Wrap Text
Unaudited condensed consolidated interim results for the six months ended 31 March 2018
Gemgrow Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 2007/032604/06)
JSE share code: GPA ISIN: ZAE0000223269
JSE share code: GPB ISIN: ZAE0000223277
(Granted REIT status with the JSE)
("Gemgrow" or "the company" or "the group")
Unaudited condensed consolidated interim results for the six months
ended 31 March 2018
Financial highlights
Strong balance sheet low LTV 29% 97% debt hedged
Debt expiry profile 3,8 years (2017: 1 year)
R549m of acquisitions transferred and integrated within portfolio
Dividend on A share of 52,18 cents and dividend on B share of
38,52 cents in line with guidance for interim period
7 times cash cover on A shares
Nature of business
Gemgrow is a specialist high yield, high growth Real Estate Investment
Trust ("REIT") holding a diverse portfolio of office, retail and industrial
properties. As at 31 March 2018 the portfolio comprised 139 properties,
located in all nine provinces of South Africa and valued in excess of
R5 billion.
The company's focus is on paying competitive dividend returns to its
investors on a sustainable basis. This is achieved through escalating
rentals, satisfactory renewal of leases with existing tenants, renting
of vacant space within the property portfolio, managing and reducing,
where possible, costs associated with the property portfolio and by
acquiring yield-enhancing properties.
Condensed consolidated financial results for the six months ended
31 March 2018
R'000/Unaudited 2018 2017
Revenue (excluding straight line rental income) 360 652 314 907
Property expenses (133 026) (125 209)
Administration and corporate costs (5 115) (5 939)
Finance charges (53 457) (46 407)
Finance income 11 668 10 964
Distributable income 180 722 148 316
Pre-effective date distribution# — 19 433
Total dividend 180 722 167 749
Property expenses as a percentage of revenue —
gross (%) 36,9 39,8
Property expenses as a percentage of revenue —
net (%) 14,3 16,6
A share — dividend for the quarter ended 12 353 11 765
31 December
B share — dividend for the quarter ended
31 December 77 687 71 496
A share — dividend for the quarter ended
31 March* 12 353 11 764
B share — dividend for the quarter ended
31 March* 78 329 72 724
Total dividend 180 722 167 749
Dividend per A share (cents) for the quarter
ended 31 December 26,09 24,85
Dividend per B share (cents) for the quarter
ended 31 December 19,18 17,84
Dividend per A share (cents) for the quarter
ended 31 March* 26,09 24,85
Dividend per B share (cents) for the quarter
ended 31 March* 19,34 18,15
90,70 85,69
# Pre-effective dividend income was the income earned for the period
between the legal date of the acquisition by Gemgrow of the entire
issued share capital of Cumulative Properties Limited and the IFRS
effective date.
* The dividend was declared on 16 May 2018.
Commentary
Revenue
Revenue includes rental income and expenditure that is recoverable from
tenants for the six months ended 31 March 2018 ("the six-month period").
* Gemgrow owned 139 properties valued in excess of R5,0 billion, of which
retail comprised 22%, office 33% and industrial 45% based on gross
lettable area ("GLA"). In revenue terms the portfolio comprised retail
of 27%, office 46% and industrial 27%.
* The average gross monthly rental per m² per sector was R104 for retail,
R118 for office and R48 for industrial.
* Vacancies increased from 8% to 9%. At a sectoral level, retail vacancies
were 9%; industrial vacancies 6% and office vacancies 13% for this period.
* The total GLA of the portfolio increased from 690 263m2 to 759 964m2 as a
result of acquisitions concluded last year, and transferred in the current
year. During the six-month period, contracted leases in respect of 72 730m2
expired and 52 335m2 (72%) of this GLA was renewed. Of the remaining
20 395m2, a further 4 736m2 (23%) was re-let to new tenants. In total 79%
of the GLA of leases that expired during the six-month period were renewed
with existing tenants or re-let to new tenants.
* The weighted average lease rental escalations were 7,95%, 8,26% and
8,07% for retail, office and industrial properties respectively.
