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Provisional summarised audited financial statements for the year ended 31 December 2017
Transcend Residential Property Fund Limited
(Incorporated in the Republic of South Africa)
Registration Number 2016/277183/06
JSE share code TPF
ISIN: ZAE000227765
(Approved as a REIT by the JSE)
(“Transcend” or “the Company”)
Provisional summarised audited financial statements for the year ended
31 December 2017
1 Basis of preparation
The summary financial statements have been prepared in accordance with the
requirements of the JSE Listings Requirements for provisional reports, and the
requirements of the Companies Act of South Africa, No 71 of 2008, as amended,
applicable to summary financial statements. The JSE Limited ("JSE") Listings
Requirements require provisional reports to be prepared in accordance with the
framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards ("IFRS"), the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by 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 financial
statements from which the summary financial statements were derived are in terms
of International Financial Reporting Standards and are consistent with those
applied to the financial statements for the period ended 31 December 2016,
as published on 31 May 2017.
The provisional summarised report is extracted from audited information, but
is not itself audited. The financial statements were audited by KPMG Inc., who
expressed an unmodified opinion thereon. Shareholders are advised that in order
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 audited
financial statements, both of which are available for inspection at the company's
registered office. The directors of Transcend take full responsibility for the
preparation of this report and that the selected financial information has been
correctly extracted from the underlying financial statements.
David Peter Lange CA(SA), Transcend's chief financial officer, was responsible
for supervising the preparation of the financial statements that this provisional
report summarises, as well as the preparation of these summary financial
statements.
2 Directors' report
Commentary
The primary business of Transcend is focused on acquiring income-generating
residential properties, with a focus on housing opportunities that are affordable,
lifestyle-enhancing and well-located in high-growth urban areas. The Company's
strategy is to establish a track record of consistent performance and growth in
distributions. The Company intends to maximise the performance of its initial
portfolio and only acquire additional properties that are stabilised.
59 046 443 shares were issued on 1 October 2016 at R10 per share as part of the
purchase agreements of each of the 13 properties owned by the Company. Transcend
listed on the Alternative Exchange of the JSE Limited on 1 December 2016 and
7 259 219 ordinary shares were issued to the public at R6,75 per share.
Following the acquisition of the initial portfolio of 13 properties, settled
through the issue of Transcend shares and successful private placement on listing,
the total number of shares in issue is 66 305 662. No further shares were issued
during the year ended 31 December 2017.
Transcend was incorporated on 8 July 2016, and the comparative reporting period
therefore covers 6 months from 1 July 2016 to 31 December 2016. Note that the prior
period results presented in the financial statements represent operating activities
for 3 months only as Transcend recognised income and expenditure from the effective
date of the property acquisitions as of 1 October 2016.
3 Results
On 7 March 2018, the board declared a distribution of 34.23125 cents per share for
the six months ended 31 December 2017. This brings the full year distribution to
64.04000 cents per share (2016: 5.60803 cents per share), which is 2% greater than
the forecast dividend per share of 62.75993 cents per share (2016: 2.10 cents per
share) published in the Company's Listing Prospectus issued on 16 November 2016.
The variance primarily relates to surplus working capital being available for
distribution.
Profit and total comprehensive income for the period amounts to R67.98 million
(2016: R16.50 million) whilst the forecast for 2017 as per the Listing Prospectus
issued on 16 November 2016, was a net profit of R41.45 million (2016: net loss for
the period of R9.92 million). The variance between the actual profit for the
current period and the forecast as per Listing Prospectus is due to a net
gain on fair value adjustments to investment property of R29.24 million (2016:
R11.34 million), and an unrealised loss on revaluation of interest-rate swaps of
R3.03 million. The headline earnings attributable to equity holders is R38.73
million (2016: R5.14 million) whilst the forecast as per the Listing Prospectus
was R41.45 million (2016: R5.49 million), with the negative variance being largely
due to the loss of R3.03 million on the revaluation of the interest-rate swaps.
The total assets as at 31 December 2017 amounted to R1.27 billion (2016: R1.23
billion) and the forecast as per the Listing Prospectus was R1.17 billion.
