To view the PDF file, sign up for a MySharenet subscription.

TEXTON PROPERTY FUND LIMITED - Provisional Condensed Financial Results for the Year Ended 30 June 2018

Release Date: 01/10/2018 07:05
Code(s): TEX     PDF:  
Wrap Text
Provisional Condensed Financial Results for the Year Ended 30 June 2018

Texton Property Fund Limited

(Incorporated in the Republic of South Africa) 

(Registration number: 2005/019302/06)

A Real Estate Investment Trust, listed on the JSE Limited

JSE share code: TEX ISIN: ZAE000190542

(formerly ISIN: ZAE000185872)
www.texton.co.za



Provisional condensed financial results for the year ended 30 June 2018



Key metrics



- Rebased dividend per share 89,31 cents (2017: 102,80 cents).

  Down 13,1%

- Restated net tangible asset value** 659,57 cents per share

  (2017: 781,93 cents per share). 

  Down 15,7%

- Gearing ratios 55,4% (2017: 50,9%).

  Up 4,5%

- Net property income* R416,9 million (2017: R440,8 million).

  Down 5,4%

- Number of properties* 49 (2017: 54).

  Down 9,3%

- Portfolio value* R5 402,9 billion (2017: R5 508, billion).

  Down 1,9%

- National/listed/blue chip tenants (by GLA)* 64,2% (2017: 61,9%).

  Up 2,3%

- Investment property income R581,2 million (2017: R589,2 million).

  Down 1,4%



* Including Texton's 50% interest in Broad Street Mall

** Net asset value less deferred tax



Commentary

Nature of the business

Texton Property Fund Limited ("Texton" or "the Company" or "the Fund") is an 

internally asset managed Real Estate Investment Trust ("REIT") listed on 

the JSE Limited. It has a portfolio of R5,4 billion of assets with retail, 

office and industrial exposure located in South Africa and the United Kingdom. 

The Board of Directors has approved and adopted a revised investment strategy. 

The strategy's main objectives are to rebalance the Fund to achieve consistent 

property income streams, strong tenant covenants and portfolio optimisation.



Our intention is to pursue industrial opportunities with sound fundamentals, 

particularly warehousing and logistics properties in main metropolitan nodes.



Texton is committed to achieving the highest possible returns for its 

shareholders by executing its mandate through achieving growth through 

diversification.



Distributable earnings and commentary on results

The Board of Directors of Texton ("the Board") is pleased to declare a final 

dividend of 41,36 (30 June 2017: 54,85) cents per share. This was achieved 

from a solid performance of the core portfolio albeit through a difficult 

trading environment and macro-economic pressures. The total dividend for the 

year amounting to 89,31 (30 June 2017: 102,80) cents per share was slightly 

behind guidance given to the market.



The exercise of the PIC Put Option resulted in the Board having to delay our 

results. As per the cautionary announcements released on 23 August and 

13 September, the PIC Put Option requires Texton to repurchase the

51,9 million shares previously held by BEE SPV for the outstanding loan balance, 

which is currently R642,6 million at year end. The repurchase is subject to 

compliance with the JSE Listings Requirements and the Companies Act which 

includes a special resolution being passed by shareholders. Texton has 

commenced the process of obtaining shareholder approval and will keep 

shareholders updated via SENS announcements. See note 5 for further details.



As guided to investors, we are nearing the completion of our portfolio 

rationalisation. The reduction of net property income as a result of the 

sale of non-core properties, additional finance costs associated with the 

R180 million payment to cancel the asset management contract and lower foreign 

exchange gains have resulted in lower distributable income for the 12 months 

to June 2018.



Our challenges in 2018 were among the toughest in our company's history. We operated 

in a tough political environment both in South Africa and the United Kingdom, a weak 

macro-economic climate in South Africa and challenging times in the property market. 

As we know, when the economy stops growing, capital growth in other sectors, 

including the commercial sector, also declines.



Economic conditions exacerbated by the technical recession in South Africa continue 

to present challenges, including weak local property fundamentals. Property owners 

are focusing on the income stability of their respective portfolios due to the slow 

economy.



The UK economy regained some pace in comparison to 2017 providing some green shoots 

for the tightening of monetary policy. The property outlook is pointing towards 

yield stability for the remainder of 2018, despite uncertainty about Brexit and the 

prospect of rising interest rates. One of the main challenges relates to the 

high-profile Company Voluntary Arrangements ("CVA") that have come to market. 

Combined with rising e- commerce, shifts in landlord rent income and increased costs 

have put pressure on the retail sector for both landlords and tenants.



Across the spectrum, there is added pressure on tenants with increased operational 

and utility costs. Our continued alignment with the right service providers has 

proven to unlock cost efficiencies where possible and savings of circa R9 million 

were achieved for the period under review.



Texton continues to act on its investment strategy of acquiring complementary and 

portfolio-enhancing properties which offer long-term distribution and capital growth 

underpinned by strong contractual cash flows. As announced on SENS on 21 May 2018, 

Texton has secured the acquisition of four A-grade industrial properties for 

R205,3 million at an acquisition yield of 9,4%. The properties are single tenanted 

with a weighted average lease term of 4,4 years. Competition Commission approval

was granted on 24 July 2018. Texton continues to focus on reducing the LTV ratio 

to return to a target level of below 40%, however, this will take time given the 

quantum of the Manco cancellation payment, together with the resolution of the 

PIC Put Option.



Property portfolio

Key performance indicators

A key focus over the past twelve months has been cost rationalisation and 

portfolio-enhancing acquisitions, which will diversify the Fund in terms of both 

sector and geography. Texton continues to maintain a defensive office portfolio, 

which has performed admirably considering the oversupply and vacancies currently 

experienced in the major property nodes. Our industrial portfolio has performed 

in line with budget other than the vacancy at Hermanstad Industrial Park.



Our South African retail portfolio has remained robust with full occupancy at 

Woodmead Commercial Park, Goldurb (Truworths) and a small vacancy at 

Kempstar Mall.



Texton's current portfolio, split by value, is 59,3% (June 2017: 61,0%; 

December 2017: 59,9%) located in South Africa and 40,7% (June 2017:

39,0%; December 2017: 40,1%) located in the United Kingdom (including our portion 

of Broad Street Mall).



The disposal of Parthenon Park and Talk Talk (Stanford House) are progressed and 

both of these properties have been classified as held for sale at 30 June 2018. 

The sale of the latter will open up an opportunity to repatriate funds back to 

South Africa to reduce our gearing and grow our UK portfolio with the remainder 

of the proceeds.



