Wrap Text
Abridged results of the audited consolidated annual financial statements
Tower Property Fund Limited
Incorporated in the
Republic of South Africa
Registration number
2012/066457/06
JSE share code: TWR
ISIN: ZAE000179040
(Approved as a REIT by the JSE)
("Tower" or the "Fund")
for the year ended 31 May 2016
TOWER PROPERTY FUND ABRIDGED RESULTS OF THE
AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS
- Total distribution of 92 cents
per share in line with
earnings growth forecast
- Revenue up 52% to
R376 million
- Headline earnings up 32% to
R164 million
- Market capitalisation
increased by 19% to
R1.9 billion (and by 69% to
R2.7 billion at 30 June 2016)
- R740 million raised through
bookbuild**
- Properties totalling
R1.6 billion acquired in
Eastern Europe (Croatia)*
- Asset management company
internalised**
- Portfolio expanded to
46 properties (50 properties
at 30 June 2016)
- Portfolio value increased by
19% to R3.9 billion (65% to
R5.1 billion at 30 June 2016)
* R1.1 billion post year-end
** Post year-end
Profile
Tower Property Fund Limited and its subsidiaries own
a diversified portfolio of 50 retail, office and industrial
properties valued at R5.1 billion (as at 30 June 2016),
located in South Africa and in Croatia, representing 69% and
31%, by value, respectively. The South African portfolio is
spread across the Western Cape (26% by value), Gauteng
(33% by value) and KwaZulu-Natal (10% by value). The
group aims to add value through active property asset
management and the cost-effective greening of properties
in the portfolio. The group plays a leading role in the green
building movement in South Africa and abroad, with some
of its directors being the founding members of the Green
Building Council of South Africa.
The investment strategy is to expand the portfolio by
targeting well located, mainly medium-sized (R80 million
to R300 million) properties with strong cash flows and to
ensure a diversified sectoral and geographic portfolio. The
objective set at the time of the JSE listing to have retail
properties account for approximately half of the portfolio
by value is close to being achieved, with the sectoral make-
up as at 30 June 2016 comprising retail 49%, office 43% and
industrial 8%.
Financial performance
Macroeconomic conditions in South Africa deteriorated dramatically in the past year. The depreciating currency
weakened further in the second half of the financial year primarily as a result of political uncertainty and the country
remains vulnerable to a downgrade from international rating agencies.
Tower's offshore exposure serves as a hedge against this volatility, with its first Croatian property increasing in
value by approximately R134 million in the 10 months since being acquired.
Despite the poor trading conditions in South Africa, Tower achieved its forecast performance for the year ended
31 May 2016 ("the period"). Revenue increased by 52% to R376 million and net operating profit by 50% to R302 million.
Distributable earnings increased by 61% to R221 million and the directors are pleased to declare a total distribution of
92 cents per share for the period. Based on a share price of R8.07 at 31 May 2016 (R7.60 ex dividend) the distribution
of 92 cents per share equates to a 12.1% yield.
The net asset value per share at 31 May 2016 is R9.85.
Operating performance
During the period, four properties totalling R728 million were acquired, increasing the value of the portfolio by 26%
to R3.9 billion. The properties are as follows:
- 15 Wellington Road, a recently refurbished mixed-use property in Parktown (R81 million)
- Evagold Shopping Centre, a lower LSM shopping centre in Evaton anchored by Cambridge Food (R110 million)
- Link Hills Shopping Centre, a convenience shopping mall in the new Waterfall node of KZN (R217 million)
- VMD KVART Block B, a premium grade office property in Zagreb, Croatia (R320 million acquisition, R452 million
valuation as at 31 May 2016).
Active asset management of the portfolio has continued to reduce operating costs, with the successful greening
programme initiated in 2013 continuing to be rolled out to suitable properties. All lighting retrofits in key properties
and solar installations are outperforming management's expectations. Selected properties continue to be assessed
by the Green Building Council of South Africa with the Cape Quarter currently being evaluated for an existing building
rating. Tower currently has two Green Building Council rated properties.
Residential apartments are being developed in the Cape Quarter precinct (32 Napier Street), where 19 new apartments
are being built. These will be sold by the group over time given the high demand for residential property in the area.
Portfolio vacancies increased to 5% at year-end. However, following the Croatian transaction, overall vacancies
reduced to a record 4% at the end of June 2016. In the past 12 months 70 346m(2) was let with 29 534m(2) of new
leases and 40 812m2 of renewals.