* The step-up escalations on renewed leases over the entire portfolio was
4%, of which retail constituted 2%, office 3% and industrial 7%.
Letting report for the six months ended 31 March 2018
Total Let Vacant Let Vacant
(m²) (m²) (m²) (%) (%)
As at 1 October 2017 690 263 637 025 53 238 92,29 7,71
Acquisitions 72 103 63 737 8 366 88,40 11,60
Disposals (1 975) (893) (1 082) 45,22 54,78
Net adjustments (427) 407 (834)
Adjusted totals 759 964 700 276 59 688 92,15 7,85
Net (loss)/gain — (8 850) 8 850
As at 31 March 2018 759 964 691 426 68 538 90,98 9,02
The vast majority of the increase in vacancies was in line with
expectations. A quarter of the increase in vacancies was due to acquisitions,
which were secured at no cost, and which represents upside for Gemgrow. The
remaining increase in vacancies was in line with our strategy to improve
the leasing profile of our portfolio by requiring tenants occupying premises
on a month-to-month basis to either sign lease renewals or to vacate the
premises.
Income statement
Operating costs
R'000 2018 % of total 2017 % of total
Municipal expenses 93 026 70 83 497 67
Property management 11 438 10 8 711 7
Security 9 349 7 9 790 8
Repairs and maintenance 5 121 4 5 749 5
Letting commission 3 101 2 4 097 3
Cleaning 4 602 3 4 245 3
Insurance 1 783 1 1 696 1
Other 4 606 3 7 424 6
Total 133 026 100 125 209 100
Municipal expenses and property management fees increased in line with
revenue. The company has rationalised the portfolio management under one
property manager and implemented cost containment measures which have
successfully reduced security, cleaning and repairs and maintenance costs.
The impact has been a reduction in the gross and net expense to income
ratios over the portfolio from 39,8% to 36,9% and 16,6% to 14,3%,
respectively. The lower letting commission expense was a function of
lease renewals and new leases concluded in the current year compared to
that in the prior year. Other expenses in the prior year contained a
provision for bad debts, higher than the current year, by R2,5 million.
Administrative and corporate costs
The higher expenses last year related to certain professional fees
relating to 2016 that were only invoiced to the company in the first
six months of 2017.
Finance income
R'000 2018 % of total 2017 % of total
Interest received on bank
balances and debtors 3 383 29 2 330 21
Interest received on loans to
executives 8 285 71 8 684 79
Total 11 668 100 10 964 100
Interest received on the loans to executives is lower, due to interest
received in the prior year from loan shares issued to the late Gerald
Leissner. This loan was settled in the prior financial year.
Finance charges
The increased interest expense related to additional debt funding used
to finance the acquisitions that transferred during the six-month period
being reported on.
Statement of financial position
Investment properties
The company owned a portfolio of 139 retail, industrial and office properties
valued in excess of R5,0 billion at 31 March 2018, located in all nine
provinces of South Africa. The average value per property as at 31 March 2018
was R36,1 million. The value of investment property has increased from R4,5
billion at 30 September 2017 to approximately R5 billion as at 31 March 2018.
The increase was primarily attributable to the acquisition of 12 investment
properties valued at R549 million and one property disposal valued at
R6 million and one leasehold property in respect of which the lease was not
renewed. There is one remaining leasehold property in the portfolio with a
value of R36 million with a lease that expires in 18 years.
Trade and other receivables
Trade receivables, deposits and other receivables reduced from R74,6 million
in September 2017 to R70,1 million at 31 March 2018. The material items
making up this balance were R15,6 million for trade receivables reduced by
a R4,8 million provision for bad debts, R3,5 million for municipal recovery
income accruals, R9,2 million for municipal deposits and R44 million in
respect of the adjustment accounts relating to the asset exchange with Vukile
Property Fund Limited ("Vukile"), which is in the process of being finalised.
