Unaudited Interim Financial Statements of Tradehold Group for six months to 31 August 2020 Cash Dividend Declaration
(Registration number: 1970/009054/06)
Incorporated in the Republic of South Africa
JSE Ordinary Share code: TDH ISIN: ZAE000152658
JSE B Preference Share code: TDHBP ISIN: ZAE000253050
("Tradehold" or the "Group")
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS OF THE
TRADEHOLD GROUP FOR THE SIX MONTHS TO 31 AUGUST 2020 AND CASH DIVIDEND
- Total assets: £807 million (29 February 2020: £883.9 million)
- Revenue: £34.5 million (31 August 2019: £47.7 million)
- Ordinary shareholders' equity: £253.9 million (29 February 2020:
- Net loss attributable to ordinary shareholders: £8.7 million
(31 August 2019: loss £0.4 million)
- Headline earnings per share: 0.5 pence (31 August 2019: 6.9 pence)
- Tangible net asset value per share: 105 pence / R23.39
(29 February 2020: 120 pence / R24.05)
- Interim dividend of 30 cents per ordinary share declared.
Tradehold's net assets at the reporting date were split across the United
Kingdom in pound sterling (42.3%), United States dollar assets in Africa
(8.1%), and the balance in South African rand (49.6%). In South Africa it
owns 74.3% of the Collins Property Group. In the UK it holds 100% of the
Moorgarth Property Group, including a 90% stake in Boutique (previously
known as 'The Boutique Workplace Company'), a provider of serviced office
accommodation in Greater London. Moorgarth owns a number of Boutique's
Total assets now amount to £807 million (29 February 2020: £883.9 million),
the decrease being mainly due to the adverse effects of the deterioration
in the exchange rate of the ZAR against £ on Collins total assets, and
proceeds from assets realised used to repay debt. Revenue was £34.5 million
(31 August 2019: £47.7 million) while total loss attributable to
shareholders stood at £8.7 million (31 August 2019: loss of £0.4 million).
The increase in the loss is mainly due to an increase in Moorgarth losses of
£5.3 million, a decrease in Collins net profit of £1.5 million mostly due to
ZAR weakness, and an adverse movement on the revaluation of the financial
assets of £1 million from the comparable period.
Headline earnings per share was 0.5 pence, down from 6.9 pence and tangible
net asset value per share (as defined by management) was 105 pence / R23.39,
compared to 120 pence / R24.05 at 29 February 2020.
The sum-of-the-parts valuation per share (as defined by management) was
107.8 pence / R24.01, compared to 121.5 pence / R24.34 at 29 February 2020.
- Collins, with a portfolio consisting of predominantly large industrial
buildings, collected 90% of all rents due during the reporting period
(95% if Covid-related remissions of R30 million are excluded) and in
the process achieved its pre-Covid budget for the period
- The vacancy rate in the Collins portfolio was maintained at a low
1,78% with all leases on average having another seven years to run
- Moorgarth, with a portfolio consisting of shopping centres and
commercial properties, achieved, under extremely demanding conditions,
an overall rent collection rate of 75%
- Moorgarth's management continued its programme of rebalancing the
portfolio away from retail, which now constitutes 54% of its value
against 60% 18 months ago
- Boutique, which operates from 31 buildings in Greater London, is
experiencing a growing interest in the market for its flexible,
fully-equipped office space. September's sales of 180 workstations
were the highest in three years.
Collins weathered the Covid-19 storm well in the six months to end August.
This was thanks largely to the composition of its property portfolio, with
upmarket industrial and distribution centres accounting for about 83% of the
total. Collins is also in the fortunate position of deriving the bulk of
its income from JSE-listed or national tenants with whom it enjoys long-term
At the end of the reporting period the vacancy level of its 1.5 million
square metres of gross lettable area (GLA) stood at 1.78%. The weighted
average lease expiring profile remained at almost seven years.