Strengthening the group's balance sheet is a key focus and selected properties which have been held since the JSE
listing are in the process of being sold. 73 Hertzog Boulevard was sold for R111 million (the building was acquired in
July 2013 for R89 million). A further five, non-core properties are currently being offered to interested buyers. The
group expects to achieve aggregate sales of R200 million for this portfolio of properties. The proceeds from these
sales will be used to reduce debt and repurchase shares given the share's attractive yield.
Offshore acquisition strategy
Tower identified Croatia as a region offering strong growth potential for the group. Croatia finds itself at opposite ends
of the property cycle to South Africa after the country experienced a number of years of recession after the 2008 global
financial crisis. Property prices are lower than they have been for some time allowing Tower to purchase premium grade
investment opportunities at attractive pricing. The group acquired 15 floors of the premium grade VMD KVART office
property in Zagreb for EUR23.7 million. The property is held in the 100% Tower subsidiary, Tower Europe d.o.o. 20% of the
equity of Tower Europe d.o.o was sold to VMD Grupa d.o.o (the developers of VMD KVART and one of the regions most
respected developers and property owners). Property management is being undertaken by a VMD Group subsidiary,
VMD Services d.o.o. The relationship provides Tower with strong in-country partners to grow its asset base.
Borrowings
Tower has loan facilities totaling R1.7 billion at 31 May 2016. Interest rates are hedged on 40% of the total loan facility
(65% as at 30 June 2016) and the weighted average rate of interest is 8.09% (6.11% as at 30 June 2016) for the portfolio.
Based on investment properties valued at R3.9 billion, the loan to value (LTV) ratio of the group was 41% at the end of
the period (39% as at 30 June 2016). The group has a targeted LTV of 40%.
Prior to the Agrokor transaction detailed above, Tower's debt was 80% exposed to South Africa. This presented a large
risk to the group given the current market volatility and rising interest rate cycle. Post the transaction this risk has
reduced dramatically where 41% of the debt is South African and 59% is through Euro denominated loans where most of
the loans are at fixed interest rates for five years (60% of South African debt is currently fixed with Euro debt expected
to be 100% fixed for five years in the short term).
Acquisitions post year-end
- Sub Dubrovnik d.o.o. which holds the Sub Dubrovnik Shopping Centre, a new convenience shopping centre in
Dubrovnik, Croatia (EUR13.0 million/R217 million*) was acquired on 21 June 2016. The purchase price was settled
through R200 million worth of shares issued to the vendor at R8 per share and R17.3 million issued through proceeds
from the capital raise.
- Meridijan 16 Shopping Centre, a convenience centre in Zagreb, Croatia (EUR15.7 million/R262 million*) was acquired
on 21 June 2016. The purchase was settled using proceeds from the capital raise. The property is to be held in a
newly incorporated Croatian subsidiary, Tower Europe Retail d.o.o.
- Vukovarska, a stand alone Konzum Super Store (equivalent to South African hypermarkets) in Zagreb, Croatia
(EUR13.2 million/R219 million*) was acquired on 21 June 2016. The purchase price was settled using R88 million debt
and R131 million proceeds from the capital raise.
- Velika Gorica, a stand alone Konzum Super Store in Zagreb, Croatia (€8.8 million/R147 million*) was acquired on
21 June 2016. The purchase price was settled using R59 million debt and R88 million proceeds from the capital raise.
- Both Vukovarska and Velika Gorica are to be held in a newly incorporated Croatian subsidiary, Tower Europe
Retail 2 d.o.o.
- Tower Asset Managers (Pty) Ltd, the group's asset management company, was acquired for R145 million on 30 June
2016. The acquisition was funded using R72.5 million debt and R72.5 million equity, issued at a price of R10.07 per share.
In June 2016, the group finalised its largest and most significant acquisition to date with the purchase of four Konzum
anchored properties (shopping centres and standalone Super Konzum stores) for EUR66.4 million. Konzum is owned by
Agrokor, the largest company in the region with annual turnover of EUR6.5 billion. A triple net, head lease has been entered
into with Konzum (guaranteed by Agrokor) covering all four properties. Tower receives a single rental payment from
Konzum each month and all operational responsibilities including creditor payments, rental collection and maintenance
are managed by Konzum/Agrokor at their expense. This gives Tower a secure, growing, Euro-based income stream
which is central to Tower's offshore strategy. Should Konzum achieve historic levels of turnover, Tower's lease should
escalate at between 4% and 5% in Euro per annum (this is highly unusual for Europe where most leases are benchmarked
against inflation which is very low at present).