Secured financial liabilities
The loans of R1,46 billion measured against investment properties of
R5 billion represents a loan to value of 29%. The interest rate swaps of R1,43
billion resulted in 97% of the interest payable being hedged. The effective
interest rate for the period ended 31 March 2018 was 9,39%.
Three-month Prime rate Debt
Maturity Jibar margin % margin % R'000
November 2018 — minus 1,5 200 674
September 2019 2,3 — 139 000
September 2022 — minus 1,6 50 000
October 2022 2,15 — 525 000
November 2022 2,20 — 548 842
Total exposure 1 463 516
(Excluding the carrying value of loan initiation fees.)
Gemgrow has furthermore entered into interest rate swaps to hedge its
exposure to fluctuations in interest rates of its debt as follows:
* an interest rate swap over R50 million until 19 February 2019;
* an interest rate swap over R40 million until 19 February 2019;
* an interest rate swap over R40 million until 1 July 2019;
* an interest rate swap over R40 million until 1 July 2019;
* an interest rate swap over R80 million until 30 September 2019;
* an interest rate swap over R50 million until 1 September 2020;
* an interest rate swap over R525 million until 31 October 2022; and
* an interest rate swap over R600 million until 15 November 2022
(excluding fair value adjustments on swaps.)
During the six-month period, the company refinanced loans of R50 million and
R525 million for five-year terms expiring in September 2022 and October 2022
respectively. The company also finalised a further five-year loan to fund
acquisitions that transferred during the six-month period to the value of
R549 million. In the same period the company implemented swap arrangements
to hedge the R525 million loan refinance and R600 million in respect of the
loans on acquisitions. As at 31 March 2018, 97% of the loans were hedged.
The weighted average debt expiry profile has improved from a 12-month debt
expiry profile in the prior year to 3,8 years as at 31 March 2018.
The company has debt expiring on 1 November 2018 to the value of R201 million
and is negotiating the renewal thereof.
Trade and other payables
Trade creditors reduced from R126,8 million to R124,5 million. The material
items making up trade creditors were VAT payable of R13,3 million, tenant
deposits of R46,4 million, trade creditors of R2 million, R34,3 million in
respect of the adjustment accounts asset exchange process for Vukile yet
to be finalised; and capital and operational expenditure accruals of
R25,8 million.
Prospects
Gemgrow is positioned to deliver on its guidance of 7% to 9% growth on its
B shares for the year ended 30 September 2018, as previously advised, while
the A shares will grow at the lower of 5% and the consumer price index.
Gemgrow's focus is to reshape and improve the quality of its core portfolio,
by unlocking further potential from existing properties, strategic disposals
and refurbishments and concluding yield-enhancing acquisitions.
Bolstering the company's team of talented property professionals and improving
operating efficiencies through improved capital allocations, solar initiatives
and cost containment measures is a key strategy in ensuring delivery in an
environment that has seen subdued growth.
The company is pleased to welcome Government's planned growth strategy for
the South African economy, which should provide Gemgrow with a platform of
accelerated growth in the future as a purely South African focused property
fund. Gemgrow's strong balance sheet and a low LTV of 29% will provide the
company with an opportunity to respond effectively to renewed growth and
positive sentiment in the economy. Gemgrow is negotiating on an ongoing
basis to acquire property portfolios that will provide further growth
opportunities.
Summary of financial performance
Six months ended Six months ended
31 March 2018 31 March 2017
Dividend per Gemgrow A share (cents) 52,18 49,70
Dividend per Gemgrow B share (cents) 38,52 35,99
Gemgrow A shares in issue 47 352 203 47 352 203
Gemgrow B shares in issue 405 042 105 400 710 459
Net asset value per A share at
reporting date (cents)* 985 994
Net asset value per B share at
reporting date (cents) 841 814
* The net asset value per Gemgrow A share has been calculated on the 60-day
volume weighted average trading price as at 31 March 2018.
