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SAFARI INVESTMENTS (RSA) LIMITED - The abridged consolidated financial statements for the year ended 31 March 2018 and notice of annual general meeting

Release Date: 27/06/2018 09:00
Code(s): SAR     PDF:  
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The abridged consolidated financial statements for the year ended 31 March 2018 and notice of annual general meeting

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")

The abridged consolidated financial statements for the year 
ended 31 March 2018 and notice of annual general meeting

The preparation of the abridged consolidated financial results for the year 
ended 31 March 2018 was prepared under the supervision of the financial 
director, WL Venter (CA (SA)).

2018 Performance Overview
- Income producing properties: 7
- 2% vacancy rate
- R142/m2 monthly weighted average gross rental/m2 for retail sector
- R161/m2 monthly weighted average base rental/m2 for health care sector
- R75/m2 monthly weighted average base rental/m2 for living sector
- R151/m2 monthly weighted average base rental/m2 for office sector
- 91% retail sector; 1% health care sector & 8% residential sector; <1%
office sector
- 88% (GLA) national tenants
- 186 017m2 total built m2 of property portfolio
- R2,81 billion property portfolio value.

Property portfolio
for the year ended 31 March 2018

                                                            Property
Name                 Location                               type

Shopping centres
Atteridgeville       Cnr Khoza and Mankopane Streets,       Retail
                     Atteridgeville
Atteridgeville       Maunde Street, Atteridgeville          Retail
Mamelodi             Cnr Stormvoel and Maphalla Roads,      Retail
                     Mamelodi
Sebokeng             Moshoeshoe Street, Sebokeng Unit 10,   Retail
                     Ext 1, Sebokeng
Heidelberg           Cnr Voortrekker and Jordaan Streets,   Retail
                     Heidelberg
Swakopmund           Swakopmund, Namibia (cnr Albatros      Retail
                     and Tsavorite Streets)

Private day hospital
Soweto                                                      Healthcare

Stands for development
Sebokeng             Erf 95 and 86 Moshoeshoe Street, 
                     Sebokeng

Lynnwood             Cnr Lynnwood Road and Roderick - 
                     Sussex and Roderick, Lynnwood

Property in process of development
Atteridgeville       Cnr Lengau, Thlou, Lepogo and 
                     Church Streets
Swakopmund           Albatros Street, Swakopmund,           Apartments
                     Namibia


                                        Market
                                      value as
                                    attributed
                                            by
                                   independent        Gross
                                        valuer     lettable    Vacancy
Name                  Region             R'000      area/m2          %
Shopping centres
Atteridgeville        Gauteng          527 200       31 210          2
Atteridgeville        Gauteng          107 300        8 715          0
Mamelodi              Gauteng          788 800       34 344          1
Sebokeng              Gauteng          495 597       34 403          1
Heidelberg            Gauteng          166 200       11 676          2
Swakopmund            Erongo           331 142       22 598          5

Private day hospital
Soweto                Gauteng           35 506        1 379          0

Stands for development
Sebokeng              Gauteng            2 003                     n/a
Lynnwood              Gauteng           39 400                     n/a

Property in process of development

Atteridgeville        Gauteng          188 479                     n/a
Swakopmund            Namibia          169 649                     n/a
Total                                2 851 276       144 325



                                                           Approximate
                     Weighted                                   age of
                      average                   Freehold/     building
Name                rental/m2     Zoning       leasehold         years
Shopping centres
Atteridgeville          135,9     Special       Freehold            10
                                  - various
Atteridgeville          119,1     Special       Freehold             2
                                  - various
Mamelodi                178,3     Special       Freehold            13
                                  - various
Sebokeng                134,5     Special       Freehold             9 
                                  - various
Heidelberg              131,6     Special       Freehold            18 
                                  - various
Swakopmund              117,7     Special       Freehold             2 
                                  - various

Private day hospital
Soweto                  161,4    Special        Freehold           1,5
                                 - various

Stands for development
Sebokeng                  n/a    Special        Freehold           n/a
                                 - various
Lynnwood                  n/a    Special        Freehold           n/a
                                 - various

Property in process of development
Atteridgeville            n/a    Special        Freehold           n/a
                                 - various
Swakopmund                n/a    Special 
                                 - various


Nature of business
Safari invests in quality income-generating property mainly focused on the 
retail sector. There was no material change in the nature of the business 
during the financial year.

