offer – 54 088 974
REIT distribution – (119 926 850)
Total contributions by and
distributions to owners of company
recognised directly in equity – (34 931 490)
Balance at 31 March 2016 – 1 556 031 936
Abridged consolidated statement of cash flows
for the year ended 31 March 2016
2016 2015
Notes R R
Net cash used in
operating activities
Cash generated from
operations 43 945 683 79 707 319
Interest income 464 734 600 382
REIT distribution paid 4 (88 302 606) (73 540 758)
Finance costs (36 254 375) (9 417 667)
Tax received/(paid) 4 295 387 (2 949 614)
Net cash used in operating
activities (75 851 177) (5 600 338)
Net cash used in investing
activities
Purchase and development of
investment property 1 (353 260 270) (243 968 283)
Net cash used in investing
activities (353 260 270) (243 968 283)
Net cash received from
financing activities
Proceeds on share issue 53 371 116 264 793 096
Proceeds from interest
bearing borrowings 587 060 824 872 078 389
Repayment of interest
bearing borrowings (216 690 884) (989 756 151)
Repayment of other financial
liabilities – (10 041 621)
Repayment of shareholders’
loan – (4 439 687)
Net cash from financing
activities 423 741 056 132 634 026
Total cash movement
for the year (5 370 391) (116 934 595)
Cash at the beginning
of the year 8 768 143 125 702 738
Total cash at the end
of the year 3 397 752 8 768 143
Segmental reporting
The group classifies the following main segments, which is
consistent with the way in which the group reports internally:
– Atteridgeville
– Mamelodi
– Sebokeng
– Heidelberg
– Namibia
Abridged segment results, net assets, include items directly
attributable to a segment as well as those that can be
allocated on a reasonable basis.
Atteridge-
ville Mamelodi Sebokeng Heidelberg
R R R R
31 March 2016
Turnover
(external) 51 732 450 5 7 282 830 45 447 605 15 843 140
Reportable
segment profit
before investment
revenue, fair
value adjustments
and finance
costs 40 247 133 47 194 044 31 767 423 10 775 190
Unallocated
reportable
segment profit
before investment
revenue, fair
value adjustments
and finance
costs – – – –
Profit before
investment revenue,
fair value
adjustments and
finance costs – – – –
Segment assets
and liabilities 596 672 064 582 030 160 383 047 363 143 597 721
Segment assets
Unallocated
assets – – – –
Total assets 596 672 064 582 030 160 383 047 363 143 597 721
Segment
liabilities 3 369 926 3 266 726 2 785 360 587 680
Unallocated
liabilities – – – –
Total
liabilities 3 369 926 3 266 726 2 785 360 587 680
Other segment
items 4 119 3 683 10 349 786
Interest revenue
(external)
Unallocated
interest revenue – – – –
Investment
revenue 4 119 3 683 10 349 786
Fair value
adjustments (29 505 372) 43 072 711 (41 354 660) (9 939 713)
Interest expense – – (20 084) –
Unallocated
interest expense – – – –
Finance costs – – (20 084) –
Reconci-
Namibia liation Total
R R R
31 March 2016
Turnover (external) 85 785 – 170 391 810
Reportable segment
profit before investment
revenue, fair value
adjustments and
finance costs (868 775) – 129 115 015
Unallocated reportable
segment profit before
investment revenue,
fair value adjustments
and finance costs – (4 985 764) (4 985 764)
Profit before investment
revenue, fair value
adjustments and
finance costs – – 124 129 251
Segment assets and
liabilities 440 857 804 – 2 146 205 112
Segment assets
Unallocated assets – 73 163 318 73 163 318
Total assets 440 857 804 73 163 318 2 219 368 430
Segment liabilities 504 280 – 10 513 972
Unallocated
liabilities – 652 822 522 652 822 522
Total liabilities 504 280 652 822 522 663 336 494
Other segment items 1 621 – 20 558
Interest revenue
(external)
Unallocated interest
revenue – 444 176 444 176
Investment revenue 1 621 444 176 464 734