Payment of dividend for the quarter ended 31 March 2018
The board of directors ("Board") has approved a gross dividend (dividend number
6) of 26,08791 cents per A share and 19,33845 cents per B share for the quarter
ended 31 March 2018 in accordance with the timetable set out below:
2018
Last day to trade Tuesday, 5 June
Shares trade ex distribution Wednesday, 6 June
Record date Friday, 8 June
Payment date Monday, 11 June
Share certificates may not be dematerialised or re-materialised between
Wednesday, 6 June 2018 and Friday 8 June 2018, both days inclusive.
The dividend will be transferred to dematerialised shareholders CSDP/ broker
accounts on Monday, 11 June 2018. Certificated shareholder's dividend payments
will be paid to certificated shareholder's bank accounts on Monday, 11 June 2018.
In accordance with Gemgrow's status as a REIT, shareholders are advised that the
dividends meet 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
dividends on the shares will be deemed to be dividends, for South African tax
purposes, in terms of section 25BB of the Income Tax Act.
Dividends 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 they are
dividends distributed by a REIT. These dividends are, however, exempt from dividend
withholding tax in the hands of South African tax resident shareholders, provided
that the South African resident shareholders provided 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 dividends are 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 dividends, 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 ordinary dividends which is exempt from income tax in
terms of the general dividend exemption in section 10(1)(k)(i) of the Income Tax
Act. From 22 February 2017, any dividends received by a non-resident from a REIT
are 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 shareholders. Assuming
dividend withholding tax will be withheld at a rate of 20%, the net dividend amount
due to non-resident shareholders is 20,87033 cents per A share and 15,47076 cents
per B 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 dividends are 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 distribution if such documents have not
already been submitted, if applicable.
Shareholders are encouraged to consult their professional advisors should they
be in any doubt as to the appropriate action to take.
A ordinary shares in issue at the date of declaration of this dividend:
47 352 203.
B ordinary shares in issue at the date of declaration of this dividend:
405 042 105.
Gemgrow's income tax reference number: 9068/723/17/1
Events after reporting period
At the general meeting held on 23 April 2018, shareholders approved an amendment
to the company's Memorandum of Incorporation, amending the timing of dividend
payments from quarterly to bi-annual. Accordingly, the next dividend is expected
to be declared on 20 November 2018.
Dividend declaration after reporting date
In line with IAS 10 Events after the reporting period, the declaration of the
dividends occurred after the end of the reporting period, resulting in a non-
adjusting event which is not recognised in the financial statements.
Litigation statement
There are no legal or arbitration proceedings, including any proceedings that
are pending or threatened, of which Gemgrow is aware, that may have or have had
in the recent past, being the previous six months, a material effect on the
group's financial position.
Basis of preparation
The unaudited condensed consolidated interim results for the six months ended
31 March 2018 have not been reviewed or reported on by the group's auditors,
Grant Thornton Johannesburg Partnership.
The financial information has been prepared in accordance with the requirements
of International Financial Reporting Standards, the SAICA Financial Reporting
guides as issued by the Accounting Practices Board, IAS 34: Interim Financial
Reporting, the JSE Listings Requirements and the requirements of the South African
Companies Act, 2008. These results have been prepared under the supervision of
J Limalia, CA(SA), Gemgrow's Chief Financial Officer.
The accounting policies adopted are consistent with those applied in the
preparation of the financial statements for the year ended 30 September 2017.
By order of the Board
16 May 2018
Directors: Gregory Kinross* (Chairperson), Mark Kaplan (CEO), Alon Kirkel (COO),
Junaid Limalia (CFO), Clifford Abrams*, Arnold Basserabie* and Ayesha Rehman*.
* Independent non-executive.
All directors are South African.
