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Audited consolidated financial results for the year ended 30 June 2021 and change to the Board of Directors
Resilient REIT Limited
Incorporated in the Republic of South Africa
Registration number: 2002/016851/06
JSE share code: RES
ISIN: ZAE000209557
Bond company code: BIRPIF
LEI: 378900F37FF47D486C58
(Approved as a REIT by the JSE)
("Resilient" or "the Company" or "the Group")
Short-form announcement: Audited consolidated financial results for the
year ended 30 June 2021 and change to the Board of Directors
www.resilient.co.za
Nature of the business
Resilient is a retail-focused 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 shopping centres and
the reconfiguration of existing shopping centres to adapt to changing market
demands. Resilient also invests directly and indirectly in offshore property
assets.
Distributable earnings and dividend declared
The Board has declared a final dividend of 226,11 cents per share for 2H2021.
Together with the 202,70 cents per share declared for 1H2021, the dividend
for FY2021 of 428,81 cents per share is 16,4% higher than that of FY2020.
During FY2021, 97% of rentals and recoveries billed (before discounts) were
collected. COVID-related discounts and tenant arrears are set out below:
Jun 2021 Dec 2020
six months six months
SA Nigeria Group SA Nigeria Group
R'000 R'000 R'000 R'000 R'000 R'000
Discounts provided
to tenants 15 718 1 795 17 513 42 100 1 611 43 711
Tenant arrears
written off 16 563 (3 519) 13 044 18 923 1 600 20 523
Net arrears at
period-end 33 050 4 603 37 653 58 229 6 939 65 168
Jun 2020 Dec 2019
six months six months
SA Nigeria Group SA Nigeria Group
R'000 R'000 R'000 R'000 R'000 R'000
Discounts provided
to tenants 166 300 6 620 172 920 - - -
Tenant arrears
written off 18 607 3 168 21 775 5 188 2 367 7 555
Net arrears at
period-end 63 516 3 524 67 040 27 013 5 678 32 691
The contribution from the Group's listed investments towards distributable
earnings increased by R146 million during FY2021. This is mainly as a result of
NEPI Rockcastle not declaring a dividend for the six months ended June 2020 and
Resilient not including the NEPI Rockcastle capitalisation issue in the amount
available for distribution for FY2020.
FY2020 benefitted from R220 million of interest earned on EUR221 million of
cross-currency swaps as well as R30 million of capitalised interest. The Group
had no cross-currency swaps during FY2021 and capitalised R0,7 million of
borrowing costs. This had a negative impact on distributable earnings, however,
it was largely offset by lower interest rates in South Africa during FY2021.
Financial performance
Note Audited Audited
for the for the
year ended year ended
June 2021 June 2020 Movement
IFRS information
Total revenue (R'000)* A 2 864 764 3 593 679 (728 915)
Basic earnings/(loss)
per share (cents)* B 76,90 (995,08) 1 071,98
Diluted earnings/(loss)
per share (cents)* B 76,77 (995,08) 1 071,85
Headline earnings/(loss)
per share (cents)* B 70,16 (672,09) 742,25
Diluted headline earnings/
(loss) per share (cents)* B 70,04 (672,09) 742,13
Dividend (cents per share) 428,81 368,44 60,37
Net asset value (R) 52,13 53,84 (1,71)
Management account information
Net asset value (R) 60,24 55,49 4,75
Loan-to-value ratio (%) C 28,8 35,2 (6,4)
Gross property expense ratio (%) 37,3 38,2 (0,9)
Percentage of direct and indirect
property assets offshore (%) 25,4 27,8 (2,4)
* Represents continuing operations. The Board resolved to dispose of Resilient's
operations in Nigeria and as such the Nigerian operations have been classified
as discontinued operations at the reporting date.
Notes:
A FY2021 included revenue from NEPI Rockcastle of R125,4 million compared to
the R729,3 million of FY2020.
B The movement can be attributed to the following:
Audited Audited
for the for the
year ended year ended
June 2021 June 2020
Note R'million R'million
Revenue from investments A 125 416 730 734
Fair value gain/(loss)
on investment property D 509 100 (841 360)
Fair value gain/(loss)
on investments 627 708 (3 142 457)
Fair value gain/(loss)
on currency derivative 224 649 (802 092)
Share of loss of associate E (2 201 143) (239 150)
C The loan-to-value ratio is calculated by dividing total interest-bearing
borrowings adjusted for cash on hand and the fair value of derivative financial
instruments by the total of investments in property, listed securities and
loans advanced.
D Fair value gain/(loss) on investment property affects basic and diluted
earnings/(loss) per share. It does not affect headline and diluted headline
earnings/(loss) per share.
E Resilient owned 40,16% of Lighthouse Capital and the investment is equity
accounted at the reporting date. Resilient's share of the loss of Lighthouse
during FY2021 was R2,2 billion. Lighthouse recognised a negative fair value
adjustment on its investment in Hammerson as the investment was fair valued to
GBP0,163 per share immediately prior to Hammerson becoming its associate.
