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Unaudited condensed interim financial statements for the six months ended 30 June 2018
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”)
Unaudited condensed interim financial statements for the six months
ended 30 June 2018
Commentary
Nature of business
Transcend is a specialist residential Real Estate Investment Trust
(REIT) with a residential-only property portfolio.
Property portfolio
Transcend’s property portfolio consists of thirteen properties
comprising 2 472 units, located primarily in Gauteng, as well as
Mpumalanga and the Western Cape. The combined gross lettable area
(“GLA”) is 124 634m2 and the properties have a combined value of
R1.219 billion, as at 30 June 2018.
Results
On 22 August 2018 the board of directors of the Company (“Board”)
approved an interim dividend of 30.09880 cents per share for the
period ended 30 June 2018.
Preparation
The unaudited condensed interim financial statements were compiled
under the supervision of Myles Kritzinger CA(SA), the Chief
Financial Officer.
Strategy
The primary business of Transcend is the acquisition of 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 fully tenanted.
Acquisitions
The Board has approved the acquisition of three fully tenanted
rental properties, consisting of 312 sectional title apartments
situated in secure, walk-up complexes. The properties are located
in Gauteng and the Western Cape. The value of the transaction is
R136.2 million, payable on transfer. Legal agreements were concluded
on two of the three properties in April and June 2018, with those
properties due to transfer to the Company during the 6 months ending
31 December 2018. Transcend has consequently made no acquisitions as
at 30 June 2018, as the properties mentioned will only transfer
after the period under review. Transcend made no disposals of any
investment properties during the period under review.
Vacancies and arrears
Based on average occupancy rates reported over the period 1 January
2018 to 30 June 2018, the total portfolio’s vacancy rate was 11.12%
which was predominantly due to a single property, Acacia Place.
However, if Acacia Place, which has a large vacancy due to the expiry
of bulk leases, is excluded, the vacancy rate of the stabilised
portfolio is 5.11%. It is expected that the vacancies of the
stabilised portfolio will remain within the 4% to 7% range for the
remainder of the financial year.
Funding
Interest rate applicable
Amount
R’million Rate
Interest rate swap: Expiry 31 January 2020
(3-year) 137 7.62%
Interest rate swap: Expiry 31 January 2018
(1-year) 137 7.51%
Interest rate swap: Expiry 31 January 2019
(1-year) 137 7.59%
Facility drawn down
Amount Margin
R’million over JIBAR
Facility A, Tranche 1: Expiry January
2020 (3-year) 274 1.85%
Facility A, Tranche 2: Expiry January
2022 (5-year) 274 2.35%
A final facility B: Expiry January 2020
(3-year) 10 Prime less 1%
The Standard Bank facilities above are 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 was 50% hedged by an
interest-rate swap at a fixed rate of 7.51% which expired in February
2018, and the 5-year tranche was 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 replaced the interest-rate swap which
expired in February 2018.
There were no restrictive funding arrangements in place as at
30 June 2018.
Percentage of debt hedged
It is the Board’s policy to economically hedge at least 50% of the
company’s exposure to interest rate risk.
Summary of financial performance
30 June 2018 31 December 2017 30 June 2017
Dividend per share
(cents) 30.10 34.23 29.81
Shares in issue 66 305 662 66 305 662 66 305 662
Net asset value per
share (Rand) 10.38 10.39 9.93
Loan-to-value ratio
(1) 42.2% 41.8% 43.0%
Net property expense
ratio (2) 30.5% 29.6% 29.6%
Gross property
expense ratio (2) 36.3% 35.2% 34.6%
Net total expense
ratio (2) 36.9% 35.6% 34.9%
Gross total expense
ratio (2) 42.2% 40.7% 39.5%
(1) The loan-to-value 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 expense ratios, utility recoveries are
excluded from rental revenue, whilst gross expense ratios include
utility recoveries in rental revenue.