Vacancies

Texton has embarked on an active drive to fill its vacancies and continues to 

engage with its broker network, principals and prospective users. Vacancies have 

increased slightly to 7,9% at 30 June 2018 from 7,0% at 31 December 2017. On a 

like-for-like basis to 30 June 2018, our vacancies remain below the South African 

Property Owners' Association (“SAPOA”) average of 11,1%. We've seen positive 

results with a decline in vacancies in our larger pockets of space, particularly 

at Scott Street, where 2 400m2 has been successfully let. As we continue to 

reduce vacancies, a key focus is on improving the tenant covenants, and 

increasing exposure to large/national/listed entities.



South Africa

Market conditions remain challenging with competitors continuing to offer 

significant lease incentives including attractive rent-free periods. Texton's 

Asset Management team, which has been bolstered with the employment of two 

additional asset managers, continues to foster relationships with our tenants 

in order to improve tenant retention. Texton does not offer significant rent-free 

periods but continually assesses new manners of offering incentives in order to 

attract and retain tenants.



Texton is progressed in discussions with the Department of Public Works

on longer-term renewals at both the Foretrust building and 14 Loop Street in 

Cape Town. Proposals for both three- and five-year tenures have been presented 

and Texton’s senior management are actively involved in this process.



Scott Street, having been vacant since November 2017, has been partially let from 

October 2018, with the tenant having a pre-emptive right to let the entire property. 

The continued vacancy of Scott Street and St George's Mall, together with longer 

re-let periods and increasing vacancies at Hermanstad Industrial Park, Bryanston 

Gate and Xstrata, have significantly impacted Texton's net property income for 

the 2018 financial year.



Vacancies are expected to increase in the first quarter of FY 2019 as significant 

occupiers at Vunani Chambers and Hermanstad Industrial Park have indicated their 

intention to vacate. We have been actively marketing the upcoming vacancies and 

continue to work closely with our broker network, property managers and tenants in 

order to retain occupancy. 



United Kingdom

We have recently taken steps to streamline the asset and property management 

structure. This has resulted in a major cost saving of GBP174 000 to be realised in 

the 2019 financial year. The UK portfolio continues to offer a robust income stream 

and a lengthy weighted average lease expiry profile. The combination of strong 

covenants and long income profiles has provided a steady and consistent 

income stream.



The United Kingdom property market has historically been characterised by 

long-term lease tenures of between 10 and 20 years. Average lease tenures have been 

progressively shortening as occupiers require greater flexibility and are prepared 

to carry fewer liabilities on their balance sheets. The looming effect of Brexit has 

increased uncertainty and is contributing to shorter-term decision making. Lease 

terms are now often for 10 years with a five-year break. Clarity over the make-up of 

a Brexit deal continues to be elusive, having a disruptive impact over politics

and business.



Additionally, there has been a substantial increase in the number of Company 

Voluntary Arrangements (CVAs), with several national and multi-national brands 

announcing branch closures.



Our vacancies in the UK are those at Broad Street Mall and Fountain House. The 

United Kingdom overall vacancy is sitting at 3,6%. Broad Street Mall still 

poses a challenge, given the depressed retail trading environment across the 

United Kingdom.



The mall has seen a decrease in footfall as we reconfigure the layout and tenant 

mix around the development plans underway. Nonetheless, our two main anchor tenants, 

TK Maxx and Wilko, continue to trade particularly well. Food retailers continue to 

perform well in the centre and Poundland has managed to attract substantial trade 

due to the Poundworld closure.



Terms have been agreed and legal negotiations are progressing well with two 

high-profile national brands to take occupation of the former Argos and Poundworld 

stores. Securing these two lettings demonstrates that the mall continues to appeal 

to a range of occupiers. One of these brands is Iceland which will drive footfall.



At Broad Street Mall, heads of terms were agreed during the quarter for a

101-bedroom hotel with Premier Inn for a new 25-year lease, subject to CPI uplifts 

(capped at 4% p.a.) and a tenant break after 20 years. The hotel development 

proposals have been positively received and the scheme is expected to generate 

significant residual value. 



Excellent progress has also been made with the wider residential plans to develop 

over 400 units above the shopping centre. The arrival next year of Crossrail 

(the new high-speed rail link connecting Reading to central London and the 

eastern suburbs) will have a positive effect on the Reading residential market. 

The development team have been value engineering the design and we aim to submit 

a planning application in the fourth quarter.



Texton continues to work closely with our joint venture partners to maximise returns 

and capital appreciation from this asset.



We are working with architects to explore the possibility of adding accommodation 

above our property located at Lower Parliament Street in Nottingham. These plans are 

still in their initial phase and financial feasibility still has to be determined. 

The potential optimisation of this asset is extremely positive given that Nottingham 

is a major university town and the budget hotel market continues to expand in the UK.



The UK portfolio benefits from an increasing income profile driven by fixed uplifts 

at rent review on 19% of the portfolio and inflation linked uplifts on 18% of the 

portfolio. Most of the remaining rent reviews are subject to an upward only basis 

where the rent is reviewed to the higher of passing or market rent. In FY18 we had 

two flat rent reviews. Six leases have rent reviews due over the course of 2019.



As can be seen from the above, the United Kingdom portfolio benefits from long-term 

leases with the majority expiring after 2020. Texton will continue to focus on 

obtaining long-term income from strong tenant covenants. Being a REIT, these 

long-term income-generating opportunities fit well in the Texton portfolio and allow 

for continuous stable returns. Texton's properties in the United Kingdom have an 

average unexpired lease term of 8,4 years by income and 9,5 years by area.



SA lease expiry profile

Between January and June 2018, Texton successfully concluded 30 new leases amounting 

to 4 615m2. In the same period, 73 existing leases were renewed, amounting to 

41 338m2. This is pleasing given our focused and proactive approach to tenant 

retention in a challenging market.



Texton's lease expiry profile has improved significantly through early and continual 

engagement with our tenants. Texton's lease expiry profile (by GLA) has seen a 

rewarding decline since June 2017, which indicated that 42% of existing leases 

would be expiring in 2018. We are pleased to report that as of June 2018 this 

figure is now below 5%, with terms agreed and the remaining tenants in possession 

of the agreements for signature.



Looking forward, the largest contributor to the June 2019 renewals is a sizeable 

occupier that is currently on a short-term lease and that we expect to renew for a 

longer lease in the coming financial year. This will improve the lease expiry 

profile from 37,3% to 31,6%. Most of these lease renewals are already progressed and 

we foresee muted to positive reversions.