Events during and subsequent to the reporting period

Events during the financial period
Phase 2 of the Platz am Meer development, being the residential apartments, 
has been completed in the 2018 financial year. The units are currently 
being marketed by Seeff with whom Safari entered into a mandate agreement 
during April 2018.

Construction of the Nkomo Village Shopping Centre is in process and the 
project is set for completion during quarter 4 of 2018. The centre will 
be anchored by Pick n Pay and Boxer and bringing other national tenants 
such as McDonalds and Builders Warehouse to the Atteridgeville community 
for the first time.

Mr WL Venter was appointed by the board as financial director with effect 
from 1 April 2017. Mr Venter is a qualified chartered accountant and was 
the property portfolio manager for Safari over the last seven years. 
The board accepted the resignation of Mr SJ Kruger as an alternate 
non-executive director with effect from 30 November 2017.

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:
- Southern Palace Capital Proprietary Limited: 66 million ordinary 
shares at R7,60 per share;
- Safarihold Proprietary Limited: 657 895 ordinary shares at 
R7,60 per share;
- Stanlib Asset Managers: 5 263 158 ordinary shares at R7,60 per share;
- Bridgefund Asset Managers: 21 052 632 ordinary shares at R7,60 
per share; and
- 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.

The following appointments to the board were made with effect from
1 March 2018:
- Ms Lulu Letlape as independent non-executive director. Ms Letlape 
obtained her master's degree from the University of Johannesburg in 
Public and Development Management. She has extensive experience in
corporate communication, community development and stakeholder management 
in both the parastatal and private sector sphere and worked at senior 
levels of management for companies such as Telkom, Mercedes-Benz, 
Sanlam and BHP Billiton;
- Mr Chris Roberts as independent non-executive director. Mr Roberts is 
a commercial property developer who has been involved in shopping centre, 
office and residential developments for the past 30 years and has 
extensive experience in identifying development opportunities, property 
finance, leasing and general property management; and
- Mr Dirk Engelbrecht as executive director. Mr Engelbrecht obtained 
his BCom LLB from the University of Pretoria and after completing his 
articles at Weavind & Weavind remained there as professional assistant
until 2011 when he joined G4S Secure Solutions as national legal manager. 
Mr Engelbrecht joined Safari in 2014 as group company secretary and 
legal advisor. He was appointed as executive director: legal services.

Financial results and activities

The group recorded an operating profit, before investment revenue, fair 
value adjustments and finance costs for the year ended 31 March 2018, 
of R183 500 000 (2017: R144 561 000). This represents an increase of 
27% year on year and is mainly due to the inclusion of Platz am Meer 
Shopping Centre where rental income was generated for twelve months 
during the 2018 financial year compared to six months for the 2017 
financial year.

The group's revenue increased by 21% to R248 649 000 compared with 
the previous year's R204 973 000. A weighted average escalation on 
lease agreements of 8% was achieved for South African assets and a 
7% weighted average escalation for the entire property portfolio for 
the 2018 financial year. Operating costs as a percentage of revenue 
was 29% (2017: 30%).

Safari group's gearing (debt to equity) ratio decreased from 57% to 13%, 
as a direct result of the capital raising which was concluded during July 
and August 2017 - refer to the section on "Events during the financial 
period" above for more information regarding the capital raising.
The fair value of the group's investment property increased by 9% to
R2 681 628 000. The increase of R224 638 000 resulted from the expansions 
and additions of R201 802 000 as well as a fair value adjustment of 
R22 836 000 for the total property portfolio. The income-generating 
properties were valued on the discounted cash flow method and are supported 
by Safari's 2% vacancy profile, the 88% national tenants' occupation level, 
a positive lease expiry profile and 7% average rental escalation achieved 
through the 2018 financial year. The net asset value per share decreased 
by 5% to 824 cents for the year, from 870 cents in the prior year.