Registered office: 3rd Floor, Upper Building, 1 Sturdee Avenue, Rosebank,
Johannesburg, 2196; PO Box 685, Melrose Arch, 2076
Transfer secretaries: Computershare Investor Services Proprietary Limited
Sponsor: Java Capital
Company secretary: Link Market Services Proprietary Limited
Website: www.gemgrow.co.za
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited
for the for the for the
six months six months year
ended ended ended
31 March 31 March 30 September
R'000 2018 2017 2017
Rental income 360 652 314 907 666 066
Straight-line rental income accrual 10 262 — 35 569
Total revenue 370 914 314 907 701 635
Property expenses (133 026) (125 209) (263 056)
Administration and corporate costs (5 115) (5 939) (8 531)
Net operating profit 232 773 183 759 430 048
Changes in fair values (12 379) 89 63 407
Profit from operations 220 394 183 848 493 455
Finance charges (53 457) (46 407) (91 577)
Finance income 11 668 10 964 20 468
Profit before taxation 178 605 148 405 422 346
Taxation — — —
Profit for the period 178 605 148 405 422 346
Other comprehensive income — — —
178 605 148 405 422 346
Condensed consolidated statement of financial position
Unaudited at Unaudited at Audited at
31 March 31 March 30 September
R'000 2018 2017 2017
Assets
Non-current assets 5 334 028 4 665 294 4 723 204
Investment property 5 022 635 4 339 685 4 438 238
Fair value of property portfolio
for accounting purposes 4 976 804 4 333 104 4 402 669
Straight-line rental income
accrual 45 831 6 581 35 569
Property, plant and equipment 168 80 164
Loans to executives 148 595 162 898 122 173
Goodwill 160 618 160 619 160 618
Deferred tax asset 2 012 2 012 2 011
Current assets 143 353 159 602 211 096
Trade and other receivables 70 117 51 781 74 598
Loan to holding company — — 80 002
Cash and cash equivalents 73 236 107 821 56 496
Non-current assets held for sale — — 9 370
Total assets 5 477 381 4 824 896 4 943 670
Equity and liabilities
Shareholders interest 3 872 359 3 743 124 3 846 010
Stated capital 3 210 314 3 184 042 3 184 041
Reserves 662 045 559 082 661 969
Other non-current liabilities 1 278 660 403 732 350 831
Secured financial liabilities 1 259 978 398 254 343 390
Derivative instruments 18 682 5 478 7 441
Current liabilities 326 362 678 040 746 829
Trade and other payables 124 550 103 007 126 788
Derivative financial instruments 1 138 — —
Secured financial liabilities 200 674 575 033 575 041
Loan from holding company — — 45 000
Total equity and liabilities 5 477 381 4 824 896 4 943 670
The secured financial liabilities include the effects of loan initiation
fees.
Condensed consolidated statement of changes in equity
Other
Stated Retained components
R'000/Unaudited capital income of equity Total
Balance at 30 September
2016 942 473 55 085 493 936 1 491 493
Issue of shares 2 241 568 — — 2 241 568
Transfer from other
components of equity — 493 936 (493 936) —
Dividends paid — (309 397) — (309 397)
Total comprehensive income
for the period — 422 346 — 422 346
Balance at 30 September
2017 3 184 041 661 969 — 3 846 010
Issue of shares 26 273 — — 26 273
Dividends paid — (178 529) — (178 529)
Total comprehensive income
for the period — 178 605 — 178 605
Balance at 31 March 2018 3 210 314 662 045 — 3 872 359
Condensed consolidated statement of cash flows
Unaudited Unaudited Audited
for the for the for the
six months six months year
ended ended ended
31 March 31 March 30 September
R'000 2018 2017 2017
Net cash utilised from operating
activities 9 205 37 195 25 928
Cash generated from operations 229 524 210 982 406 434
Finance charges paid (53 457) (46 407) (91 578)
Interest received 11 667 10 964 20 469
Dividends paid (178 529) (138 344) (309 397)
Net cash utilised in investing
activities (566 634) (3 048) 56 158
Acquisition of investment property (572 611) (2 966) (30 472)
Proceeds from disposal of investment
property 6 000 — 26 652
Acquisition of property, plant and
equipment (23) (82) (179)
Pre-acquisition income — — 19 433
Repayment of loans by executives — — 40 724
Net cash generated from financing
activities 574 169 49 936 (49 328)
Proceeds from issue of share capital (149) 13 936 4 425
Proceeds from loans to holding
company 35 002 — (35 002)
Proceeds from/(repayment of)
financial liabilities 539 316 36 000 (18 751)
Net movement in cash and cash
equivalents 16 740 84 083 32 758
Cash and cash equivalents at the
beginning of the period 56 496 23 738 23 738
Cash and cash equivalents at the end
of the period 73 236 107 821 56 496
Reconciliation of earnings to headline earnings
Unaudited Unaudited Audited
for the for the for the
six months six months year
ended ended ended
31 March 31 March 30 September
R'000 2018 2017 2017
Profit for the period attributable
to Gemgrow shareholders 178 605 148 405 422 346
Earnings 178 605 148 405 422 346
Changes in fair value of investment — — (58 265)
property
Loss on sale of investment property — — (7 017)
Headline profit attributable to
shareholders 178 605 148 405 357 064
Consolidated condensed segmental analysis for the six months ended
31 March 2018
The entity has reportable segments based on the geographic locations of the
properties, which are the entity's strategic business segments. The entity's
executive directors review internal management reports monthly and all segments
greater than 10% are considered strategic. All segments are in South Africa.
