Wrap Text
Condensed consolidated financial results for the year ended 30 June 2017
Texton Property Fund Limited
(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)
www.texton.co.za
Condensed consolidated financial results for the year ended 30 June 2017
Financial highlights
- Rebased dividend per share 102,80 cents (2016: 96,99 cents) up 6,0%
- Dividends per share 102,80 cents (2016: 103,68) down 0,8%
- Net asset value* 952,34 cents (2016: 1 006,81) cents down 5,4%
- Revenue R598,8 million (2016: R572,2 million) up 4,6%
- Net property income R440,8 million (2016: R400,7 million) up 10,0%
- LTV ratio on Investment Property 38,9% (June 2016: 37,2%)
Non-financial highlights
- Gross lettable area (GLA)** 407 803 m2 (June 2016: 427 831m2) down 4,7%
- National/listed/blue chip tenants (by GLA)** 61,9% (2016: 57,6%) up
7,5%
- Vacancies (by GLA)** 4,9% (2016: 9,0%) down 45,6%
- Portfolio value** R5 508 billion (2016: R5 774 billion) down 4,6%
* Net tangible asset value less deferred tax
** Including Broad Street Mall
Condensed consolidated statement of financial position as at 30 June 2017
Reviewed Audited
as at 30 June as at 30 June
2017 2016
R'000 R'000
Assets
Non-current assets 5 237 499 5 498 451
Investment property 4 836 757 4 991 066
Property, plant and equipment 13 660 10 778
Investment in joint venture 247 906 262 938
Other financial assets 72 565 132 108
Other non-current assets 10 319 8 027
Restricted cash 56 292 93 534
Current assets 310 193 324 569
Trade and other receivables 46 031 38 659
Investment property reclassified as held
for sale 100 750 133 000
Income tax receivable 3 835 3 781
Restricted cash 5 153 25 134
Cash and cash equivalents 154 424 123 995
Total assets 5 547 692 5 823 020
Equity and liabilities
Equity
Stated capital 2 848 404 2 906 923
Retained earnings 743 054 788 906
Share-based payment reserve 47 1 074
Foreign exchange translation reserve (270 131) (102 579)
Shareholders' interest 3 321 374 3 594 324
Non-current liabilities 1 415 849 1 932 586
Other financial liabilities 1 400 896 1 928 971
Deferred tax 14 953 3 615
Current liabilities 810 469 296 110
Current portion of other financial
liabilities 720 742 215 429
Trade and other payables 89 727 80 681
Total liabilities 2 226 318 2 228 696
Total equity and liabilities 5 547 692 5 823 020
Shares in issue ('000)* 350 328 357 362
Net asset value per share (cents) 948,08 1 005,79
Net tangible asset value less deferred
tax per share (cents) 952,34 1 006,81
*Excludes treasury and share trust shares.
Total number of shares in issue 376 067 376 067
Less: Share incentive scheme (10 429) (10 429)
Less: Treasury shares (15 310) (8 276)
Shares in issue 350 328 357 362
* Includes deferred tax on capital allowances to be held as DTL until property
disposed of.
Condensed consolidated statement of comprehensive income
for the year ended 30 June 2017
Reviewed Audited
year ended year ended
30 June 30 June
2017 2016
R'000 R'000
Investment property income 589 165 561 362
Straight-line rental adjustment 9 664 10 871
Revenue 598 829 572 233
Property expenses (158 068) (171 521)
Net property income 440 761 400 712
(Loss)/profit from joint venture (1 613) 5 053
Other income 5 581 2 033
Other operating expenses (17 623) (11 253)
Foreign exchange gains/(loss) 35 711 (10 695)
Asset management fees (25 610) (27 908)
Operating profit 437 207 357 942
Finance income 97 665 84 877
Finance costs (159 520) (130 820)
Fair value adjustments and impairments (47 642) 11 945
Capital items (8 522) (52)
Profit before income tax 319 188 323 892
Income tax (14 326) -
Profit for the year 304 862 323 892
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of
foreign operations (167 552) (111 802)
Total comprehensive income for the year 137 310 212 090
Headline earnings
Earnings attributable to shareholders 304 862 323 892
Revaluation of investment property 108 450 43 519
Goodwill impairment - 77 018
Headline earnings attributable to shareholders 413 312 444 429
Earnings attributable to shareholders
Weighted average number of shares ('000) 351 633 335 208
Basic and diluted earnings per share (cents)** 86,70 96,62
Headline earnings per share (cents)** 117,54 132,58
Dividend per share (cents) 102,80 103,68
Interim dividend 47,95 51,52
Final dividend* 54,85 52,16
* Declared subsequent to period end.
