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Consolidated financial results for the year
ended 30 June 2020
Resilient REIT Limited
Incorporated in the Republic of South Africa
Registration number: 2002/016851/06
JSE share code: RES
ISIN: ZAE000209557
Bond code: BIRPIF
LEI: 378900F37FF47D486C58
(Approved as a REIT by the JSE)
("Resilient" or "the Company" or "the Group")
Short-form announcement: consolidated financial results for the year
ended 30 June 2020
Nature of the business
Resilient is an internally asset managed Real Estate Investment Trust ("REIT")
listed on the JSE Limited. Its strategy is to invest in dominant retail centres
with a minimum of three anchor tenants and let predominantly to national
retailers. A core competency is the successful development of new malls and
the reconfiguration of existing malls to adapt to changing market demands.
Resilient also invests in offshore property-related assets.
Distributable earnings and dividend declared
The Board has declared a final dividend of 100,48 cents per share for
2H2020. Together with the 267,96 cents per share declared for 1H2020, the
dividend for FY2020 of 368,44 cents per share is 30,6% lower than that for
FY2019.
In calculating the Group's dividend for FY2020, only 59,1% of the basic rental
from the Edcon group was included. NEPI Rockcastle has not declared a dividend
for the six months ended June 2020 and the Board has not included the
capitalisation issue by NEPI Rockcastle in the amount available for distribution
for 2H2020. Lighthouse Capital has advised that, following the change in its
year-end to December, it will declare a distribution for the nine months to
December 2020 in February 2021. Consequently, Resilient's final dividend excludes
any distribution from Lighthouse in respect of the three months ended June 2020.
The final dividend was negatively impacted by the COVID-19 lockdown and the
termination of the Group's cross-currency swaps. This was partially offset by
lower interest rates in South Africa that benefitted the Group as R3,8 billion
of interest rate hedges are in the form of interest rate caps.
Financial performance
Audited Audited
for the for the
year ended year ended
Note Jun 2020 Jun 2019 Movement
IFRS information
Total revenue (R'000) A 3 740 351 3 805 964 (65 613)
Basic (loss)/earnings per
share (cents) B (1014,86) 1 246,14 (2261,00)
Headline (loss)/earnings
per share (cents) B (651,60) 468,87 (1 120,47)
Dividend (cents per share) 368,44 531,06 (162,62)
Net asset value (R) 53,84 69,32 (15,48)
Management account information
Net asset value (R) 55,49 69,39 (13,90)
Loan-to-value (%) C 34,8 26,8 8,0
Net property expense
ratio (%) D 17,4 16,1 1,3
Gross property expense
ratio (%) D 38,2 35,6 2,6
Net total expense
ratio (%) D, E 19,4 16,2 3,2
Gross total expense
ratio (%) D, E 36,9 31,4 5,5
Notes
In June 2019 shareholders approved the repurchase of 52 182 504 Resilient
shares and the acquisition of 7 474 707 Fortress B shares, held as collateral
for the loans previously advanced by Resilient to the Siyakha Trusts, in full
settlement of these loans. The Siyakha Trusts were deconsolidated at June 2019.
A: Total revenue for June 2019 includes R227,5 million of dividends received
from Fortress A and Fortress B shares held by the Siyakha Trusts which were
consolidated at the time.
B: The significant movement in basic and headline earnings can be attributed to
the following items:
Audited Audited
for the for the
year ended year ended
Jun 2020 Jun 2019
R'million R'million
Fair value (loss)/gain on investment
property* (1 130) 372
Fair value (loss)/gain on investments (3 142) 144
Fair value (loss)/gain on currency
derivatives** (802) 443
Profit on deconsolidation of the Siyakha
Trusts* - 2 437
* Excluded from headline earnings.
** All cross-currency swaps were eliminated to reduce treasury risk.
C: The loan-to-value ratio is calculated by dividing total interest-bearing
borrowings adjusted for cash on hand by the total of investments in property,
listed securities and loans advanced.
D: Resilient's approach to the COVID-19 pandemic has been, and will continue to be,
supportive of tenants, particularly SMMEs and leisure - focused tenants. 2H2020 was
impacted by Resilient's pro rata share of COVID-related discounts of R166,3 million
(c. 95% of a normalised month's rental and rates billing). It was furthermore
impacted by the continued above inflation increases in administered prices,
particularly utilities and rates.
E: 2H2020 excludes distributions from NEPI Rockcastle in respect of the six
months ended June 2020 and from Lighthouse in respect of the three months ended
June 2020.
Property performance
Resilient owns 28 retail centres in South Africa with a GLA of 1,17 million
square metres and three retail centres in Nigeria with a GLA of 30 015
square metres.