Outlook
The Board has revised its forecast distribution to flat growth for the
2018 financial year, amended from the 6-8% growth forecast as
communicated in the SENS announcement published on 8 March 2018. Contrary
to management’s initial view that South Africa would be entering a period
of moderately positive growth, the current climate which sees higher
taxes and increased fuel costs has placed added pressure on tenant
affordability, rental escalations and property vacancies, and consequently,
on market performance.
The revised forecast distribution is primarily due to the poor performance
of Acacia Place, which can be directly attributable to higher vacancies on
bulk lease renewals and lower rentals. This property has had an exposure
of 39% to bulk leases during the reporting period. The remaining portfolio
has no exposure to bulk leases and is defensive in nature, through holding
individual leases with tenants.
The Parklands properties have experienced an increase in property operating
expenses due to the under-recovery of certain utilities and water tariff
increases due to the water shortages in the Western Cape. Management has
implemented measures to recover these utilities in future from tenants which
should see an improvement in property operating expenses for the second
half of the 2018 financial year.
This coupled with a difficult South African economic trading environment
experienced in the first half of the year and its impact on the affordable
housing target market segment has led to a revision of the company’s forecast
distribution growth based on the assumption that current market and trading
conditions prevail and continue to impact on the residential segment. This
revised forecast has not been reviewed or reported on by the independent
auditors.
Condensed statement of profit or loss and other comprehensive income
Unaudited Unaudited
6 months 6 months
ended ended
Notes 30 June 2018 30 June 2017
(R'000) (R'000)
Rental income from investment
properties 71 482 70 568
Recoveries of operating costs
from tenants 6 570 5 439
Revenue 78 052 76 007
Property operating expenses 2 (28 344) (26 316)
Net operating income 49 708 49 691
Other operating expenses (4 578) (3 743)
Operating profit 45 130 45 948
Unrealised gain/(loss) on
interest-rate swaps 1 466 (1 688)
Net finance charges (24 785) (26 184)
Finance charges (25 790) (26 710)
Finance income 1 005 526
Profit before taxation 21 811 18 076
Taxation - -
Profit and total comprehensive
income for the period 21 811 18 076
Basic/diluted earnings per share
(cents) 32,89 27,26
Headline earnings per share
(cents) 32,89 27,26
Condensed statement of financial position
Unaudited Audited Unaudited
30 June 31 December 30 June
2018 2017 2017
(R'000) (R'000) (R'000)
Assets
Non-current assets 1 221 001 1 219 394 1 189 700
Investment property 1 219 201 1 218 640 1 189 400
Property and equipment 1 800 754 300
Current assets 45 454 50 489 48 270
Trade and other
receivables 4 018 4 441 4 530
Cash and cash equivalents 41 436 46 048 43 740
Total assets 1 266 455 1 269 883 1 237 970
Equity and liabilities
Shareholders' interest 687 944 688 829 658 697
Stated capital 632 276 632 276 632 276
Retained earnings 55 668 56 553 26 421
Non-current liabilities 503 862 505 763 505 402
Interest-bearing
borrowings 502 910 502 893 503 943
Derivative liabilities 952 2 870 1 459
Current liabilities 74 649 75 291 73 871
Short-term portion of
interest-bearing
borrowings 52 467 52 431 51 743
Trade and other payables 21 174 22 038 21 600
Provision for audit fees 398 598 299
Derivative liablities 610 158 229
Current taxation liability - 66 -
Total equity and
liabilities 1 266 455 1 269 883 1 237 970
Condensed statement of changes in equity
Stated Retained Total
capital Earnings equity
(R'000) (R'000) (R'000)
Unaudited balance at 1 July 2017 632 276 26 421 658 697
Profit and total comprehensive
income for the period - 58 076 58 076
Transactions with owners
Dividends - (27 944) (27 944)
Audited balance at 1 January 2018 632 276 56 553 688 829
Profit and total comprehensive
income for the period - 21 811 21 811
Transactions with owners -
Dividends - (22 696) (22 696)
Unaudited balance at 30 June 2018 632 276 55 668 687 944
