Wrap Text
Unaudited condensed consolidated interim financial results for the six months ended 31 December 2016
Texton Property Fund Limited
(“the Fund” or “the Company”)
(Incorporated in the Republic of South Africa)
(Registration number: 2005/019302/06)
A Real Estate Investment Trust, listed on the JSE Limited
JSE share code: TEX ISIN: ZAE000190542
(formerly ISIN: ZAE000185872)
Unaudited condensed consolidated interim financial results
for the six months ended 31 December 2016
Financial highlights
– Dividend per share (rebased) up 7,0% from 44,83 cents (rebased,
excluding once-offs) to 47,95 cents per share
– Dividend per share (actual) down 6,9% from 51,52 cents per share to
47,95 cents per share
– Net asset value down 2,6% from 1 003,32 cents per share to 977,54
cents per share
– Investment property income up 10,2% from R264,2 million to R291,2
million
– Net property income up 26,3% from R164,9 million to R208,2 million
– Loan to value ratio down 34,5% from 37,0% at 30 June 2016
Non-financial highlights
– Gross lettable area down 4,1% from 427 813m2 at 30 June 2016 to
410 166m2
– National/listed/blue-chip tenants (by GLA) up 9,2% from 52,1% at
December 2015 to 61,3%
– Vacancies (by GLA) down to 6,2% from 9,0% at 30 June 2016
– Portfolio value (including 50% share of Broad Street Mall) down 2,5%
from R5,774 billion at 30 June 2016 to R5,627 billion
Condensed consolidated statement of financial position
at 31 December 2016
Unaudited Unaudited Audited
as at as at as at
31 Dec 2016 31 Dec 2015 30 Jun 2016
R’000 R’000 R’000
Assets
Non-current assets 5 392 393 4 779 483 5 498 451
Investment property 5 028 186 4 274 383 4 991 066
Property, plant and
equipment 12 509 11 852 10 778
Goodwill – 88 630 –
Investment in joint
venture 237 316 300 119 262 938
Other financial assets 63 171 – 132 108
Other non-current assets 7 981 6 178 8 027
Restricted cash 43 230 98 321 93 534
Current assets 198 512 747 687 324 569
Trade and other
receivables 41 009 34 870 38 659
Investment property
reclassified as held-
for-sale – 340 680 133 000
Income tax receivable 3 819 1 209 3 781
Restricted cash 25 119 27 157 25 134
Cash and cash
equivalents 128 565 343 771 123 995
Total assets 5 590 905 5 527 170 5 823 020
Equity and liabilities
Stated capital 2 848 404 2 910 877 2 906 923
Retained earnings 846 405 619 409 788 906
Share-based payment
reserve 1 074 1 476 1 074
Foreign exchange
translation reserve (271 276) 58 131 (102 579)
Shareholders’ interest 3 424 607 3 589 893 3 594 324
Non-current liabilities 1 566 800 1 806 743 1 932 586
Other financial
liabilities 1 563 185 1 803 128 1 928 971
Deferred tax 3 615 3 615 3 615
Current liabilities 599 498 130 534 296 110
Current portion of other
financial liabilities 512 140 4 317 215 429
Trade and other payables 87 358 126 217 80 681
Total liabilities 2 166 298 1 937 277 2 228 696
Total equity and
liabilities 5 590 905 5 527 170 5 823 020
Shares in issue, excluding
treasury shares (’000) ^ 350 328 357 802 357 362
Net asset value per
share (cents) 977,54 1 003,32 1 005,79
Net tangible asset value less
deferred tax per share (cents) 978,57 979,56 1 006,81
^ Treasury shares include shares held by a subsidiary and by the Share
Incentive Scheme
Condensed consolidated statement of comprehensive income
for the six months ended 31 December 2016
Unaudited Unaudited Audited
six months six months Year to
31 Dec 2016 31 Dec 2015 30 Jun 2016
R’000 R’000 R’000
Investment property income 291 180 264 178 561 362
Straight-line rental
adjustment 9 083 (10 372) 10 871
Revenue 300 263 253 806 572 233
Property expenses (92 050) (88 947) (171 521)
Net property income 208 213 164 859 400 712
Profit from joint venture 1 288 3 333 5 053
Other income 127 980 1 220 2 033
Other operating expenses (8 912) (5 874) (11 253)
Foreign exchange
gains/(losses) 26 453 (1 801) (10 695)