** Calculated on the weighted average number of shares.
Condensed consolidated statement of cash flow
for the year ended 30 June 2017
Reviewed Audited
year ended year ended
30 June 30 June
2017 2016
R'000 R'000
Cash flows from operating activities
Cash generated from operations 554 858 417 205
Finance income received 72 745 63 713
Finance costs paid (144 468) (124 991)
Dividends paid (350 714) (367 767)
Income tax paid (3 047) (266)
Net cash inflow/(outflow) from operating
activities 129 374 (12 106)
Cash flows from investing activities
Additions to property, plant and
equipment (8 232) (6 685)
Additions to investment property (6 841) (15 442)
Proceeds on disposal of investment property 163 400 24 000
Additions to other non-current assets (5 545) (1 986)
Investment in joint venture - (119)
Acquisition of business combinations, net
of cash acquired (282 692) (1 103 302)
Loans advanced to joint venture (16 345) (231 057)
Repayments from joint venture 13 191 -
Net cash outflow from investing activities (143 064) (1 334 591)
Cash flows from financing activities
Proceeds on share issue - 943 556
Treasury shares acquired (58 519) (74 554)
Premiums paid on hedging instruments (11 681) -
Proceeds from other financial liabilities 851 745 374 061
Repayments of other financial liabilities (772 835) -
Net cash inflow from financing activities 8 710 1 243 063
Decrease in cash and cash equivalents for
the year (4 980) (103 634)
Cash and cash equivalents at the
beginning of the year 123 995 220 385
Effect of exchange rate movement on cash
and cash equivalents (6 945) (4 479)
Release of restricted cash 42 354 11 723
Cash and cash equivalents at the end of
the year 154 424 123 995
Reconciliation from segment result to profit for the year
for the year ended 30 June 2017
Reviewed Audited
year ended year ended
30 June 30 June
2017 2016
R'000 R'000
Segment results 431 097 389 841
Straight-line rental adjustment 9 664 10 871
Other income 5 581 2 033
(Loss)/profit from joint venture (1 613) 5 053
Other operating expenses (17 623) (11 253)
Foreign exchange gain/(loss) 35 711 (10 695)
Asset management fees (25 610) (27 908)
Finance income 97 665 84 877
Finance cost (159 520) (130 820)
Fair value adjustment (47 642) 11 945
Capital items (8 522) (52)
Income tax* (14 326) -
Profit for the year 304 862 323 892
* Includes deferred tax on capital allowances to be held as DTL until
property disposed of.