4 Property portfolio
Acquisitions
Transcend made no acquisitions during the year under review.
There are 13 residential properties in Transcend's portfolio, which consists
of 2 472 units valued at R1.219 billion (2016: R1.189 billion).
Geographically, the properties are located in the following provinces:
Gauteng 80%
Western Cape 12%
Mpumalanga 8%
The above allocation is based on Gross lettable area ("GLA")
5 Vacancies
Based on existing leases as at 31 December 2017, the total portfolio's vacancy
rate was 7.28%. However, if Acacia Place, which has a large vacancy due to the
expiry of a bulk lease prior to year end is excluded, the vacancy rate of the
stabilised portfolio is 4.13%. It is expected that the vacancies of the
stabilised portfolio will remain within the 2% to 6% range.
6 Facilities
The debt balance as at 31 December 2016 of R547 million from various funders
was partially paid-down and re-financed by the Standard Bank of South Africa
Limited (“Standard Bank”) on 31 January 2017. This was done in order to
consolidate the debt funding and secure a lower average cost of debt. The
new debt facility is made up as follows:
- Facility A, Tranche 1 of R274 million at 3-month JIBAR plus 1.85% with
a maturity date 36 months from date of drawdown;
- Facility A, Tranche 2 of R274 million at 3-month JIBAR plus 2.35% with
a maturity date 60 months from date of drawdown; and
- Facility B of R10 million at prime less 1% with a maturity date 36 months
from date of drawdown.
The administrative fee of R1.548 million on the raising of the new loan
facility was capitalised and is amortised over 4 years.
The new Standard Bank facility is secured by the investment properties owned
by Transcend with a carrying value of R1.219 billion. Interest is payable
quarterly. Transcend currently has interest-rate swaps on these facilities.
The 3-year tranche is 50% hedged by an interest-rate swap at a fixed rate
of 7.51% which expired in February 2018, and the 5-year tranche is 50%
hedged by an interest-rate swap at a fixed rate of 7.62% which expires in
February 2020. A new interest-rate swap was entered into in December 2017
with a forward start date of January 2018 and a maturity date of January
2019 at a fixed rate of 7.59%, which replaces the interest-rate swap which
expired in February 2018.
It is the board’s policy to economically hedge at least 50% of the company's
exposure to interest rate risk.
R'000
2017 2016
Nedbank Limited - 227 634
National Housing Finance Corporation SOC Ltd - 128 425
Standard Bank - 191 417
Standard Bank 556 518 -
Maturity dates range between January 2020 and
January 2022.
The interest rates are at 3-month JIBAR or prime,
plus or less a margin.
The bonds are secured by properties to the value of
R1.219 billion.
Carrying value of administrative fee on raising of
new loan facility capitalised (1 194)
Total interest-bearing borrowings 555 324 547 476
Less: Short-term portion of interest-bearing
borrowings (52 431) (216 911)
Long-term interest-bearing borrowings 502 893 330 565
7 Gearing
Transcend's loan-to-value (“LTV”) ratio is 42% (2016: 44%), which represents
a reduction from the prior year, but is still outside the targeted long-term
range of 30% to 40%. Management is confident that this long-term range is
achievable.
8 Summary of financial performance
December 2017 December 2016
Dividend per share (cents) 64.04 5.61
Shares in issue 66 305 662 66 305 662
Net asset value per share (cents) 10.39 9.78
Loan-to-value ratio (1) 41.8% 44.1%
Net property expense ratio (2) 29.6% 28.4%
Gross property expense ratio (2) 35.2% 32.9%
Net total expense ratio (2) 35.6% 40.0%
Gross total expense ratio (2) 40.7% 43.7%
(1) The LTV ratio is calculated by dividing interest-bearing borrowings
(net of cash on hand) by the total value of investment property.
(2) For the calculation of net ratios, utility recoveries are excluded
from rental revenue, whilst gross ratios include utility recoveries
in rental revenue.