Asset management fees (12 653) (12 648) (27 908)
Operating profit 342 369 149 089 357 942
Finance income 48 281 23 888 84 877
Finance costs (79 895) (51 065) (130 820)
Fair value adjustments (70 525) (146 854) 11 945
Capital items – (58) (52)
Profit/(loss) before income
tax 240 230 (25 000) 323 892
Income tax – – –
Profit/(loss) for the
period 240 230 (25 000) 323 892
Other comprehensive income
Items that may be reclassified
to profit or loss
Exchange differences on
translation of foreign
operations (168 697) 48 908 (111 802)
Total comprehensive income
for the period 71 533 23 908 212 090
Reconciliation of attributable
income to earnings, headline
earnings and distributable income
Earnings/(loss)
attributable to
shareholders 240 230 (25 000) 323 892
Gross revaluation of
investment property 3 115 102 454 43 519
Goodwill impairment – – 77 018
Headline earnings attributable
to shareholders 243 345 77 454 444 429
Weighted average number of
shares ('000) 355 121 313 487 335 208
Basic and diluted earnings/
(loss) per share (cents) 67,65 (7,97) 96,62
Headline earnings per share
(cents) 68,52 24,71 132,58
Dividend per share (cents) 47,95 51,52 103,68
Interim dividend * 47,95 51,52 51,52
Final dividend * – – 52,16
Rebased Interim dividend # 47,95 44,83 44,83
* Declared subsequent to period end
# Rebased dividend as reported
Condensed consolidated statement of cash flows
for the six months ended 31 December 2016
Unaudited Unaudited Audited
six months six months Year to
31 Dec 2016 31 Dec 2015 30 Jun 2016
R’000 R’000 R’000
Net cash inflow/(outflow)
from operating activities 153 328 53 582 (12 106)
Net cash outflow from
investing activities (127 894) (728 941) (1 334 591)
Net cash (outflow)/inflow
from financing activities (47 829) 785 712 1 243 063
Net (decrease)/increase in
cash and cash equivalents (22 395) 110 353 (103 634)
Effect of the conversion of
foreign operations on cash
and cash equivalents (7 933) 13 033 (4 479)
Release of restricted cash 34 898 – 11 723
Cash and cash equivalents at
the beginning of the year 123 995 220 385 220 385
Cash and cash equivalents
at the end of the period/year 128 565 343 771 123 995
Condensed consolidated statement of changes in equity
for the six months ended 31 December 2016
Share- Foreign
based currency
Stated payment revaluation Retained
capital reserve reserve earnings Total
R’000 R’000 R’000 R’000 R’000
Group
Balance at
30 June 2015 2 037 921 1 074 9 223 832 781 2 880 999
Transactions with
owners of the
Company recognised
directly in
equity – – – – –
Issue of shares
(net of share
issue expenses) 943 556 – – – 943 556
Dividend paid – – – (188 372) (188 372)
Treasury shares
acquired (74 554) – – – (74 554)
Share-based
payment – 402 – – 402
transactions
Total comprehensive
income for
the period – – 48 908 (25 000) 23 908
Profit for the
period – – – (25 000) (25 000)
Exchange differences
on translation of
foreign operations – – 48 908 – 48 908
Balance at 31
December 2015 2 906 923 1 476 58 131 619 409 3 585 939
Dividend paid – – – (179 395) (179 395)
Share-based
payment transactions – (402) – – (402)
Total comprehensive
income for
the period – – (160 710) 348 892 188 182
Profit for the
period – – – 348 892 348 892
Exchange differences
on translation of
foreign operations – – (160 710) – (160 710)
Balance at
30 June 2016 2 906 923 1 074 (102 579) 788 906 3 594 324
Dividend paid – – – (182 731) (182 731)
Treasury shares
acquired (58 519) – – – (58 519)
Total comprehensive
income for the
period – – (168 697) 240 230 71 533
Profit for the
period – – – 240 230 240 230
Exchange differences
on translation of
foreign operations – – (168 697) – (168 697)
Balance at 31
December 2016 2 848 404 1 074 (271 276) 846 405 3 424 607
Distributable earnings
for the six months ended 31 December 2016
Unaudited Unaudited Audited
six months six months Year to