Distributable earnings
for the year ended 30 June 2017
Reviewed Audited
year ended year ended
30 June 30 June
2017 2016
R'000 R'000
Investment property income 589 165 561 362
Property expenses (158 068) (171 521)
(Loss)/profit from joint venture (1 613) 5 053
Non-cash items included in loss from joint
venture 5 217 -
Other income 5 581 2 033
Other operating expenses (17 623) (21 948)
Asset management fees (25 610) (27 908)
Net finance cost (58 801) (43 496)
Finance income 97 665 84 877
Finance cost (159 520) (130 820)
Finance cost amortisation 3 054 2 447
Accrued distribution included in share price - 29 784
Distribution of foreign exchange gain 22 586 37 369
Dividends on treasury shares 25 767 19 166
Total distribution 386 601 389 894
Condensed consolidated statement of changes in equity for the year
ended 30 June 2017
Foreign
Share currency
based revalua-
Staded payment tion Retained
capital reserve reserve earnings Total
R'000 R'000 R'000 R'000 R'000
Balance at
30 June 2015
(Audited) 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 943 556 - - - 943 556
Dividend paid - - - (367 767) (367 767)
Treasury shares
acquired (74 554) - - - (74 554)
Total
comprehensive
income for the
year - - (111 802) 323 892 212 090
Profit for the
year - - - 323 892 323 892
Exchange
differences
on translation of
foreign operations - - (111 802) - (111 802)
Balance at
30 June 2016
(Audited) 2 906 923 1 074 (102 579) 788 906 3 594 324
Transactions
with owners of
the Company
recognised
directly in equity
Dividend paid - - - (350 714) (350 714)
Treasury shares
acquired (58 519) - - - (58 519)
Share-based
payments
transactions - (1 027) - - (1 027)
Total comprehensive
income
for the year - - (167 552) 304 862 137 310
Profit for the year - - - 304 862 304 862
Exchange differences
on translation of
foreign operations - - (167 552) - (167 552)
Balance at
30 June 2017
(Reviewed) 2 848 404 47 (270 131) 743 054 3 321 374
Commentary
Nic Morris, the outgoing CEO said:
"2017 proved to be a challenging year for the South African and UK economies,
with more uncertainty creeping into the global financial system. In the UK,
the snap election in June 2017 saw the currency weakening and in South Africa,
the appointment of a new finance minister has added increased political risk
to the economy which will impact further on strained growth expectations on
the various rating agency downgrades.
2017 has seen Texton continue to pursue its diversification strategy, both
geographically and sectorally. In South Africa during the year under review,
five non-core properties with a total value of R163,4 million were disposed of,
and deals were agreed for a further nine disposals valued at R100,8 million,
reducing the number of properties in the portfolio by 14, thereby achieving
the stated objective of disposing of non-core assets.
In the UK, two properties, one industrial and one office, were acquired, valued
at circa £16,2 million, further improving geographical diversification, and
enhancing returns in line with expectations. These acquisitions emphasise
Texton’s focus on investing in properties yielding greater than 6,5% with
long-term leases and high-quality tenants.
Brexit and the downgrade of South African Sovereign risk has made for a tough
business environment, however on a positive note, the value of the Rand has
remained resilient due to positive sentiment towards emerging markets. Given
the uncertainty in forecasting currency movements, the Company has approached
currency and interest rate hedging conservatively.
The Company's strategy remains unchanged and management continue to seek
opportunities for investment in the UK. The UK pipeline is strong and
deals with counterparties have not been materially affected by economic
uncertainty, although valuations are under pressure."
Key performance indicators
As communicated in last year's annual results announcement, Texton's strategy
is focused around diversification of the portfolio both by sector and
geographically. Management has continued to implement the strategy through
disposal of non-core assets in South Africa and acquisitions in the United
Kingdom. Acquisitions have been funded through debt and proceeds generated
from disposal of non-core assets.
Texton's current portfolio, split by value, is 61,0% South Africa and
39,0% United Kingdom (including our portion of Broad Street Mall).
The vacancy rate of 4,9% (2016: 9,0%) has improved significantly.
The weighted average lease expiry is 4,2 years (2016: 5 years).
Acquisitions
During the year two properties were acquired in the United Kingdom.
- On 17 August 2016 the Company acquired an office building (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,
with a lease that expires in November 2021.
The purchase price of the property was R173,1 million, which was cash settled.
- On 17 August 2016 the Company acquired an industrial building (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, with a lease that expires in January 2026.
The purchase price of the property was R112,2 million which was cash settled.
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 Sales
GLA Date of price price
Property name Sector m2 transfer R'000 R'000
Vodacom Park and Office/ 5 698 26 September 49 300 71 0001
Linger Longer Retail 2016
Perseus Park Office 13 837 16 November 60 700 61 900
2016
Murrayfield Office 1 417 8 December 6 700 3 500
Forum 2016
Standard Bank Office 8 144 15 December 24 500 27 000
Randburg 2016
Total 29 096 141 200 163 400
1 The sales price is the combined price for both the Vodacom properties.
Transformation
Texton's BEE shareholding is currently at 17,8%. The Fund achieved
a Level 5 rating and has initiatives in place to improve this rating in line
with Property sector codes.