Fair value adjustments 24 752 901 10 552 977 (2 421 155)
Interest expense – – (20 084)
Unallocated interest
expense – (36 234 291) (36 234 291)
Finance costs – (36 234 291) (36 254 375)
Atteridge-
ville Mamelodi Sebokeng Heidelberg
R R R R
31 March 2015
Turnover
(external) 38 390 897 54 391 189 32 010 715 15 752 326
Reportable
segment profit
before investment
revenue, fair
value adjustments
and finance
costs 30 802 065 45 431 053 25 328 874 11 324 237
Unallocated
reportable
segment
profit before
investment
revenue, fair
value adjustments
and finance costs – – – –
Profit before
investment revenue,
fair value – – – –
adjustments and
finance costs
Segment assets
and
liabilities 557 027 113 530 413 169 370 393 792 142 575 742
Segment assets
Unallocated
assets – – – –
Total assets 557 027 113 530 413 169 370 393 792 142 575 742
Segment
liabilities 2 116 216 3 244 136 2 355 681 642 514
Unallocated
liabilities – – – –
Total
liabilities 2 116 216 3 244 136 2 355 681 642 514
Other segment
items 1 789 16 438 7 642 417
Interest revenue
(external)
Unallocated interest
revenue – – – –
Investment
revenue 1 789 16 438 7 642 417
Fair value
adjustments 60 568 520 18 140 538 (10 029 447) 5 490 729
Interest
expense – (77) – (87)
Unallocated
interest
expense – – – –
Finance costs – (77) – (87)
Reconci-
Namibia liation Total
R R R
31 March 2015
Turnover (external) 96 627 – 140 641 754
Reportable segment profit
before investment
revenue, fair value
adjustments and
finance costs (531 382) – 112 354 847
Unallocated reportable
segment profit before
investment revenue, fair
value adjustments and
finance costs – (7 415 566) (7 415 566)
Profit before investment
revenue, fair value
adjustments and finance
costs – – 104 939 282
Segment assets and
liabilities 140 731 951 – 1 741 141 767
Segment assets
Unallocated assets – 56 654 722 56 654 722
Total assets 140 731 951 56 654 722 1 797 796 489
Segment liabilities – – 8 358 547
Unallocated liabilities – 280 017 241 280 017 241
Total liabilities – 280 017 241 288 375 787
Other segment items 2 888 – 29 174
Interest revenue
(external)
Unallocated interest
revenue – 571 208 571 208
Investment revenue 2 888 571 208 600 382
Fair value adjustments 40 454 072 – 114 624 412
Interest expense – – (164)
Unallocated interest
expense – (9 417 503) (9 417 503)
Finance costs – (9 417 503) (9 417 667)
Earnings per share for the year ended 31 March 2016
2016 2015
R R
Earnings used in the calculation of
basic earnings per share
(profit after tax) 81 542 724 206 826 899
Ordinary shares in issue
at year end 182 182 319 172 282 443
Weighted average number of
ordinary shares 177 386 298 169 733 035
Headline earnings 83 963 879 92 237 289
Basic earnings per share (cents) 46 122
Diluted earnings per share
(cents) 45 120
Basic headline earnings per share
(cents) 47 54
Diluted headline earnings per
share (cents) 46 54
Headline earnings reconciliation
Basic earnings (profit after tax) 81 542 724 206 826 897
Gains and losses from the
adjustment to the fair value of
non-current assets 2 421 155 (114 589 608)
Headline earnings 83 963 879 92 237 289
Net asset value per share for the year ended 31 March 2016
2016 2015
R R
Total assets 2 219 368 430 1 797 796 488
Total liabilities (663 336 494) (288 375 786)
1 556 031 936 1 509 420 702
Ordinary shares in issue 182 182 319 172 282 443
Net asset value per share (cents) 854 876
Tangible net asset value (cents) 854 876
Explanatory notes to the abridged consolidated statement of
financial position and abridged consolidated statement of
comprehensive income for the year ended 31 March 2016:
1. It is the group’s policy to have the entire investment property
portfolio valued on an annual basis by an independent valuator.