Statement of financial position
Audited as at Audited as at
31 December 31 December
2017 2016
Assets R'000 R'000
Non-current assets 1 219 394 1 189 400
Investment property 1 218 640 1 189 400
Plant and equipment 754 -
Current assets 50 489 37 305
Trade and other receivables 4 441 13 804
Cash and cash equivalents 46 048 23 501
Total assets 1 269 883 1 226 705
Equity and liabilities
Shareholders' interest 688 829 648 800
Stated capital 632 276 632 276
Retained earnings 56 553 16 524
Non-current liabilities 505 763 330 565
Interest-bearing borrowings 502 893 330 565
Derivative liabilities 2 870 -
Current liabilities 75 291 247 340
Short-term portion of interest-bearing
borrowings 52 431 216 911
Trade and other payables 22 038 29 865
Provision for audit fees 598 564
Derivative liabilities 158 -
Current taxation liability 66 -
Total equity and liabilities 1 269 883 1 226 705
Statement of profit or loss and other comprehensive income
Audited Audited for
for the year the period
ended ended
31 December 31 December
2017 2016
R'000 R'000
Rental income from investment properties 144 784 33 990
Recoveries of operating costs from
tenants 12 436 2 272
Revenue 157 220 36 262
Property operating expenses (55 297) (11 941)
Net operating income 101 923 24 321
Other operating expenses (8 705) (3 916)
Operating profit 93 218 20 405
Gain on fair value adjustment of
investment property 29 240 11 387
Unrealised loss on revaluation of
interest-rate swaps (3 028) -
Net finance charges (51 400) (15 268)
Finance income 1 591 171
Finance charges (52 991) (15 439)
Profit before taxation 68 030 16 524
Taxation expense (57) -
Profit and total comprehensive income
for the period 67 973 16 524
Basic and diluted earnings per share
(cents) 102.51 51.70
Statement of cash flows
Audited Audited for
for the year the period
ended ended
31 December 31 December
2017 2016
R'000 R'000
Cash generated by operating activities 94 655 37 030
Finance charges paid (44 012) (13 262)
Finance income received 1 591 171
Net cash generated from operating
activities 52 234 23 939
Capitalisation of transfer and bond costs - (13 013)
Property and equipment acquired (856) -
Net cash utilised in investing activities (856) (13 013)
Interest-bearing borrowings repaid (887) (24 425)
Dividends paid (27 944) -
Proceeds from share issue - 36 999
Net cash (utilised in)/generated by
financing activities (28 831) 12 575
Net movement in cash and cash equivalents 22 547 23 501
Cash and cash equivalents at the
beginning of the period 23 501 -
Cash and cash equivalents at the end of
the period 46 048 23 501
Cash and cash equivalents consist of:
Bank and cash balances 32 219 9 972
Tenant deposits 13 829 13 529
46 048 23 501
Statement of changes in equity
Stated Retained Total
capital earnings equity
R'000 R'000 R'000
Balance at 1 July 2016 - - -
Transactions with owners
Issue of ordinary shares 639 464 - 639 464
Capitalised listing fees (7 188) - (7 188)
Total profit and comprehensive income
for the period
Total profit and comprehensive income
for the period - 16 524 16 524
Balance at 31 December 2016 632 276 16 524 648 800
Transactions with owners
Dividends - (27 944) (27 944)
Total profit and comprehensive income
for the year - 67 973 67 973
Balance at 31 December 2017 632 276 56 553 688 829
Notes
1 Reconciliation of profit for the year to headline earnings
Audited Audited for
for the year the period
ended ended
31 December 31 December
2017 2016
R'000 R'000
Reconciliation of basic earnings to
headline earnings
Profit for the year attributable to
Transcend shareholders 67 973 16 524
Change in fair value of investment
properties (29 240) (11 387)
Headline earnings attributable to
Transcend shareholders 38 733 5 137
Actual number of shares in issue 66 305 662 66 305 662
Weighted average number of shares in
issue 66 305 662 31 962 195
Basic and diluted earnings per share
(cents) 102.51 51.70
Headline and diluted headline earnings
per share (cents) 58.42 16.07
2 Sectoral split
Based on: GLA Book value
Residential 100% 100%
3 Lease expiry profile
Based on: GLA (%) Rental revenue
Vacancy 7.4% 6.8%
Monthly 58.7% 59.6%
30 June 2018 19.2% 19.0%
31 December 2018 14.6% 14.5%
31 December 2019 0.1% 0.1%
100.0% 100.0%
4 Related parties and related party transactions
Transcend is 11% owned by public shareholding and 89% held by the South
African Workforce Housing Fund SA (PVE), a South African en commandite
partnership duly represented by its general partner, South African Workforce
Housing Fund SA GP (RF) Pty Ltd (the "Partnership"). The Partnership is
comprised of three partners, being the South African Workforce Housing
Fund (Cayman) I Ltd, South African Workforce Housing Fund (Cayman) II Ltd
and South African Workforce Housing Fund (SA) II.
