Wrap Text
Condensed consolidated reviewed interim financial results for the period ended 30 September 2017
Safari Investments RSA Limited
Registration number: 2000/015002/06
Approved as a REIT by the JSE Limited
JSE share code: SAR
ISIN: ZAE000188280
Republic of South Africa
("Safari" or the "Company" or the "Group")
Condensed consolidated reviewed interim financial results for the period
ended 30 September 2017
The condensed consolidated interim financial statements have been reviewed
by Deloitte & Touche. The Financial Director, Mr WL Venter CA (SA), was
responsible for the preparation of these reviewed financial statements,
executed by the Financial Manager of Cosmos Management CC, Mr MC Basson.
Safari Investments RSA Limited and Subsidiary
Income-generating retail portfolio
for the period ended 30 September 2017
The
Victorian Denlyn Atlyn Thabong
Heidelberg, Mamelodi, Atteridgeville, Sebokeng,
Geographic Gauteng Gauteng Gauteng Gauteng
Trading since 1997 2003 2006 2007
Total built area 15 400m2 43 500m2 41 200m2 43 100m2
Occupation levels 99% 99% 100% 100%
National tenants 96% 90% 91% 90%
Number of shops 40 109 95 104
Annual trading
density/m2
September 2017* R41 700/m2 R44 300/m2 R30 400/m2 R26 200/m2
Soweto Platz
Private Day- am
Mnandi hospital Meer
Atteridgeville, Soweto, Swakopmund,
Geographic Gauteng Gauteng Namibia
Trading since 2015 2016 2016
Total built area 10 600m2 2 800m2 29 500m2
Occupation levels 98% 100% 94%
National tenants 76% 100% 81%
Number of shops 31 N/A 70
Annual trading density/m2
September 2017* R23 100/m2 N/A R24 600/m2
*This excludes furniture and financial services.
National average trading density for centres situated in South Africa:
R29 700/m2 (centres in category of Atlyn, Denlyn and Thabong) and
R36 300/m2 (centres in category of The Victorian and Mnandi).
(Source: IPD Q2 2017).
Portfolio vacancy % 1%
Portfolio national % 89%
Portfolio trading density R32 300/m2
Lease expiry profile of the portfolio
2017/2018 – 14% GLA
2017/2018 – 18% Revenue
2018/2019 – 10% GLA
2018/2019 – 11% Revenue
2019/2020 – 13% GLA
2019/2020 – 17% Revenue
2020/2021 – 13% GLA
2020/2021 – 15% Revenue
2021+ - 49% GLA
2021+ - 39% Revenue
Condensed consolidated statement of financial position as at
30 September 2017
Reviewed Reviewed Audited
30 September 30 September 31 March
2017 2016 2017
Notes R'000 R'000 R'000
Assets
Non-current
assets
Investment
property 1 2 501 727 2 212 487 2 421 550
Fair value of
investment 2 541 185 2 243 481 2 456 990
property
Operating lease
asset (39 458) (30 994) (35 440)
Intangible assets - 9 -
Loans to
shareholders 42 871 - -
Operating lease
asset 2 38 322 27 409 33 349
2 582 920 2 239 905 2 454 899
Current assets
Inventories 3 193 188 142 077 175 003
Loans to
shareholders 4 7 660 - -
Trade and other
receivables 6 23 381 50 496 14 139
Operating lease
asset 2 1 136 3 585 2 091
Current tax
receivable - 1 638 1 638
Cash and cash
equivalents 3 427 3 031 2 931
228 792 200 827 195 802
Total assets 2 811 712 2 440 732 2 650 701
Equity and
liabilities
Equity
Stated capital 4 2 088 293 1 154 020 1 187 088
Share-based
payment reserve 5 49 800 - -
Retained income 412 163 410 719 476 453
2 550 256 1 564 739 1 663 541
Liabilities
Non-current
liabilities
Interest bearing
borrowings 7 139 680 842 250 898 433
Deferred tax 26 265 19 678 23 105
165 945 861 928 921 538
Current
liabilities
Trade and other
payables 6 15 787 14 065 15 792
Interest bearing
borrowings 7 950 - 5 576
Bank overdraft 78 774 - 44 254
95 511 14 065 65 622
Total liabilities 261 456 875 993 987 160
Total equity and
liabilities 2 811 712 2 440 732 2 650 701
Condensed consolidated statement of profit or loss and other comprehensive
income for the period ended 30 September 2017
Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Notes R'000 R'000 R'000
Revenue 121 668 91 933 204 973
Property revenue 8 117 650 94 833 203 427
Operating lease 2 4 018 (2 900) 1 546
Other income 4 144 2 546 4 477
Other operating
expenses 9 (32 582) (29 920) (64 889)
Operating profit 93 230 64 559 144 561
Investment income 630 101 182
Finance costs (33 361) (33 909) (59 012)
Share-based
payment expense 5 (49 800) - -
Fair value
adjustment - - 74 822
Fair value of
investment
property - - 76 368
Operating lease
asset - - (1 546)