It has always been Texton's intention to prioritise an Enterprise Development
strategy in line with the ambits of the Property Charter. In November 2016,
Texton committed to support small to medium sized black- owned businesses who
were entrants to the property and general business sectors. This was initiated
through the utilisation of 332m2 vacant office space at Investment Place by
creating an entrepreneur hub in a serviced office space. There was a
significant uptake of space and as at year end this space is fully let with 82%
of the space occupied by Level 1 and 2 contributors. Due to the successful
implementation of this, Texton is considering the roll-out of a similar
initiative at Vunani Office Park.
Greening
Greening is an important element of our business and the portfolio of assets
is kept under constant review, as part of Texton's ongoing greening strategy.
During the year, a smart metering initiative was approved and rolled out across
33 properties within the portfolio.
Texton is currently considering the implementation of a solar power initiative
at Kempstar Mall. The site has been identified as an excellent opportunity
given a number of factors including the energy consumption (load profile),
large roof surface and exposure to the sun.
Basis of preparation
The condensed consolidated financial statements are prepared in
accordance with the requirements of the JSE Limited Listings Requirements for
preliminary reports and the requirements of the Companies Act of South Africa.
The Listings Requirements require preliminary reports to be prepared in
accordance with the framework concepts and the measurement and recognition
requirements of the International Financial Reporting Standards (IFRS) and
the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by the Financial Reporting
Standards Council and to also, as a minimum, contain the information required
by IAS 34 Interim Financial Reporting.
The accounting policies applied in the preparation of the condensed
consolidated financial statements are in terms of IFRS and are consistent with
those applied in the previous consolidated annual financial statements. The
definitions of capital items and related adjustments are included in the
accounting policies in the June 2016 Annual Financial Statements. There were
no standards and amendments to standards with a material impact on the
condensed consolidated financial statements that are relevant to and become
effective for the first time in Texton's financial year commencing 1 July 2016.
The condensed consolidated financial statements are presented in Rand, which
is the company's functional currency and the Group's presentation currency,
rounded to the nearest thousand.
These results have been compiled under the supervision of the Acting
Chief Financial Officer, Jo-Ann Pohl CA(SA), ACCA.
Review report of the Independent Auditor
The condensed consolidated financial statements for the year ended
30June 2017 have been reviewed by KPMG Inc., who expressed an unmodified
review conclusion. The auditor's report does not necessarily report on all
the information contained in this announcement. 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 issuer's
registered office.
Fair value
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 derivatives was R82,9 million and the fair
value of the interest rate liability derivative was R1,8 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 valuation methods applied are consistent with those applied in
preparing the previous consolidated financial statements. The carrying
value of all other financial assets and liabilities approximate
their fair value.
Business combinations
During the period,the Group acquired 100% of the issued shares of two
companies, Malabar Investment Holdings Limited (Mowbray House) and Ganix
Investment Holdings Limited (Heapham Road) in the United Kingdom
valued at circa £16,2 million. Transaction costs amount to
R6,5 million. The main business of each of the companies was to
own a single investment property. These were as follows:
Acqui- Rental
sition escala-
Transfere price GLA Yield tion
Details Location date Rm m2 % %
Mowbray Nottingham, 17 August 173,1 5 360 7,5 3
House UK 2016
Heapham Gainsborough, 17 August 112,2 7 912 6,7 2,5
Road UK 2016
* 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 9 034 6 350 15 384
Revenue for the full period 13 541 9 038 22 579
Operating profit since
acquisition - attributable
to Group 7 479 5 172 12 651
Operating profit for the full
period 10 518 7 077 17 595
Stated capital and shares repurchased
There are 376 066 766 ordinary shares of no par value in issue (2016:
376 066 766). The Group accounts for 10 428 348 shares which were issued to the
staff incentive scheme trust as treasury shares (2016: 10 428 348). During the
period 2 to 20 September 2016, a subsidiary of Texton, Discus House Proprietary
Limited, repurchased 7 034 133 shares at an average price of R8,31, bringing
the total treasury shares held to 15 310 276 (2016: 8 276 143).