The group's investment properties comprise both completed developments
as well as developments under construction. There was R353 260 270
additional capital expenditure during the year including the incurred
cost of new properties acquired and capitalised cost of development
projects for that period.
The value of the investment property increased by 20% from 31 March 2015
due to cost capitalised in the construction of the Maunde
Shopping Centre, Platz am Meer Waterfront Centre, Thabong Shopping
Centre, Soweto Private Day Hospital and the acquisition of the
Lynnwood properties. The construction costs are financed by the Absa
facility (interest bearing borrowings).
The valuation of investment property (except for the property
valuations based on the direct comparable method) was based on the
discounted cash flow method. The valuation of investment property
(Erf 9043, 9044, 9045 Atteridgeville Ext 5 and remainder of
Portion 294, Farm Pretoria Town and Townlands 351 and the
subsidiary’s property) was based on the direct comparable method,
plus development cost. This method was used as the erven
identified above are new stands purchased during 2013, which are
not yet income earning (not yet generating cash flow).
These valuations are considered to be Level 3 on the fair value
hierarchy as per IFRS 13 Fair Value Measurement. There have been no
movements of inputs between fair value hierarchy levels nor have
there been any changes in the methods of valuation as mentioned
above. If the valuator were to increase both the capitalisation and
discount rates by 0,50% the total valuation would decrease by
R88 300 000.
This announcement does not include all the information required
pursuant to paragraph 16A(j) of IAS 34. The full annual financial
statements are available on the issuer’s website, at the issuer’s
registered offices and upon request.
2. Most of Safari’s current lease agreements are in the second half
of the signed lease period. Sufficient new lease agreements and
renewals are in place; escalations of 8% have been achieved for new
leases negotiated.
3. On 20 May 2015 the Board passed a resolution to increase the
size of the retail area of the Platz am Meer development from
16 885m2 to 22 405m2. The group previously measured inventory at
30% of Erf 71, Swakopmund, Erongo Region, Registration division G,
measuring 8 712m2, being residential units to be erected and
constructed on the land. In the current period the group has
revised its estimate to 30% of the total construction cost of the
project, based on the quantity surveyor’s estimates. The residential
units will be available for sale in the ordinary course of business.
4. During 2016 Safari distributed 34 cents per share in July 2015,
and 34 cents per share in December 2015. The total distribution
declared was R119 926 850 (2015: R91 800 000) resulting in 31%
increase year on year. The company made a net payment of R88 302 606
to shareholders. A total of R31 624 244 was reinvested through a
dividend reinvestment plan which resulted in 3 718 279 new
shares issued.
5. Trade and other receivables fluctuated between the comparative
periods, due to the value added tax (VAT) receivable from the South
African/Namibia Revenue Services for the financial period under
review. The VAT receivable is due to the current construction
projects at the various properties.
Trade and other payables consists of deposits (tenants) held at
current retail centres, income received in advance and accrued
expenses.
6. The bulk of current and non-current liabilities were directly
related to the facility being utilised to finance the project
development of Platz am Meer Waterfront Centre, Maunde Shopping
Centre, Thabong Shopping Centre (Phases 3 and 3.1), Soweto Day
Hospital and Nkomo Village.
7. The property revenue increased by 20% compared with the previous
year’s results. The additional increase over and above the annual
escalation is due to the opening of the Atlyn South Block
(Atlyn Shopping Centre), Thabong Shopping Centre extensions, Maunde
Shopping Centre (commenced trading in August 2015) and
Soweto Day-Hospital (operational since January 2016).