31 Dec 2016 31 Dec 2015 30 Jun 2016
R’000 R’000 R’000
Revenue 291 180 264 178 561 362
Property expenses (92 050) (88 947) (171 521)
Profit from joint venture 1 288 3 333 5 053
Other income 5 443 1 220 4 097
Other operating expenses (8 912) (5 874) (11 253)
Realised foreign exchange
gains/(losses) 13 714 (1 896) 2 759
Asset management fees (12 653) (12 648) (27 908)
Net finance cost (30 028) (26 675) (43 496)
Finance income 48 281 23 888 84 877
Finance cost (79 895) (51 065) (130 820)
Finance cost amortisation 1 586 502 2 447
Accrued distribution included – 27 720 27 720
in share price
Distribution of non-reccurring
foreign exchange gain – 23 915 23 915
Dividends on treasury shares 12 342 9 410 19 166
Total distribution 180 324 193 736 389 894
Operating segments
The Group has two reportable segments based on the geographic splits in
South Africa and the United Kingdom which are the Group’s strategic business
segments. The geographic segments are then split between office, retail and
industrial. For each strategic business segment, the Group’s CEO (who is
considered the Chief Operating Decision Maker) reviews internal management
reports on at least a monthly basis. Segments are located in South Africa
and the United Kingdom. There are no single major customers.
Reconciliation from segment result to profit for the period
for the six months ended 31 December 2016
Unaudited Unaudited
six months six months
31 Dec 2016 31 Dec 2015
R’000 R’000
Segment results 199 130 175 231
Straight-line rental adjustment 9 083 (10 372)
Other income 127 980 1 220
Share of profit from joint venture 1 288 3 333
Other operating expenses (8 912) (5 372)
Foreign exchange gains/(losses) 26 453 (1 801)
Asset management fees (12 653) (12 648)
Finance income 48 281 23 888
Finance cost (78 309) (51 065)
Finance cost amortisation (1 586) (502)
Fair value adjustment (70 525) (146 854)
Capital items – (58)
Profit/(loss) for the period 240 230 (25 000)
Segmental analysis at 31 December 2016
South Africa
Office Retail Industrial Total
R’000 R’000 R’000 R’000
2016
Extracts from the statement
of comprehensive income
Investment property income 178 698 31 424 24 517 234 639
Property expenses (64 746) (14 169) (11 111) (90 026)
Segmental result 113 952 17 255 13 406 144 613
Extracts from the statement
of financial position
Investment property 2 586 674 463 848 316 793 3 367 315
Property, plant and
equipment 12 473 15 21 12 509
2 599 147 463 863 316 814 3 379 824
2015
Extracts from the statement
of comprehensive income
Investment property income 183 119 22 194 23 588 228 901
Property expenses (65 238) (11 467) (11 857) (88 562)
Net property income 117 881 10 727 11 731 140 339
Extracts from the statement
of financial position
Investment property 2 399 108 236 014 249 640 2 884 762
Property, plant and
equipment 11 812 17 23 11 852
Investment property held-
for-sale 243 020 58 350 39 310 340 680
2 653 940 294 381 288 973 3 237 294
United Kingdom
Office Retail Industrial Total
R’000 R’000 R’000 R’000
2016
Extracts from the statement
of comprehensive income
Investment property income 26 064 13 084 17 393 56 541
Property expenses (1 010) (468) (546) (2 024)
Segmental result 25 054 12 616 16 847 54 517
Extracts from the statement
of financial position
Investment property 733 130 384 637 543 104 1 660 871
Property, plant and
equipment – – – –
733 130 384 637 543 104 1 660 871
2015
Extracts from the statement
of comprehensive income
Investment property income 25 486 7 775 2 016 35 277
Property expenses (245) (102) (38) (385)
Net property income 25 241 7 673 1 978 34 892
Extracts from the statement
of financial position
Investment property 717 460 232 440 439 721 1 389 621
Property, plant and equipment
Investment property held-
for-sale – – – –
717 460 232 440 439 721 1 389 621
Total
Office Retail Industrial Total