Lease expiry profile

                                                         GLA            Revenue

                                                          (%)                (%)

SA

Vacant                                                    9,3

2019                                                     37,3              43,9

2020                                                     14,0              15,3

2021                                                     18,7              20,1

2022                                                      3,5               4,1

2023                                                     11,6               7,2

>2023                                                     5,6               9,4

                                                        100,0             100,0

UK

Vacant                                                    3,6

2019                                                      2,5               3,3

2020                                                      2,9               3,1

2021                                                      7,1              10,2

2022                                                      1,5               2,3

2023                                                      0,6               1,4

>2023                                                    81,8              79,7

                                                        100,0             100,0

Combined

Vacant                                                    7,9

2019                                                     28,5              31,3

2020                                                     11,3              11,5

2021                                                     15,9              17,0

2022                                                      3,0               3,6

2023                                                      9,1               5,4

>2023                                                    24,3              31,2

                                                        100,0             100,0



Greening initiatives

Sustainable business and greening initiatives remain a priority for Texton. As 

previously reported, various water saving initiatives were implemented at our 

properties located in the Western Cape. As part of the replacement of 

air-conditioning plant at Foretrust, we will be installing an air chiller plant 

which is significantly more energy and water efficient.



We will be assessing the efficiency of the solar plant at Kempstar Mall in Kempton 

Park over the course of the coming year. Texton will assess the results of the 

project and consider potentially rolling this out at additional properties.



Capital management

During the second half of the financial year, Texton successfully renewed facilities 

with Standard Bank of R50,5 million for three years. The Investec facility of 

GBP19 million was renewed for an additional three years, split between a GBP and 

a ZAR facility. The HSBC facility of GBP10 million was successfully concluded 

and drawn down post year-end.



Texton has made progress on its capital management strategy of matching SA assets 

with SA debt by reducing the amount of GBP facilities secured by SA assets to 

GBP10 million from GBP19 million in the prior year. We continue to work towards 

a target of financing and securing all SA facilities with SA assets and UK 

facilities with UK assets.



We are proactively engaging with the banks on rolling existing facilities well 

in advance of expiry and have engaged with several banks to establish 

relationships to further diversify the lending portfolio.



As a result of the recognition of the PIC Put Option liability, the Group 

loan-to-value ratio increased to 55,4%. This led to the breach of the loan to 

value covenant of facilities with Standard Bank, Investec and Santander. All 

three banks have condoned the breach, however, the International Financial Reporting 

Standards require that these are classified as current liabilities as indicated on 

the statement of financial position. The condonements are between 6 and 12 months 

thus no repayments are anticipated and the original loan maturity dates remain 

as disclosed below.



Debt maturity profile

South Africa

                                                                Drawn down

                                   Facility             Fixed            Floating*

                                      R'000             R'000               R'000

FY19                                506 549                 -             477 659

FY20                                460 326                 -             457 210

FY21                                399 881                 -             399 881

                                  1 366 756                 -           1 334 750

* Partly/fully hedged by interest rate swaps.



United Kingdom

                                                                Drawn down

                                   Facility             Fixed            Floating

                                      R'000             R'000               R'000

FY20                                370 335           370 335                   - 

FY22                                548 274                 -             548 274*

                                    918 609           370 335             548 274

* Partly/fully hedged by interest rate swaps.



Interest rate swap maturity profile

                                    Nominal           Nominal               Fixed

                                     amount            amount                rate

                                      R'000           GBP'000                   %

Expiry

16 May 2020                         225 000                 -                7,27

2 Nov 2020                          200 000                                  7,19

16 May 2021                         225 000                 -                7,40

30 Jun 2021                         270 000                 -                7,82

12 Aug 2021                               -            20 310                0,49

15 Feb 2022                         200 000                 -                7,31

                                  1 120 000            20 310



The Board has reaffirmed the interest rate hedging strategy that at least 80% of 

borrowings must be hedged against interest rate risk. Texton is 82,4% hedged at 

30 June 2018.



The Fund has an average cost of debt of 9,11% on its SA debt and 3,24% on its UK 

debt.



Currency

The closing exchange rate at 30 June 2018 was R18,09:GBP1 (June 2017: R17,04:GBP1); 

and the average exchange rate for the year ended 30 June 2018 was R17,29:GBP1 

(June 2017: R17,26:GBP1).



Texton has hedged its currency exposure through various derivative instruments. It 

is the Board's policy to hedge the net property income from the UK assets for one 

year ahead which is in line with Texton's budgeting period.



Cross-currency interest rate swaps

                            Nominal         Nominal        Texton          Texton

                             amount          amount      receives            pays

                              R'000         GBP'000             %               %

Expiry

2 Sep 2021                  600 000          30 801            11      3,18+LIBOR

27 Jan 2022                 128 547           7 710            12      3,98+LIBOR

                            728 547          38 511



Put options

                                     Texton          Exchange             Premium

                                       buys           rate to                paid

                                    GBP'000               GBP               R'000

Expiry

18 Dec 2018                           2 900             19,25               3 523

29 Jun 2019                           2 900             19,25               3 300



Stated capital and shares repurchased

There are 376 066 766 ordinary shares of no par value in issue (June

2017: 376 066 766). The Group holds 10 428 348 (June 2017: 10 428 348) treasury 

shares via Texton Property Fund Limited Share Incentive Scheme Trust. Treasury 

shares held by Discus House Proprietary Limited, a subsidiary of Texton, amount to 

16 243 865 (June 2017: 15 310 276) shares, bringing the total treasury shares held 

to 26 672 213 (June 2017: 25 738 624).



No further share buy backs were completed in the second half of the financial year.



The Company's share structure is in line with international best practice for REITs.



Prospects

Texton's portfolio is defensively positioned in both of the markets in which it 

operates, however, vacancies in the SA portfolio are expected to increase over the 

short term which will result in lower net property income in the 2019 financial 

year. The cost of tenancy continues to pose a challenge, with low economic growth 

forecast for SA and continued uncertainty around Brexit perpetuating a challenging 

operating environment for Texton. We continue to place significant focus on tenant 

retention and the filling of our vacancies through active asset management.



Texton aims to reduce its LTV ratio to ultimately achieve a level of 40% or lower.

A significant portion of the proceeds from our various disposals will be applied 

to paying down facilities in order to achieve this. It is anticipated that the 

reduction will take time particularly in light of the R180 million fee paid to 

cancel the asset management contract in the 2018 financial year.



Payment of final dividend

Notice is hereby given of the declaration of dividend number 11 of 41,36 cents 

per share for the final six-month period to 30 June 2018, bringing the total 

dividends for the year ended 30 June 2018 to 89,31 cents per share. The 

dividend was declared out of income reserves.