Dividends
In terms of REIT legislation at least 75% of the distributable earnings 
must be distributed in every financial year. The distribution consisted
of an interim cash dividend of 35 cents in December 2017 and a final cash 
dividend of 33 cents per share - the details of which were released on 
SENS on 26 June 2018. To determine distributable earnings per share for 
the distribution period 1 April 2017 to 31 March 2018 with the final 
distribution declared for distribution in July 2018, antecedent dividends 
resulting from the new share issue in July and August 2017 were included 
in distributable earnings and the weighted number of shares in issue was 
used to determine the distribution per share.

Going concern
The directors are of the opinion that the group has adequate financial 
resources to continue its operations for the foreseeable future and, 
accordingly, the consolidated annual financial statements have been 
prepared on a going-concern basis.

The group is in a sound financial position and has access to sufficient 
borrowing facilities to meet its foreseeable cash requirements for operational 
activities and current capital commitments. The directors are not aware of 
any material changes that may have an adverse impact on the company, nor of 
any material non-compliance with statutory or regulatory requirements nor of 
any pending changes to legislation which may affect the group.

Litigation statement
In terms of section 7.D.11 of the JSE Listings Requirements, the directors 
are not aware of any legal or arbitration procedures that are pending or 
threatening, that might have had, in the previous 12 months, a material 
effect on the group's financial position.

Auditors
Deloitte & Touche was appointed as auditors for the group from 2 September 
2015 and also performed the interim review during September 2017. 
During the financial year Bester Greyling was the designated audit partner 
for the Safari group.

Abridged consolidated statement of financial position 
as at 31 March 2018

                                                    2018            2017
                                                   R'000           R'000
Assets
Non-current assets
Investment property                            2 638 538       2 421 550
Fair value of investment property              2 681 628       2 456 990
Operating lease asset                            (43 090)        (35 440) 
Loans to shareholders                             45 166               - 
Operating lease asset                             42 350          33 349
Deferred tax                                      16 908               -
                                               2 742 962       2 454 899
Current assets
Inventories                                      169 649         175 003
Loans to shareholders                              8 149               - 
Trade and other receivables                       15 331          14 139
Operating lease asset                                740           2 091
Current tax receivable                                 -           1 638
Cash and cash equivalents                          2 948           2 931
                                                 196 817         195 802
Total assets                                   2 939 779       2 650 701
Equity and liabilities
Equity
Stated capital                                 2 087 928       1 187 088
Share-based payment reserve                       49 800               - 
Retained income                                  427 053         476 453
                                               2 564 781       1 663 541
Liabilities
Non-current liabilities
Interest-bearing borrowings                      335 245         898 433
Deferred tax                                      18 535          23 105
                                                 353 780         921 538
Current liabilities
Trade and other payables                          20 655          15 792
Interest-bearing borrowings                          563           5 576
Bank overdraft                                         -          44 254
                                                  21 218          65 622
Total liabilities                                374 998         987 160
Total equity and liabilities                   2 939 779       2 650 701



Abridged consolidated statement of profit or loss and other 
comprehensive income for the year ended 31 March 2018

                                                    2018            2017
                                                   R'000           R'000
Revenue                                          248 649         204 973
Property revenue                                 240 999         203 427
Operating lease                                    7 650           1 546
Other income                                       5 743           4 477
Operating expenses                               (70 892)        (64 889) 
Operating profit                                 183 500         144 561
Investment income                                  3 446             182
Fair value adjustments                            15 186          74 822
Gross fair value adjustments                      22 836          76 368
Operating lease                                   (7 650)         (1 546)
Finance costs                                    (37 431)        (59 012) 
Impairment of inventory                           (5 035)              - 
Share-based payment expense                      (49 800)              - 
Profit before taxation                           109 866         160 553
Taxation                                          21 477          (4 627) 
Profit for the year                              131 343         155 926
Other comprehensive income                             -               - 
Total comprehensive income for the year          131 343         155 926
Basic earnings per share (cents)                      57              83
Diluted earnings per share (cents)                    50              83



Abridged consolidated statement of changes in equity for the year 
ended 31 March 2018