Condensed statement of cash flows
Unaudited Unaudited
30 June 30 June
2018 2017
(R'000) (R'000)
Cash flows from operating activities
Profit and total comprehensive income for the
period 21 811 18 076
Adjustments for:
Finance costs 25 790 26 710
Depreciation of fittings 120 23
Finance income (1 005) (526)
Unrealised loss on interest-rate swaps (1 466) 1 688
Operating profit before working capital
changes 45 250 45 971
Working capital changes: Decrease/(increase)
in trade and other
receivables 423 9 275
(Decrease)/increase in trade and other
payables (1 393) (8 638)
Cash generated by operating activities 44 280 46 608
Finance income received 1 005 526
Finance costs paid (25 408) (17 370)
Income tax paid (66) -
Net cash from operating activities 19 811 29 764
Cash flows from investing activities
Fittings acquired (1 166) (323)
Additions to investment property (561) -
Net cash utilised in investing activities (1 727) (323)
Cash flows from finance activities
Interest-bearing borrowings repaid - (17 817)
Settlement receipt of interest-bearing
borrowings - 16 795
Dividends paid (22 696) (8 179)
Net cash utilised in financing activities (22 696) (9 201)
(Decrease)/Increase in cash and cash
equivalents (4 612) 20 240
Cash and cash equivalents at beginning of
period 46 048 23 500
Cash and cash equivalents at end of period 41 436 43 740
Sectoral split
2018 2017
Based on: GLA(%) Book value GLA (%) Book value
Residential 100 100 100 100
Lease expiry profile (unaudited)
2018
Based on:
Gross Leasable Gross Rental
Area (%) (%)
Vacancy 10.5 9.1
Monthly 56.6 58.1
31 December 2018 18.6 18.8
30 June 2019 14.2 13.9
31 December 2019 0.1 0.1
100 100
2017
Based on:
Gross Leasable Gross Rental
Area (%) (%)
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
Significant financial statement notes
1. Basis of preparation and accounting policies
The unaudited condensed interim financial statements are prepared in
accordance with International Financial Reporting Standards, (IAS) 34
Interim Financial Reporting, the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards
Council, the JSE Listings Requirements, and the requirements of
the Companies Act of South Africa. The accounting policies applied
in the preparation of these unaudited condensed interim financial
statements are in terms of International Financial Reporting Standards
and are consistent with those applied in the previous financial
statements as at 31 December 2017.
The directors are not aware of any material matters or circumstances
arising subsequent to 30 June 2018 that require any additional disclosure
or adjustments to the unaudited condensed interim financial statements.
The directors take full responsibility for the preparation of these
unaudited condensed interim financial statements and for ensuring that
the financial information has been correctly extracted from the underlying
unaudited interim financial statements. These unaudited condensed interim
financial statements have not been reviewed by the Company’s auditors.
2. Changes in significant accounting policies
The accounting policies applied in these unaudited condensed interim
financial statements are the same as those applied in the Company’s
financial statements as at and for the year ended 31 December 2017.
The Company has initially adopted IFRS 9 Financial Instruments and IFRS 15
Revenue from Contracts with Customers from 1 January 2018, which do not
have a material effect on the Company’s financial statements. There has
consequently been no restatement of any opening balances as at 1 January
2018.
3. Property operating expenses
Unaudited Unaudited
6 months 6 months
ended ended
30 June 2018 30 June 2017
Property operating expenses (R'000) (R'000)
Utilities: 11 299 9 966
Water 2 184 1 592
Electricity 2 520 2 676
Rates 3 482 3 330
Sewerage 1 609 988
Refuse 1 504 1 380
Bad debts written off 2 151 -
Property management fees 5 463 5 439
Levies 2 632 2 783
Security 1 892 1 762
Repairs and maintenance 3 547 3 091
Payroll 946 898
Allowance for doubtful debts (1 435) 814
Other property operating expenses 1 849 1 563
28 344 26 316
4. Segmental analysis
Segmental information
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.
