Wrap Text
Reviewed provisional condensed consolidated financial results for the year ended 28 February 2015
Delta Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/005129/06)
Share code: DLT
ISIN: ZAE000194049
("Delta" or "the Fund" or "the Group") (REIT status approved)
REVIEWED PROVISIONAL
condensed consolidated financial results
for the year ended 28 February 2015
Highlights
- 15.7% growth in full year distribution to 84.07 cents per share
- Loan to Value post year end decreased from 49.9% to 46.72%
- Forward guidance distribution growth 8%
- R1 billion revenue achieved
- NAV per share R10.02 (2014: R9.28)
- Maiden US$ distribution received from Delta International
- Oversubscribed capital raise of R735.1 million post year end
Consolidated statement of comprehensive income
Reviewed Audited
for year for year
ended ended
28 February 28 February
2015 2014
R'000 R'000
Restated
Revenue
Contractual rental income 940 623 594 209
Straight line rental income accrual 68 584 59 814
1 009 207 654 023
Property operating expenses (244 323) (151 520)
Net property rental and related income 764 884 502 503
Other income 34 015 12 300
Gain from bargain purchase 127 –
Administration expenses (51 008) (48 090)
Foreign exchange loss (12 366) –
Net operating profit 735 652 466 713
Fair value adjustments 458 985 261 256
Profit from operations 1 194 637 727 969
Finance costs (316 380) (151 149)
Interest received 3 965 5 954
Amortisation of debenture premium 264 883 376 969
Cancellation fee (41 200) –
Impairment of development right (15 582) –
Profit before debenture interest and taxation 1 090 323 959 743
Debenture interest (177 044) (254 046)
Profit before taxation 913 279 705 697
Taxation (2 211) 56 007
Profit from continuing operations 911 068 761 704
Loss from discontinued operations (45 070) –
Profit for the year 865 998 761 704
Other comprehensive income
Items that may be subsequently reclassified to profit or loss
Translation of foreign entities* 63 813 –
Total comprehensive income for the year 929 811 761 704
Profit for the year attributable to:
Equity shareholders of Delta Property Fund Limited 885 420 761 704
Non–controlling interests (19 422) –
865 998 761 704
Total comprehensive income attributable to:
Equity shareholders of Delta Property Fund Limited 912 605 761 704
Non–controlling interests 17 206 –
929 811 761 704
Basic and diluted earnings per share (cents) 237.02 294.73
Basic and diluted earnings per share from continuing operations (cents) 242.74 294.73
* There are no tax effects recognised on these items.
Reconciliation of earnings, headline earnings and distributable earnings
Profit for the year from continuing operations attributable to equity
shareholders 911 068 761 704
Debenture interest 177 044 254 046
Earnings 1 088 112 1 015 750
Loss for the year from discontinued operations attributable to equity
shareholders (25 648) –
Profit for the year attributable to equity shareholders 1 062 464 1 015 750
Headline earnings – continuing operations
Attributable earnings from continuing operations 1 088 112 1 015 750
Change in fair value of investment property (net of deferred taxation) (485 224) (308 748)
Change in fair value of property (485 224) (264 523)
Deferred taxation – (44 225)
Gain from bargain purchase (127) –
Impairment of development right (net of deferred taxation) 11 219 –
Impairment of development right 15 582 –
Deferred taxation (4 363) –
613 980 707 002
Headline earnings – continuing and discontinued operations
Attributable earnings from continuing and discontinued operations 1 062 464 1 015 750
Change in fair value of investment property (net of deferred taxation) (542 838) (308 748)
Change in fair value of property (570 208) (264 523)
Deferred taxation 27 370 (44 225)
Gain from bargain purchase (127)
Impairment of development right (net of taxation) 11 219 –
Impairment of development right 15 582 –
Tax effect (4 363) –
Non–controlling interest 27 419 –
Headline earnings from continuing and discontinued operations 558 137 707 002
Headine earnings from continuing operations 613 980 707 002
Straight line rental income accrual (net of deferred taxation) (68 584) (73 321)
Straight line rental income accrual (68 584) (59 814)
Deferred taxation – (13 507)
Antecedent interest 3 425 35 270
Transaction costs – 1 048
Cancellation fee 41 200 –
Deferred taxation – other adjustments 8 955 (4 046)
Fair value loss on investment in securities 5 249 3 267
Fair value loss on derivative financial instruments 20 990 –