8. The operating expenses as a percentage of revenue was 28% (2015:
27%), due to the additional properties coming into operation (Atlyn
South Block of 1 379m2, Thabong extensions of 13 500m2, Maunde
Shopping Centre of 10 550m2).
9. The movement in the tax balance is due to deferred tax on
income received in advance, lease straight-lining and wear and tear
allowances claimed in terms of Section 11 E of the Income Tax Act.
Notes to the abridged financial statements
Basis of preparation
The abridged consolidated financial statements are prepared in
accordance with the requirements of the JSE Limited Listings
Requirements for abridged reports and the requirements of
the Companies Act of South Africa, as amended, the JSE Listings
Requirements require abridged reports to be prepared in accordance
with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards (IFRS),
the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee and Financial Pronouncements as issued by
Financial Reporting Standards Council and to also, as a minimum,
contain the information required by International Accounting Standard
(IAS 34) Interim Financial Reporting. The accounting policies
applied in the preparation of the abridged consolidated financial
statements are in terms of IFRS and are consistent with those
applied in the previous financial statements.
Financial statements
The consolidated annual financial statements for the year have
been audited by Deloitte & Touche and an unmodified report issued,
and is available for inspection at the group’s registered office
or in electronic format on the website: www.safari-investments.com.
The abridged consolidated financial statements are extracted from
the audited financial information but are not themselves audited.
Information included under the headings “2016 Performance overview”
and “CEO and Chairman’s Report” has not been audited or reviewed.
Shareholders are advised that in order to obtain a full understanding
of the nature of the auditors’ engagement they should obtain a copy
of the report with accompanying financial statements from the group’s
registered offices. The directors take full responsibility for the
preparation of the abridged results and all financial information has
been correctly extracted from the underlying financial statements.
The consolidated annual financial statements were approved by the
Board of Directors on 14 June 2016 and published on 22 June 2016.
New standards and interpretations
The accounting policies of the group have been applied
consistently to the policies as presented in the consolidated
financial statements for the year ended 31 March 2016.
Events subsequent to the reporting period
Safari increased its interest bearing borrowings with Absa to
R900 million with effect from 1 April 2016 at lending rate of prime
less 1,05%. The facility will be utilised to fund capital projects.
At the Board meeting held on 25 May 2016 the following capital
projects or deviations on existing projects were approved:
– The approved capital budget of R31 031 776 at the Denlyn
Centre would be adjusted downwards by R8 102 879 to the value of
R22 928 897;
– The capital budget at Thabong Centre (phase 4) development was
decreased by R1 748 406 from R87 990 595 to R86 242 189;
– The Victorian Centre upgrade project budget was increased by
R7 929 718 from the budget of R16 303 948 to R24 233 666; and
– The Platz am Meer budget was increased by R64 626 053 from a total
investment value of R575 018 832 to R639 644 885.
The Group Company Secretary was Safari Retail Proprietary Limited,
represented by Mr DC Engelbrecht. With effect from 1 April 2016
Mr DC Engelbrecht was directly appointed by the company as the
Group Company Secretary.
The directors are not aware of any other material reportable events
which occurred during and subsequent to the reporting period.
Related-party transactions
All related-party transactions are as per approved agreements.
Cosmos Management CC (Cosmos) provided bookkeeping and property
management services to Safari and is a related party due to the
common directorship. The services rendered by Cosmos amounted to
R5,2 million (2015: R4,3 million).
Safari Retail Proprietary Limited (Retail) provides secretarial,
financial and administration services to Safari and is a related
party due to the common directorship. The services rendered by Retail
amounted to R2,0 million (2015: R2,4 million).
Board commentary
Profile
Safari Investments RSA Limited (Safari), with a total asset base of
R2,2 billion, is a retail-focused Real Estate Investment Trust (REIT)
listed on the Johannesburg Stock Exchange Limited (JSE) main board
under the property sector.
Safari invests in quality income-generating property; revenue is
generated through sustainable rental income. There were no changes to
the nature of the business during the financial period under review.