The Company's share structure is in line with international best practice
for REITs.
Currency
The closing exchange rate at 30 June 2017 was R17,04:1GBP (2016: R19,58:1GBP)
and the average exchange rate for the year ended 30 June 2017 was R17,26:1GBP
(2016: R21,47:1GBP).
Borrowings
At 30 June 2017 the Fund had a loan to value ratio of 38,91% (2016:
37,20%). The calculation of loan to value was based on interest-bearing
borrowings for investment property included in other financial liabilities
(excluding the fair value of the interest rate swaps) of R1 926 million
(2016: R1 912 million) and the value of investment property, excluding Broad
Street Mall, of R4 951 million (2016: R5 135 million). The Fund remains
capitalised to take advantage of yield-enhancing acquisitions. The Fund has an
average cost of debt of 9,13% on its South African debt at 3,17% on its United
Kingdom debt.
Events after the reporting date
Internalisation of the Asset Management function (Manco Internalisation). As
set out in the announcement released on SENS on Thursday, 9 March 2017 and
further announcements on Friday, 21 July 2017, and Tuesday, 29 August 2017,
the Parties have agreed, in terms of the Cancellation, Cession, Delegation and
Sale Agreement, that the Asset Management Agreement be cancelled with Texton
Property Investments Proprietary Limited (TPI), the external asset management
company.
The Manco Internalisation will take place through the cancellation of the Asset
Management Agreement, cession and delegation of TPI's rights in and to the
Contracts to Texton and sale of the Assets to Texton and the assumption by
Texton of all future operating costs associated with the performance of the
asset management function, including staff costs, in consideration for which
Texton will make a cash payment to Texton Property Investments of R180 million
(excluding VAT, if applicable). The Manco Internalisation will be accounted for
in terms of IFRS 3: Business Combinations.The financial effect cannot
yet be estimated.
In South Africa deals have been agreed for a further nine disposals valued at
R100,8 million, thereby achieving the stated objective of disposing of non-core
assets.
Expected Cost Sales
Property GLA transfer price price
name Sector m2 date R’000 R’000
54 Bompas Commercial 750 October 2017 10 061 13 500
Road
Mabe Commercial 1 642 August 2017 24 500 8 000
Business
Park
Elsecar Industrial 1 252 September 2017 4 690 4 800
Westsands Industrial 1 363 September 2017 4 341 4 500
Prairie Industrial 2 325 September 2017 4 157 7 100
Verona Industrial 3 933 September 2017 7 981 9 500
Eastsands Industrial 2 853 September 2017 12 047 8 600
Electron Industrial 1 183 August 2017 7 752 2 500
Benstra Commercial 7 818 August 2017 41 200 42 250
Total 23 119 116 729 100 750
The directors are not aware of any other matters or circumstances arising
subsequent to 30 June 2017 that require any additional disclosure or adjustment
to the financial statements.
Prospects
Nosiphiwo Balfour, the incoming CEO said:
"Low economic growth associated with the current South African environment
coupled with economic uncertainty in the UK will continue to create a
challenging operating environment for Texton. Whilst the Company is defensively
positioned, the downward pressure on rentals, combined with a sluggish economy
impacting tenants, will have to be closely monitored and efficiently managed.
The Fund has been focused on active asset management to ensure tenant retention
and improved efficiencies and major vacancies that were a concern in the
previous period have been filled, which has led to the vacancy rate reducing
from 9,0% to 4,9%. We are aiming to increase exposure to prime industrial
assets in South Africa and alongside reducing our office space we recognise
that from an acquisition perspective high-yield assets in the commercial sector
are limited. Over the past year the Fund has reduced exposure to smaller assets,
below R50 million threshold, which are management intensive, and this has
assisted our cost base.