Changes to the Board and Company Secretary

In compliance with paragraph 3.59 of the JSE Listings Requirements, the Board 

hereby notifies its shareholders of the following changes which occurred during 

the period:

- Jacob Wiese resigned as a Non-Executive Director effective 5 April 2018;

- Kenneth Collins resigned as an Alternate Director effective 5 April 2018;

- Marius Muller was appointed on 21 May 2018 as a Non-executive Director and 

as a member of the Audit and Risk Committee and Chairman of the Investment

Committee. On 17 September 2018, Marius was appointed interim Chief Executive 

Officer with immediate effect;

- Marcel Golding was appointed on 21 May 2018 as a Non-executive Director;

- Nqaba Sokabo resigned as Company Secretary effective 30 June 2018;

- Motif Capital Partners represented by Joel Naidoo CA(SA) was appointed as the 

Company Secretary from 1 July 2018;

- Shaheeda Mia resigned as an Independent Non-executive Director and Member of 

the Audit and Risk Committee on 4 September 2018; and

- Nosiphiwo Balfour was appointed as the Chief Executive Officer on 17 July 2017 

and resigned 14 September 2018.

- Inge Pick was appointed as the Chief Financial Officer on 18 September 2017.

- Termination of CIS Company Secretaries Proprietary Limited on 

11 December 2017.



Salient dates

Dividend declaration date                  Friday, 28 September 2018

Last date to trade                         Tuesday, 16 October 2018

Ex dividend date                           Wednesday, 17 October 2018

Record date                                Friday, 19 October 2018

Payment date                               Monday, 22 October 2018



Share certificates may not be dematerialised or rematerialised between Wednesday, 

17 October 2018 or Friday, 19 October 2018, both dates inclusive.



An announcement informing shareholders of the tax treatment of the dividends 

will be released on SENS on 28 September 2018.



Texton's income tax reference: 9353785158

Issued shares as at 28 September 2018: 376 066 766





Condensed consolidated statement of financial position 

as at 30 June 2018

                                       Reviewed         Restated*       Restated*

                                          as at            as at           as at 

                                        30 June          30 June          1 July 

                                           2018             2017            2016

                                          R'000            R'000           R'000

Assets

Non-current assets                    4 864 870        5 237 499       5 498 451

Investment property                   4 534 810        4 836 757       4 991 066

Property, plant and equipment             1 851            2 376           2 594

Tenant installation*                     11 908           11 284           8 184

Investment in joint venture             231 302          247 906         262 938

Other non-current assets                 19 370           10 319           8 027

Other financial assets                   32 600           72 565         132 108

Restricted cash                          33 029           56 292          93 534

Current assets                          458 857          310 193         324 569

Restricted cash                          16 427            5 153          25 134

Trade and other receivables              56 169           35 732          38 659

Non-current assets classified

as held for sale                        272 156          100 750         133 000

Other financial assets*                   6 692           10 299               - 

Income tax receivable                    13 745            3 835           3 781

Cash and cash equivalents                93 668          154 424         123 995

Total assets                          5 323 727        5 547 692       5 823 020

Equity and liabilities

Equity                                2 297 186        2 724 380       2 979 986

Stated capital                        2 257 206        2 263 137       2 321 656

Retained earnings                       254 934          731 327         759 835

Foreign currency translation

reserve                                (214 954)        (270 131)       (102 579) 

Share-based payment reserve                   -               47           1 074

Liabilities                           3 026 541        2 823 312       2 843 034

Non-current liabilities                 384 987        1 383 876       1 932 586

Other financial liabilities             374 289        1 365 469       1 928 971

Lease liability*                          3 395            3 454               - 

Deferred tax                              7 303           14 953           3 615

Current liabilities                   2 641 554        1 439 436         910 448

Other financial liabilities           1 898 441          720 742          80 681

PIC Put Option                          642 570          628 967         614 338

Trade and other payables                100 543           89 727         215 429

Total equity and liabilities          5 323 727        5 547 692       5 823 020



*Refer to note 6.





Condensed consolidated statement of comprehensive income 

for the year ended 30 June 2018



                                                        Reviewed        Restated*

                                                         for the         for the

                                                      year ended      year ended 

                                                         30 June         30 June

                                                            2018            2017

                                                           R'000           R'000



Investment property income                               581 192         589 165

Straight-line rental adjustment                            7 721           9 664

Revenue                                                  588 913         598 829

Property expenses                                       (171 925)       (158 068) 

Net property income                                      416 988         440 761

Other income                                                 478           5 581

Administrative expenses                                  (28 270)        (17 623) 

Loss on equity accounted joint venture                   (47 452)         (1 613) 

Foreign exchange gains                                    17 304          35 711

Asset management fees                                     (6 139)        (25 610) 

Operating profit                                         352 909         437 207

Finance income                                           102 727          97 665

Finance costs                                           (167 016)       (159 520) 

Fair value adjustments                                  (208 423)        (46 875) 

Capital expenses                                          (3 806)         (8 522) 

PIC Put Option recognition adjustment                    (13 603)        (14 629) 

Cancellation of asset management contract               (180 102)              - 

(Loss)/profit before tax                                (117 314)        305 326

Taxation                                                     611         (14 326) 

(Loss)/profit for the year                              (116 703)        291 000

Other comprehensive income:

Items that may be reclassified to profit or loss:

Exchange differences on translating foreign 

operations                                                55 177        (167 552) 

Total comprehensive (loss)/income for the

year                                                     (61 526)        123 448

Profit and total comprehensive (loss)/income for 

the year attributable to:

Equity holders of the Company                            (61 526)        123 448

Headline earnings

(Loss)/earnings attributable to shareholders            (116 703)        291 000

Revaluation of investment property                       167 578         108 450

Headline earnings attributable to

shareholders                                              50 875         399 450

Weighted average number of shares in issue

(’000)                                                   349 812         351 633

Basic and diluted (loss)/earnings per share

(cents)                                                   (33,36)          82,76

Headline and diluted earnings per share

(cents)                                                    14,54          113,60

Interim dividend per share (cents)                         47,95           47,95

Final dividend per share (cents)                           41,36           54,85



*Refer to note 6.





Condensed consolidated statement of cash flows

for the year ended 30 June 2018



                                                        Reviewed        Restated*

                                                         for the         for the

                                                      year ended      year ended

                                                         30 June         30 June

                                                            2018            2017

                                                           R'000           R'000

Cash flows from operating activities

Cash generated from operations (note 3)                  199 960         554 858

Finance income received                                   84 050          72 745

Finance costs paid                                      (152 530)       (144 468) 

Dividends paid                                          (359 690)       (350 714) 

Income tax paid                                          (17 026)         (3 047) 

Net cash (outflow)/inflow from operating activities     (245 236)        129 374

Cash flows from investing activities

Additions to property, plant and equipment                  (515)         (8 232) 

Additions to investment property                         (19 488)         (6 841) 

Proceeds on disposal of investment property               87 250         163 400

Additions to other non-current assets                          -          (5 545)

Acquisition of business combination net of

cash acquired                                                  -        (282 692) 

Loans advanced to joint venture                                -         (16 345) 

Repayments from joint venture                              2 923          13 191

Loans repaid                                                 272               -

Letting commission paid                                   (2 910)              - 

Costs and deposit paid for Equites acquisition           (10 128)              -

Tenant installation incurred                              (5 321)              - 

Net cash inflow/(outflow) from investing activities       52 083        (143 064)

Cash flows from financing activities

Treasury shares acquired                                  (5 931)        (58 519) 

Premiums paid on hedging instruments                      (6 823)        (11 681) 

Proceeds from other financial liabilities                721 822         851 745

Settlement of lease liability                               (472)              - 

Repayments of other financial liabilities               (593 353)       (772 835) 

Net cash inflow from financing activities                115 243           8 710

Decrease in cash and cash equivalents                    (77 910)         (4 980) 

Cash and cash equivalents at the beginning

of the year                                              154 424         123 995

Effect of exchange rate movement on cash

and cash equivalents                                       5 165          (6 945) 

Release of restricted cash                                11 989          42 354

Cash and cash equivalents at the end of the year          93 668         154 424



*Refer to note 6.