The relationship between the Partnership and International Housing Solutions
(RF) (Pty) Ltd ("IHS (RF)(Pty) Ltd") is governed by a signed investment
advisory agreement.
Transcend is externally managed by International Housing Solutions Asset
Management (Pty) Ltd ("IHS AM"), a private company registered and incorporated
in accordance with the laws of South Africa and a wholly-owned subsidiary
of IHS (RF) (Pty) Ltd. An asset management agreement was entered into by
Transcend and IHS AM and became effective 1 October 2016. IHS AM charged
Transcend asset management fees of R4.466 million (2016: R1.116 million)
during the year in accordance with the asset management agreement.
The property management function of the Company is outsourced on market related
terms to International Housing Solutions Property Management (Pty) Ltd ("IHS PM"),
a private company registered and incorporated in accordance with the laws of
South Africa. A property management agreement was entered into by Transcend and
IHS PM on 16 October 2016. IHS PM charged Transcend property management fees of
R11.116 million (2016: R2.515 million) during the year in accordance with the
property management agreement.
5 Summarised segmental analysis
Transcend has thirteen reportable segments based on the entity's strategic
business segments. For each strategic business segment, the entity's executive
directors review internal management reports on a monthly basis. All segments are
located in South Africa.
For the year ended 31 December 2017
R’000
67 Acacia Alpine
on 7th Place Mews
Revenue 10 784 18 519 5 013
Property operating expenses (3 289) (7 293) (1 748)
Profit and total comprehensive
income for the year 13 154 4 863 7 312
Total assets 98 602 130 685 36 653
Total interest-bearing borrowings - - -
Ekhaya Ekhaya Jackalberry
Fleurhof Jabulani Close
Revenue 8 760 12 471 12 320
Property operating expenses (2 195) (4 567) (3 593)
Profit and total comprehensive
income for the year 11 047 9 825 8 575
Total assets 70 248 91 630 113 727
Total interest-bearing borrowings - - -
Kent Road Kosmosdal Parklands
Revenue 4 498 17 033 13 187
Property operating expenses (1 509) (5 525) (5 634)
Profit and total comprehensive
income for the year 4 294 14 037 11 635
Total assets 35 508 140 151 99 918
Total interest-bearing borrowings - - -
Village
Seven, Theresa
Stone Arch Terenure Park
Estate Estate Estates
Revenue 8 006 28 151 12 172
Property operating expenses (3 495) (9 350) (4 765)
Profit and total comprehensive
income for the year 4 678 22 850 12 554
Total assets 55 870 216 548 99 337
Total interest-bearing borrowings - - -
Reconciling
Tradewinds items Total
Revenue 6 306 - 157 220
Property operating expenses (2 334) - (55 297)
Profit and total comprehensive
income for the year 5 263 (62 114) 67 973
Total assets 46 783 34 223 1 269 883
Total interest-bearing borrowings - 555 324 555 324
For the period ended 31 December 2016
R’000
67 Acacia Alpine
on 7th Place Mews
Revenue 2 540 3 401 1 050
Property operating expenses (679) (1 409) (386)
Profit and total comprehensive
income for the period 781 (215) 355
Total assets 91 800 133 800 32 100
Total interest-bearing borrowings 50 895 99 876 14 273
Ekhaya Ekhaya Jackalberry
Fleurhof Jabulani Close
Revenue 2 039 3 020 3 016
Property operating expenses (479) (1 188) (814)
Profit and total comprehensive
income for the period 1 979 3 556 1 512
Total assets 65 000 88 600 112 400
Total interest-bearing borrowings 31 403 45 471 23 156
Kent Road Kosmosdal Parklands
Revenue 1 079 4 169 3 019
Property operating expenses (348) (1 166) (985)
Profit and total comprehensive
income for the period 716 166 5 242
Total assets 33 800 135 900 93 500
Total interest-bearing borrowings 14 194 57 354 37 278
Village
Seven, Theresa
Stone Arch Terenure Park
Estate Estate Estates