Summarised segmental analysis
For the period ended 30 June 2018
R'000
67th on Acacia Alpine
7th Place Mews
Revenue 5 368 7 013 2 624
Property operating expenses (1 671) (2 885) (1 142)
Profit and total comprehensive
income for the period 3 629 4 103 1 524
Investment property 97 500 127 529 36 207
Total assets 98 699 129 991 36 868
Interest-bearing borrowings - - -
Ekhaya Ekhaya Jackalberry
Fleurhof Jabulani Close
Revenue 4 619 7 003 6 757
Property operating expenses (1 270) (2 645) (1 848)
Profit and total comprehensive
income for the period 3 352 4 358 4 872
Investment property 69 512 90 640 112 300
Total assets 70 269 91 682 113 584
Interest-bearing borrowings - - -
Kent Road Kosmosdal Parklands
Revenue 2 274 8 564 6 188
Property operating expenses (801) (2 650) (3 294)
Profit and total comprehensive
income for the period 1 475 5 915 2 899
Investment property 35 105 138 514 98 538
Total assets 35 533 140 377 100 344
Interest-bearing borrowings - - -
Village
Seven,
Stone Theresa
Arch Terenure Park
Estate Estate Estates
Revenue 4 019 14 342 6 063
Property operating expenses (1 738) (4 940) (2 300)
Profit and total comprehensive
income for the period 2 263 9 380 3 750
Investment property 55 100 214 203 98 013
Total assets 55 798 216 356 99 313
Interest-bearing borrowings - - -
Tradewinds Reconciling Total
Revenue 3 218 - 78 052
Property operating expenses (1 160) - (28 344)
Profit and total comprehensive
income for the period 2 062 (27 771) 21 811
Investment property 46 040 - 1 219 201
Total assets 46 800 30 841 1 266 455
Interest-bearing borrowings - 555 377 555 377
For the period ended 30 June 2017
R'000
67th on Acacia Alpine
7th Place Mews
Revenue 5 290 8 414 2 306
Property operating expenses (1 762) (2 903) (756)
Profit and total comprehensive
income for the period 3 527 5 492 1 551
Investment property 91 800 133 800 32 100
Total assets 93 087 136 573 32 837
Interest-bearing borrowings - - -
Ekhaya Ekhaya Jackalberry
Fleurhof Jabulani Close
Revenue 4 203 6 132 6 003
Property operating expenses (1 158) (1 943) (1 777)
Profit and total comprehensive
income for the period 3 045 4 174 4 226
Investment property 65 000 88 600 112 400
Total assets 65 844 94 332 113 765
Interest-bearing borrowings - - -
Kent Road Kosmosdal Parklands
Revenue 2 214 8 244 6 333
Property operating expenses (736) (2 865) (2 636)
Profit and total comprehensive
income for the period 1 478 5 373 3 697
Investment property 33 800 135 900 93 500
Total assets 34 158 137 876 91 129
Interest-bearing borrowings - - -
Village
Seven,
Stone Theresa
Arch Terenure Park
Estate Estate Estates
Revenue 3 772 14 008 6 035
Property operating expenses (1 688) (4 534) (2 473)
Profit and total comprehensive
income for the period 2 084 9 466 3 560
Investment property 54 900 210 000 92 850
Total assets 55 529 212 631 93 929
Interest-bearing borrowings - - -
Entity
Tradewinds level Total
Revenue 3 053 - 76 007
Property operating expenses (1 085) - (26 316)
Profit and total comprehensive
income for the period 1 968 (31 565) 18 076
Investment property 44 750 - 1 189 400
Total assets 45 399 30 881 1 237 970
Interest-bearing borrowings - 555 686 555 686
Reconciliation of profit for the year to distributable earnings
Unaudited Unaudited
6 months ended 6 months ended
30 June 2018 30 June 2017
(R'000) (R'000)
Profit for the year attributable to
Transcend shareholders 21 811 18 076
Unrealised loss on interest-rate
swaps (1 466) 1 688
Distributable income for the period 20 345 19 764
Distribution per share (cents) 30,10 29,81
5. Investment properties
In line with the Company’s valuation policy, third party independent
valuations are performed annually by external registered valuers, 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 investment properties were valued by third party independent valuers
as at 31 December 2017 by capitalising the net contractual income derived
from the properties for a period of one year in advance by utilising 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.