Dividend received from subsidiary 18 247 –
Foreign exchange loss 12 366 –
Amortisation of debenture premium (264 883) (376 969)
Profit on disposal of listed investments (20 425) –
Accrued distribution from listed investments 11 905 –
Retained distributable earnings – (2 935)
Distributable earnings attributable to equity shareholders 382 425 289 316
Less: Distribution declared 382 425 289 316
Interim 180 469 116 738
Final (Declared after 28 February 2015) 201 956 172 578
Number of shares in issue at interim 451 042 442 359 083 615
Number of shares in issue at year end 458 409 836 429 510 825
Weighted average number of shares in issue 448 263 938 344 639 642
Basic and diluted earnings per share (cents)
Basic and diluted earnings per share from continuing operations 242.74 294.73
Basic and diluted earnings per share from discontinued operations (5.72) –
237.02 294.73
Basic and diluted headline earnings per share (cents)
Basic and diluted headline earnings per share from continuing operations 136.97 205.14
Basic and diluted headline earnings per share from discontinued operations (12.46) –
124.51 205.14
The Fund has no dilutionary instruments in issue
Distribution per share (cents) – interim 40.01 32.51
Distribution per share (cents) – year-end (Declared after 28 February 2015) 44.06 40.18
Distribution per share (cents) – full year 84.07 72.69
Consolidated statement of financial position
Reviewed Audited Audited
for year for year for year
ended ended ended
28 February 28 February 28 February
2015 2014 2013
R'000 R'000 R'000
Restated Restated
Assets
Non-current assets
Investment property 8 393 900 6 965 730 2 119 112
Fair value of property portfolio 8 213 035 6 853 449 2 070 053
Straight line rental income accrual 180 865 112 281 49 059
Property, plant and equipment 2 923 3 555 279
Investments – 333 637 –
Deferred tax – 4 573 –
Total non-current assets 8 396 823 7 307 495 2 119 391
Current assets
Other financial assets – 26 862 25 917
Current tax receivable 1 153 – –
Trade and other receivables 284 036 121 837 39 410
Cash and cash equivalents 60 730 82 179 56 828
Total current assets 345 919 230 878 122 155
Assets classified as held for sale 2 110 030 – –
Non-current asset held for sale 26 500 – –
Total assets 10 879 272 7 538 373 2 241 546
Equity and liabilities
Equity
Share capital 2 778 064 317 544 144 666
Foreign currency translation reserve 27 185 – –
Retained income 1 815 732 924 311 162 607
4 620 981 1 241 855 307 273
Non-controlling interest 453 190 – –
5 074 171 1 241 855 307 273
Liabilities
Non-current liabilities
Debentures and debenture premium – 2 570 022 936 079
Interest-bearing borrowings 3 652 300 2 981 312 832 450
Deferred tax 19 – 57 207
Derivative financial instruments 20 990 – –
Total non–current liabilities 3 673 309 5 551 334 1 825 736
Current liabilities
Interest-bearing borrowings 856 265 216 430 33 992
Trade and other payables 103 163 83 256 35 477
Current tax payable – 6 142 –
Unitholders for distribution – 172 578 39 068
Other financial liabilities – 266 656 –
Bank overdraft 21 122 –
Total current liabilities 959 449 745 184 108 537
Liabilities associated with disposal group held for sale 1 172 343 – –
Total liabilities 5 805 101 6 296 518 1 934 273
Total equity and liabilities 10 879 272 7 538 373 2 241 546
Consolidated statement of cash flows
Reviewed Audited
for year for year
ended ended
28 February 28 February
2015 2014
R'000 R'000
Restated
Cash generated from operations 483 116 377 871
Interest received 3 965 5 954
Finance costs (315 593) (151 149)
Taxation (paid)/received (4 914) 370
Net cash from operating activities 166 574 233 046
Acquisition of investment property (572 108) (4 421 950)
Refurbishment and renovations capitalised (148 134) (41 790)
Purchase of property, plant and equipment (1 027) (4 410)
Payments of other financial assets – (945)
Proceeds from disposal/(acquisition) of listed securities 348 809 (348 889)
Net cash outflow on acquisition of subsidiary (8 720) –
Accrued distribution on acquisition of listed securities – 14 141
Net cash from investing activities (381 180) (4 803 843)
Proceeds from issue of shares – 2 226 574
Capital issue expenses (8 168) (27 859)
Debenture interest paid (349 622) (200 642)
Proceeds from interest-bearing borrowings 1 310 036 2 331 300
(Repayment)/proceeds of other financial liabilities (266 656) 266 656
Changes in shareholding of subsidiary (492 335) –
Net cash from financing activities 193 255 4 596 029