There are no single major tenants. The following summary describes the operations
in each of the company's reportable segments.
Geographical
R'000/Unaudited Western KwaZulu-
31 March 2018 Gauteng Cape Natal
Contractual rental income 216 874 49 020 38 142
Straight line rental income 6 687 1 000 783
Listed securities income — — —
Operating and administration costs (83 228) (17 292) (12 931)
Net operating profit/(loss) 140 333 32 728 25 994
Interest received 465 60 73
Finance charges (131) (1) (3)
Net operating profit/(loss) 140 667 32 787 26 064
Changes in fair values — — —
Reportable segment profit/(loss)
before tax 140 667 32 787 26 064
Taxation — — —
Reportable segment profit after tax 140 667 32 787 26 064
Reportable segment assets 3 146 555 679 041 553 426
Reportable segment liabilities (52 849) (13 456) (26 254)
3 093 706 665 585 527 172
R'000/Unaudited Limpopo Other Total
31 March 2018
Contractual rental income 15 200 41 416 360 652
Straight line rental income 382 1 410 10 262
Listed securities income — — —
Operating and administration costs (3 782) (20 908) (138 141)
Net operating profit/(loss) 11 800 21 918 232 773
Interest received 6 11 064 11 668
Finance charges (1) (53 321) (53 457)
Net operating profit/(loss) 11 805 (20 339) 190 984
Changes in fair values — (12 379)* (12 379)
Reportable segment profit/(loss)before
tax 11 805 (32 718) 178 605
Taxation — — —
Reportable segment profit after tax 11 805 (32 718) 178 605
Reportable segment assets 556 265 542 094 5 477 381
Reportable segment liabilities (13 045) (1 499 417) (1 605 022)
543 219 (957 323) 3 872 359
Sectoral
R'000/
Unaudited Commercial Industrial Retail
31 March 2018
Contractual rental income 183 941 103 485 73 226
Straight line rental income 6 137 1 571 2 554
Operating and administration costs (64 859) (38 302) (27 339)
Net operating profit 125 219 66 754 48 441
Finance income 328 232 104
Finance charges (43) (90) (2)
Net operating income/(loss) 125 504 66 896 48 543
Changes in fair values — — —
Reportable segment profit before tax 125 504 66 896 48 543
Taxation — — —
Reportable segment profit after tax 125 504 66 896 48 543
Reportable segment assets 2 534 390 1 388 954 1 231 379
Reportable segment liabilities (44 884) (23 812) (43 422)
2 489 506 1 365 142 1 187 957
R'000/
Unaudited Overheads Total
31 March 2018
Contractual rental income — 360 652
Straight line rental income — 10 262
Operating and administration costs (7 641) (138 141)
Net operating profit (7 641) 232 773
Finance income 11 003 11 667
Finance charges (53 321) (53 456)
Net operating income/(loss) (49 959) 190 984
Changes in fair values (12 379)* (12 379)
Reportable segment profit before tax (62 338) 178 605
Taxation — —
Reportable segment profit after tax (62 338) 178 605
Reportable segment assets 322 658 5 477 381
Reportable segment liabilities (1 492 904) (1 605 022)
(1 170 246) 3 872 359
* Changes in fair values relate to the swaps implemented by the company.