* EUR1=R16.68
Prospects
Management will bed down the Agrokor acquisition in the short term and look to extract as much value out of its South
African core properties as possible. Proposed residential developments at Cape Quarter are awaiting local authority
approval and these are expected to have a positive impact on the group's distributable earnings. Non-core properties
will be sold as the group looks to strengthen its balance sheet and reduce debt. A strong growth pipeline exists in
Croatia, Eastern Europe and South Africa and these opportunities are being reviewed relative to the access to and the
cost of capital in South Africa.
The directors anticipate core earnings growth of greater than 10% for the year ending 31 May 2017. This growth will
translate into total distribution growth of 6%. This assumes no major tenant or macroeconomic changes.
Core earnings, on which these forecasts have been based, represent tenant rental income, less operating costs and
debt. Shareholders should calculate growth on core earnings for transparency with any one-off earnings being shown
as a value add opportunity. These forecasts are the responsibility of the directors and have not been reviewed and
reported on by the group's auditors.
Sectoral Spread
31 May 2016
Office 55%
Retail 35%
Industrial 10%
Geographic Spread
31 May 2016
Western Cape 33%
KZN 13%
Gauteng 42%
Croatia 12%
Summarised consolidated statement of profit and loss and other comprehensive income
Audited Audited
12 months 12 months
ended ended
31 May 2016 31 May 2015
R'000 R'000
Revenue
Contractual rental income 355 686 230 929
Straight-line lease accrual 20 765 16 792
376 451 247 721
Net property operating expenses (30 733) (34 928)
Net property income 345 718 212 793
Administration expenses (23 946) (14 952)
Other income 10 377 2 914
Foreign exchange loss (30 519) –
Net operating profit 301 630 200 755
Fair value adjustments on investment properties (10 604) 101 740
Fair value adjustments on interest rate derivatives (7 533) 762
Profit from operations 283 493 303 257
Finance income 2 635 2 093
Finance costs (117 675) (78 776)
Indirect capital raising expenses (894) (206)
Profit before taxation 167 559 226 368
Taxation – –
Profit for the period 167 559 226 368
Other comprehensive income – items that may subsequently be reclassified to profit and loss
Exchange difference on foreign operations 42 968 –
Total comprehensive profit for the period 210 527 226 368
Profit for the period attributable to:
Equity shareholders of Tower Property Fund Limited 158 840 226 368
Non-controlling interest 8 719 –
167 559 226 368
Total comprehensive income attributable to:
Equity shareholders of Tower Property Fund Limited 200 789 226 368
Non-controlling interest 9 738 –
210 527 226 368
Basic and diluted earnings per share (weighted average shares in issue (cents)) 67.1 149.9
Summarised consolidated statement of financial position
Audited Audited
12 months 12 months
ended ended
31 May 2016 31 May 2015
Assets
Non-current assets
Investment property 3 889 664 3 107 097
Straight-line lease accrual 52 682 33 893
Other financial assets 3 184 –
3 945 530 3 140 990
Current assets
Trade and other receivables 77 053 68 852
Cash and cash equivalents 63 620 15 458
Amounts receivable for the sale of investment property 111 000 –
251 673 84 310
Investment property held for sale – 14 485
251 673 98 795
Total assets 4 197 203 3 239 785
Equity and liabilities
Equity
Stated capital 2 239 098 1 519 601
Treasury capital (2 854) (1 212)
Foreign currency translation reserve 41 949 –
Retained earnings 89 390 146 650
Shareholders' interest 2 367 583 1 665 039
Non-controlling interest 20 228 –
Total equity 2 387 811 1 665 039
Liabilities
Non-current liabilities
Other financial liabilities 1 023 828 857 341
Loan payable to non-controlling interest 30 920 –
1 054 748 857 341
Current liabilities
Other financial liabilities 691 354 289 471
Trade and other payables 63 290 52 184
Amounts owing for the acquisition of investment property – 375 750
754 644 717 405
Total equity and liabilities 4 197 203 3 239 785
Summarised consolidated statement of cash flows
Audited Audited
12 months 12 months
ended ended
31 May 2016 31 May 2015