Condensed consolidated statement of changes in equity

for the year ended 30 June 2018              

 

                                          Foreign

                                          currency    Share-

                                            trans-     based

                                 Stated    lation   payment   Retained

                                capital   reserve   reserve   earnings      Total

Reviewed                          R'000     R'000     R'000      R'000      R'000

Balance previously reported   2 906 923  (102 579)    1 074    788 906  3 594 324

PIC Put Option liability

raised and lease liability     (585 267)                         2 135   (583 132)

Restated* balance at 

30 June 2016                  2 321 656  (102 579)    1 074    791 041  3 011 192

Treasury shares acquired        (58 519)                                  (58 519)

Share-based payments

transaction                                          (1 027)               (1 027)

Total comprehensive income 

for the year                                                   291 000    291 000

- Profit for the year

- Exchange differences on 

translation of foreign

operations                               (167 552)                       (167 552)

Transactions with shareholders 

recognised directly in equity                                                   -

- Dividend paid                                               (350 714)  (350 714)

Balance at 30 June 2017       2 263 137  (270 131)       47    731 327  2 724 380

Treasury shares acquired         (5 931)                                   (5 931)

Elimination of share-based

payments reserve on transfer

of liability to new share

incentive scheme                                        (47)                  (47)

Total comprehensive income 

for the year                                                  (116 703)  (116 703)

- Loss for the year

- Exchange differences on 

translation of foreign

operations                                 55 177                          55 177

Transactions with shareholders 

recognised directly in equity                                                   -

- Dividend paid                                               (359 690)  (359 690)

Balance at 30 June 2018       2 257 206  (214 954)        -    254 934  2 297 186



*Refer to note 6.





Preparation, accounting policies and audit opinion

1. Basis of preparation

The condensed consolidated reviewed financial statements are prepared in 

accordance with the requirements of the JSE Limited Listings Requirements, the 

requirements of the Companies Act of South Africa, the measurement and recognition

requirements of International Financial Reporting Standards (“IFRS”) and the 

SAICA Financial Reporting Guides as issued by the Accounting Practices Committee 

and the Financial Reporting Pronouncements as issued by the Financial Reporting 

Standards Council and to also, as a minimum, contain the information required 

by IAS 34 – Interim Financial Reporting.



The accounting policies applied in the preparation of the condensed consolidated 

reviewed financial statements are in terms of IFRS and are consistent with those 

applied in the previous consolidated annual financial statements. None of the 

new standards, interpretations and amendments effective as of 1 July 2017 have 

had material impact on the condensed consolidated reviewed annual financial 

statements.



These condensed consolidated reviewed financial statements have been prepared 

on a going concern basis, however, we draw your attention to note 10.



All monetary information is presented in the functional currency of the Company, 

being South African Rand and is rounded to the nearest thousand (R'000).



2. Preparation of the provisional condensed consolidated reviewed financial 

statements and auditors' review conclusion

The Directors take full responsibility for the preparation of these condensed 

consolidated reviewed financial statements. These condensed consolidated 

reviewed financial statements for the year ended 30 June 2018 have been 

prepared under the supervision of the Chief Financial Officer, Ms Inge Pick 

CA(SA). These provisional condensed consolidated financial statements for 

the year ended 30 June have been reviewed by SizweNtsalubaGobodo Grant 

Thornton ("SNG GT"), who expressed an unmodified review conclusion. The 

review conclusion contained the following Emphasis of Matter paragraph 

and reportable irregularity paragraph:



Material uncertainty relating to going concern

We draw your attention to Note 10 on Going Concern which describes the 

entity's liquidity position indicating the entity had current liabilities 

of R2 641,6 million (2017: R1 439,4 million) and current assets of

R459,0 million (2017: 310,2 million).  Note 10 indicates that these 

conditions, along with other matters, indicate the existence of a material 

uncertainty which may cast significant doubt on the company's ability to 

continue as a going concern. Our conclusion is not qualified in respect 

of this matter.



Compliance with laws and regulations

Texton Property Fund Limited did not submit its annual tax return for 

the 2016 and 2017 years as required in terms of section 25 of the Tax 

Administration Act, read with section 66(1) of the Income Tax Act. A 

second report was submitted to the Independent Regulatory Board of Auditors 

indicating that the reportable irregularity was no longer taking place 

and that adequate steps had been taken for the prevention or recovery 

of any loss as a result thereof.



The review opinion does not necessarily report on all of the information 

in this announcement. Shareholders are therefore advised that, in order

to obtain a full understanding of the nature of the auditor's engagement, 

they should obtain a copy of that report from Texton's registered address.



Financial instruments and investment property fair value disclosure The 

Group's investment properties are valued internally using the capitalisation 

of net income method at interim reporting periods and externally by an 

independent valuer for year-end reporting.



The Group's investment properties were externally valued by an independent 

valuer. In terms of IAS 40: Investment Property and IFRS 7: Financial 

Instruments: Disclosure, investment properties are measured at fair value 

and are categorised as level 3 investments.



The revaluation of investment property requires judgement in the 

determination of future cash flows from leases and an appropriate 

capitalisation rate which varies between 6,59% and 9,21%.



Changes in the capitalisation rate attributable to changes in market 

conditions can have a significant impact on property valuations. An 

increase in the capitalisation rate of 0,5% (2017: 0,5%) will decrease 

the value of the portfolio by R31,8 million (2017: R170,0 million) and a

0,5% (2017: 0,5%) decrease will result in an increase of R32,2 million

(2017: R189,1 million).



In terms of IAS 39: Financial Instruments: Recognition and Measurement 

and IFRS 7, the Group's currency and interest rate derivatives are measured 

at fair value through profit or loss and are categorised as level 2 

investments. The fair value of the currency derivatives was an asset of 

R32,6 million (June 2017: R82,9 million) and the fair value of the interest 

rate derivative net asset was R7,0 million (June 2017: net liability 

R1,8 million). These fair values were determined using valuation 

techniques that present value the net cash flows. These cash flows are 

based on observable market data.