Net movement in cash and cash equivalents (21 351) 25 232
Cash at the beginning of the year 82 060 56 828
Total cash at end of the year 60 709 82 060
Condensed consolidated segmental analysis
Reviewed
Admin and
For the year ended Office Office corporate
28 February 2015 (R'000) Retail government other Industrial costs Total
Contractual rental income 25 102 588 251 296 169 31 101 – 940 623
Straight line rental income
accrual 260 48 914 13 830 5 580 – 68 584
Property operating
expenses (7 021) (136 188) (95 383) (5 731) – (244 323)
Net property rental and
related income 18 341 500 977 214 616 30 950 – 764 884
Fair value adjustments (8 286) 317 817 190 365 (14 672) (26 239) 458 985
Investment property (8 286) 317 817 190 365 (14 672) – 485 224
Investments – – – – (5 249) (5 249)
Derivative financial
instruments – – – – (20 990) (20 990)
Investment property 207 800 5 206 800 2 751 400 227 900 – 8 393 900
Fair value of property
portfolio 206 622 5 061 753 2 727 088 217 572 – 8 213 035
Straight line rental
income accrual 1 178 145 047 24 312 10 328 – 180 865
Condensed segmental analysis
Audited
Admin and
For the year ended Office Office corporate
28 February 2014 (R'000) Retail government other Industrial costs Total
Contractual rental income 14 574 396 662 162 640 20 333 – 594 209
Straight line rental income
accrual 811 46 135 8 120 4 748 – 59 814
Property operating
expenses (3 157) (90 817) (54 384) (3 162) – (151 520)
Net property rental and
related income 12 228 351 980 116 376 21 919 – 502 503
Fair value adjustments 5 536 153 391 99 541 6 055 (3 267) 261 256
Investment property 5 536 153 391 99 541 6 055 – 264 523
Investments – – – – (3 267) (3 267)
Investment property 175 690 4 595 321 1 959 370 235 349 – 6 965 730
Fair value of property
portfolio 174 772 4 499 187 1 948 888 230 602 – 6 853 449
Straight line rental
income accrual 918 96 134 10 482 4 747 – 112 281
Restated consolidated statement of changes in equity
Foreign
currency
translation Non–
Retained Share reserve controlling
income capital (FCTR) interest Total
R'000 R'000 R'000 R'000 R'000
Restated balance at 01 March 2013 162 607 144 666 – – 307 273
Previously reported 121 444 932 232 – – 1 053 676
Prior period errors
Recognition of debenture premium – (787 566) – – (787 566)
Amortisation of debenture premium 41 163 – – – 41 163
Issue of linked units – issued as
consideration for investment property – 879 851 – – 879 851
Issue of linked units – rights issue – 863 095 – – 863 095
Issue of linked units – cash – 179 367 – – 179 367
Capital issue expenses – (27 859) – – (27 859)
Cum distribution – distribution number 01* – (44 837) – – (44 837)
Cum distribution – distribution number 02* and 03* – (25 913) – – (25 913)
Profit for the period 384 735 – – – 384 735
Restated balance at 01 March 2014 924 311 317 544 – – 1 241 855
Previously reported 506 179 2 755 936 – – 3 262 115
Prior period errors
Recognition of debenture premium 2013 – (787 566) (787 566)
Amortisation of debenture premium 2013 41 163 – – – 41 163
Recognition of debenture premium 2014 – (1 657 736) – – (1 657 736)
Amortisation of debenture premium 2014 376 969 – – – 376 969
Issue of linked units – issued as
consideration for investment property
relating to prior year – 6 910 – – 6 910
Issue of linked units – issued as
consideration for investment property – 161 966 – – 161 966
Non-controlling interest on acquisition of
disposal group – – – 457 747 457 747
Capital issue expenses – (14 139) – – (14 139)
Cum distribution – distribution number 03* – (5 836) – – (5 836)
Cum distribution – distribution number 04
and 05* – (3 425) – – (3 425)
Profit for the year 885 420 – – (19 422) 865 998
REIT conversion – 2 321 954 – – 2 321 954
Other comprehensive income for the year – – 27 185 36 628 63 813
Transfer between equity holders 6 001 – – (6 001) –
Dividends paid – – – (15 762) (15 762)
Balance at 28 February 2015 1 815 732 2 778 064 27 185 453 190 5 074 171
* Details of distributions 01 – 05 as announced on SENS
DIRECTORS COMMENTARY
1. Nature of business
Delta is a JSE main board listed Real Estate Investment Trust (REIT). Its primary focus is on long-term investment
in quality, rental generating properties situated in strategic nodes attractive to national government and tenants
requiring empowered landlords. The Fund is black managed and a level 2 B-BBEE contributor, qualifying for long-
term government leases in terms of the Department of Public Work's B-BBEE policy.