Cash generated from operations 303 019 132 423
Finance income 2 626 2 093
Finance costs (115 447) (77 130)
Net cash from operating activities 190 198 57 386
Cash flows from investing activities
Investment property acquired (921 594) (349 741)
Proceeds on sale of investment property 5 000 11 310
Net cash from investing activities (916 594) (338 431)
Cash flows from financing activities
Proceeds from the issue of shares 500 000 –
Direct capital raising expenses (7 500) (13)
Acquisition of treasury capital (1 642) (1 212)
Loans raised 1 099 714 859 302
Loans repaid (640 315) (474 585)
Foreign loan raised 30 920 –
Dividends paid (204 553) (116 027)
Acquisition of interest rate derivatives (2 066) (9 133)
Net cash utilised in financing activities 774 558 258 332
Increase/(decrease) in cash and cash equivalents 48 162 (22 713)
Cash and cash equivalents at beginning of year 15 458 38 171
Cash and cash equivalents at end of year 63 620 15 458
Summarised consolidated statement of changes in equity
Foreign
currency
translation Share- Non-
Stated Treasury reserve Retained holders' controlling
capital capital (FTCR) earnings interest interest Total
R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1 June 2014 1 251 034 – – 46 713 1 297 747 – 1 297 747
Shares issued during the period 258 175 – – – 258 175 – 258 175
Share issue expenses (13) – – – (13) – (13)
Antecedent dividends 10 405 – – – 10 405 – 10 405
Acquisition of treasury shares – (1 212) – – (1 212) – (1 212)
Profit for the year – – – 226 368 226 368 – 226 368
Dividends paid – – – (126 431) (126 431) – (126 431)
Balance at 31 May 2015 1 519 601 (1 212) – 146 650 1 665 039 – 1 665 039
Issue of 52 631 579 shares effective 1 June 2015 500 000 – – – 500 000 – 500 000
Issue of 4 945 054 shares effective 31 July 2015 45 000 – – – 45 000 – 45 000
Issue of 4 090 447 shares effective 7 August 2015 40 250 – – – 40 250 – 40 250
Issue of 13 422 680 shares effective 14 August 2015 130 200 – – – 130 200 – 130 200
Share issue expenses (7 500) – – – (7 500) – (7 500)
Antecedent dividends 11 547 – – – 11 547 – 11 547
Acquisition of treasury shares – (1 642) – – (1 642) – (1 642)
Acquisition of foreign subsidiary – – – – – 10 490 10 490
Profit for the year – – – 158 840 158 840 8 719 167 559
Foreign currency translation differences – – 41 949 – 41 949 1 019 42 968
Dividends paid – – – (216 100) (216 100) – (216 100)
Balance at 31 May 2016 2 239 098 (2 854) 41 949 89 390 2 367 583 20 228 2 387 811
Notes:
1. Calculation of headline earnings and distributable earnings reconciliation
Audited Audited
12 months 12 months
ended ended
31 May 2016 31 May 2015
Gross Net
Profit attributable to ordinary equity holders 158 840 226 368
Adjusted for:
Change in fair value of investment properties 10 604 15 908 (101 740)
Profit on sale of investment property (10 377) (10 377) –
Headline earnings 164 371 124 628
Adjusted for:
Straight-line lease accrual (20 765) (16 792)
Antecedent dividends 15 396 10 405
Change in fair value of interest rate derivatives 7 533 (762)
Profit on sale of investment property 10 377 10 377 –
Distributable profit 176 912 117 479
Adjusted for:
Indirect capital raising expenses 894 206
Foreign exchange loss 30 519 30 820 –
Contracted adjustment 10 575 10 640
Debt cancellation fees – 4 183
Amortisation of debt raising fees 1 677 4 554
Distributable earnings 220 878 137 062
Distributable income 220 878 137 062
Taxable dividend (declared on 4 August 2016) 112 368 –
Taxable dividend (declared on 4 February 2016) 108 510 –
Taxable dividend (declared on 24 August 2015) – 74 055
Taxable dividend (declared on 4 February 2015) – 63 007
Weighted average number of shares in issue 236 655 769 150 970 113
Number of shares in issue at year-end (including treasury shares) 240 351 709 165 261 949
Number of shares in issue at year-end (excluding treasury shares) 240 023 530 165 117 691
Distribution per share 92.0 86.8
Six months ended 31 May 46.8 44.8
Six months ended 30 November 45.2 42.0
Headline and diluted headline earnings per share (weighted average shares in issue) (cents) 69.5 82.6
Distributable earnings per share (weighted average shares in issue) (cents) 93.3 90.8