Profit before
taxation 10 699 30 751 160 553
Taxation (3 161) (1 200) (4 627)
Profit for the
period 7 538 29 551 155 926
Other - - -
comprehensive income
Total comprehensive
income for the
period 7 538 29 551 155 926
Basic earnings per
share (cents) 3,61 15,81 83,46
Diluted earnings per
share (cents) 3,43 15,81 83,46
Condensed consolidated statement of changes in equity for the period
ended 30 September 2017
Share-based
payment Retained Total
Share capital reserve income equity
R'000 R'000 R'000 R'000
Balance at 1
April 2016
(Audited) 1 116 566 - 439 466 1 556 032
Profit for the
period - - 29 551 29 551
Other comprehensive
income - - - -
Total comprehensive
income for the
period - - 29 551 29 551
Shares issued through
capitalisation
dividend 5 928 - - 5 928
Private
placement 31 578 - - 31 578
Capital raising fee
on shares paid for
and issued in the
current period (53) - - (53)
REIT
distribution – - (58 298) (58 298)
Total
contributions 37 453 - (58 298) (20 845)
by and distributions
to owners of Company
recognised directly
in equity
Balance at 30
September 2016
(Reviewed) 1 154 019 - 410 719 1 564 738
Profit for the
period - - 126 375 126 375
Other comprehensive
income - - - -
Total comprehensive
income for the
period - - 126 375 126 375
Shares issued through
capitalisation
dividend 13 341 - - 13 341
Private
placement 20 000 - - 20 000
Capital raising fee
on shares paid for
and issued in the
current period (272) - - (272)
REIT
distribution - - (60 641) (60 641)
Total contributions
by and distributions
to owners of Company
recognised directly
in equity 33 069 - (60 641) (27 572)
Share-based
payment Retained Total
Share capital reserve income equity
R'000 R'000 R'000 R'000
Balance 1 April
2017 (Audited) 1 187 088 - 476 453 1 663 541
Profit for the
period - - 7 538 7 538
Total comprehensive
income for the
period - - 7 538 7 538
Share-based
payment - 49 800 - 49 800
Total share- based
payments
for the period - 49 800 - 49 800
Shares issued through
capitalisation
dividend 2 853 - - 2 853
Private
placement 152 000 - - 152 000
Private
placement 756 600 - - 756 600
Capital raising fee
on shares paid for
and issued in the
current period (10 248) - - (10 248)
REIT
distribution - - (71 828) (71 828)
Total contributions
by and distributions
to owners of Company
recognised directly
in equity 901 205 - (71 828) 829 377
Balance 30
September 2017
(Reviewed) 2 088 293 49 800 412 163 2 550 256
Condensed consolidated statement of cash flows for the period
ended 30 September 2017
Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
R'000 R'000 R'000
Net cash used in
operating activities
Cash generated from 61 781 3 595 84 313
Interest income 630 101 182
Finance costs (33 361) (33 909) (59 012)
REIT distribution (68 975) (52 371) (99 668)
Tax received 1 638 - -
Net cash used in
operating
activities (38 287) (82 584) (74 185)
Net cash used in
investing activities
Purchase and
development of
investment
property (80 179) (157 797) (292 037)
Net cash used in
investing
activities (80 179) (157 797) (292 037)
Net cash from
financing activities
Proceeds on share
issue 898 352 31 526 51 254
Proceeds from interest
bearing borrowings 145 682 340 307 677 330
Repayment of interest
bearing borrowings (909 061) (131 819) (407 083)
Proceeds from bank
overdraft 79 704 - 71 142
Repayment of bank
overdraft (24 387) - (47 685)
Advance on
shareholders'loan (50 531) - -
Net cash from
financing
activities 139 759 240 014 344 958
Total cash movement
for the
period 21 293 (367) (21 264)
Cash at the beginning
of the period (17 866) 3 398 3 398
Total cash at the
end of the period 3 427 3 031 (17 866)
Explanatory notes to the condensed consolidated statement of financial
position and condensed consolidated statement of comprehensive income
1. It is the Group's policy to have the investment property portfolio
valued on an annual basis by an independent valuator. The previous
valuation was done on 31 March 2017 and the next valuation will be done
on 31 March 2018. These valuations are considered to be Level 3 on the
fair value hierarchy as per IFRS 13 Fair Value Measurement. There have
been no movements of inputs between fair value hierarchy levels nor have
there been any changes in the methods of valuation as mentioned above.