2. Capital structure
To align the Company's capital structure with the REIT standard in South Africa and to comply with JSE Listings
Requirements for REITs, Delta converted its linked unit capital structure into an all share capital structure within
the scheme of arrangement framework provided for in terms of section 114 of the Companies Act of South
Africa. The implementation date of the scheme was 12 December 2014 resulting in a R2 322 million increase
in share capital.
3. Strategy
Delta is a leading empowerment player in the listed property sector. The Fund has maintained a Level 2 B-BBEE
status. This combined with its demonstrated ability to redevelop CBD nodes and manage government tenanted
assets, supports its growth through the inherent recessionary hedge and tenure provided by sovereign leases.
Delta's strategy is to achieve above industry average distributions and capital growth through a portfolio
comprising predominantly domestic and foreign based sovereign underpinned properties, with the balance of
the portfolio exposed to non-government offices, retail, industrial and purpose-specific properties under long-
term leases. Delta also intends to hold 25% in Delta International to maintain its exposure to the high growth
opportunities on the African continent.
4. Distributable earnings and commentary on results
The release of the results were delayed to accommodate restatements arising out of JSE and FRIP
recommendations. It should be noted that these restatements had no impact on the distributable earnings.
Total distributions for the year ended February 2015 increased by 15.66% to 84.07 cents per share (February
2014: 72.69 cents per share). The dividend for the final six months of the financial year is 44.06 cents per share,
an increase of 9.66% against the comparable six-month period.
Property operating expenses were well contained with the cost-to-income ratio marginally lower at
10.16% (February 2014: 10.77% – restated on net basis). In line with industry practice the Fund has changed
its method of calculating the cost-to-income ratio from a gross basis to a net basis.
Distributable income includes once-off fees earned by Delta of R6.2 million for the commitment on its investment
in Delta International and R6.3 million for leasing commission charged to Somnipoint Proprietary Limited in
respect of leases concluded on Somnipoint's Absa Towers building.
The increase in administration expenses from R48.1 million for the year ended 28 February 2014 to R51.0 million
at 28 February 2015 is in line with the increase in the size of the portfolio.
Delta had acquired development rights over land adjacent to the Beacon Hill property for a consideration of
R15.5 million. These development rights never came to fruition and were impaired in the current financial year.
The loss from discontinued operations of R45.1 million and the non-controlling interest of R19.4 million relates
to the consolidation of Delta International. This loss is largely driven by the unrealised forex loss which is due
to due to the depreciation of the United States Dollar ("USD") against the Moroccan Dirham.. The conversion of
Delta International's consolidated USD net income into the Fund's reporting currency (Rands) of R68.3 million
was positive due to the strength of the USD against the Rand.
The NAV per share was R10.02 at year end (2014: R9.28 – restated after adjusting for distribution payable).
The increase in NAV was predominantly as a result of an increase in the independent valuation of the investment
property portfolio.
5. Prior period restatement
The restatements have arisen from the JSE pro-active monitoring process and based on the advice the JSE
received from the FRIP. While management had followed industry practice, the restatements have been made
based on the JSE's recommendations.
In 2015 the following restatements were identified relating to the 2014 financial statements:
The Group accounted for antecedent interest as income in profit or loss rather than adding the antecedent
interest to the debentures' initial carrying amount, and subsequently reducing the liability when the cash flows of
the debenture interest distributions are recognised on the next distribution date.