Theresa Park Estates
Revenue 1 866 6 786 2 790
Property operating expenses (770) (2 083) (1 097)
Profit and total comprehensive
income for the period 1 719 8 624 (4 421)
Total assets 54 900 210 000 92 850
Total interest-bearing borrowings 26 837 76 862 49 609
Reconciling
Tradewinds items Total
Revenue 1 485 - 36 260
Property operating expenses (536) - (11 940)
Profit and total comprehensive
income for the period 255 (3 745) 16 524
Total assets 44 750 - 1 189 400
Total interest-bearing borrowings 20 268 - 547 476
Reconciliation of profit for the year to distributable earnings
For the For the
year ended period ended
31 December 31 December
2017 2016
R’000 R’000
Profit for the year attributable to
Transcend shareholders 67 973 16 524
Unrealised loss on interest-rate swaps 3 028 -
Change in fair value of investment
properties (29 240) (11 387)
Listing fee expensed - 1 752
Surplus working capital available for
distribution 703 1 290
Clean-out dividend (1) - (4 461)
Distributable income for the year (2) 42 464 3 718
Distribution per share (cents) 64.04 5.61
Interim 29.81 -
Final 34.23 5.61
(1) The clean-out dividend was a distribution to Transcend shareholders
prior to the Transcend listing on the JSE. This dividend was equivalent
to the distributable earnings for the period 1 October 2016 to
30 November 2016.
(2) The adjustments made to profit to derive the amount available for
distribution to shareholders have not been audited.
6 Financial instrument and investment property fair value disclosures
Categories of financial instruments
The Company's principal financial liabilities are borrowings, classified
as other financial liabilities, and derivative financial liabilities,
classified at fair value through profit or loss. The main purpose of the
Company's borrowings is to finance the acquisition of the Company's property
portfolio. The Company has rent and other receivables, trade and other
payables and cash and short-term deposits that arise directly from its
operations, classified as loans and receivables.
Fair value hierarchy for financial instruments and investment property
IFRS 13 requires that an entity discloses for each class of financial
instruments and investment property measured at fair value, the level in
the fair value hierarchy into which the fair value measurements are
categorised in their entirety.
When measuring the fair value of an asset or liability, the Company uses
observable market data as far as possible. Fair values are categorised
into different levels in a fair value hierarchy based on inputs used in
the valuation techniques as follows:
* Level 1: quoted prices (unadjusted) in active markets for identical
assets or liabilities
* Level 2: inputs other than quoted prices included in level 1 that are
observable for the asset or liability, either directly (i.e. as prices)
or indirectly (i.e. derived from prices)
* Level 3: inputs for the asset or liability that are not based on
observable market data
Figures in R’000s
Fair value Level 1 Level 2 Level 3
2017
Assets
Investment properties 1 218 640 - - 1 218 640
Liabilities
Derivative liabilities 3 028 - 3 028 -
There have been no transfers between level 1, level 2 and level 3 during
the year under review.
The carrying amounts of loans and receivables, and other financial
liabilities reasonably approximate their fair value.
Details of valuation techniques
Investment properties
In line with the Company's valuation policy, independent valuations are
performed annually for at least one third of the portfolio. However, due
to the size of the current portfolio, management's practice for the past
2 financial years has been to appoint independent valuers to value the
entire portfolio. Investment property is categorised as level 3 in terms
of the fair value hierarchy.