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. For all investment properties, their current use
equates to the highest and best use.
The fair values of investment properties remain unchanged as at 30 June
2018, as management has assessed that the assumptions underlying the
31 December 2017 valuation have remained unchanged. The net contractual
income as at 30 June 2018 is in line with the assumptions used in the
valuations, and the capitalisation rates remain unchanged.
6. Financial instrument fair value disclosures
Financial assets and liabilities measured at fair value
The Company’s principal financial liabilities are interest-bearing
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 trade
and other receivables and cash and cash equivalents classified as
loans and receivables and trade and other payables classified as other
financial liabilities, that arise directly from its operations. The
carrying amounts of these loans and receivables reasonably approximate
their fair value as they are short term in nature.
IFRS 13 requires that an entity disclose for each class of financial
instrument 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 the 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
2018
Fair value Level 1 Level 2 Level 3
Assets
Investment properties 1 219 201 - - 1 219 201
Liabilities
Derivative liabilities 1 562 - 1 562 -
There have been no transfers between level 1, level 2 and level 3
during the six months under review.
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, classified as
derivative financial liabilities at fair value through profit and
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 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 similar 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 30 June 2018, the derivative financial liabilities relating to
the interest-rate swaps were fair valued, resulting in a decrease of
R0.13 million (2017: R1.69 million) in the liability and a
corresponding fair value gain of R1.45 million (2017: loss of
R1.69 million) in the condensed statement of profit or loss and
other comprehensive income.
7. Earnings per share
Unaudited Unaudited
6 months ended 6 months ended
30 June 2018 30 June 2017
(R'000) (R'000)
Reconciliation of profit for the year
to headline earnings
Profit for the year attributable to
Transcend shareholders 21 811 18 076
Change in fair value of investment
properties -
Headline earnings attributable to
Transcend shareholders 21 811 18 076
Weighted average number of shares
in issue 66 305 662 66 305 662
Basic and diluted earnings per
share (cents) 32,89 27,26
Headline and diluted earnings per
share (cents) 32,89 27,26
8. Related parties
Relationships
Transcend’s shares are 11% held by public shareholders 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 IHS 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 on 1 October 2016. IHS AM
charged Transcend asset management fees of R2.45 million (2017:
R2.24 million) during the period under review in accordance with the
asset management agreement.
The property management function of the Company is outsourced on market
related terms to IHS 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 R5.46 million (2017: R5.44 million) during the
period under review in accordance with the property management
agreement.
9. Subsequent events
In line with IAS 10 Events After the Reporting Date, the directors are
not aware of any events or circumstances arising since the end of the
period that would significantly affect the operations of the Company
or the results of those operations.
10. Liquidity
As at 30 June 2018, the Company had a positive net asset value. Its
current liabilities exceed its current assets by R29.2 million
(2017: R25.6 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
interim dividend.
11. Payment of interim dividend
The Board has approved, and notice is hereby given of an interim
dividend of 30.09880 cents per share for the six months ended
30 June 2018 (2017: 29.80875 cents per share).
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 24.07904 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 day to trade cum dividend Tuesday, 11 September 2018
Shares trade ex dividend Wednesday, 12 September 2018
Record date Friday, 14 September 2018
Payment date Monday, 17 September 2018
Share certificates may not be dematerialised or materialised between
Wednesday, 12 September 2018 and Friday, 14 September 2018, both days
inclusive.
In respect of dematerialised shareholders, the dividend will be transferred
to the CSDP/broker accounts on Monday, 17 September 2018. Certificated
shareholders’ dividend payments will be deposited on or about Monday,
17 September 2018.
Shares in issue at the date of declaration of this dividend:
66 305 662.
Transcend’s income tax reference number: 9015377253
By order of the Board
Robert Nicolaas Wesselo Myles Kritzinger
Chief Executive Officer Chief Financial Officer
Johannesburg
24 August 2018
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 8 March 2018.
Registered office: 54 Peter Place, Block C, Cardiff House, 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
Designated advisor: Java Capital
Company secretary: CorpStat Governance Services (Pty) Ltd
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