The consideration payable in the form of linked units on acquisition of investment property was previously accounted
for as deferred consideration instead of apportioning the amount between the liability and equity components. In
addition, a non-cash transaction relating to the deferred consideration was included within the financing activities
and included in the amount of acquisition of investment property within the investing activities.
The debentures and the liability component of the deferred consideration was excluded from the non-current
liabilities and total liabilities line items in the statement of financial position.
The Group recognised debentures at nominal value instead of fair value. As a result the premium or discount to
the nominal value was not amortised over the expected life of the debentures.
The effect of the restatements are as follows:
2014 2013
Statement of comprehensive income
Decrease in antecedent interest income 35 270 –
Decrease in debenture interest (35 270) –
Increase in amortisation of debenture premium (376 969) (41 163)
Statement of financial position
Increase in non-current liabilities and total liabilities (493 937) (189 676)
Decrease in unitholders interests 493 937 189 676
Increase in debentures (2 076 085) (746 403)
Decrease in share capital 2 438 392 787 566
Decrease in deferred consideration 55 825 –
Increase in retained earnings (418 132) (41 163)
Effect of changes in statement of cash flows
Increase in net cash flows from investing activities 55 825 –
Decrease in net cash flows from financial activities (55 825) –
Effect on EPS and HEPS
While the prior period restatements have no impact on the
distributions to unitholders the impact on basic and diluted earnings
and headline earnings is as follows:
Feb 2014 Feb 2014
Before Restated
Basic and diluted earnings per share (cents) 195.58 294.73
Basic and diluted headline earnings per share (cents) 106.00 205.14
6. Property portfolio
As at 28 February 2015, the portfolio, valued at R8.4 billion (2014: R6.9 billion), a 23.7% growth, consisted of
82 properties with a total GLA of 703,103 m².
The segmental and geographic breakdown of the portfolio at the reporting date was as follows:
SEE PRESS FOR GRAPHS
6.1 Acquisitions
R737.3 million worth of direct property acquisitions transferred during the year. These were acquired at an
aggregate yield of 11.06% adding a total GLA 94 918m2.
6.2 Property extensions and refurbishments
As at
28 February
2015
R'000
Capital improvements in respect of investment property
– Opening balance – 01 March 2014 182 685
– Refurbishments and renovations capitalised in the period (148 134)
– New approvals 444 901
479 452
These commitments will be financed by a combination of available cash resources and debt financing
facilities.
Specific ongoing and completed projects include:
SARS Bellville, Cape Town
The total refurbishment of the SARS Bellville building was completed during the year at a total cost of
R3.2 million.
SARS Randburg, Johannesburg
The construction of an additional 213 parking bays at the SARS Randburg building was completed during
the year at a cost of R15.9 million. There are now 397 parking bays which has improved the parking ratio
to 4.1 per 100m2.
NPA Cape Town, Cape Town
The total refurbishment of this building was completed during the year at a cost of R24 million and included specific tenant
requirements, air-conditioning and external painting. This building has now re-established itself as one of the iconic buildings on
Buitengracht Street. A new 10-year lease was concluded with the tenant, the National Prosecuting Authority.
Commission House, Pretoria
The total refurbishment and extension of Commission House is currently under way which will increase the buildings total GLA
from 6 617.52m2 to 10 630.20m2. The total approved cost of the project is R71.3 million with an expected yield of 10.18%. The
completion date is expected to be December 2015.
CMH House, Durban
Redevelopment of the building to accommodate a CMH show room and 450 parking bays has commenced and is expected to
be completed by October 2015. The total approved cost of the project is R156.6 million. CMH has signed a new 15-year lease
commencing on completion of the redevelopment.
6.3 Lettings and vacancies
The lease expiry profile of the portfolio at 28 February 2015 was as follows:
Details GLA Revenue
% %
Vacant 7.1 –
28 Feb 16 17.7 19.0
28 Feb 17 21.0 24.9
28 Feb 18 22.1 21.2
28 Feb 19 8.2 11.4
28 Feb 20 7.8 7.7
> 28 Feb 20 16.1 15.8
Total 100.0 100.0
During the year, leases in respect of 93 682m2 were renewed, and brought forward or acquired vacancies of 8 148m2 were
filled.
The weighted average escalation rate across the portfolio was 7.97% at year-end and the weighted average rental per square
metre for the full portfolio was R95.84.