Geographical
Western KwaZulu-
R'000/Unaudited Gauteng Cape Natal
31 March 2017
Contractual rental income 207 107 46 339 34 463
Straight line rental income — — —
Operating and administration costs (78 479) (18 457) (11 852)
Net operating profit 128 628 27 882 22 611
Finance income 237 — 33
Finance charges (163) (84) —
Net operating income/(loss) 128 702 27 798 22 644
Changes in fair values — — —
Reportable segment profit before tax 128 702 27 798 22 644
Taxation — — —
Reportable segment profit after tax 128 702 27 798 22 644
Reportable segment assets 2 761 242 595 478 507 760
Reportable segment liabilities (39 962) (10 597) (14 751)
2 721 280 584 881 493 009
R'000/Unaudited Other Total
31 March 2017
Contractual rental income 26 998 314 907
Straight line rental income — —
Operating and administration costs (22 360) (131 148)
Net operating profit 4 638 183 759
Finance income 10 694 10 964
Finance charges (46 160) (46 407)
Net operating income/(loss) (30 828) 148 316
Changes in fair values 89 89
Reportable segment profit before tax (30 739) 148 405
Taxation — —
Reportable segment profit after tax (30 739) 148 405
Reportable segment assets 960 416 4 824 896
Reportable segment liabilities (1 016 462) (1 081 772)
(56 046) 3 743 124
Sectoral
R'000/
Unaudited Commercial Industrial Retail
31 March 2017
Contractual rental income 172 677 89 468 52 762
Straight-line rental income accrual — — —
Operating and administration costs (65 301) (35 632) (22 981)
Net operating profit 107 376 53 836 29 781
Finance income 182 53 69
Finance charges (236) (6) —
Net operating income/(loss) 107 322 53 883 29 850
Changes in fair values — — —
Reportable segment profit before tax 107 322 53 883 29 850
Taxation — — —
Reportable segment profit after tax 107 322 53 883 29 850
Reportable segment assets 2 427 301 1 342 556 643 211
Reportable segment liabilities (24 693) (16 826) (50 054)
2 402 608 1 325 730 593 157
R'000/
Unaudited Overheads Total
31 March 2017
Contractual rental income — 314 907
Straight-line rental income accrual — —
Operating and administration costs (7 234) (131 148)
Net operating profit (7 234) 183 759
Finance income 10 660 10 964
Finance charges (46 165) (46 407)
Net operating income/(loss) (42 739) 148 316
Changes in fair values 89 89
Reportable segment profit before tax (42 650) 148 405
Taxation — —
Reportable segment profit after tax (42 650) 148 405
Reportable segment assets 411 828 4 824 896
Reportable segment liabilities (990 199) (1 081 772)
(578 371) 3 743 124
Geographical
Western KwaZulu-
R'000/Audited Gauteng Cape Natal
30 September 2017
Contractual rental income 421 238 94 998 70 967
Straight line rental income accrual 18 738 3 506 2 933
Operating and administration costs (160 144) (35 386) (24 385)
Net operating profit 279 833 63 117 49 515
Finance income 605 48 100
Finance charges (405) (251) (17)
Net operating income/(loss) 280 033 62 914 49 598
Changes in fair values 1 060 28 098 (4 744)
Reportable segment profit/(loss) before
tax 281 093 91 012 44 854
Taxation — — —
Reportable segment profit after tax 281 093 91 012 44 854
Reportable segment assets 2 856 785 655 643 536 329
Reportable segment liabilities (41 672) (13 531) (26 216)
2 815 113 642 112 510 114
R'000/Audited Other Total
30 September 2017
Contractual rental income 78 863 666 066
Straight line rental income accrual 10 392 35 569
Operating and administration costs (51 671) (271 587)
Net operating profit 37 583 430 048
Finance income 19 714 20 468
Finance charges (90 904) (91 577)
Net operating income/(loss) (33 607) 358 939