The South African portfolio's performance for FY2020 can be divided into three
separate periods. The performance for 1H2020 was sound with comparable retail
sales growth of 4,2%. The 2020 calendar year started strongly with comparable
sales growth for January and February of 6,5%. Trading restrictions were
introduced in mid-March followed by the lockdown on 27 March and sales
deteriorated sharply resulting in negative comparable sales of 3,6% for FY2020.
Excluding the COVID-related discounts, the South African portfolio recorded net
property income growth of 5,5% on a comparable basis.
Jones Lang LaSalle Proprietary Limited ("JLL") valued the South African
property portfolio at June 2020. Resilient's share of the South African
portfolio was devalued by 3,5% (R813 million). Resilient's share of the
devaluation of the Nigerian properties amounted to USD8 million, as valued
by CBRE Excellerate.
Resilient's pro rata share of the South African vacancy increased marginally
from 1,9% at December 2019 to 2,1% at June 2020. Vacancies in the Nigerian
portfolio increased to 9,3% at year-end mainly as a result of the withdrawal
of Mr Price from Nigeria.
Prospects
As previously announced, Resilient is still in discussions to sell certain
property assets. The purchasers have confirmed their ongoing interest in
the properties, however, negotiations have been delayed due to COVID-19.
The Board anticipates that economic recovery will be gradual and uneven.
Resilient is well positioned to continue benefitting from the defensive quality
of its assets and strong tenant profile.
The Board will maintain the Group's conservative financial structure but will
benefit from deep-value opportunities in international markets through its
investment in Lighthouse.
In light of the increased uncertainty due to COVID-19, particularly relating to
distributions from Resilient's listed securities, the Board is not in a position
to provide guidance for FY2021. The Board intends to continue to declare and pay
dividends in line with the policies applied in the past and will accordingly
continue to pay out 100% of distributable earnings to shareholders. With regards
to listed securities, Resilient will only distribute dividends received in or
converted to cash.
Payment of final dividend
The Board has approved and notice is hereby given of a final dividend of
100,48000 cents per share for the six months ended 30 June 2020.
The dividend is payable to Resilient shareholders in accordance with the
timetable set out below:
Last date to trade cum dividend Tuesday, 15 September 2020
Shares trade ex dividend Wednesday, 16 September 2020
Record date Friday, 18 September 2020
Payment date Monday, 21 September 2020
Share certificates may not be dematerialised or rematerialised between
Wednesday, 16 September 2020 and Friday, 18 September 2020, both days
inclusive.
The auditor, PKF Octagon Inc., has issued an unmodified audit opinion on the
consolidated financial statements for the year ended June 2020. The audit was
conducted in accordance with International Standards on Auditing. The preliminary
summarised report ("full announcement") has been audited by PKF Octagon Inc. and
an unmodified audit opinion has been issued. Copies of the audit reports and the
consolidated financial statements are available for inspection at Resilient's
registered address.
This short-form announcement is the responsibility of the directors and is only a
summary of the information in the full announcement released on SENS and does not
include full or complete details. The full announcement is available on the
Company's website at
https://www.resilient.co.za/downloads.htm?Subcategory=2020 and can be accessed
using the following JSE link:
https://senspdf.jse.co.za/documents/2020/jse/isse/rese/FY2020.pdf
The full announcement is available for inspection at the registered offices of the
Company or its sponsor, at no charge, during office hours. Any investment decision
should be based on the full announcement available on the Company's website.
Dividend: tax treatment
In accordance with Resilient's status as a REIT, shareholders are advised that the
dividend of 100,48000 cents per share for the six months ended 30 June 2020
("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 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. Any distribution received by a non-resident from a REIT will be subject to
dividend withholding tax at 20%, unless the rate is reduced in terms of any
applicable agreement for the avoidance of double taxation ("DTA") between South
Africa and the country of residence of the shareholder. Assuming dividend
withholding tax will be withheld at a rate of 20%, the net dividend amount due to
non-resident shareholders is 80,38400 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.
Shares in issue at the date of declaration of this dividend: 400 126 254
Resilient's income tax reference number: 9579269144
By order of the Board
Des de Beer Monica Muller
Chief executive officer Chief financial officer
Johannesburg
26 August 2020
Directors
Alan Olivier (chairman); Stuart Bird; David Brown; Thembi Chagonda;
Des de Beer*; Des Gordon; Nick Hanekom*; Johann Kriek*; Dawn Marole;
Monica Muller*; Protas Phili; Umsha Reddy; Barry van Wyk
(*executive director)
Company secretary
Ashleigh Egan
Registered address
4th Floor, Rivonia Village, Rivonia Boulevard, Rivonia, 2191
Transfer secretaries
Link Market Services South Africa Proprietary Limited
13th Floor, 19 Ameshoff Street, Braamfontein, 2001
Sponsor
Java Capital Trustees and Sponsors Proprietary Limited
6th Floor, 1 Park Lane, Wierda Valley, Sandton, 2169
www.resilient.co.za
Date: 26-08-2020 12:15:00
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