The fair values of all financial instruments, interest rate swaps and 

fixed rate financial liabilities are substantially the same as the carrying 

amounts reflected on the statement of financial position.



There were no transfers between levels 1, 2 and 3 during the year. The 

valuation methods applied are consistent with those applied in preparing 

the previous consolidated financial statements.



The Board is not aware of any matters or circumstances arising subsequent 

to June 2018 that require any additional disclosure or adjustment to 

the financial statements, other than the discussed in note 5.



3. Cash generated from operations

                                                      Reviewed        Restated*

                                                       for the         for the

                                                    year ended      year ended

                                                       30 June         30 June

                                                          2018            2017

                                                         R'000           R'000

Cash generated by operations

(Loss)/profit before tax                              (117 314)        305 326

Adjusted for:

Amortisation and depreciation                            9 277            7 613

Impairment allowance                                     1 772            1 239

Loss from joint venture                                 47 452            1 613

Finance income                                        (102 727)         (97 665) 

Straight-line adjustment                                (7 721)          (9 664) 

Finance costs                                          167 016          127 547

Fair value adjustments                                 207 761          199 941

Share-based payment expense                                662          (1 027) 

PIC Put Option recognition adjustment                   13 603           14 629

Unrealised foreign exchange (gains)/loss                (6 700)         (21 350) 

Assets scrapped                                            111                - 

Cash generated before working capital changes          213 192          528 202

Changes in working capital:

- Increase/(decrease) in trade and other receivable    (21 625)           7 334

- Increase in trade and other payables                   8 393           19 322

Cash generated by operations                           199 960          554 858



* Refer to note 6.



4. Related party transactions

Hermanstad Electricity Agreement

A service agreement was entered into in December 2015 between Texton, the trustees 

of the Nooitgedacht Family Trust, Chick Legh and Kuper Legh Property Management 

Proprietary Limited. This agreement entitled Chick Legh and the Nooitgedacht Family 

Trust, of which Thys van Heerden is a trustee and beneficiary, to retain a 

percentage of the monthly electricity recovery invoiced to tenants of the 

Hermanstad property. This amount was earned for services provided by Nooitgedacht 

Family Trust and Chick Legh whereby they would obtain the municipal statements 

relating to electricity consumption, pay the amount over to the municipality on 

Texton's behalf, allocate the consumption to tenants using the reports from the 

requisite service provider and provide such amounts to Kuper Legh Property 

Management Proprietary Limited for electricity recovery from tenants. This is 

a related party transaction as Thys van Heerden and Chick Legh are directors 

of Texton Property Fund Limited and Kuper Legh Property Management Proprietary 

Limited as well as beneficiaries of the contract in their personal capacities.



                                       Reviewed       Restated*       Restated*

                                          as at          as at           as at 

                                        30 June        30 June          1 July 

                                           2018           2017            2016

                                          R'000          R'000           R'000

JA Legh                                 138 093        120 966         377 143

Nooitgedacht Family Trust               138 093        120 966         377 143

                                        276 186        241 932         754 286



5. Post balance sheet events

PIC Put Option

To meet the Company's transformation and empowerment objectives, Texton entered 

into the BEE transaction in 2015. The transaction aimed to provide a competitive 

advantage to Texton in the execution of its stated strategy, which included 

leveraging Texton's BEE status to retain and attract government and national 

tenants. At the time of the transaction, the South African government was 

Texton's single largest tenant, occupying approximately 20% of Texton's total 

gross lettable area. This has been significantly reduced over time.



The BEE transaction was structured such that BEE SPV acquired 51 858 876

Texton shares using funding from GEPF. Texton entered into a Subscription and 

Relationship Agreement and the PIC Put Option Agreement, as revised. In the event 

of a default, which includes a breach of the loan covenants, PIC is obliged to 

first place BEE SPV in breach and to give BEE SPV 15 business days to remedy 

such breach. Should the breach remain unremedied, then the PIC (acting on behalf 

of GEPF) may exercise the cession and pledge of Texton shares granted to it BEE 

SPV and, with Texton's approval, which may not unreasonably be delayed or 

withheld, PIC shall sell the Texton shares held by BEE SPV. If both of these 

courses of action do not result in the full repayment of the outstanding 

balance of the loan, then the PIC may exercise the PIC Put Option.



The exercise of the PIC Put Option is subject to compliance with the Companies 

Act and JSE Listings Requirements. The PIC Put Option is considered a specific 

repurchase of shares in terms of the JSE Listings Requirements and, as such, 

would be subject to a fairness opinion (if, at the time, PIC constitutes a 

related party for purposes of the JSE Listings Requirements) and authorisation 

by shareholders by way of a special resolution.



The exercise of the PIC Put Option is also subject to the Board of Directors 

being satisfied that Texton would pass the solvency and liquidity test after 

payment of the amount to PIC pursuant to the exercise of the PIC Put Option.

On 22 August 2018, Texton received a letter from the Public Investment 

Corporation ("PIC") on behalf of the Government Employees Pension Fund ("GEPF") 

notifying Texton Broad-Based Empowerment Proprietary Limited ("BEE SPV") that 

a default event had occurred and that BEE SPV had 15 working days to remedy 

the breach.



A cautionary announcement was released on 23 August 2018 setting out the 

steps per the Amended and Restated Put Option Agreement between GEPF and 

Texton, in the event that the breach was not remedied within the time period.



As per the updated cautionary announcement on 13 September 2018, the PIC has 

exercised the Put Option. This matter is subject to shareholder approval via 

special resolution and further communication will follow in this regard. Per 

the Put Option Agreement settlement is due within 90 days of receipt of the 

exercise notice, subject to compliance with the Companies Act and JSE Listings 

Requirements and any other regulatory approvals required.



A liability of R642,6 million was recognised at 30 June 2018 in accordance with 

IFRS.



The PIC Put Option recognition adjustment relates to an adjustment to the amount 

Texton is required to pay for the shares due to a further default by BEE SPV. 

In accordance with IAS 32, this liability is for the repurchase of shares, 

however, the change in value is not as a result of a change in the net present 

value thus is not recognised as a finance cost.



Dividend declaration

Dividend of 41,36 cents per share has been declared post year end.