The properties were valued as at 31 December 2017 by capitalising the net
contractual income derived from the properties for a period of one year
in advance by an applicable capitalisation rate as determined by the
independent valuer. This is the fundamental basis on which income
producing properties are traded in the South African market. This is
also due to there being strong supporting evidence of open market rental
rates and capitalisation rates which are evidenced by sales in the market.
Key assumptions used to determine the value of the properties: Expected
net operating income:
The average rental income ranges from R4 259 to R6 530 (2016: R3 985 to
R6 273) per unit. Generally, the rentals are market related compared to
similar buildings in comparable areas.
Capitalisation rate:
The capitalisation rate ranges from 8.25% to 9.5% (2016: 8.25% to 9.5%).
The capitalisation rate applied was derived using an appropriate risk
free rate and adding on property related risk and illiquidity risk related
to property, as well as further amounts related to each property’s
construction, size, duration, rental, exit and other property specific
risks. Testing this for reasonableness was achieved by comparing the
resultant value per opportunity and effective yield rate against current
project sales information, and comparative sales of similar properties
in similar locations.
Growth rate:
The range for rental escalations is 2.5% to 4% (2016: 3% to 4.5%). The
rental growth rates are based on current experience with actual growth
achieved, but should trend towards inflation over the long term. The
lower growth rates are reflective of tough current economic conditions.
Vacancy factor
In order to apply a conservative approach, 2.5% to 13.25% (2016: 3% to
10%) of the gross income was deducted as a provision for rental that may
not be collected as a consequence of vacancy, tenant failure or tenant
refitting during the course of the coming year. The current vacancies
are market related, with the exception of Acacia Place which has a
vacancy of 24% at 31 December 2017 due to a bulk lease which was
terminated.
All of the Company’s investment properties were valued at 31 December
2017 by an external registered valuer. The valuations were reviewed by
the executive directors and asset managers, and presented to the
Investment Committee and then to the Audit and Risk Committee for
approval on 6 March 2018. For all investment properties, their current
use equates to the highest and best use.
Derivative liabilities - Interest-rate swaps
Transcend uses interest-rate swaps to protect the Company against adverse
movements in interest rates. These interest-rate swaps are measured at
fair value through profit or loss, are classified as derivative financial
liabilities at fair value through profit of loss and are categorised in
terms of the Company's fair value hierarchy as level 2.
The fair value of interest-rate swaps is calculated as the present value
of the estimated future cash flows. Estimates of the future floating-rate
cash flows are based on quoted swap rates, future prices and interbank
borrowing rates. Estimated cash flows are discounted using a yield curve
constructed from similiar sources, which reflects the relevant benchmark
interbank rate used by market participants for this purpose when pricing
interest rate swaps. The fair value estimate is subject to a credit risk
adjustment that reflects the credit risk of the company and of the
counterparty. This is calculated based on credit spreads derived from
current credit default swap or bond prices.
As at 31 December 2017, the derivative financial liabilities relating to
interest-rate swaps were fair valued, resulting in an increase of R3.03
million in the liability and a corresponding fair value movement of R3.03
million (2016: Rnil) in profit or loss.
7 Prospects
After the significant political events of the past 3 months, South Africa
is entering what many believe to be a moderately positive era of growth.
Management supports this view and therefore expects the current portfolio
to perform in line with, if not better than, the past 12 months. This,
coupled with natural rental escalations, the effects of gearing and
pro-active cost management, should result in increased distributions for
the 2018 year which are slightly higher than expected inflation. Management
is therefore forecasting distribution growth of between 6-8% from 2017
to 2018.
This forecast is based on the assumption that current market and trading
conditions prevail for the current stabilised portfolio. This forecast has
not been reviewed or reported on by the independent external auditors.
Transcend's use of distribution per share as a relevant measure of financial
performance remains unchanged from the Listing Prospectus.