                                       Share-
                                        based 
                             Stated    payment     Retained        Total
                            capital    reserve       income       equity
                              R'000      R'000        R'000        R'000
Balance at
1 April 2016              1 116 566          -      439 466    1 556 032
Profit for the year               -          -      155 926      155 926
Other comprehensive
income                            -          -            -            - 
Total comprehensive
income for the year               -          -      155 926      155 926
Shares issued through 
capitalisation dividend       5 928          -            -        5 928
Shares issued through 
capitalisation dividend      13 341          -            -       13 341
Private placement            31 578          -            -       31 578
Private placement            20 000          -            -       20 000
Capital raising fee on 
shares paid for and 
issued in the current
period                         (325)         -            -         (325) 
Reit distribution paid            -          -     (118 939)    (118 939)
Total contributions by 
and distributions to 
owners of company 
recognised directly 
in equity                    70 522          -     (118 939)     (48 417)
Balance at
1 April 2017              1 187 088          -      476 453    1 663 541
Profit for the year               -          -      131 343      131 343
Other comprehensive
income                            -          -            -            - 
Total comprehensive
income for the year               -          -      131 343      131 343
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             (10 613)          -            -      (10 613) 
Share-based payment              -      49 800            -       49 800
Total share-based
payments for the year            -      49 800            -       49 800
Reit distribution
paid                             -           -     (180 743)    (180 743) 
Total contributions by
and distributions
to owners of company 
recognised directly in 
equity                     900 840      49 800     (180 743)     769 897
Balance at
31 March 2018            2 087 928      49 800      427 053    2 564 781


Abridged consolidated statement of cash flows for the year 
ended 31 March 2018
                                                    2018            2017
                                                   R'000           R'000
Net cash used in operating activities
Cash generated from operations                   179 844          84 313
Investment income                                  3 445             182
Finance costs                                    (37 434)        (59 012) 
Reit distribution paid                          (177 891)        (99 668)
Tax received                                       1 638               -
Net cash used in operating activities            (30 398)        (74 185)
Net cash used in investing activities
Purchase and development of investment 
property                                        (201 802)       (292 037)
Net cash used in investing activities           (201 802)       (292 037)
Net cash from financing activities              
Proceeds on share issue                          897 988          51 254
Proceeds from interest-bearing borrowings        447 970         677 330
Repayment of interest-bearing borrowings      (1 016 171)       (407 083)
Proceeds from bank overdraft                      72 900          71 142
Repayment of bank overdraft                      (96 357)        (47 685) 
Advance on shareholders' loan                    (53 316)              - 
Net cash from financing activities               253 014         344 958
Total cash movement for the year                  20 814         (21 264)
Cash and cash equivalents at the 
beginning of the year                            (17 866)          3 398
Total cash and cash equivalents at 
the end of the year                                2 948         (17 866)


Segmental reporting
The group classifies the following main segments, which is consistent with 
the way in which the group reports internally:
- Atteridgeville
- Mamelodi
- Sebokeng
- Heidelberg
- Namibia

Abridged segment results, net assets, include items directly attributable 
to a segment as well as those that can be allocated on a reasonable
basis.
                                    Atteridge-
                                         ville     Mamelodi      Sebokeng
                                         R'000        R'000         R'000
31 March 2018
Turnover (external)                     67 367       72 519        51 290
Reportable segment profit before 
investment revenue, fair 
value adjustments and
finance costs                           54 291       61 481        33 035
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                         827 073      781 742       495 768
Unallocated assets                           -            -             - 
Total assets                           827 073      781 742       495 768
Segment liabilities                      6 969        3 703         3 761
Unallocated liabilities                      -            -             - 
Interest-bearing borrowings                  -            -             - 
Total liabilities                        6 969        3 703         3 761
Other segment items
Interest revenue (external)                 15           10            15
Unallocated interest revenue                 -            -             - 
Investment revenue                          15           10            15
Fair value adjustments                  46 418       95 866       (11 972) 
Interest expense                             -            -             - 
Unallocated interest expense                 -            -             -
Finance costs                                -            -             -