The group's results for the six months are in line with its pre-Covid budget
despite granting Covid-remissions of R30 million during this period. Even
so, by consistently focusing on satisfying client needs, the group managed
to collect 90% of all income due despite most businesses being closed down
during the countrywide lockdown in May.
Management continued focusing on achieving consistent, quality income
streams. It had already previously embarked on an ongoing programme of
upgrading the composition, average size and quality of the properties in the
portfolio, that at the end of the reporting period was valued at
R8.8 billion. To achieve this, non-core assets - 37 mainly smaller, mainly
commercial buildings - were identified for disposal. Of these, 26 were sold
by the end of the 2020 financial year. During the reporting period, a
further seven were disposed of, with four remaining. As a result of these
actions, the average size of properties in the portfolio increased from
17 367 to 20 420 square metres. The quality of income has improved by virtue
of the fact that 89% of the rental income generated from properties sold was
from non-national tenants, compared to the 79% rental income generated from
national tenants on properties that have been developed.
Throughout the reporting period, the group managed to retain its strong cash
position. It also focused strongly on the liability side of the balance
sheet to reduce its associated costs by unwinding long-dated fixed interest
rate agreements. The benefits derived from these actions will be felt going
Management continues to look at ways of making the business more cash-
generative by renegotiating facilities that would free up operating cash.
The total value of the Collins portfolio was £393.9 million (R8 773 million)
at the reporting date, compared with £438 million (R8 634 million) as at
29 February 2020. The £ value has been adversely affected by the currency
deterioration of the South African rand to pound sterling (R22.27 at the
reporting date compared to R20.0388 at 29 February 2020).
Collins Group contributed net profit of £3.3 million (31 August 2019:
£4.8 million) to the group's net loss after minorities in the six-month
period. The decrease is mainly due to a lower valuation gain on its CPI
hedges, and the deterioration in ZAR to £ from the comparable reporting
The Collins Group's total contribution to tangible net asset value per share
is 51.8 pence (R11.54) compared to 59.3 pence (R11.88) at 29 February 2020.
The first six months of the financial year turned into the most challenging
ever for Moorgarth, as was likely the case for the entire modern-day British
property industry. Covid-19 precipitated a rapid dimension change in terms
of working practices, shopping behaviour and leisure activities. The change
in consumer behaviour has been dramatic and is likely to endure. While
online retail sales increased from the historic 19% of total sales to 33%
and up to 40% during the three months of the full lockdown period, digital
shopping growth is projected to continue. At the same time, working from
home has become commonplace with many large tenants in commercial buildings
forcing staff to remain home until 2021.
Industry figures show average rent collections in retail malls ranged from
20% to 50%, with many falling even below those levels. Moorgarth performed
considerably better, with retail rent collections for the first three months
of the reporting period averaging 71.4%. This was despite the government
enforced closures of two of its malls during the initial lockdown. During
the second three months, retail rent collections averaged 65.3%. However,
commercial space rent collection levels were considerably higher, averaging
95%, bringing the average of the total portfolio to 75%. During this time
Moorgarth achieved 15 new lettings and finalised 28 lease renewals or
extensions, all at or close to ERV (estimated rental value).
To counter the effects of the drop in rent collections and consequently
lower income, management's focus continued to be on key defensive measures
to protect income, preserve cash and manage bank relationships. Major items
of capital expenditure were deferred to a future date. Collectively, these
steps enabled the company to meet all its operating costs and to service all
The impact of the pandemic has created massive uncertainty in the market,
particularly in the retail sector, and as a result, the lack of comparable
transactions against which to demonstrate any credible and accurate
assessment of value have simply not existed. Coupled with the impending and
as yet unknown outcome of Brexit, it has become almost impossible to put
accurate valuations on assets. Management therefore decided on a general
impairment of value across the portfolio. Using as a guideline the
findings of the IPD All Property Index, it has reduced values overall by
£11.8 million for the half-year, having also reduced values by a similar
amount in the previous financial year. Since February 2019 Moorgarth's
retail portfolio has been marked down by 18% in value, despite securing
planning consent on our Reading project for 422 apartments. Retail now
comprises 54% of the total portfolio, compared to 60% then.