R’000 R’000 R’000 R’000
2016
Extracts from the statement
of comprehensive income
Investment property income 204 762 44 508 41 910 291 180
Property expenses (65 756) (14 637) (11 657) (92 050)
Segmental result 139 006 29 871 30 253 199 130
Extracts from the statement
of financial position
Investment property 3 319 804 848 485 859 897 5 028 186
Property, plant and
equipment 12 473 15 21 12 509
3 332 277 848 500 859 918 5 040 695
2015
Extracts from the statement
of comprehensive income
Investment property income 208 605 29 969 25 604 264 178
Property expenses (65 483) (11 569) (11 895) (88 947)
Net property income 143 122 18 400 13 709 175 231
Extracts from the statement
of financial position
Investment property 3 116 568 468 454 689 362 4 274 383
Property, plant and
equipment 11 812 17 23 11 852
Investment property held-
for-sale 243 020 58 350 39 310 340 680
3 371 400 526 821 728 695 4 626 915
Directors’ commentary
Nature of the business
Texton is an externally managed Real Estate Investment Trust (“REIT”)
listed on the JSE Limited. Its strategy is focused around diversification
of the portfolio by both sector and geographically in South Africa and
the United Kingdom.
Distributable earnings and commentary on results
The Board has declared an interim dividend of 47,95 cents per share which
implies growth of 7,0% on the core earnings, excluding any once-off items,
for the six-month period ended 31 December 2016. For the six-month period
ended 31 December 2015, Texton declared an interim dividend of 51,52 cents
per share and thus the 2016 interim dividend represents a 6,9% decline
year-on-year. 6,69 cents of the 2015 interim dividend was a non-recurring
dividend consisting of a foreign exchange gain of R23,9 million. It has
been decided that Texton will no longer make once-off dividend payments.
Adjusting the prior year dividend by the once-off results in a rebased
dividend of 44,83 cents per share (“the rebased dividend”). The 7,0%
growth was achieved mostly from a solid performance of the South African
core portfolio, accretive acquisitions made in the United Kingdom, and
the fact that the gain made on realisation of the cross currency interest
rate swap was used to reduce debt.
Acquisitions
During the period, Texton acquired two properties in the UK:
– On 17 August 2016 the Fund acquired an office building known as Mowbray
House situated in Nottingham, England. The gross lettable area measures
5 360m2, all of which is occupied by a single tenant, Browne Jacobson LLP,
on a lease that expires in November 2021. The purchase price of the property
was R173,8 million, settled in cash.
– On 17 August 2016 the Fund acquired an industrial building known as
Heapham Road situated in Gainsborough, England. The gross lettable area
measures 7 912m2, all of which is occupied by a single tenant, Coveris
Flexibles UK Limited, on a lease that expires in January 2026. The purchase
price of the property was R112,8 million, settled in cash.
Disposals
Progress has been made in rationalising the SA portfolio, and in line with
Texton’s stated strategy of disposing of non-core properties we have
successfully sold the following properties to various vendors:
Cost Sale
Property GLA price price
name Sector m2 Date of transfer R’000 R’000
Vodacom Park
and Linger Office/
Longer Retail 5 698 26 September 2016 49 300 71 000
Perseus
Park Office 13 837 16 November 2016 60 700 61 900
Murrayfield
Forum Office 1 417 8 December 2016 6 700 3 500
Standard
Bank
Randburg Office 8 144 15 December 2016 24 500 27 000
Total 29 096 141 200 163 400
Vacancies
Vacancies have reduced to 6,2% at 31 December 2016, down from 9,0% at
30 June 2016.
Facilities and interest rate derivatives
During the period, GBP facilities totalling GBP20,3 million were raised
with HSBC for a five-year period at a fixed rate of 2,495%.