Vacancies in the Delta portfolio at 28 February 2015 amounted to 7.1% of gross lettable area compared with 4.6% at
28 February 2014. The increase from 28 February 2014 is primarily due to the vacancies acquired with the Marine Building
and Delta Towers which were not paid for and once tenanted will increase the forward yield of the Fund.
7. Investment in Delta International
On 22 May 2014 the Company acquired 89.01% of Delta International Property Holdings Limited ("Delta International") for
R8.7 million. Delta International is a listed property investment company offering investors direct access to high growth opportunities
in African real estate (excluding South Africa). At acquisition date the net assets of Delta International Property Holdings Limited
amounted to R8.8 million. The excess of net assets over the consideration paid has been recognised as a gain on bargain purchase
in profit or loss.
During the year Delta International concluded a capital raise in which the Company participated, resulting in Delta's interest being
diluted. At 28 February 2015, the Company held 23 415 200 shares in Delta International for an aggregate purchase consideration
of R501.3 million. Delays to Delta International's capital raising programme resulted in Delta temporarily holding 52.41% of Delta
International's issued share capital. Delta's intention was to hold approximately 25% of Delta International. A capital raising exercise
which commenced before 28 February 2015 culminated in Delta International raising a further $39.0 million in April 2015 which
effectively diluted Delta's shareholding to 35%. Delta expects to be diluted further in the year ahead. The level of shareholding that
existed at year-end together with the post year-end dilution has resulted in Delta International being consolidated as a disposal group
at 28 February 2015. Going forward Delta International will be accounted for as an associate based on the fact that the Delta board
of directors ("Board") has no control over the activities of Delta International.
The following table summarises the fair value of identifiable assets acquired and liabilites assumed at the acquisition date:
Assets
Cash balances 7 101
Loans receivable 2 874
9 975
Liabilities
Trade and other payables (34)
Identifiable assets and liabilities before non-controlling interest 9 941
Non-controlling interest (1 094)
Identifiable assets acquired and liabilities assumed 8 847
Purchase consideration (8 720)
Gain from bargain purchase 127
Purchase consideration (8 720)
Cash acquired –
Cash outlfow on acquisition of subsidiary (8 720)
8. Borrowings and hedging
During the past 12 months Delta increased the utilisation of its debt facilities from R3.2 billion to R4.5 billion, to execute on several
key acquisitions, including The Marine and Delta Towers buildings as well as Delta's investment in Delta International. The resultant
increase in Loan to Value ("LTV") from 47.5% to 49.9% was deemed by management to be an interim measure until further capital
was raised. From August 2014, Delta saw liquidity in the DCM market dry up mainly as a result of the collapse of African Bank, and
thus maturing commercial paper was replaced with vanilla funding. Despite these challenges, Delta has managed to maintain a highly
competitive weighted average cost of debt funding of 8.10% and a fixed:floating ratio of 70%. The weighted average expiry of fixed debt
is 2.36 years, and the weighted average expiry of Delta's total facilities is 2.37 years. The post year end issuance of a R100 million
secured bond in March 2015 and the raising of R735.1 million of equity, assisted Delta to settle bridging facilities with Standard
Bank of R406 million, and thereby reduced the LTV to 46.72% (as at May 2015) with the weighted average expiry profile extending
to 2.51 years. Delta will continue to utilise the DMTN programme and other sources of funding to maintain a low cost of debt going
forward.
9. Non-current assets held for sale
During the year the Group took the decision to dispose of the Richmond Forum Building this building to reduce vacancies on the Group's portfolio and utilise the funds
to reduce the Group's gearing levels. The property will be disposed of within 12 months of the current financial period and is disclosed
as part of the "Office-other" segment in these financial statements.
10. Events after the reporting period
Post year-end Delta has raised R735.1 million via vendor placements (of which R503 million came from the March 2015 capital
raise) through the issue of 82 376 138 new Delta shares. The proceeds have been used to pay down existing debt facilities and to
fund new acquisitions.
Subsequent to 28 February 2015, Delta has concluded the transfer of four properties for a total purchase consideration of
R492.3 million. These acquisitions have been funded through a combination of new debt facilities and proceeds from new shares
issued post year-end.
11. Prospects
While South Africa has entered a period which is anticipated to deliver low economic growth, the Board and management remain
positive that Delta's defensive portfolio is well positioned for any downturn. Delta will continue to pursue empowerment sensitive
opportunities. Management remains committed to reducing the level of gearing in the Fund and intends to lower this to 40% by
February 2016.