                                                        Recon-
                             Heidelberg    Namibia   ciliation       Total
                                  R'000      R'000       R'000       R'000
31 March 2018
Turnover (external)              20 726     32 346           -     248 649
Reportable segment
profit before investment 
revenue, fair value 
adjustments and finance
costs                            15 278     24 418           -            - 
Unallocated reportable
segment profit before
investment revenue, fair 
value adjustments and
finance costs                         -          -       5 003        5 003
Profit before investment 
revenue, fair value 
adjustments and finance
costs                                 -          -           -      183 500
Segment assets and 
liabilities
Segment assets                  169 361     510 146          -    2 784 089
Unallocated assets                    -           -    155 689      155 689
Total assets                    169 361     510 146    155 689    2 939 779
Segment liabilities                 509       2 695          -       17 637
Unallocated liabilities               -           -     21 552       21 552
Interest-bearing borrowings           -           -    335 808      335 808
Total liabilities                   509       2 695    357 360      374 998
Other segment items
Interest revenue
(external)                            -           -          -           39
Unallocated interest revenue          -           -      3 406        3 406
Investment revenue                    -           -      3 406        3 445
Fair value adjustments            9 325    (118 501)     1 700       22 836
Interest expense                      -       2 953          -        2 953
Unallocated interest expense          -           -     34 480       34 480
Finance costs                         -       2 953     34 480       37 434



                                    Atteridge-
                                         ville     Mamelodi      Sebokeng
                                         R'000        R'000         R'000
31 March 2017
Turnover (external)                     58 404       61 364        47 874
Reportable segment profit 
before investment revenue, fair 
value adjustments and finance
costs                                   45 412       50 979        33 102
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                        674 639         694 485      490 212
Unallocated assets                          -               -            - 
Total assets                          674 639         694 485      490 212
Segment liabilities                     3 873           3 366        3 684
Unallocated liabilities                     -               -            - 
Interest-bearing borrowings                 -               -            -
Total liabilities                       3 873           3 366        3 684
Other segment items
Interest revenue (external)                21              30           21
Unallocated interest revenue                -               -            - 
Investment revenue                         21              30           21
Fair value adjustments                 63 886          86 681       66 148
Interest expense                            -               -            - 
Unallocated interest expense                -               -            -
Finance costs                               -               -            -

                                                        Recon-
                             Heidelberg    Namibia   ciliation       Total
                                  R'000      R'000       R'000       R'000
31 March 2017
Turnover (external)              17 048     15 918       4 365     204 973
Reportable segment profit 
before investment revenue,
fair value adjustments and 
finance costs                    11 437     10 228           -     151 158
Unallocated reportable segment 
profit before investment 
revenue, fair value 
adjustments and finance costs         -          -      (6 597)     (6 597)
Profit before investment 
revenue, fair value 
adjustments and
finance costs                         -          -           -     144 561
Segment assets and 
liabilities
Segment assets                  154 688    560 745           -   2 574 769
Unallocated assets                    -          -      75 932      75 932
Total assets                    154 688    560 745      75 932   2 650 701
Segment liabilities                 671     26 994           -      38 588
Unallocated liabilities               -          -      44 563      44 563
Interest-bearing borrowings           -          -     904 009     904 009
Total liabilities                   671     26 994     948 572     987 160
Other segment items
Interest revenue (external)           3          -           -          75
Unallocated interest revenue          -          -         107         107
Investment revenue                    3          -         107         182
Fair value adjustments            3 345   (137 805)     (5 887)     76 368
Interest expense                      -          -           -           -
Unallocated interest expense          -          -      59 012      59 012
Finance costs                         -          -      59 012      59 012



Earnings per share for the year ended 31 March 2018

                                                    2018            2017
                                                   R'000           R'000
Earnings used in the calculation of basic 
earnings per share (profit after tax)            131 343         155 926
Ordinary shares in issue at year-end             251 975         191 257
Weighted average number of ordinary
shares                                           230 253         186 837
Headline earnings                                108 507          79 558
Diluted weighted average number of shares        265 293         186 837
Basic earnings per share (cents)                      57              83
Diluted earnings per share (cents)                    50              83
Basic headline earnings per share (cents)             47              43
Diluted headline earnings per share (cents)           41              43
Headline earnings reconciliation
Profit after tax                                 131 343         155 926
Gains and losses from the adjustment to 
the fair value of non-current assets             (22 836)        (76 368)
                                                 108 507          79 558