Debt maturities profile
Drawn down
Facility Fixed Floating
R’000 R’000 R’000
South Africa
FY 2017 200 000 – 199 309*
FY 2018 285 326 – 285 326*
FY 2019 600 000 – 186 979*
FY 2020 172 574 – 172 574*
1 257 900 – 844 188
UK
FY 2018 321 260 – 317 842
FY 2020 361 045 361 045 –
FY 2022 343 410 – 343 410
1 025 715 361 045 661 252
Total 2 283 615 361 045 1 505 440
* Partly/fully hedged by interest rate swaps
Interest rate swap maturity profile
South Africa – Standard Bank
Nominal rate
Expiry R’000 %
22 March 2017 103 000 7,12
22 March 2017 102 000 7,12
17 July 2017 200 000 7,12
11 February 2019 170 000 8,05
11 February 2019 100 000 8,29
Total 675 000
UK – HSBC
Nominal rate
Expiry GBP’000 %
12 August 2021 20,31 million 2,495
Currency derivatives
The Fund has entered into the following currency derivatives
Cross-currency interest rate swap
Bank pays We pay
Expiry R’000 GBP’000 % %
2 September 2021 600 000 30 801 11 3,18% + libor
Put options
Premium
Expiry Texton buys ZAR:1 GBP paid
28 December 2016 GBP3,1 million R18,50 R1,4 million
10 March 2017 GBP3,1 million R18,50 R1,9 million
Repurchase of shares
In September 2016, a subsidiary of Texton, Discus House Proprietary Limited,
purchased 7 034 133 shares at an average price of R8,32, bringing the total
number of shares held in treasury to 15 310 276. This excludes the
10 428 348 shares held in the Share Incentive Trust.
Summary of financial performance
Unaudited Unaudited Audited
31 Dec 2016 31 Dec 2015 30 Jun 2016
Shares in issue and used for
dividend calculation (’000) 350 328 357 802 357 362
Weighted average number of
shares in issue (’000) 355 121 313 487 335 208
Net asset value per share
(cents) 977,54 1 003,32 1 005,79
Net tangible asset value less
deferred tax per share (cents) 978,57 979,56 1 006,81
Basic and diluted
(loss)/earnings per shares
(cents) 67,65 (7,97) 96,62
Headline earnings per share
(cents) 68,52 24,71 132,58
Dividend per share 47,95 51,52 103,68
Interim dividend 47,95 51,52 51,52
Final dividend 52,16
Rebased Interim dividend 47,95 44,83 44,83
Share price (cents) 783 979 800
Loan to value (%)* 34,51 28,6 37,0
* Loan to value is calculated by dividing property-related bank funding
less cash and cash equivalents, by the gross value of investment property,
including property, plant and equipment, and excluding the equity
accounted investment in Broad Street Mall.
Preparation and accounting policies
The unaudited condensed consolidated interim financial results have been
prepared in accordance with International Financial Reporting Standards
(“IFRS”), IAS 34: Interim Financial Reporting, the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee,
Financial Pronouncements as issued by the Financial Reporting Standards
Council, the JSE Limited Listings Requirements and the requirements of
the Companies Act of South Africa. This report complies with the SA REIT
Association Best Practice Recommendations. This report was compiled under
the supervision of Brigitte de Bruyn CA(SA), the financial director.
The accounting policies applied in the preparation of the unaudited
condensed consolidated interim financial statements are in terms of IFRS
and are consistent with the accounting policies applied in the preparation
of the previous consolidated financial statements, with the exception of
the adoption of new and revised standards which became effective during
the period.
The Group’s investment properties were not valued internally by the
directors at the interim reporting period. For year-end purposes they are
partially externally valued by independent valuers and partially internally
valued. In terms of IAS 40: Investment Property and IFRS 7: Financial
Instruments: Disclosure, investment properties are measured at fair value
and are categorised as Level 3 investments.
The revaluation of investment property requires judgement in the
determination of future cash flows from leases and an appropriate
capitalisation rate which varies between 8,5% and 10,69% for South African
properties and between 6,02% and 7,7% for UK properties. Changes in the
capitalisation rate attributable to changes in market conditions can have
a significant impact on property valuations. A 50 basis points increase
in the capitalisation rate will decrease the value of investment property
by R321,1 million. A 50 basis points decrease in the capitalisation rate
will increase the value of investment property by R410,1 million.