6. Restatements

6.1 Prior period error

Shareholders are advised that the Company's financial results for the year 

ended 30 June 2017, have been restated as follows:



                                     Previously       

                                       reported                         Restated 

                                        30 June                          30 June

                                           2017       Adjustment            2017

                                          R'000            R'000           R'000

Statement of financial position

Finance lease liability(1)              (35 427)          31 973          (3 454) 

Stated capital(2)                    (2 848 404)         585 267      (2 263 137) 

PIC Put option liability(2)                   -         (628 697)       (628 697) 

                                     (2 883 831)         (11 457)     (2 895 288)

Retained earnings (1)(2)               (743 054)          11 727        (731 327) 

Impact on equity                       (743 054)          11 727        (731 327) 



Statement of comprehensive income

Fair value adjustments (1)              (47 642)          31 973         (15 669) 

PIC Put option recognition

adjustment (2)                                -          (14 629)        (14 629)

Profit before taxation                  319 188           17 344         336 532

Profit for the year                     304 862           17 344         322 206

Total comprehensive

(loss)/profit for the year              137 310           17 344         154 654

Impact on earnings per share

Basic and diluted earnings per share      86,70            (3,94)          82,76

Headline and diluted earnings 

per share                                117,54            (3,94)         113,60





                                     Previously       

                                       reported                         Restated 

                                        30 June                          30 June

                                           2016       Adjustment            2016

                                          R'000            R'000           R'000



Finance lease liability(1)              (34 712)          31 206          (3 506) 

Stated capital(2)                    (2 906 923)         585 267      (2 321 656) 

PIC Put option liability(2)                   -         (614 338)       (614 338) 

                                     (2 941 635)           2 135      (2 939 500)

Retained earnings (1)(2)               (788 906)          (2 135)       (791 041) 

Impact on equity                       (788 906)          (2 135)       (791 041) 



Statement of comprehensive income

Fair value adjustments (1)              (37 430)          26 336         (11 094)

PIC Put option recognition

adjustment (2)                                -          (17 977)        (17 977)

Profit before taxation                  323 892          (29 071)        294 821

Profit for the year                     323 892          (29 071)        294 821

Total comprehensive

(loss)/profit for the year              212 090          (29 071)        183 019

Impact on earnings per share

Basic and diluted earnings per share

Headline and diluted earnings per share



(1)  The lease liability for Woodmead Commercial Park has been restated due to a 

prior year error. Contingent rentals were erroneously included in the calculation 

of the lease liability resulting in an overstatement of the liability by 

R32,0 million.

(2)  A liability of R629,0 million was raised for the PIC Put Option. Texton 

entered into the Put Option Agreement in 2015. The exercise of the Put Option 

by the PIC gave rise to a contractual liability under IAS 32 as Texton does not 

have an unconditional right to avoid paying cash. This led to the raising of the 

liability and the restatement of the prior year financial statements. Refer to 

note 5 for more details. In the prior year this amount was not recognised 

based on judgements made by management which took into account external accounting 

and legal opinions. During the current year, after a further review of the 

judgements used in accounting for the liability it was recognised as a prior 

period error.



6.2  Reclassification of assets and liabilities

Following a review of assets and liabilities disclosed in the Group statement 

of financial position during the current financial year, the assets and 

liabilities detailed below have been disclosed separately in the comparable 

financial year to present the assets and liabilities in accordance with the 

classification applied in the current year.



Tenant installation

Tenant installation of R11,2 million that was previously disclosed under 

Property, plant and equipment, has now been separately disclosed on the 

statement of financial position as a separate asset.



Currency put option

The currency put option asset of R10,2 million that was previously 

included in Trade and other receivables has now been separately disclosed 

in the statement of financial position under Other financial assets.



Lease liability

The lease liability R3,5 million* that was previously included in other 

financial liabilities, has now been separately disclosed on the statement 

of financial position as a separate liability.



* Restated amount as per note 6.1.



7. Segmental analysis

                                                          South Africa

                                                    Reviewed        Restated

                                                     for the         for the

                                                  year ended      year ended

                                                     30 June         30 June

                                                        2018            2017

                                                       R'000           R'000

Segmental revenue - rental revenue 

Office                                               351 336         365 844

Retail                                                74 397          70 326

Industrial                                            46 993          51 341

                                                     472 726         487 511

Profit before tax

Office                                               170 493         177 427

Retail                                                42 982          25 076

Industrial                                            14 739          25 218

Corporate                                           (310 465)         71 912 

                                                     (82 251)        299 633

Total assets

Office                                             2 541 199       2 632 492

Retail                                               474 328         478 738

Industrial                                           293 825         343 671

Corporate                                             85 957         411 987

                                                   3 395 309       3 866 888





                                                                UK

                                                    Reviewed        Restated

                                                     for the         for the

                                                  year ended      year ended

                                                     30 June         30 June

                                                        2018            2017

Segmental revenue - rental revenue

Office                                                55 104          51 507

Retail                                                25 297          25 237

Industrial                                            35 786          34 574

                                                     116 187         111 318

Profit before tax

Office                                               (5 007)         (33 303) 

Retail                                              (95 211)           9 159

Industrial                                           49 162           29 837

Corporate                                            15 993                - 

                                                    (35 063)           5 693

Total assets

Office                                              736 784          736 125

Retail                                              576 524          385 725

Industrial                                          614 383          558 954

Corporate                                               727                -

                                                  1 928 418        1 680 804





                                                              Total

                                                    Reviewed        Restated

                                                     for the         for the

                                                  year ended      year ended

                                                     30 June         30 June

                                                        2018            2017

Segmental revenue - rental revenue

Office                                               406 440         417 351

Retail                                                99 694          95 563

Industrial                                            82 779          85 915

                                                     588 913         598 829

Profit before tax

Office                                               165 486         144 124

Retail                                               (52 229)         34 235

Industrial                                            63 901          55 055

Corporate                                          (294 472)          71 912 

                                                   (117 314)         305 326

Total assets

Office                                            3 277 983        3 368 617

Retail                                            1 050 852          864 463

Industrial                                          908 202          902 625

Corporate                                            86 684          411 987

                                                  5 323 721        5 547 692



8. Summary of financial performance

                                                    Reviewed        Restated

                                                     for the         for the

                                                  year ended      year ended

                                                     30 June         30 June

                                                        2018            2017

Shares in issue and used for dividend

calculation ('000)                                   349 395         350 328

Weighted average number of shares in issue ('000)    349 812         351 633

Net asset value per share (cents)                     657,48          777,67

Net tangible asset value less deferred tax 

per share (cents)                                     659,57          781,93

Basic and diluted (loss)/earnings per

share (cents)                                        (33,36)           82,76

Headline and diluted earnings per share (cents)       14,54           113,60

Dividend per share (cents)                            89,31           102,80

Share price (cents)                                  605,00           790,00

Loan-to-value ratio*                                  55,4%            53,1%

Loan-to-value ratio excluding PIC Put  

Option liability                                      42,7%            40,8% 

IFRS

Gross property cost to income ratio                   29,6%            25,7%

Net property cost to income ratio                     14,6%             9,1% 

Gross total cost to income ratio                      36,3%            28,4%

Net total cost to income ratio                        22,7%            15,7%



* The loan-to-value ratio is calculated by dividing total liabilities by the 

total property assets and investment in joint venture.