Net asset value per share for the year ended 31 March 2018

                                                    2018            2017
                                                   R'000           R'000
Total assets                                   2 939 779       2 650 701
Total liabilities                               (374 998)       (987 160)
                                               2 564 781       1 663 541
Ordinary shares in issue                         311 186         191 257
Net asset value per share (cents)                    824             870
Tangible net asset value (cents)                     824             870


REIT distribution paid
                                                    2018            2017
                                                   R'000           R'000
Prior year final distribution (34 cents per
share) (2017: 32 cents per share)                (68 975)        (52 370)
Capitalisation of distribution 
(R7,60 per share) (2017: R8,00 per share)         (2 853)         (5 928)
Interim distribution (35 cents per share) 
(2017: 32 cents per share)                      (108 915)        (47 300)
Capitalisation of distribution 
(R0 per share) (2017: R7,60 per share)                 -         (13 341)
Total distribution                              (180 743)       (118 939)

To determine distributable earnings per share for the distribution period
1 April 2017 to 31 March 2018 with the final distribution for this 
distribution period declared for distribution in July 2018, antecedent 
dividends resulting from new share issues in July 2017 and August 2017 
were included in distributable earnings and the weighted average number 
of shares in issue was used to determine the distribution per share.

R177 890 822 (2017: R99 668 459) was paid in cash to shareholders, the 
remaining balance of R2 852 561 (2017: R19 270 596) was settled by
means of a capitalisation dividend.

Basis of preparation
The abridged consolidated financial statements are prepared in accordance 
with the requirements of the JSE Limited Listings Requirements for 
abridged reports and the requirements of the Companies Act 71 of 2008 of 
South Africa, as amended. The JSE Listings Requirements require abridged
reports to be prepared in accordance with the framework concepts and the 
measurement and recognition requirements of International Financial 
Reporting Standards (IFRS), the presentation and disclosure requirements 
of IAS 34 - Interim Financial Reporting, the SAICA Financial Reporting 
Guides as issued by the Accounting Practices Committee and Financial 
Reporting Pronouncements as issued by Financial Reporting Standards 
Council and the Companies Act 71 of 2008. The accounting policies applied 
in the preparation of the abridged consolidated financial statements 
are in terms of IFRS and are consistent with those applied in the previous 
financial statements.

Explanatory notes to the abridged consolidated statement of financial 
position and abridged consolidated statement of comprehensive income 
for the year ended 31 March 2018:

1. It is the Group's policy to have the investment property portfolio 
valued on an annual basis by an independent valuator. The valuation
of investment property (except for the property valuations based on the 
direct comparable method as detailed below) totalling R2 441 606 190
(2017: R2 319 400 000) was based on the discounted cash flow method.

The valuation of investment property (Erven 9043, 9044, 9045
Atteridgeville Ext 5 and Erf 68 of the subsidiary's property and the 
Lynnwood property), totalling R239 869 622 (2017: R137 589 936) was based 
on the direct comparable method, plus development cost. This method was 
used as the erven identified above are stands purchased during 2013,
which are not yet income generating (not yet generating cash flow).
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 valuer
were to increase both the capitalisation and discount rates by 0,50%, 
the total valuation would decrease by R122 600 000. If the valuer were 
to decrease both the capitalisation and discount rates by 0,50%, the 
total valuation would increase by R137 300 000.

If the valuer were to increase the long-term vacancy provision by 1,00%, 
the total valuation would decrease by R20 400 000. If the valuer were to 
decrease the long-term vacancy provision by 1,00% the total valuation 
would increase by R20 300 000.The ongoing construction of the Nkomo Village 
property in Atteridgeville together with a positive fair value adjustment 
resulted in a 9% increase in the value of investment property since 
31 March 2017. The construction costs are financed by interest-bearing 
borrowings and capital raised by share issues.