If the valuator were to increase both the capitalisation and discount
rates by 0,50% the total valuation would decrease by R113 845 000.If the
valuer were to decrease both the capitalisation and discount rates by
0,50% the total valuation would increase by R140 872 000. The finalisation
of the Thabong expansion in Sebokeng and Denlyn shopping centre in
Mamelodi together with the commencement of the construction phase of the
Nkomo Village property in Atteridgeville and continued construction of
the Platz am Meer property in Swakopmund resulted in a 3% increase in the
value of investment property since 31 March 2017. The construction costs
are financed by the R900 million Absa facility (interest-bearing borrowings)
and the N$100 million Bank Windhoek overdraft facility.
2. Most of Safari's current lease agreements are in the first half of the
lease term. Renewals are negotiated well in advance with an average annual
escalation of 8%.
3. Luxury upmarket residential units consist of 30% of Erf 71, Swakopmund,
Erongo Region, Registration division G, measuring 8,712m2. The 36 luxury
upmarket apartments will be available for sale in the ordinary course of
business. The units are currently being marketed by an appointed agent.
4. Safari raised in total R2,9 million (375 337 ordinary Safari shares)
through the dividend reinvestment process during July 2017. Shareholders
had the option to reinvest their distribution in ordinary shares at a price
of R7,60 per share. The capital raised through the dividend reinvestment
process was utilised to settle part of the facility used to finance the
construction of current projects.
During July 2017 Safari entered into a subscription agreement with SA
Corporate Real Estate Limited ("SA Corporate") whereby the company has
issued 20 million ordinary shares at R7,60 per share to SA Corporate for a
total cash amount of R152 million in terms of the company's general
authority to issue shares for cash.
During August 2017 Safari entered into the following subscription
agreements raising a total of R757 million:
a. Southern Palace Capital Proprietary Limited: 66 million
ordinary shares at R7,60 per share
b. Safarihold Proprietary Limited: 657 895 ordinary shares at
R7,60 per share
c. Stanlib Asset Managers: 5 263 158 ordinary shares at R7,60 per share
d. Bridgefund Asset Managers: 21 052 632 ordinary shares at R7,60
per share
e. WDB Investment Holdings Limited ("WDBIH"): 6 578 948 ordinary
shares at R7,60 per share
Safari provided financial assistance by issuing a capital and interest
guarantee to Sanlam for 91% of the transaction value of the Southern
Palace transaction. Financial assistance was also provided to WDBIH by
way of vendor financing.
In the 2018 financial year Safari will distribute a minimum of 75% of its
taxable earnings to the shareholders as per the REIT requirements, and the
shareholders will be liable for the tax on the profit distributed.
5. Safari was approached by Southern Palace Capital Proprietary Limited
("Southern Palace"), a subsidiary of Southern Palace Group of Companies
Proprietary Limited (the "Southern Palace Group") to subscribe for shares
in Safari. After taking into account the Southern Palace Group's potential
value add as a strategic BEE investor given their focus on infrastructure
development and real estate and their know-how, Safari decided to enter
into negotiations with Southern Palace.
On 7 July 2017 shareholders approved the issue of 66 million new Safari
shares (the "subscription shares") to Southern Palace for a total
consideration of R501,6 million. Shareholders also approved financial
assistance by Safari to Southern Palace for this subscription.
The structure of the financial assistance provided by Safari is explained
in more detail below.
Accounting treatment of the Southern Palace Capital Proprietary
Limited transaction
The transaction with Southern Palace consists of two elements, which are
accounted for as follows:
5.1 The cash funded specific issue, being the subscription by
Southern Palace of 6 789 474 subscription shares for a cash consideration
of R51,6 million. This part of the subscription is funded by Southern
Palace using third party funding and/or own cash reserves. Consequently,
the cash proceeds, net of transaction costs, increases share capital and
the number of Safari shares in issue.
5.2 The balance of the subscription of 66 million shares
(59 210 526 shares) is funded by Sanlam Life Insurance Limited
(Acting through its Sanlam Capital Markets Division) ("Sanlam"). Safari
issued an interest- and capital guarantee to the amount of R455 million
for the loan facilities provided to Southern Palace. The funding is
secured by a pledge and cession in favour of Sanlam over the 66 million
shares. Safari entered into an "Acknowledgement of Claim and Reversionary
Pledge and Cession Agreement" with Southern Palace whereby Southern Palace
irrevocably and unconditionally agrees to indemnify Safari for the full
amount paid by Safari on account of the borrower’s obligations under the
guarantees issued as set out above.