Property portfolio
The property portfolio consists of 19 properties. Five of the
properties are established retail centres, of which three are serving
as regionals in their areas. The above-mentioned properties are the
income-generating assets in the Safari portfolio. These include
Denlyn in Mamelodi (42 200m2); Atlyn (41 200m2) and Maunde (10 550m²)
in Atteridgeville; Thabong in Sebokeng (41 150m2); and The Victorian
in Heidelberg (15 400m2). These centres are anchored by national
retailers such as Shoprite, Spar and Pick n Pay. Safari’s current
rental portfolio is 99% retail based. Safari acquired its first
private day-hospital situated in Soweto, which opened its doors
in January 2016.
Letting activity
Safari’s vacancy factor in its portfolio at 31 March 2016 was 4%
(2015: 1%) of the total income-generating retail space which
consisted of 87% (2015: 90%) national tenants. The weighted average
rental escalation percentage for the period was 8,3% (2015: 8,3%).
The increase in vacancy rate and decrease in national tenancy was due
to an upgrade of our tenant mix and layout at Thabong and Denlyn
centres. In order to maximise the efficiency of our tenant mix and
layout we had to relocate major tenants – this process involved
vacating certain areas of the centre to attend to construction work
and the relocation of tenants on a permanent or temporary basis.
As at the date of this report the vacancy factor was at 2% with
the abovementioned upgrades still in progress.
Current projects
1. The Maunde Street, Atteridgeville, development would be a
stand-alone centre complementing the current Atlyn node. The
10 550m2 additional GLA was completed and pushed the Atlyn node to
above 50 000m2. Maunde Centre opened its doors for trading during
June 2015.
2. This project has been successfully completed at Atlyn, Maunde and
Denlyn Centres. The projected return on investment for this project
is 12,5%. Electricity generated through this system is used for
common area consumption (costs covered by the landlord) and the
excess will be purchased by African Electrical Technologies, our
electrical engineering service provider.
3. Soweto Private Day-Hospital is the first property investment other
than pure retail that Safari has acquired. It is operated by a
subsidiary company of Advanced Health, based on a triple-A net lease
agreement. We are proud to announce that the hospital opened its
doors in February 2016.
4. Thabong Phases 3 and 3.1 brought in an additional 13 500m2 of
gross leasable area (“GLA”) to the current retail space. Phase 3.1
(Pick n Pay) opened at the end of April 2015 and serves as a very
popular food anchor in Sebokeng. We have received interest from
Builders Warehouse Superstore (part of the Massmart group) and are in
the process of a 3 600m2 expansion to accommodate it together with a
tyre service centre and offices. We are also relocating Jetmart to a
smaller shop in order to accommodate a gymnasium which we believe
will be a value-added offering at Thabong.
5. The Platz am Meer Centre in Swakopmund is under construction
and progressing according to schedule. The opening of the Platz am
Meer development is set for September 2016 bringing brand-new
national tenants to the town of Swakopmund such as Woolworths,
Checkers, Dis-Chem and Edgars. Phase 2 of the project, the upmarket
residential apartments, is set for completion during April 2017.
6. The Board approved the upgrade of the Pick n Pay at the Victorian,
as well as the extension of Jordaan Street in order to enhance the
accessibility to the centre. The upgrade to Pick n Pay was completed
and received very well by the public. In addition we are currently in
the process of upgrading and refurbishing the walkways and gardens in
the centre.
7. Owing to persistent applications from national retailers for space
at our Denlyn Centre we have revised the tenant mix and initiated a
plan to relocate and resize some tenants in order to accommodate some
of our valued national retailers in our other centres.
We will be downsizing Absa, relocating Nike, upgrading and resizing
Jetmart and accommodating a few other national brands at Denlyn
Centre.
8. Nkomo Village is a small regional centre of approximately
20 553m2 anchored by Pick n Pay and Boxer with other national
retailers such as Builders Warehouse Superstore, Pep and McDonalds.