Changes in fair values 38 993 63 407
Reportable segment profit/(loss) before tax 5 387 422 347
Taxation — —
Reportable segment profit after tax 5 387 422 347
Reportable segment assets 894 913 4 943 670
Reportable segment liabilities (1 016 242) (1 097 660)
(121 329) 3 846 010
Sectoral
R'000/Audited Commercial Industrial Retail
30 September 2017
Contractual rental income 359 066 194 343 112 657
Straight-line rental income accrual 24 008 7 024 4 537
Operating and administration costs (134 088) (74 533) (41 497)
Net operating profit 248 986 126 833 75 697
Finance income 331 339 166
Finance charges (486) (183) (10)
Net operating income/(loss) 248 831 126 989 75 852
Changes in fair values 39 748 14 158 4 359
Reportable segment profit/(loss)
before tax 288 579 141 147 80 211
Taxation — — —
Reportable segment profit after tax 288 579 141 147 80 211
Reportable segment assets 2 511 992 1 374 418 676 343
Reportable segment liabilities (29 326) (26 248) (55 950)
2 482 666 1 348 170 620 393
R'000/Audited Overheads Total
30 September 2017
Contractual rental income — 666 066
Straight-line rental income accrual — 35 569
Operating and administration costs (21 468) (271 587)
Net operating profit (21 468) 430 048
Finance income 19 632 20 468
Finance charges (90 898) (91 577)
Net operating income/(loss) 92 734 358 939
Changes in fair values 5 142 63 407
Reportable segment profit/(loss) before tax (87 592) 422 346
Taxation — —
Reportable segment profit after tax (87 592) 422 346
Reportable segment assets 380 917 4 943 670
Reportable segment liabilities (986 136) (1 097 660)
(605 219) 3 846 010
Reconciliation of headline earnings to distributable earnings
Unaudited Unaudited Audited
for the for the for the
six months six months year
ended ended ended
31 March 31 March 30 September
R'000 2018 2017 2017
Headline profit attributable to
shareholders 178 605 148 405 357 064
Cost of strategic repositioning — —
Changes in fair values of financial
instruments 12 379 (89) 1 875
Straight line rental income accrual (10 262) — (35 569)
Amortisation of loan raising costs — —
Deferred tax — —
Pre-effective date distribution 19 433 19 432
Distributable earnings attributable
to shareholders 180 722 167 749 342 802
Number of A shares in issue 47 352 203 47 352 203 47 352 203
Number of B shares in issue 405 042 105 400 710 459 400 710 459
Weighted average number of A shares
in issue 47 352 203 47 352 203 47 352 203
Weighted average number of B shares
in issue 403 994 895 400 710 459 400 710 459
Basic and diluted earnings per A
share (cents) 39,57 33,12 94,26
Basic and diluted earnings per B
share (cents) 39,57 33,12 94,26
Headline and diluted headline
earnings per A share (cents) 39,57 33,12 79,69
Headline and diluted headline
earnings per B share (cents) 39,57 33,12 79,69
Note: A statutory headlines earnings per share (HEPS) reconciliation has not
been performed due to the earnings being equal to headline earnings for
the period.
Directors
Mark Kaplan (CEO)
Junaid Limalia (CFO)
Alon Kirkel (COO)
Gregory Kinross (Chairman)*
Clifford Abrams*
Arnold Basserabie*
Ayesha Rehman*
* Independent non-executive
Registered Office
Gemgrow Properties Limited
3rd Floor Upper Building
1 Sturdee Avenue Rosebank Johannesburg 2196
Transfer Secretaries
Link Market Services South Africa Proprietary Limited
Sponsor
Java Capital Trustees and Sponsors Proprietary Limited
Company Secretary
Gillian Prestwich
CIS Company Secretaries Proprietary Limited
gemgrow.co.za
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