On initial recognition, being 28 August 2017, the date on which the funded
shares of 59 210 526 subscription shares were issued, a once-off IFRS 2
charge of R49,8 million and corresponding share-based payment reserve was
recognised. Consequently, the subscription shares issued to Southern
Palace in terms of the Sanlam funded specific issue have not been treated
as issued for accounting purposes. The guarantees provided by Safari to
Sanlam in terms of the financial assistance approved by shareholders
triggered the IFRS 2 charge. The IFRS 2 charge was measured at fair value,
using a Monte Carlo option pricing model on the effective date of the
transaction. The assumptions used in this model include:
a. A closing spot price of R6,80 per Safari share as at 28 August
2017;
b. Volatility of 31,94% (based on historical trends in the Safari share
price); and
c. Three year term guarantee.
Consequently, reserves were increased due to the share-based payment
transaction taking place.
6. Trade and other receivables fluctuated between the comparative periods,
mainly due to the Value Added Tax ("VAT") receivable from the Namibian
Revenue Services for the financial period under review. The VAT receivable
is as a result of the current construction projects at the Platz am Meer
property in Swakopmund, a substantial portion of the VAT receivable was
received from the Namibian Revenue Services subsequent to 30 September 2017.
Trade and other payables consists of tenant deposits held, income received
in advance and accrued expenses.
7. The bulk of current and non-current liabilities relate to the facilities
being utilised to finance the project development of the Platz am Meer
Waterfront Centre, the construction of the Nkomo property and expansions
at existing properties as mentioned in note 1 above. The capital raising
mentioned in note 4 above resulted in a significant decrease in interest
bearing borrowings which will also result in a significant decrease in
finance cost for the 2018 financial year, compared to the 2017 financial
year.
8. The September 2017 interim property revenue increased by 24% compared
to the September 2016 interim figure. The increase is a result of annual
rental escalations, reduced vacancy rates and an improved tenant mix
together with expansions as mentioned in note 1 above and the Platz am Meer
Shopping Centre which commenced trading during September 2016.
9. The September 2017 interim operating expenses as a percentage of revenue
was 27% compared to 33% in September 2016.
Condensed consolidated segmental report for the
period ended 30 September 2017
Atteridgeville Mamelodi Sebokeng Heidelberg
R'000 R'000 R'000 R'000
30 September 2017
(Reviewed)
Turnover (external) 31 041 36 507 23 938 10 740
Reportable segment
profit before
investment revenue,
fair value adjustments
and finance costs 24 574 31 733 15 449 8 156
Unallocated reportable
segment profit before
investment revenue,
fair value adjustments
and finance costs - - - -
Profit before investment
revenue, fair value
adjustments and finance
costs - - - -
Segment assets 694 496 692 781 507 426 157 740
Unallocated assets - - - -
Total assets 694 496 692 781 507 426 157 740
Segment liabilities 4 140 3 050 4 321 644
Unallocated
liabilities - - - -
Interest bearing
borrowings - - - -
Total liabilites 4 140 3 050 4 321 644
Other segment items
Interest revenue
(external) 12 6 13 –
Unallocated
interest revenue - - - -
Investment revenue 12 6 13 –
Fair value
adjustments - - - -
Interest expense - - - -
Unallocated
interest expense - - - -
Finance costs - - - -
Namibia Reconciliation Total
R'000 R'000 R'000
30 September 2017
(Reviewed)
Turnover (external) 17 241 2 201 121 668
Reportable segment profit
before investment
revenue, fair value
adjustments and finance
costs 13 454 - 93 366
Unallocated reportable
segment profit before
investment revenue, fair
value adjustments and
finance costs - (136) (136)
Profit before investment
revenue, fair value
adjustments
and finance costs - - 93 230
Segment assets 628 222 - 2 680 665
Unallocated assets – 131 047 131 047
Total assets 628 222 131 047 2 811 712
Segment liabilities 81 016 - 93 171
Unallocated liabilities - 27 655 27 655
Interest bearing
borrowings - 140 630 140 630
Total liabilites 81 016 168 715 261 456
Other segment items
Interest revenue
(external) - - 31
Unallocated interest
revenue - 599 599
Investment revenue - 599 630
Fair value adjustments - - -
Interest expense - - -
Unallocated interest
expense - 33 361 33 361
Finance costs - 33 361 33 361
Atteridgeville Mamelodi Sebokeng Heidelberg
R'000 R'000 R'000 R'000
30 September 2016
(Reviewed)
Turnover (external) 27 586 30 887 21 949 7 623
Reportable segment
profit before investment
revenue, fair
value adjustments and
finance costs 21 046 26 144 14 653 4 942
Unallocated reportable
segment profit before
investment revenue,
fair value
adjustments and
finance costs - - - -