Net asset value per share (shares in issue at period-end) (cents) 985 1 008
2. Segmental analysis
For the year ended 31 May 2016 (R '000) Retail Office Industrial Total
Property assets 1 295 970 2 237 323 409 053 3 942 346
Segment liabilities 555 202 1 148 073 74 804 1 778 079*
Revenue (excluding straight-line lease adjustments) 140 427 176 469 38 790 355 686
Net operating costs (13 279) (16 776) (678) (30 733)
Segment profit 127 148 159 693 38 112 324 953
Straight-line lease adjustment 20 765
Non-property related expenses (23 946)
Other income 10 377
Foreign exchange loss (30 519)
Net operating profit 301 630
For the year ended 31 May 2015 (R '000) Retail Office Industrial Total
Property assets 953 115 2 161 045 26 830 3 140 990
Segment liabilities 454 345 727 723 12 275 1 194 343*
Revenue (excluding straight-line lease adjustments) 82 742 145 772 2 415 230 929
Net operating costs (12 979) (21 462) (487) (34 928)
Segment profit 69 763 124 310 1 928 196 001
Straight-line lease adjustment 16 792
Non-property related expenses (14 952)
Other income 2 914
Net operating profit 200 755
Audited Audited
12 months 12 months
ended ended
31 May 31 May
2016 2015
R'000 R'000
* Segment liabilities 1 778 079 1 194 343
Non-segment liabilities
- Trade and other payables 393 4 653
- Loan to non-controlling interest 30 920
- Amount owing for the acquistion of investment property 375 750
Total liabilities 1 809 392 1 574 746
The prior year segment liabilities balance has been amended to include trade and other payables
South
Africa Croatia
R'000 R'000
Statement of profit or loss and other comprehensive income for the period
ended 31 May 2016
Contractual rental income 328 565 27 121
Straight-line lease accrual 20 765 –
Statement of financial position extracts at 31 May 2016
Investment property 3 437 503 452 161
Straight-line lease accrual 52 682 –
3. Business Combinations
3.1 After the reporting date, the group acquired 100% of the share capital of SUB Dubrovnik d.o.o. in Dubrovnik, Croatia, for a total
purchase consideration of R217.3 million.
3.2 After the reporting date, the group acquired 100% of the share capital of the asset management company, Tower Asset
Managers Proprietary Limited ("TAM"), for R145 million.
Sub Tower Asset
Dubrovnik Managers
2016 2016
R'000 R'000
The assets and liabilities arising from the acquisition are as follows:
Investment properties 385 223 –
Property, plant and equipment 170 68
Trade and other receivables** 5 272 –
Cash and cahs equivalents 8 621 5 591
Deferred Tax – 28
Assets 399 286 5 687
Borrowings (260 481) –
Trade and other payables (10 785) (685)
Tax payable – (4 940)
Liabilities (271 266) (5 625)
Fair value of assets and liabilities acquired 128 020 62
Total purchase consideration 217 304 145 000
Goodwill 89 284 144 938
Purchase consideration: 217 304 145 000
Add: acquisition related costs 9 356 950
Less: settled in Tower shares (200 000) (72 500)
Purchase consideration settled in cash 26 660 73 450
Cash and cash equivalents in subsidiary acquired (8 621) (5 591)
Net cash outflow on acquisition 18 039 67 859
* The goodwill arising from the TAM acquisition is attributable to the at-market component of the property management contract between TAM
and Tower Property Fund, the TAM management and employees that transferred to Tower Property Fund and the expected synergies from the
acquisition.
** Gross contractual amounts receivable in Sub Dubrovnik are R4.7 million, all of which is expected to be collected.
*** The goodwill in Sub Dubrovnik arose as a result of the expected synergies from the acquisition.
Audited Audited
12 months 12 months
ended ended
31 May 31 May
2016 2015
4. Related party transactions included:
Asset management fees paid to Tower Asset Managers Proprietary Limited (R'000) 18 924 11 449
Property management fees paid to Spire Property Management Proprietary Limited (R'000) 20 047 14 643
Relationship: Key management personnel services entities
5. Non-controlling interests relates to the VMD Grupa d.o.o. 20% holding in Tower Europe d.o.o.
6. Contracted adjustment is the net operating income earned between the effective date and the transfer date of properties which
transferred during the period.