8 Significant non-cash transactions
In terms of the settlement agreeement, Standard Bank settled the debt
facilities with the various debt providers to the value of R555.98 million.
An amount of R555.1 million of new debt was raised during the 2017 financial
year. The net amount is therefore R0.89 million which was raised. This is
disclosed in the statement of cash flows. Please refer to note 6 for more
detail regarding the facilities in place as at 31 December 2017.
9 Subsequent events
In line with IAS10 Events after the reporting date, the declaration of the
final dividend as disclosed in Note 11 Payment of final dividend, occurred
after the end of the reporting period, resulting in a non-adjusting event
that is not recognised in the financial statements.
The directors are not aware of any events or circumstances arising since
the end of the financial year that would significantly affect the operations
of the Company or the results of those operations.
10 Liquidity
As at 31 December 2017, the Company had a positive net asset value. Its
current liabilities exceed its current assets by R24.8 million (2016:
R210 million) as a result of payments on the long-term interest-bearing
borrowings becoming due and payable in the next 12 months. These payments
are due quarterly, and the Company has satisfied itself that it will have
sufficient cash to settle these liabilities as they become due and payable
each quarter. The Company has performed a cashflow forecast for the next
12 months, and the directors are satisfied that the Company will be liquid
and solvent after the declaration of the dividend.
11 Payment of final dividend
The board has approved and notice is hereby given of a dividend of
34.23125 cents per share for the six months ended 31 December 2017. This
brings the full year distribution to 64.04000 cents per share (2016:
5.60803 cents per share) for the year ended 31 December 2017.
In accordance with Transcend’s status as a REIT, shareholders are advised
that the dividend meets the requirements of a “qualifying distribution” for
the purposes of section 25BB of the Income Tax Act, No. 58 of 1962 (“Income
Tax Act”). The dividend 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 dividend 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 it is a dividend distributed by a REIT. This dividend is, however,
exempt from dividend withholding tax in the hands of South African tax resident
shareholders, provided that the South African resident shareholders provide
the following forms to their Central Securities Depository Participant
(“CSDP”) or broker, as the case may be, in respect of uncertificated shares,
or the Company, in respect of certificated shares:
a) a declaration that the 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 dividend, 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, (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 27.38500 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 dividend if such documents have not already been submitted, if
applicable.
The dividend is payable to Transcend shareholders in accordance with the timetable
set out below:
Last date to trade cum dividend Tuesday, 3 April 2018
Shares trade ex dividend Wednesday, 4 April 2018
Record date Friday, 6 April 2018
Payment date Monday, 9 April 2018
Share certificates may not be dematerialised or rematerialised between
Wednesday, 4 April 2018 and Friday, 6 April 2018, both days inclusive.
In respect of dematerialised shareholders, the dividend will be transferred to CSDP
accounts/broker accounts on Monday, 9 April 2018. Certificated shareholders' dividend
payments will be deposited on or about Monday, 9 April 2018.
By order of the board
Robert Nicolaas Wesselo David Peter Lange
Chief Executive Officer Chief Financial Officer
Johannesburg
8 March 2018
Registered office: 54 Peter Place, Block C, Peter Place Office Park, Bryanston, 2191
Transfer secretaries: Link Market Services South Africa Proprietary Limited, 13th Floor,
19 Ameshoff Street, Braamfontein, 2001, PO Box 4844, Johannesburg, 2000
Sponsor: Java Capital
Company secretary: Karen Waldeck-Kruger
Directors: Robert Reinhardt Emslie* (Chairperson); Robert Nicolaas Wesselo
(Chief executive officer); David Peter Lange** (Chief financial officer);
Myles Kritzinger *** (Chief financial officer); Solly Mboweni (Chief operating officer);
Cathal Padraig Conaty; Faith Nondumiso Khanyile* ; Michael Simpson Aitken*;
Michael Louis Falcone
* Independent non-executive director
** David Peter Lange resigned as chief financial officer and executive director of the
Company effective 8 March 2018.
*** Myles Kritzinger was appointed as chief financial officer and executive director of
the Company effective 9 March 2018.
Date: 09/03/2018 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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