Profit before investment
revenue, fair value
adjustments and
finance costs - - - -
Segment assets and
liabilities
Segment assets 602 010 594 201 401 344 148 577
Unallocated assets - - - -
Total assets 602 010 594 201 401 344 148 577
Segment liabilities 4 435 3 493 3 287 912
Unallocated
liabilities - - - -
Interest bearing
borrowings - - - -
Total liabilities 4 435 3 493 3 287 912
Other segment items
Interest revenue
(external) 15 19 16 2
Unallocated interest
revenue - - - -
Investment revenue 15 19 16 2
Fair value adjustments - - - -
Interest expense - - - -
Unallocated interest
expense - - - -
Finance costs - - - -
Namibia Reconciliation Total
R'000 R'000 R'000
30 September 2016
(Reviewed)
Turnover (external) 579 3 309 91 933
Reportable segment
profit before investment
revenue, fair value
adjustments and
finance costs 251 - 67 036
Unallocated reportable
segment profit before
investment revenue, fair
value adjustments and
finance costs - (2 477) (2 477)
Profit before investment
revenue, fair value
adjustments and
finance costs - - 64 559
Segment assets and
liabilities
Segment assets 612 093 - 2 358 225
Unallocated assets - 82 507 82 507
Total assets 612 093 82 507 2 440 732
Segment liabilities 1 335 - 13 462
Unallocated liabilities - 20 281 20 281
Interest bearing
borrowings - 842 250 842 250
Total liabilities 1 335 862 531 875 993
Other segment items
Interest revenue
(external) - - 52
Unallocated interest
revenue - 49 49
Investment revenue - 49 101
Fair value adjustments - - -
Interest expense - - -
Unallocated interest
expense - (33 909) (33 909)
Finance costs - (33 909) (33 909)
Notes to the condensed consolidated reviewed financial statements
Basis of preparation
The preparation of the group's interim financial results for the six months
ended 30 September 2017 was the responsibility of the Financial Director,
Mr WL Venter, executed by the Financial Manager, Mr MC Basson. The
consolidated interim financial statements are prepared in accordance with
IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides
as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by Financial Reporting Standards Council, the
Listing Requirements of the JSE Limited and the requirements of the
Companies Act of South Africa. The accounting policies applied in the
preparation of these interim financial statements are in terms of
International Financial Reporting Standards and are consistent with those
applied in the previous consolidated annual financial statements.
Financial statements
The interim financial results have been reviewed by Deloitte & Touche in
accordance with ISRE 2410 – "Review of interim financial information
performed by the independent auditor of the entity". The review report
issued by Deloitte & Touche is unmodified and is available for inspection
at the issuer's registered office. The auditor's report does not
necessarily report on all of the information contained in this
announcement/financial results. 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. The review report can be obtained at Safari’s registered office
or on the website: www.safari-investments.com. The directors take full
responsibility for the preparation of the interim consolidated financial
results.
Any reference to future financial information included in this
announcement has not been reviewed or reported by the auditor. The interim
consolidated financial statements were approved by the Board of Directors
on 20 November 2017.
New standards and interpretations
The accounting policies of the group have been applied consistently with
the policies as presented in the consolidated financial statements for the
year ended 31 March 2017.
Events during and subsequent to the reporting period
Events during the financial period
On 19 June 2017 a distribution of 34 cents per share was declared, with
the option to reinvest the distribution in exchange for ordinary Safari
shares. A total of 375 337 new shares were issued to shareholders who
exercised this option. Refer to note 4 for information on the share
subscriptions that took place.
At the Annual General Meeting held on 2 August 2017 all resolutions were
passed and Dr JP Snyman and Me FN Khanyile were re-elected as
non-executives who retired by rotation in terms of the memorandum of
incorporation and being eligible offered themselves for re-election.
It was further resolved that the directors of the company be authorised,
by way of a general authority, to issue a maximum of 15% of the issued
share capital from the authorised but unissued shares in the capital of
the company for cash. The shareholders also passed a non-binding advisory
vote on the Company's Remuneration Policy which is available for
inspection on the Company's website.
During July 2017 Safari issued 20 million ordinary shares to SA Corporate
for a total cash amount of R152 million in terms of the company's general
authority to issue shares.