7. The foreign exchange loss relates to the foreign denominated loan that was granted by Standard Bank to the group for the
acquisition of VMD KVART.
8. Other income in the current year relates to profit on the sale of two office blocks, Tybalt Place and 73 Hertzog Boulevard.
Basis of preparation
The summarised results of the audited consolidated financial statements ("results") for the year ended
31 May 2016 have been prepared in accordance with the framework concepts, the measurement and recognition
requirements of International Financial Reporting Standards ("IFRS"), the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and the information required by IAS 34:Interim Financial Reporting,
the JSE Listings Requirements and in the manner required by the Companies Act of South Africa. The accounting
policies and methods of computation applied in the preparation of the results are in accordance with IFRS and
are consistent with those applied in the audited annual financial statements for the year ended 31 May 2015,
except for the new and amended standards of IFRS adopted as set out below.
In the current year, the group has adopted all amendments to IFRSs that are relevant to its operations and
effective for the reporting period beginning on 1 June 2015.
At the reporting date the following amendments were adopted, which are relevant to the group's operations,
but had no material effect:
- Amendments to IFRS 3 - Contingent consideration and accounting for the formation of joint arrangements;
- Amendment to IFRS 8 - Operating segments;
- Amendment to IAS 37 and IAS 39 - Contingent consideration of an acquirer in a business combination;
- Amendment to IAS 40 - Determining whether the acquisition of a property is the acquisition of an
investment property or a business combination.
There was no material impact on the results on the adoption of the above amendments. Mazars, the group's
independent auditor, has audited the consolidated annual financial statements of Tower Property Fund Limited
for the year ended 31 May 2016 and has expressed an unqualified audit opinion thereon. These summarised
results have been extracted from the audited consolidated annual financial statements for the year ended
31 May 2016, but are not themselves audited. The audited consolidated financial statements and audit report
are available for inspection at the company's registered office. Their audit was conducted in accordance with
International Standards on Auditing and the applicable requirements of the South African Companies Act,
71 of 2008, as amended. The auditor's report does not necessarily report on all the information contained in
this report. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the
auditor's engagement they should obtain a copy of the auditor's report together with the accompanying financial
information from the registered office.
These results were prepared under the supervision of Mrs J Mabin CA(SA) in her capacity as Chief Financial Officer.
The directors take full responsibility for the preparation of the summarised results for the year ended 31 May
2016 and for ensuring that the financial and other information has been correctly extracted from the underlying
audited consolidated annual financial statements for the year ended 31 May 2016. The directors are not aware
of any matters or circumstances arising subsequent to 31 May 2016 that require any additional disclosure or
adjustment to the financial statements, other than as disclosed in this announcement.
Fair value of financial instruments recognised in the statement of financial position
The group measures fair values using the fair value hierarchy that reflects the significance of the inputs used
in making the measurements.
The valuation of interest rate swaps uses observable market data and requires management judgement and
estimation. The availability of observable market data and model inputs reduces the need for management's
judgement and estimation and also reduces uncertainty associated with the determination of fair values. The
fair value of the interest rate swap is determined by the bank using a valuation technique that maximises the
use of observable market inputs. Interest rate swaps are valued by discounting future cash flows using the
interest rate yield curve. Interest rate swaps are classified as level 2 financial instruments.
On 31 May 2016, the group cancelled its rand denominated swap and caps totalling R780 million, which expired
within one to two years. These fixes were significantly in the money and the proceeds from the cancellation
thereof was used to purchase a R500 million swap at 7.70%, expiring on 31 May 2019.
The group entered into Euro denominated interest rate swaps in respect of the following borrowings:
Notional amount
(Euro '000)
Contract 1: 4.10% maturing 3 August 2020 7 000
Contract 2: 3.70% maturing 18 March 2021 2 540
Contract 3: 3.60% maturing 21 June 2021 31 514*
* Entered into post year-end
Dividend distribution
Notice is hereby given that a gross dividend of 46.81552 cents per share (dividend number 6) has been declared
in respect of the year ended 31 May 2016. In accordance with Tower's status as a REIT, shareholders are advised
that the distribution meets the requirements of a "qualifying distribution" for the purposes of section 25BB of
the Income Tax Act, No. 58 of 1962 (Income Tax Act) from income reserves.