9. Distributable earnings

                                                    Reviewed        Restated

                                                     for the         for the

                                                  year ended      year ended

                                                     30 June         30 June

                                                        2018            2017

                                                       R'000           R'000

Revenue                                              581 192         589 165

Property expenses                                   (171 925)       (158 068) 

Loss from joint venture                              (47 452)         (1 613)

Non-cash items included in loss from

joint venture                                         44 740           5 217

Other income                                             478           5 581

Administrative expenses                              (28 270)        (17 623) 

Asset management fees                                 (6 139)        (25 610) 

Net finance cost                                     (64 289)        (58 801)

- Finance income                                     102 727          97 665

- Finance cost                                      (167 016)       (159 520)

- Amortisation of structuring fees*                        -           3 054

Taxation                                              (7 039)              - 

Distribution of realised forex                        10 604          22 586

Dividends on treasury shares                          23 982          25 767

Total distribution                                   335 882         386 601

Less: Distribution to shareholders (interim)        (180 324)       (180 324)

Available for distribution (final)                   155 558         206 277



* Following adoption of the SA REIT Best Practice Recommendations this item 

will no longer be added back for distribution purposes.



10. Going concern

There are a number of factors that may result in uncertainties regarding the 

going concern assumption for the Group as it may not be able to realise its 

assets and discharge its liabilities in the normal course of business.



The Group's cash resources at 30 June 2018 total R93,8 million and are presently 

not considered adequate to meet the Group's current obligations for the 

foreseeable future in the event that shareholders vote in favour of the repurchase 

of shares in terms of the PIC Put Option.



Availability of funding for the group's activities

A current facility of R466 million expires in March 2019. Management has engaged 

with the banks regarding the renewal of this facility. The refinancing is 

subject to the following:

- The Covenant is restored to the level as set out in the facility agreement

- The satisfactory completion of due diligence procedures which are customary 

when reviewing a refinancing transaction

- Obtaining all internal credit approvals

- Being satisfied with the underlying collateral that is presented in support 

of the refinancing

- Legal documentation being entered into in a form and substance acceptable 

to the lender 



Outcome of pic Put Option vote

As noted above Texton will seek approval from shareholders regarding the 

repurchase of shares in terms of the PIC Put option.



In the event that shareholders pass the resolution approving the repurchase 

of shares this will result in a cash outflow and the breach of the conditions 

of condonements provided by the banks.



As discussed in note 5, Texton entered into the PIC Put Option in 2015 as 

security for the loan given by GEPF to BEE SPV to acquire shares in Texton. 

The PIC Put Option agreement sets out the steps should BEE SPV default and these 

steps have been followed ending in the PIC exercising the PIC Put Option on 

13 September 2018. The PIC Put Option agreement requires that Texton repurchases 

the PIC Put Option shares for the outstanding loan balance, which is R642,6 million. 

The repurchase is subject to compliance with the JSE Listings Requirements relating 

to specific share repurchases and the Companies Act. In the context, the Pic Put 

Option is a specific repurchase of Texton shares by Texton from a related party 

which requires:

(i) a statement of solvency and liquidity after the share repurchase. Factually, 

the solvency and liquidity test will not be met;

(ii) a fairness statement by the directors of Texton, supported by an independent 

fairness opinion; and

(iii) approval by the shareholders of Texton by way of a special

resolution.



In addition to the above, and if the requirements set out above have been met, there 

has to be further compliance with section 48 of the Companies Act to the fact that 

immediately after the share repurchase Texton will meet the solvency and liquidity 

test required by section 46 of the Companies Act. As indicated above, Texton will 

not meet this requirement.



As a result of IFRS 10 Texton has raised the liability in its financial statements 

for the full amount as a current liability. It is anticipated that Texton will not 

meet the requirements of the JSE Listings Requirements and the Companies Act and 

will thus not be in a position to repurchase the shares put to Texton by the PIC.



Notwithstanding, Texton is pursuing the steps to seek shareholder approval. If 

approval is not obtained by Texton, Texton has been advised by senior counsel that 

the PIC Put Option falls away and is of no further force and effect.



Texton's facilities with Santander, Standard Bank and Investec contain a number of 

covenants including the requirement for the group LTV to be a maximum of 50%. Due 

to the inclusion of the PIC Put Option liability at 30 June 2018, Texton's group 

LTV is at 55,4% and a breach of the loan covenant has occurred. This has resulted 

in the facilities being classified as current liabilities at 30 June 2018. Texton 

has engaged with the three banks and obtained condonements of the breaches for

periods of between 6 and 12 months, subject to the outcome of the vote on the 

special resolution authorising the specific repurchase of shares in terms of the 

PIC Put Option. Texton's engagements with the banks regarding their position post 

the shareholder vote has been positive as the uncertainty regarding this liability 

would be removed. It should be noted that, should shareholders vote in favour of the 

special resolution, the PIC Put Option Agreement states that Texton would be liable 

but would only be required to settle the liability when it met the solvency and 

liquidity requirements to do so.



Corporate information

Texton Property Fund Limited

Incorporated in the Republic of South Africa

Registration number: 2005/019302/06

A Real Estate Investment Trust listed on the JSE Limited

JSE share code: TEX ISIN: ZAE000190542

Formerly ISIN: ZAE000185872



Physical and registered address

Block C, Investment Place

10th Road, Hyde Park 2196

PO Box 653129, Benmore 2010



Board of directors

PD Naidoo (Chairperson)

NV Balfour*# (Chief Executive Officer) 

IF Pick* (Chief Financial Officer)

JR Macey (Lead Independent) 

M Golding

JA Legh

MH Muller*& (Interim Chief Executive Officer) 

P Ntshalintshali

MJ van Heerden

TMZ Zuma



* Executive director

# Resigned as Chief Executive Officer on 14 September 2018

& Appointed as Interim Chief Executive Officer on 17 September 2018



Company secretary

Motif Capital Partners Suite 11, 

2nd Floor Melrose Boulevard Melrose Arch 2193



Auditor

SizweNtsalobaGobodo Grant Thornton Inc.

20 Morris Street East, Woodmead 2191



Sponsor

Merchantec Capital

2nd Floor North Block

Hyde Park Office Tower

Cnr 6th Road and Jan Smuts Avenue

Hyde Park 2196

PO Box 41480, Craighall 2024



Transfer secretary

Computershare Investor Services

Proprietary Limited

Rosebank Towers, 15 Biermann Avenue

Rosebank 2196

PO Box 61051, Marshalltown 2107



Investor relations

FabNature

102 Taronga Road 

Rondebosch East 

Cape Town 7780








Date: 01/10/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Share This Story