2. Most of Safari's current lease agreements are in the first half of 
the lease term. The average annualised property yield for the 
income-generating property portfolio based on market values as at 
31 March 2018 is 7,3% for the 2018 financial year. Included in revenue 
is gross rent, solar income and turnover rent for all income-generating 
properties and all property expenses have been deducted. The average 
weighted forward yield for the portfolio is 8,2%.

3. The 36 luxury upmarket apartments are available for sale in the 
ordinary course of business. In the current year the group finalised 
the construction on the apartments in Namibia. In the previous year the 
group accounted for inventory at 30% of the total construction cost, 
based on the quantity surveyor's estimate. This was his best estimate, 
taking available information into account. After final accounts were 
settled, the actual cost to construct the apartments was calculated to 
be 25,25% of the total construction cost for the Platz am Meer development. 
This resulted in a change in estimate.

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 (refer to note 5 below)
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 consist 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. Trade receivables increased 
mainly due to deposits being raised for the new Nkomo development currently 
under construction and outstanding debtor balances.

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 banking 
facility being utilised to finance the project development of the Platz am 
Meer, 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 also resulted in a significant decrease in finance cost 
for the 2018 financial year, compared to the 2017 financial year.

8. The property revenue increased by 18% compared with the previous year. 
The increase is a result of annual rental escalations and the fact that the 
Platz am Meer shopping centre generated rental income for twelve months compared 
to six months in the previous year.

9. Operating expenses as a percentage of revenue was 29% compared to 30% in the 
previous year's results. This is as a result of stringent budgeting and 
continuous monitoring of expenses.

10. Deferred tax is no longer calculated on the straight-line rental income 
accrual or on the operating lease asset, as the rental accrual will form part 
of the group's distribution in the future. Given the conversion to a REIT, 
such distributions are fully deductible for tax purposes and hence no tax 
liability  will arise on straight-line rental income accruals or operating 
lease assets. Safari Investments Nambia Proprietary Limited will however 
still incur deferred tax on the above as this subsidiary company is 
not a REIT.

Financial statements
The consolidated financial statements for the year have been audited by 
Deloitte & Touche and an unmodified report issued, and is available for 
inspection at the group's registered office or in electronic format on 
the website: www.safari-investments.com.

The abridged consolidated financial statements are extracted from the 
audited financial information but are not themselves audited. Information 
included under the headings "2018 Performance overview" and "Director's 
report" has not been audited or reviewed. Shareholders are advised that
in order to obtain a full understanding of the nature of the auditors' 
engagement they should obtain a copy of the report with accompanying 
financial statements from the group's registered offices. The directors 
take full responsibility for the preparation of the abridged results 
and all financial information has been correctly extracted from the 
underlying financial statements.

The consolidated annual financial statements were approved by the Board 
of Directors on 20 June 2018 and published on 27 June 2018.

New standards and interpretations
The accounting policies of the group have been applied consistently to 
the policies as presented in the consolidated financial statements for 
the year ended 31 March 2018.

Events subsequent to the reporting period
Notice was received that a cross-default was triggered on the senior 
facility (Southern Palace Capital Proprietary Limited share subscription 
transaction) where Safari Investments RSA Limited is the guarantor for 
the interest and capital portions of the facility provided to Southern
Palace Capital Proprietary Limited for the purchase of Safari Investments
RSA Limited shares during August 2017. The cross-default arose from 
Southern Palace Capital Proprietary Limited not settling a facility 
held by them for the own equity portion of this transaction on time.

This was due to a delay in processes to release funds by a third party 
which is currently being addressed by Southern Palace Capital Proprietary 
Limited. The guarantees provided by Safari Investments RSA Limited on 
the senior facility have not been called on at the time of this report.
At the board meeting held on 20 June 2018 a final cash distribution of
33 cents per share was declared and will be paid to shareholders during
July 2018. The directors are not aware of any other material reportable 
events which occurred during and subsequent to the reporting period.

Related-party transactions
All related-party transactions are as per approved agreements.

Cosmos Management CC (Cosmos) provided bookkeeping and property portfolio 
management services to Safari and is a related party due to the common 
directorship. The services rendered by Cosmos amounted to R6,9 million 
(2017: R6,4 million).