During August 2017 Safari concluded the transaction in terms of the
subscription agreements entered into during November 2016 raising a total
of R757 million. The following ordinary shares were issued in terms of
this private placement share issue as authorised by shareholders during a
special general shareholders meeting held on 7 July 2017:
a. Southern Palace Capital Proprietary Limited: 66 million ordinary shares
at R7,60 per share
b. Safarihold Proprietary Limited: 657 895 ordinary shares at
R7,60 per share
c. Stanlib Asset Managers: 5 263 158 ordinary shares at R7,60 per
share
d. Bridgefund Asset Managers: 21 052 632 ordinary shares at R7,60
per share
e. WDB Investment Holdings Proprietary Limited: 6 578 948 ordinary shares
at R7,60 per share
Safari provided financial assistance by issuing a capital and interest
guarantee to Sanlam for 91% of the transaction value of the Southern
Palace transaction. Financial assistance was also provided to WDBIH by way
of vendor financing. The following new investments were approved by the
Board of Safari during the 31 August 2017 board meeting: Nkomo Village
Shopping Centre is Safari's third shopping centre development in
Atteridgeville with a gross built area of 22 921m2 and lettable area of
18 682m2. It will boast with first time national tenants in this area
including Boxer, Builders Superstore, McDonalds, Fruit and Veg City,
Medizone and the Gym Company. The project developers are Safari
Developments (Pretoria) Proprietary Limited and the opening date is set
for 22 November 2018. The total development budget approved by the board
amounts to R345 239 856. Safari Investments RSA Limited provides the
necessary funds to cover the development cost. The agreed upon development
cost will be paid over to the developer by way of progress payments as
agreed by the investor and developer. Once the project is complete,
the developer will hand the project over to the investor.
Events subsequent to the financial period
The following capital expenditure to the Platz am Meer centre was
furthermore approved by the Board of Safari during the 8 November
2017 board meeting:
a. Mooring facilities in the small boat harbour to the amount of
N$6,2 million
b. N$5,0 million to upgrade the roads adjacent to the centre and adding a
taxi rank and bus parking area to ease access to the centre.
On 8 November 2017 the board accepted SJ Kruger's resignation as
non-executive alternate director. The board is considering new
appointments to ensure optimal board composition.
Related-party transactions
Below a list of all related-party transactions during the period:
Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
R'000 R'000 R'000
Services rendered
by/purchases from
related parties
Safari Developments
Pretoria
Proprietary Limited 35 095 40 690 81 971
Safari Developments
Swakopmund
Proprietary Limited 55 390 150 571 252 471
Safari Retail
Proprietary Limited 940 881 2 753
Matla Quantity
Surveyors
Proprietary Limited - - 66
Fanus Kruger
Consulting CC 80 - 80
Safarihold Proprietary
Limited 375 - -
Pace Construction
Proprietary Limited 1 066 3 186 3 617
Close corporation
controlled by common
director
Cosmos Management CC 3 430 2 890 6 446
MDM Architects CC 69 67 114
Earnings per share
for the period ended 30 September 2017
Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
R'000 R'000 R'000
Earnings used in
the calculation of
basic earnings per
share
(profit after tax)
(R'000) 7 538 29 551 155 926
Ordinary shares
in issue at year end
('000) 251 975 186 871 191 257
Weighted average
number of ordinary
shares ('000) 208 656 183 102 186 837
Diluted weighted
average number of
ordinary share
('000) 219 657 183 102 186 837
Headline earnings
(R'000) 7 538 29 551 79 558
Basic earnings per
share (cents) 3,61 15,81 83,46
Diluted earnings per
share (cents) 3,43 15,81 83,46
Basic headline
earnings per share
(cents) 3,61 16,14 42,58
Diluted headline
earnings per share
(cents) 3,43 16,14 42,58
Headline earnings
reconciliation
Basic earnings (profit
after tax) (R'000) 7 538 29 551 155 926
Gains and losses from
the adjustment to the
fair value of non-
current assets (R'000) - - (76 368)
Headline earnings
(R'000) 7 538 29 551 79 558
Net asset value per share
for the period ended 30 September 2017
Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
R'000 R'000 R'000
Total assets (R'000) 2 811 712 2 440 732 2 650 701
Total liabilities
(R’000) (261 456) (875 993) (987 160)
2 550 256 1 564 739 1 663 541
Ordinary shares in
issue for NAV
calculation 311 186 186 871 191 257
Net asset value per
share (cents) 819,53 837,34 869,79
Tangible net asset
value (cents) 819,53 837,34 869,79
Board commentary
Profile
Safari Investments RSA Limited ("Safari"), with a total asset base of
R2,8 billion, is a retail-focused Real Estate Investment Trust ("REIT")
listed on the Johannesburg Stock Exchange Limited ("JSE") main board
under the property section. On 15 June 2017 a distribution of 34 cents
per share was declared, with the option to reinvest the distribution in
exchange for ordinary Safari shares. A total of 375 337 shares were
issued to shareholders electing to reinvest their distribution.