We are confident that our team will rise to the challenge of renewing existing
leases and attracting new tenants with strong covenants. By June 2018, 30% of
the lease agreements (by GLA) expire and there is a big emphasis on concluding
new leases and renewals at a positive reversion rate knowing that the
macroeconomic environment remains pressurised. The finalisation of the Manco
Internalisation will align the Fund with best practice and we hope to realise
further cost efficiencies. We expect it to remain a challenging operating
environment; however we have positioned the portfolio defensively. Texton is
poised to continue to deliver distribution growth in line with its
diversification strategy."
Cash dividend
Notice is hereby given of the declaration of the final dividend number 12 of
54,85 cents per share for the final six-month period to 30 June 2017, bringing
the total dividend for the year ended 30 June 2017 to 102,80 cents per share
(2016: 103,68). The dividend has been declared from income reserves.
The dividend for the year, although decreasing by 0,8%, represents a 6,0%
growth compared to the rebased dividend reported on in the prior year.
Texton's Income Tax Reference Number: 9353785158.
Issued shares as at 4 September 2017: 376 066 766.
Salient dates
Dividend declaration date Monday, 4 September
Last date to trade Tuesday, 19 September
Shares trade ex-dividend Wednesday, 20 September
Record date Friday, 22 September
Payment date Tuesday, 26 September
Share certificates may not be dematerialised or rematerialised between
20 September 2017 and 22 September 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
in South Africa 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 1 January 2014, any dividend
received by a non-resident from a REIT will be subject to dividend withholding
tax at 20%, 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.
Changes to executive management and the board of directors
In compliance with paragraph 3.59 of the Listings Requirements of the JSE
Limited, the Texton board of directors (Board) announced the appointment of
Nosiphiwo Balfour to the position of Chief Executive Officer (CEO), effective
17 July 2017. Nosiphiwo has been an independent non-executive director of
Texton since 30 June 2014. Following the appointment of Nosiphiwo, Nic Morris
stepped down as CEO of the Company and as an executive director of the Board,
effective 17 July 2017, but remained employed by Texton Property Investments
Proprietary Limited until 30 August 2017 to facilitate a smooth transition for
the new CEO. Texton has appointed Inge Pick as the Chief Financial Officer
(CFO), effective 18 September 2017. Inge is a qualified Chartered Accountant
(SA) and has a wealth of financial and strategic management experience at a
senior level in the REIT sector. In addition, the following changes have been
made to the Board.
The directors of Texton (the Board) hereby notifies its shareholders of the
following additional changes which occurred during the year: Angelique de
Rauville (CEO) resigned 1 December 2016; Brigitte de Bruyn (Financial Director)
resigned on 30 June 2017; Shaheeda Mia was appointed as an independent
non-executive director on 13 July 2017, member of the Audit and Risk Committee
and the Chair of the Social and Ethics Committee; Patrick Ntshalintshali
resigned as a member of the Audit and Risk Committee on 13 July 2017;
Kyansambo Ntombi Vundla was appointed as the Chair of the Remuneration
Committee on 18 August 2017; and John Macey was appointed as the Lead
Independent Director with effect from 31 August 2017.
The Board is well positioned to comply with the recommendations of King IV.
SA property profile
2017 2016
SA sector % %
Revenue
Office 72,7 77,2
Retail 16,5 13,3
Industrial 10,8 9,5
GLA
Office 61,1 63,4
Retail 11,4 10,8
Industrial 27,5 25,8
UK property profile
2017 2016
UK sector % %
Revenue
Office 27,3 22,7
Retail 39,6 40,9
Industrial 33,1 36,4
GLA
Office 24,6 22,6
Retail 29,4 29,1
Industrial 46,0 48,3
SA lease expiry profile
Revenue
GLA per month
% %
Revenue
2017 Vacant 5,4 0,0
2018 33,9 42,0
2019 16,5 15,4
2020 14,8 13,8
>2020 29,4 28,8
UK lease expiry profile
Revenue
GLA per month
% %
Revenue
2017 Vacant 3,5 0,0
2018 2,3 3,8
2019 1,4 2,3
2020 0,7 1,1
>2020 92,1 92,8
Operating segments
The Group has six reportable segments based on the geographic split which are
the group's strategic business segments. The geographic segments are 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 customer concentration risks.