Moorgarth's share of the group net loss amounted to £12.4 million, against a
net loss of £7.1 million at 31 August 2019.
The total value of Moorgarth's portfolio at half year (excluding IFRS 16
right-of-use assets) dropped to £230.3 million from £239.6 million if its
interest in joint ventures (not reflected in the balance sheet) is included.
The decrease was mainly due to fair-value losses (excluding IFRS 16 fair-
value losses on right-of-use assets) of £11.8 million (29 February 2020:
loss of £13.6 million) on investment properties, of which £6.4 million
relates to the joint venture held properties.
Moorgarth's contribution to tangible net asset value per share was
41.5 pence (R9.25) (29 February 2020: 44.9 pence (R9)).
Boutique (previously The Boutique Workplace Company or TBWC) offers flexible
office accommodation from 31 buildings in greater London. Together, these
buildings (some of which are owned by Moorgarth that buys and equips them
for Boutique's needs) offer some 4 400 individual workstations in a modern
shared office environment, including substantial amounts of amenity/breakout
The pandemic clearly had a short-term impact on the company during the
reporting period in that footfall in greater London offices fell to
virtually nil overnight when the UK was put into a three-month lockdown.
Most employers adopted a conservative position on staff returning to the
office, and in Greater London, many staff members, especially those
dependent on public transport, remained at home. This situation has
continued even after full lockdown ended.
Despite this, Boutique remained fully operational since the end of the
lockdown in June and managed to end the reporting period in an improved cash
position. In addition, with indications that market conditions might be
improving, September proved the best month for new business in three years.
Cost-saving measures saw general operating expenses drop by a third, with
salary costs substantially reduced by using the government's furlough scheme
and negotiating rent concessions from landlords. All capital expenditure was
placed on hold and stringent cashflow measures introduced.
Boutique is also increasingly focusing on management contracts as a growing
number of landlords become open to such arrangements in the light of how
difficult traditional lease occupation has become. For Boutique, such
contracts are attractive as they do not require significant capital
commitment while operational liabilities remain with the landlord.
Boutique's EBITDA (earnings before interest, tax, amortisation and
depreciation) for the six months to end August was £595 000 (31 August 2019:
£1.4 million), before adjusting for the new IFRS 16 reporting requirements.
Nguni Group (Namibia)
Negotiations are underway to sell Tradehold's total Namibian portfolio which
comprises a number of top-quality retail and commercial properties as well
as vacant land for development. Given the quality of the assets and
corresponding income stream, the portfolio was able to perform
satisfactorily despite the impact of Covid-19.
The value of the Namibian portfolio was £33.4 million (R745 million) at the
reporting date, compared with £37 million (R743 million) on 29 February
2020. The value has been adversely affected by the currency deterioration of
the South African rand to pound sterling (R22.27 at the reporting date
compared to R20.04 at 29 February 2020). Namibia reported a net profit after
minorities of £1 million (31 August 2019: net profit of £409 000). The Nguni
Group's total contribution to tangible net asset value per share was 8 pence
(R1.79) (29 February 2020: 8.5 pence (R1.71)).
Tradehold Africa Group (Mozambique, Botswana and Zambia)
The value of the portfolio decreased to £23.4 million from £23.7 million at
the end of February 2020 due the weakening of the US$ against £. The company
contributed £1.9 million in profit to the total group loss, compared to a
net profit of £1.7 million for the corresponding period. Tradehold Africa's
total contribution to tangible net asset value per share was 7.1 pence
(R1.57) (29 February 2020: 7.3 pence (R1.47).
INTERIM ORDINARY SHARE CASH DIVIDEND
The board of directors of Tradehold (the "Board") resolved to declare a
gross cash dividend of 30 cents per ordinary share on 12 November 2020 -
Tradehold's first interim dividend ever. The income used for this purpose is
Tradehold's share of the dividend Collins Group declares every six months in
terms of the agreement with its minority shareholders. The dividend will
reduce Tradehold's stated capital.