Safari invests in quality income-generating property; revenue is generated
through sustainable rental income. There were no significant changes to
the nature of the business during the financial period under review.
Property portfolio
The property portfolio includes six established/income-generating retail
centres, of which three are serving as regionals in their areas. These
include Denlyn in Mamelodi (43 500m2); Atlyn (41 200m2) and Mnandi
(10 600m2) in Atteridgeville; Thabong in Sebokeng (43 100m2); The
Victorian in Heidelberg (15 400m2) and Platz am Meer in Swakopmund
(29 500m2) that opened for trading on 22 September 2016. During 2016
Safari also acquired its first private day-hospital (2 800m2) in Soweto
with Advanced Health Limited as tenant. An investment in solar panels was
also completed at the Platz am Meer shopping centre in Swakopmund in the
current reporting period, generating further investment revenue. This is
in addition to the revenue already generated by solar panels at Denlyn,
Atlyn and Mnandi.
During 2016 Safari also acquired six properties situated in Lynnwood,
Pretoria, with an aggregate land size of 1,3 hectares which is held for
potential future development. There are residential units on some of these
properties for which occupation rent is charged. Two vacant stands
(1 376m2 and 1 375m2 in size respectively) adjacent to Thabong shopping
centre in Sebokeng have also been acquired in the current financial
reporting period, further enhancing the expansion possibilities of the
Thabong shopping centre.
Bulk reserve (retail and other): Thabong: ± 10,000m2
Platz am Meer: ± 10,000m2
Nkomo Village: ± 20,000m2
Lynnwood: ± 12,000m2
Letting activity
Safari’s vacancy factor in its portfolio as at 30 September 2017 was
1% (2016: 2%) of the total income-generating space. The average
annual rental escalation percentage for the period was 8% (2016: 8%).
At Mnandi we added a gym, Cash Crusaders and Roots Griller in the current
reporting period. A gym adds significant value to a centre as it draws
additional feet, especially at times when the centre would typically be
quiet.
At Sebokeng, Slater Gym opened its doors for trading during April
2017 and a newly revamped Jetmart was relocated within the centre.
Current projects
Atteridgeville
The earthworks for the Nkomo Village development in Atteridgeville were
completed in the previous reporting period. The development, close to the
existing Saulsville Station, will have a total gross lettable area of
18 682m2 and the total investment value is R384 million. This retail
centre will be co-anchored by Pick n Pay and Boxer. We will also welcome
the first Builders Superstore and McDonalds to the Atteridgeville
community. Nkomo Village is set to open in November 2018.
The left-in access to Mnandi shopping centre from Maunde Street has been
completed during March 2017. This had a noticeable positive impact in
terms of traffic in the centre and improved trading densities.
Sebokeng
At Thabong Centre the Builders Warehouse Superstore of
approximately 1 500m2 (excluding yard space of 385m2) has been completed
and opened its doors for trading during October 2016.
Swakopmund
Construction of the retail portion of the development, known as
Platz am Meer, has been finalised and commenced trading on 22
September 2016. The centre has been received with a great deal of
excitement from the Swakopmund community. The 36 luxury upmarket
apartments which will be completed by the end of November 2017 are
currently being actively marketed by Pam Golding Properties Namibia.
The location of the development is strategically incomparable. New
developments to the north are changing the patterns and flow of traffic
and business in Swakopmund completely. The waterfront site is well-located
within the residential area.
The Platz am Meer development comprises a mixed-use development of retail,
office and upmarket residential apartments. Mooring facilities in the
small boat harbour will be finalised in 2018.The waterfront development
is truly unique and a special addition to the coastal town of Swakopmund,
strengthening the town's tourist attractiveness.
Denlyn
The 1 250m2 expansion of the Denlyn shopping centre has been
completed, further enhancing the tenant mix of Denlyn with the addition of
national retailers such as Shoe City, Footgear, Pep Cell and Cross
Trainer who commenced trading on 24 November 2016.
Financial performance
Headline earnings decreased from R29,5 million to R7,5 million compared
with the same period for the previous year. The decrease is directly
related to the IFRS 2 charge which is explained in more detail in note 5
of the financial statements. Headline earnings per share (cents) decreased
by 77% to 3,61 cents per share, compared with 15,81 cents per share for
the comparative period.
If the IFRS 2 charge is disregarded in order to provide comparative
figures, the headline earnings would then have increased from
R29,5 million to R57,3 million compared with the same period for the
previous year. Headline earnings per share (cents) would then increase
by 74% to 27,48 cents per share, compared with 15,81 cents per share for
the comparative period.