In terms of IAS 39: Financial Instruments: Recognition and Measurement and
IFRS 7, the Group’s currency and interest rate derivatives are measured at
fair value through profit or loss and are categorised as Level 2. The fair
value of the currency asset derivative was R68,0 million and the fair value
of the interest rate liability derivative was R4,0 million. These fair
values were determined using valuation techniques that present value the
net cash flows. These cash flows are based on observable market data.
There were no transfers between Levels 1, 2 and 3 during the period. The
aluation methods applied are consistent with those applied in preparing
the previous consolidated financial statements. The carrying value of all
other financial assets and liabilities approximates their fair value.
The directors are not aware of any matters or circumstances arising
subsequent to December 2016 that require any additional disclosure or
adjustment to the financial statements. The condensed consolidated
interim financial statements have not been audited or reviewed by
Texton’s auditors.
Business combinations
During the period, the Group acquired two properties in the United Kingdom.
These were as follows:
Acqui- Rental
sition esca-
price GLA Yield lation
Details Location Transfer date Rm m2 % %
Mowbray Nottingham, 17 August
House UK 2016 173,8 5 360 7,5% 3%*
Heapham Gainsborough, 17 August
Road UK 2016 112,8 7 912 6,7% 2,5%*
* Fixed annual increases that take effect every five years to provide
uplifts
Mowbray Heapham
House Road Total
R’000 R’000 R’000
Purchase price 173 085 112 234 285 319
Net assets acquired
Investment property 173 306 112 108 285 414
Cash and cash equivalents 1 454 1 173 2 627
Trade and other receivables 308 245 553
Trade and other payables (164) (142) (306)
Income received in advance (1 306) (832) (2 138)
VAT (513) (318) (831)
Net assets acquired 173 085 112 234 285 319
Cash acquired (1 454) (1 173) (2 627)
Net cash outflow 171 631 111 061 282 692
Revenue since acquisition 4 087 2 746 6 833
Revenue for the full period 5 450 3 662 9 112
Profit since acquisition –
attributable to Group 3 381 2 182 5 563
Profit for the full period 4 508 2 909 7 417
Lease expiry profiles
South Africa
Revenue
GLA per month
% %
Vacant 2017 7,6 0,0
2018 14,1 14,7
2019 26,6 31,9
2020 15,5 15,4
>2020 36,2 38,0
United Kingdom
Revenue
GLA per month
% %
Vacant 2017 1,4 0,0
2018 4,4 6,1
2019 1,0 1,3
2020 1,1 1,6
>2020 92,1 91,0
Currency
The closing exchange rate at 31 December 2016 was R16,91:1GBP and the
average exchange rate for the six months ended 31 December 2015 was
R17,69:1GBP. The Group’s functional and presentation currency is the
South African Rand.
Segmental analysis
South African property profile
2016 2015
SA sector % %
Revenue
Office 74,4 81,6
Retail 15,2 8,8
Industrial 10,4 9,6
GLA
Office 60,8 67,1
Retail 11,4 7,2
Industrial 27,8 25,7
United Kingdom property profile
2016 2015
UK sector % %
Revenue
Office 20,8 47,7
Retail 45,0 33,7
Industrial 34,2 18,6
GLA
Office 25,1 27,1
Retail 29,1 34,5
Industrial 45,8 38,4
Prospects
Low economic growth associated with the current South African
environment coupled with economic uncertainty in the UK regarding
Brexit will continue to create challenges for Texton in both investment
jurisdictions. Whilst the Company is well positioned to
grow off its rebased core earnings, continued pressure on tenants,
particularly in the office sector, will have to be closely monitored
and efficiently managed.
Texton’s core property portfolio is performing well and vacancies have
materially reduced since financial year end. Portfolio rationalisation
is still front of mind and management has made solid progress disposing
of the non-core portfolio. Current Rand strength has impacted on our UK
earnings, however hedging instruments have been entered into to protect
Texton’s income against downside risk associated with economic volatility.
The realisation of a R123,9 million gain on the cross currency interest
rate swap has been reinvested into the business, reducing our LTV
to 34,5%.