Lighthouse further recognised its share of Hammerson's losses since it became
its associate.
Property performance
South Africa
Resilient's focus on regions with strong economic fundamentals, either through
mining and resources or export-quality agricultural products, has proved
defensive. Resilient generally has the dominant offering in its target markets
and always includes a strong grocery and convenience offering.
Comparable retail sales were affected by the trading restrictions imposed
as a result of the COVID-19 pandemic. For the 12 months to June 2021,
retail sales of the South African portfolio increased by 7,9%
(when compared to the 12 months to June 2020). In April 2020, the level
5 restrictions resulted in non-essential retailers being unable to trade.
If the effect of April is excluded, retail sales for the remaining
11 months of FY2021 increased by 2,1% (when compared to the
same 11 months of FY2020).
In total, rentals for renewals and new leases (including the cession of
Edgars leases to Retailability and new leases with TFG in respect of Jet)
increased by 1,9% on average during FY2021. Administered costs, particularly
rates and taxes and electricity, are still escalating well ahead of
inflation and retail sales growth and are affecting tenants' cost of
occupancy.In a difficult economic environment, Resilient's property
portfolio recorded net property income growth of 1,1%, excluding the
COVID-related discounts. Resilient's share of the South African portfolio
was revalued upwards by 2,2% by Jones Lang LaSalle Proprietary Limited.
Resilient owns 28 retail centres with a GLA of 1,17 million square metres.
Resilient's pro rata share of the vacancy decreased marginally from 2,4% at
December 2020 to 2,3% at June 2021.
Acquisition of interest in four shopping centres in France
Resilient has reached agreement with Wereldhave Retail France SAS on the
acquisition of a 25% interest in four French shopping centres. Lighthouse
will own the other 75% interest. Resilient's purchase consideration
amounts to c. EUR76,25 million and related working capital on the
effective date of 30 September 2021. The shopping centres are situated
in growing regions in northern France and in cities that will continue
to benefit from urbanisation. Property management of the shopping centres
will be contracted to Accessite which manages over 50 shopping centres
in France.
Prospects
Resilient's property portfolio and listed investments are well positioned to
prove defensive in the year ahead. Although the economic prospects should
improve as the COVID-19 pandemic is brought under control, the Board will
maintain the Group's conservative financial structure. Resilient will continue
to take advantage of any deep value opportunities that may arise in
international markets through or in partnership with Lighthouse.
As stated before, the level of uncertainty, particularly relating to the
pandemic and the distribution that Resilient will receive from its listed
securities, remains elevated. Under these circumstances, the Board is not in a
position to provide guidance. The distribution policy remains unchanged and
Resilient will maintain its payout ratio at 100%.
Change to the Board of Directors
Thando Sishuba has been appointed to the Board as an independent
non-executive director with effect from 26 August 2021.
Thandos'appointment was made in accordance with Resilient's
Nomination Policy and to increase the independence and skillset of
the Board.
Payment of final dividend
The Board has approved and notice is hereby given of a final dividend of
226,11000 cents per share for the six months ended 30 June 2021.
The dividend is payable to Resilient shareholders in accordance with the
timetable set out below:
Last date to trade cum dividend Tuesday, 14 September 2021
Shares trade ex dividend Wednesday, 15 September 2021
Record date Friday, 17 September 2021
Payment date Monday, 20 September 2021
Share certificates may not be dematerialised or rematerialised between
Wednesday, 15 September 2021 and Friday, 17 September 2021, both days inclusive.
In respect of dematerialised shareholders, the dividend will be transferred to
the Central Securities Depository Participant accounts/broker accounts on
Monday, 20 September 2021. Certificated shareholders' dividend payments will be
posted on or about Monday, 20 September 2021.
The auditor, PKF Octagon Inc., has issued an unmodified audit opinion on the
consolidated financial statements for the year ended June 2021. The audit was
conducted in accordance with International Standards on Auditing. The key
audit matters included in the auditor's report are the valuation of
investment properties and the compliance with debt covenants. The preliminary
summarised report ("full announcement") has been audited by PKF Octagon Inc.
and an unmodified audit opinion has been issued.
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 can be
found on the Company's website at
https://www.resilient.co.za/downloads.htm?Subcategory=2021
and can be accessed using the following
JSE link:https://senspdf.jse.co.za/documents/2021/jse/isse/rese/FY2021.pdf
The full announcement, the consolidated financial statements and the audit
reports are 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.
In accordance with Resilient's status as a REIT, shareholders are advised that
the dividend of 226,11000 cents per share for the six months ended 30 June 2021
("the dividend") meets the requirements of a "qualifying distribution" for the
purposes of section 25BB of the Income Tax Act, 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 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 ceases 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 180,88800 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 ceases 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 2021
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, 2196
Debt sponsor
Rand Merchant Bank (a division of FirstRand Bank Limited)
1 Merchant Place, corner of Fredman Drive and Rivonia Road, Sandton, 2196
Date: 26-08-2021 05:10:00
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