Safari Retail Proprietary Limited (Retail) provided marketing and 
letting service for existing centres to Safari and is a related party 
due to the common directorship. The services rendered by Retail amounted 
to R1,3 million (2017: R2,8 million). 

Board commentary

Profile
Safari Investments RSA Limited (Safari), with a total asset base of 
R2,94 billion, is a retail-focused Real Estate Investment Trust 
(REIT) listed on the Johannesburg Stock Exchange Limited (JSE) 
main board under the property sector.

Safari invests in quality income-generating property; revenue is
generated through sustainable rental income. There were no changes 
to the nature of the business during the financial period 
under review.

Property portfolio
The property portfolio consists of 19 properties. Six of the 
properties are established retail centres, of which four are 
serving as regionals in their areas. The Soweto Day Hospital,
operational since January 2016, also forms part of the Safari 
property portfolio. The above-mentioned properties are the 
income-generating assets in the Safari portfolio. These include 
Denlyn in Mamelodi (43 450m2); Atlyn (41 200m2) and Mnandi 
(10 550m2) in Atteridgeville; Thabong in Sebokeng (43 100m2); 
The Victorian in Heidelberg (15 400m2); Platz am Meer in 
Swakopmund (29 500m2) and the Soweto Day Hospital (2 817m2). 
The retail centres are anchored by national retailers such as 
Shoprite /Checkers, Super Spar and Pick n Pay. Safari's current 
rental portfolio is 91% retail based.

Phase 2 of the Platz am Meer development, being the residential 
apartments, has been completed in the 2018 financial year. The 
units are currently being marketed by Seeff with whom Safari 
entered into a mandate agreement during April 2018.

Letting activity
Safari's vacancy factor in its portfolio as at 31 March 2018 was 2%
(2017: 2%) of the total income-generating retail space which consisted 
of 88% (2017: 87%) national tenants.

Current projects
Construction of the Nkomo Village Shopping Centre is in process and 
the project is set for completion during quarter 4 of 2018. The centre 
will be anchored by Pick n Pay and Boxer and bringing other national 
tenants such as McDonalds and Builders Warehouse to the 
Atteridgeville community for the first time.

The following capital expenditure to the Platz am Meer development 
was approved by the board of Safari during the 8 November 2017 board
meeting:
- Mooring facilities in the small boat harbour to the amount of
N$6,2 million; and
- 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.

Prospects
The development and extension as detailed above ensures that Safari 
will maintain its attractive portfolio growth. Above-inflation increases 
in utility cost and continued financial market volatility are expected 
to continue. 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. 
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
27 June 2018

Notice of Annual General Meeting
Notice is hereby given that the annual general meeting of shareholders 
of Safari ("AGM") will be held at 14:00 on Tuesday, 31 July 2018, at Menlyn
Boutique Hotel, 209 Tugela Road, Ashlea Gardens, Pretoria.

Corporate information
Safari Investments RSA Limited 
(Registration number: 2000/015002/06) 
JSE code: SAR
ISIN: ZAE000188280
Country of incorporation: Republic of South Africa (7 July 2000)

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 BCom LLB
342 The Rand Street, Lynnwood, Pretoria 
Postal: 420 Friesland Lane, Lynnwood Pretoria 0081

Corporate adviser
Fanus Kruger Consulting Proprietary Limited
(Registration number 2015/324537/07)
67 Brink Street, Rustenburg 0299

Directors of Safari Investments RSA Limited
Dr JP Snyman (Independent non-executive chairman) 
FJJ Marais (Chief executive officer)
WL Venter (Executive financial director)
K Pashiou (Executive: operations director)
DC Engelbrecht (Executive: legal services director and 
group company secretary)
FN Khanyile (Independent non-executive director)
LL Letlape (Independent non-executive director)
Dr M Minnaar (Independent non-executive director) 
CR Roberts (Independent non-executive director)
AE Wentzel (Lead independent non-executive director)

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
Weavind & Weavind Incorporated
Block E, Glenfield Office Park
361 Oberon Street, Faerie Glen
Pretoria 0081
Tel: +27 (0) 12 346 3098

Sponsor
PSG Capital
(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

Date: 27/06/2018 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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