Groundwork has been completed and we are ready to commence
construction. Anticipated opening date is set for early 2018.
Prospects
The development and extension as detailed above ensures that Safari
will maintain its attractive portfolio growth. Above-inflation
increases in utility cost and continued financial market volatility
are expected to continue. The Board is committed to maximising the
rental income streams with the proactive letting strategy focused on
national tenants, and minimising the operating expenditure. The Board
will focus on opportunities in order to achieve sustainable
long-term, recurring distributable earnings. Any forecast in the
results has not been reviewed or reported on by the independent
external auditors and is the responsibility of the Board.
By order of the Board
22 June 2016
Notice of Annual General Meeting
Shareholders are hereby advised that Safari’s integrated annual report
will be dispatched to shareholders on 22 June 2016. Notice is hereby
given that the annual general meeting (“AGM”) will be held at
14:00 on Wednesday, 27 July 2016, at Irene Country Lodge, Nellmapius
Drive, Irene, Pretoria. In terms of section 59 (1) (a) and (b) of the
Companies Act, the Board of the company has set the following record
dates for the purpose of determining which shareholders are entitled
to receive notice of the annual general meeting (being the date on
which a shareholder must be registered in the company’s securities
register) as Friday, 10 June 2016 and participate in and vote at the
integrated annual general meeting as Friday,22 July 2016 with the last
day to trade being Tuesday, 19 July 2016.
To view the 2016 Integrated Annual Report visit www.safari-investments.com
Corporate information
Safari Investments RSA Limited
Registration number: 2000/015002/06
JSE code: SAR
ISIN: ZAE000188280
Country of incorporation: Republic of South Africa (7 July 2000)
Registered address and place of business
420 Friesland Lane, Lynnwood, Pretoria 0081
Tel +27 (0) 12 365 1881
Fax +27 (0) 86 272 1313
E-mail: info@safari-investments.com
Website: www.safari-investments.com
Auditors
Deloitte & Touche
Riverwalk Office Park, Block B
41 Matroosberg Road, Ashlea Gardens, Pretoria 0081
Commercial banker
Absa Bank Limited
(Registration number: 1986/004794/06) Absa Towers East
170 Main Street, Johannesburg 2001
PO Box 7735, Johannesburg 2000
Group Company Secretary
Dirk Engelbrecht BCom LLB
420 Friesland Lane, Lynnwood, Pretoria
Postal: 420 Friesland Lane, Lynnwood, Pretoria 0081
Corporate adviser
Fanus Kruger Consulting CC (Registration number 2006/173299/23)
Propateez Office Park
98 Beyers Naude Drive, Rustenburg 0300
Directors of Safari Investments RSA Limited
JZ Engelbrecht (Executive Financial Director)
FN Khanyile (independent non-executive director)
SJ Kruger (non-executive alternate director)
FJJ Marais (Chief Executive Officer)
M Minnaar (independent non-executive director)
K Pashiou (executive director)
JP Snyman (independent non-executive Chairman)
JC Verwayen (non-executive alternate director)
AE Wentzel (lead independent non-executive director)
Independent valuer
Mills Fitchet (Tvl) CC
(Registration number CK 89/40464/23)
No 17 Tudor Park, 61 Hillcrest Avenue, Oerder Park, Randburg 2115
PO Box 35345, Northcliff 2115
Legal advisers
VFV Incorporated
Corporate Place, Block A, 39 Selati Street, Pretoria
PO Box 8636, Pretoria 0001
Sponsor
PSG Capital Proprietary Limited (Registration number
1951/002280/06) 1st Floor, Ou Kollege Building
35 Kerk Street, Stellenbosch 7599
PO Box 7403, Stellenbosch 7599
Transfer secretaries
Computershare Investor Services Proprietary Limited
(Registration number 2004/003647)
70 Marshall Street, Johannesburg 2001
PO Box 61051, Marshalltown 2107
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