Funding
Safari has a secured loan facility of R900 million of which R250
million is ring-fenced in terms of the Absa guarantee provided on the
Southern Palace transaction. Currently the debt represents 8% of the total
value of assets ("LTV") and the cost of finance is at the prime lending
rate less 1,05%. The prime lending rate decreased by 0,25% compared to
the comparative period.
Credit rating
During September 2017 Safari received its third credit rating from
Global Credit Rating Co. ("GCR"):
- National Long term: BBB(ZA)
- National Short term: A2(ZA)
- Rating outlook: Positive
Source: Global Credit Rating
2017 Annual General Meeting
Safari's Annual General Meeting was held on 2 August 2017.
All resolutions proposed were passed and are available on
www.safari-investments.com.
Directorate
At the 2017 Annual General Meeting Ms FN Khanyile and Dr JP Snyman
were re-elected as non-executives who retired by rotation in terms of the
Memorandum of Incorporation and, being eligible, offered themselves for
re-election. Mr WL Venter was appointed as the Financial Director
effective 1 April 2017. Ms FN Khanyile, Dr M Minnaar, Dr JP Snyman and
Mr AE Wentzel were re-appointed as members of the Audit and Risk
Committee. The Board subsequently reviewed all Board committees and in
line with King IV principles resolved that the Remuneration and
Nominations committees will be merged and Ms FN Khanyile, Dr M Minnaar
and Mr AE Wentzel (as Chairperson) were constituted as members of the new
Audit and Risk Committee with effect from 31 August 2017.
Prospects
The Board is committed to maximising the rental income streams with the
proactive letting strategy focused on national tenants, and minimising
the operating expenditure. The Board will focus on opportunities in order
to achieve sustainable long-term, recurring distributable earnings.
The recent capital raising settled a significant portion of debt resulting
in a substantial saving on interest, and ensures that the Company
minimises financial risk associated with high debt levels.
Any forecast in the results has not been reviewed or reported on by the
independent external auditors and is the responsibility of the Board.
By order of the Board
20 November 2017
Corporate information
Country of incorporation
Republic of South Africa (7 July 2000)
Registered address and place of business
420 Friesland Lane, Lynnwood, Pretoria 0081
Tel +27 (0) 12 365 1889
Fax +27 (0) 86 272 1313
E-mail: info@safari-investments.com
Website: www.safari-investments.com
Auditors
Deloitte & Touche
Riverwalk Office Park, Block B, 41 Matroosberg Road, Ashlea
Gardens, Pretoria 0081
Commercial banker
Absa Bank Limited
(Registration number: 1986/004794/06)
Absa Towers East, 170 Main Street, Johannesburg 2001
PO Box 7735, Johannesburg 2000
Group Company Secretary
Dirk Engelbrecht BComm LLB
420 Friesland Lane, Lynnwood, Pretoria
Postal: 420 Friesland Lane, Lynnwood, Pretoria 0081
Corporate adviser
Fanus Kruger Consulting cc
(Registration number 2006/173299/23)
Propateez Office Park, 98 Beyers Naude Drive, Rustenburg 0300
Directors of Safari Investments RSA Limited
FN Khanyile (Independent non-executive)
SJ Kruger (Non-executive alternate)
FJJ Marais (Chief Executive Officer)
M Minnaar (Independent non-executive)
K Pashiou (Executive)
JP Snyman (Independent non-executive Chairman)
WL Venter (Executive Financial Director)
AE Wentzel (Lead independent non-executive)
Independent valuer
Mills Fitchet (Tvl) CC
(Registration number CK 89/40464/23)
No 17 Tudor Park, 61 Hillcrest Avenue, Oerder Park, Randburg 2115
PO Box 35345, Northcliff 2115
Legal advisers
VFV Incorporated
Corporate Place, Block A, 39 Selati Street, Pretoria
PO Box 8636, Pretoria 0001
Sponsor
PSG Capital Proprietary Limited
(Registration number 1951/002280/06)
1st Floor, Ou Kollege Building, 35 Kerk Street, Stellenbosch 7599
PO Box 7403, Stellenbosch 7599
Transfer secretaries
Computershare Investor Services Proprietary Limited
(Registration number 2004/003647)
Rosebank Towers, 15 Biermann Avenue, Rosebank 2196
PO Box 61051, Marshalltown 2107
Visit our investor relations link on our website for more information and
financial updates, profiles and news.
www.safari-investments.com/investor-relations/
Key contacts
If interested in investing with us or for more information on our
investment opportunities, contact:
Fanus Kruger (Investor Relations Officer)
Telephone: +27 14 592 2569 | E-mail: fanus@fkc.co.za
Or alternatively
Francois Marais (Chief Executive Officer)
Safari Investments RSA Limited
Telephone: +27 12 365 1889 | E-mail: fm@safari-investments.com
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