The distribution constitutes a foreign dividend as defined in section 1 of
the Income Tax Act ("ITA") and is a dividend for purposes of dividends tax
("DT"), since the shares are listed on the JSE Limited ("JSE").
An exemption from DT is provided for in the ITA in respect of foreign
dividends paid to a South African company and to a non-resident to the
extent that it is paid in respect of listed shares, provided certain
administrative procedures are complied with.
The ITA further provides for an exemption from income tax in respect of
foreign dividends received or accrued in respect of listed shares.
In terms of the ITA, DT of 20% has been withheld in the case of those
shareholders who are not exempt from it. They will therefore receive a net
dividend of 24 cents per ordinary share.
Tradehold has 261 346 570 ordinary shares in issue. Its income tax reference
number is 9725/126/71/9.
The salient dates for the dividend are as follows:
Declaration date Thursday, 12 November 2020
Last date to trade cum dividend Tuesday, 1 December 2020
Date trading commences ex dividend Wednesday, 2 December 2020
Record date Friday, 4 December 2020
Date of payment to shareholders Monday, 7 December 2020
Share certificates may not be dematerialised or rematerialised between
Wednesday, 2 December 2020, and Friday, 4 December 2020, both days included.
At the end of the 2020 financial year, we made the point that the turmoil
and devastation caused by Covid-19 would result in too many imponderables to
make predictions about the future. That statement is still as true now as it
was then. Globally, more than a million people have already died of the
disease and the economic disruption continues. The UK is one of the
countries to have been particularly hard hit, with a second wave leading to
tighter lockdown restrictions across the country. In South Africa,
joblessness is increasing daily while the government's new recovery plan,
even if implemented immediately, will take time before it has any impact on
the local economy. The Board therefore believes trading conditions will
remain largely unchanged. Nevertheless, it expects the results for the full
year to February 2021 to show some improvement on those of the first half.
APPOINTMENT OF DIRECTOR
In compliance with paragraph 3.59 of the Listings Requirements of the JSE,
Tradehold shareholders are advised that Mr Paul Johannes Roelofse has been
appointed as an independent non-executive director to the Board with effect
from 10 November 2020.
Mr Roelofse holds a B.Acc. (Cum Laude) degree and a B.Acc. (Hons) degree
from the University of Stellenbosch. He is a qualified Chartered Accountant
and CFA charterholder. He was employed at Rand Merchant Bank from 2002 until
2019, where he headed the global Corporate Finance business and served on
the Investment Banking Board.
C H Wiese K L Nordier
12 November 2020
The contents of this announcement are the responsibility of the directors of
Tradehold. The announcement is only a summary of the information contained
in the complete unaudited condensed consolidated interim results for the six
months ended 31 August 2020 ("Full Announcement") released on SENS today.
Any investment decisions by investors and shareholders should be based on
consideration of the Full Announcement which is available at the following
and on Tradehold's website at http://www.tradehold.co.za. Copies of the Full
Announcement are available for inspection and may be requested at no charge
from Tradehold's registered office at 36 Stellenberg Road, Parow Industria
or Tradehold's company secretary at firstname.lastname@example.org, or
from the offices of its sponsor, Questco Corporate Advisory Proprietary
Limited, 33 Ballyclare Drive, Bryanston at no charge, from Monday to Friday
during office hours.
DIRECTORS AND ADMINISTRATION
Executive directors: TA Vaughan, FH Esterhuyse, DA Harrop, KL Nordier
Non-executive directors: CH Wiese (alternate JD Wiese), HRW Troskie,
MJ Roberts, LL Porter, KR Collins
Independent non-executive directors: HRW Troskie, MJ Roberts, LL Porter
Company secretary: P J Janse van Rensburg
Transfer secretary: Computershare Investor Services (Pty) Ltd
Sponsor: Questco Corporate Advisory Proprietary Limited
Date: 12-11-2020 09:00:00
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