Assuming South African property net income growth of 6,0% to 8,0% per
annum combined with circa 2,0% net property income growth in the UK,
our total distribution growth on the rebased dividend is expected to
be between 3,0% to 6,0% for the full year ending 30 June 2017. This
assumes the Rand remains below R18,50 to the Pound. The primary
reason for reduced growth in 2017 can be attributed to large vacancies
during the year which have only recently been filled and the fact
that the Rand is currently very strong when compared against the Pound.
Payment of interim dividend
Notice is hereby given of the declaration of the interim dividend number
12 of 47,95 cents per share for the six-month period to 31 December 2016.
The dividend has been declared from income reserves.
Texton’s income tax reference number: 9353785158
Issued shares as at 31 December 2016: 376 066 766
Salient dates
Declaration date Monday, 6 March 2017
Last date to trade in order to participate
in the cash dividend Tuesday, 28 March 2017
Shares to trade ex-dividend Wednesday, 29 March 2017
Record date Friday, 31 March 2016
Payment date Monday, 3 April 2017
Share certificates may not be dematerialised or rematerialised between
29 March 2017 and 31 March 2017, both dates inclusive.
Tax treatment
In accordance with Texton’ status as a REIT, shareholders are advised
that the dividends meet the requirements of a “qualifying
distribution” for the purposes of section 25BB of the Income Tax Act,
No. 58 of 1962 (“Income Tax Act”). The dividends on the shares will
be deemed to be a dividend, for South African tax purposes, in terms
of section 25BB of the Income Tax Act.
The dividends received by or accrued to South African tax residents must
be included in the gross income of such shareholders and will not be
exempt from income tax (in terms of the exclusion to the general dividend
exemption, contained in paragraph (aa) of section 10(1)(k)(i) of the
Income Tax Act) because they are dividends distributed by a REIT. These
dividends are, 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 dividend is exempt from dividends tax; and
b) a written undertaking to inform the CSDP, broker or the company,
as the case may be, should the circumstances affecting the exemption
change or the beneficial owner cease to be the beneficial owner, both
in the form prescribed by the Commissioner for the South African Revenue
Service. Shareholders are advised to contact their CSDP, broker or the
company, as the case may be, to arrange for the abovementioned documents
to be submitted prior to payment of the dividends, if such documents
have not already been submitted.
Dividends received by non-resident shareholders will not be taxable as
income and instead will be treated as an ordinary dividend which is
exempt from income tax in terms of the general dividend exemption in
section 10(1)(k)(i)of the Income Tax Act. It should be noted that up to
31 December 2013 dividends received by non-residents from a REIT were
not subject to dividend withholding tax. Since 22 February 2017, any
dividend received by a non-resident from a REIT will be subject to
dividend withholding tax at 20% (previously 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. Assuming dividend withholding tax will
be withheld at a rate of 20%, the net dividend amount due to
non-resident shareholders is 38.3600 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 their CSDP, broker or the company,
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,
broker or the company, as the case may be, to arrange for the
abovementioned documents to be submitted prior to payment of the
dividends if such documents have not already been submitted, if applicable.
On behalf of the board
PD Naidoo N Morris
Chairman Chief Executive Officer
6 March 2017
Board of directors
PD Naidoo (Chairman), N Morris (Chief Executive Officer), B de Bruyn
(Financial Director), NV Balfour, KR Collins (alternate), JR Macey,
KN Vundla, JA Legh, MJ van Heerden, JD Wiese
PM Tau-Sekati and TS Sishuba resigned on 25 August 2016 and
AN Du Hecquet de Rauville resigned on 1 December 2016.
Corporate information
Company registration number
2005/019302/06
Company Secretary
CIS Company Secretaries Proprietary Limited
Sponsor
Investec Bank Limited
Transfer secretary
Computershare Investor Services Proprietary Limited,
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
Physical and registered address
Block C, Investment Place, 10th Road, Hyde Park, 2196
Postal address
PO Box 41394, Craighall Park, 2024
Telephone number: +27 11 731 1980 www.texton.co.za
Date: 06/03/2017 11:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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