SA
Office Retail Industrial Total
R'000 R'000 R'000 R'000
2017
Extracts from the
statement of
comprehensive income
Investment property
income 361 655 65 863 50 329 477 847
Property expenses (110 354) (22 311) (22 062) (154 727)
Net property income 251 301 43 552 28 267 323 120
Extracts from the
statement of financial
position
Investment property
Investment property 2 491 413 457 590 295 862 3 244 865
Property, plant and
equipment 13 587 15 58 13 660
Non-current assets
held-for-sale 63 750 - 37 000 100 750
Property valuation 2 568 750 457 605 332 920 3 359 275
2016
Extracts from the
statement of
comprehensive income
Investment property
income 369 239 46 563 46 610 462 412
Property expenses (128 961) (19 862) (20 116) (168 939)
Net property income 240 278 26 701 26 494 293 473
Extracts from the
statement of financial
position
Investment property 2 606 332 467 744 316 017 3 390 093
Property, plant and
equipment 10 750 5 23 10 778
Investment property
held-for-sale 133 000 - - 133 000
Property valuation 2 750 082 467 749 316 040 3 533 871
UK
Office Retail Industrial Total
R'000 R'000 R'000 R'000
2017
Extracts from the
statement of
comprehensive income
Investment property
income 51 507 25 237 34 574 111 318
Property expenses (1 828) (744) (769) (3 341)
Net property income 49 679 24 493 33 805 107 977
Extracts from the
statement of financial
position
Investment property
Investment property 664 719 380 047 547 126 1 591 892
Property, plant and
equipment - - - -
Non-current assets
held-for-sale - - - -
Property valuation 664 719 380 047 547 126 1 591 892
2016
Extracts from the
statement of
comprehensive income
Investment property
income 56 096 22 326 20 528 98 950
Property expenses (1 538) (756) (288) (2 582)
Net property income 54 558 21 570 20 240 96 368
Extracts from the statement
of financial position
Investment property 654 652 414 786 531 535 1 600 973
Property, plant and
equipment - - - -
Investment property
held-for-sale - - - -
Property valuation 654 652 414 786 531 535 1 600 973
Total
Office Retail Industrial Total
R'000 R'000 R'000 R'000
2017
Extracts from the
statement of
comprehensive income
Investment property
income 413 162 91 100 84 903 589 165
Property expenses (112 182) (23 055) (22 831) (158 068)
Net property income 300 980 68 045 62 072 431 097
Extracts from the
statement of financial
position
Investment property
Investment property 3 156 132 837 637 842 988 4 836 757
Property, plant and 13 587 15 58 13 660
equipment
Non-current assets
held-for-sale 63 750 - 37 000 100 750
Property valuation 3 233 469 837 652 880 046 4 951 167
2016
Extracts from the
statement of
comprehensive income
Investment property
income 425 335 68 889 67 138 561 362
Property expenses (130 499) (20 618) (20 404) (171 521)
Net property income 294 836 48 271 46 734 389 841
Extracts from the
statement of financial
position
Investment property 3 260 984 882 530 847 552 4 991 066
Property, plant and
equipment 10 750 5 23 10 778
Investment property
held-for-sale 133 000 - - 133 000
Property valuation 3 404 734 882 535 847 575 5 134 844
Board of directors
PD Naidoo (Chairman), JR Macey (Lead Independent), NV Balfour
(Chief Executive Officer), JD Wiese, KR Collins (alternate), KN Vundla,
JA Legh, MJ van Heerden, P Ntshalintshali,S Mia
Corporate information
Company registration number: 2005/019302/06
Company secretary: CIS Company Secretaries Proprietary Limited
(Gillian Prestwich)
Sponsor: Investec Bank Limited
Transfer secretary: Computershare Investor Services Proprietary Limited,
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
(PO Box 61051, Marshalltown, 2107 South Africa)
Physical and registered address: Block C, Investment Place, 10th Road,
Hyde Park, 2196
Postal address: PO Box 653129, Benmore, 2010
Date: 04/09/2017 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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