Accordingly the dividend received by South African tax residents must be included in their gross income and will
not be exempt in terms of the ordinary dividend exemption in section 10(1)(k)(i) of the Income Tax Act as a result
of paragraph (aa) of the proviso thereto which provides that dividends distributed by a REIT are not exempt from
income tax.
The dividend is, however, exempt from dividend withholding tax in the hands of South African tax resident
shareholders, provided that the South African resident shareholders provide the following forms to their Central
Securities Depository Participant (CSDP) or broker, as the case may be in respect of uncertificated shares or the
company, in respect of certificated shares:
a) a declaration that the dividends are exempt from dividend tax; and
b) a written undertaking to inform the CSDP or broker, as the case may be, should the circumstances affecting
the reduced rate change or the beneficial owner cease to be the beneficial owner;
both in the form prescribed by the Commissioner for the South African Revenue Service. Shareholders are
advised to contact their CSDP or broker, as the case may be, to arrange for the abovementioned documents
to be submitted prior to the payment of the distribution if such documents have not already been submitted.
Dividends received by non-resident shareholders will be exempt from income tax in terms of section 10(1)(k)
(i) of the Act, but will be subject to dividend withholding tax. Dividend withholding tax is levied at a rate of 15%,
unless the rate is reduced in terms of any applicable agreement for the avoidance of double taxation (DTA)
between South Africa and the country of residence of the shareholder.
Should dividend withholding tax be withheld at a rate of 15%, the net dividend amount due to non-resident
shareholders is 39.79319 cents per share. A reduced dividend withholding rate in terms of the applicable DTA
may only be relied on if the non-resident shareholder has provided the following forms to their CSDP or broker,
as the case may be in respect of uncertificated shares or the Company, in respect of certificated shares:
a) a declaration that the dividend is subject to a reduced rate as a result of the application of a DTA; and
b) a written undertaking to inform the CSDP or broker, as the case may be, should the circumstances affecting
the reduced rate change or the beneficial owner cease to be the beneficial owner,
both in the form prescribed by the Commissioner for the South African Revenue Service. Non-resident
shareholders are advised to contact their CSDP or broker, as the case may be, to arrange for the
abovementioned documents to be submitted prior to the payment of the distribution if such documents
have not already been submitted.
The dividend is payable to Tower shareholders in accordance with the timetable set out below:
2016
Last day to trade cum dividend: Tuesday, 23 August
Shares trade ex dividend: Wednesday, 24 August
Record date: Friday, 26 August
Payment date: Monday, 29 August
Share certificates may not be dematerialised or rematerialised between Wednesday,
24 August and Friday, 26 August 2016, both days inclusive.
The dividend will be transferred to dematerialised shareholders' CSDP accounts or
broker accounts on Monday, 29 August 2016.
Certificated shareholders' dividend payments will be paid to certificated
shareholders' bank accounts on or about Monday, 29 August 2016.
Shares in issue at date of declaration (excluding treasury shares): 340 100 686
Tower income tax reference number: 9607/564/16/9
By order of the Board
Tower Property Fund Limited
4 August 2016
The Annual General Meeting will be held on 19 October 2016 at 10:00
at the Belmont Conference Centre.
Last day to trade to participate in and vote at the annual general meeting – Tuesday, 11 October 2016.
Record date to participate in and vote
at the annual general meeting – Friday,
14 October 2016.
Tower Property Fund Limited Registered address 2nd Floor, Spire House, Tannery Park, 23 Belmont Road,
Incorporated in the Rondebosch, 7700 (PO Box 155, Rondebosch, 7701)
Republic of South Africa Contact details +27 (0)21 685 4020/info@towerpropertyfund.co.za
Company secretary Ovland Management Services Proprietary Limited
Registration number: Auditors Mazars
2012/066457/06 Sponsor Java Capital
JSE share code: TWR Transfer secretaries Link Market Services South Africa Proprietary Limited
ISIN: ZAE000179040 Directors: A Dalling* (Chairman), M Edwards (Chief Executive Officer),
(Approved as a REIT by the JSE) J Bester*, K Craddock*, M Evans*, J Mabin (Chief Financial Officer),
("Tower" or the "group") B Kerswill*, A Magwentshu*, N Milne*, R Naidoo*
(*non-executive)
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