On the assumption that trading conditions and the macroeconomic environment remains stable with no major tenant and corporate
defaults, management anticipates combined distribution growth of 8% for the year ahead. The forecast has not been reviewed or
reported on by the Group's auditors.
By order of the Board
JB Magwaza (Chairman) SH Nomvete (Chief Executive Officer)
22 May 2015
Notes
1. Basis of preparation and accounting policies
The condensed consolidated financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements for
provisional reports and the requirements of the Companies Act of South Africa. The Listings Requirements require provisional reports to be prepared in
accordance with the framework concepts and 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 Financial Pronouncements as issued by 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 financial statements are in terms of IFRS and are consistent with those applied in the previous consolidated
annual financial statements
This report has been compiled under the supervision of Bronwyn Corbett CA(SA), the Chief Financial Officer of Delta.
Delta has complied with IFRS and JSE Listings Requirements by disclosing earnings and headline earnings per share. Headline earnings includes fair value
adjustments for financial instruments and the straight line rental income accrual which does not affect distributable earnings.
These provisional consolidated financial statements for the year ended 28 February 2015 have been reviewed by BDO South Africa Incorporated, who
expressed an unmodified review conclusion. The auditor's report contained the following paragraph with respect to a reportable irregularity:
A director of the company did not declare his personal financial interest in a transaction as required by section 75 of the Companies Act. We have reason to
believe that the director has contravened section 75 of the Companies Act and his common law duty as agent of the Company to avoid a conflict of interest.
As at the date of this report we are satisfied that the matter has been adequately addressed by the Board of directors.
A copy of the auditor's review report is available for inspection at the Company's registered office together with the financial statements identified in the
auditor's report.
2. Declaration of final dividend ("the cash dividend") with the election to reinvest the distribution
Shareholders are advised that dividend number 5 of 44.05542 cents per share for the six months ended 28 February 2015 has been declared. The source
of the cash dividend is from rental income.
Shareholders will be entitled, in respect of all or part of their shareholding, to elect to reinvest the cash dividend in return for Delta shares ("the share
re-investment alternative"), failing which they will receive the cash dividend in respect of all or part of their shareholding. The number of shares to which
shareholders are entitled will be determined with reference to the ratio that 44.05542 cents per share bears to the five-day volume weighted average
traded price (ex dividend) of Delta shares on the JSE prior to the finalisation date, which will be no later than Friday, 29 May 2015.
Salient dates relating to the cash dividend and the share alternative:
Circular and form of election posted to Delta shareholders Friday, 22 May 2015
Announcement of share re-investment alternative issue price and finalisation information Friday, 29 May 2015
Last day to trade cum dividend Friday, 5 June 2015
Shares trade ex dividend Monday, 8 June 2015
Listing of maximum possible number of share re-investment alternative shares commences on the JSE Wednesday, 10 June 2015
Last day to elect to receive the share re-investment alternative (no late forms of election will be accepted) by 12:00 Friday, 12 June 2015
Record date Friday, 12 June 2015
Announcement of results of cash dividend and share re-investment alternative on SENS Monday, 15 June 2015
Cheques posted to certificated shareholders and accounts credited by CSDP or broker to dematerialised shareholders
electing the cash dividend (the cash dividend payment date) on or about Monday, 15 June 2015
Announcement of results of cash dividend and share re-investment alternative in the press Wednesday, 17 June 2015
Share certificates posted to certificated shareholders and accounts credited by CSDP or broker to dematerialised
shareholders electing the share re-investment alternative on or about Thursday, 18 June 2015
Adjustment to shares listed on or about Friday, 19 June 2015
Shares may not be dematerialised or rematerialised between Monday, 8 June 2015 and Friday, 12 June 2015, both days included.
In accordance with Delta's status as a REIT with effect from 8 December 2014, shareholders are advised that the dividend meets the requirements
of a "qualifying distribution" for the purposes of section 25BB of the Income Tax Act, No. 58 of 1962 ("Income Tax Act"). An announcement informing
shareholders of the tax treatment of the distributions will be released separately on SENS.
Directors: JB Magwaza† (Chairman), SH Nomvete* (CEO), BA Corbett* (CFO), JJG Da Costa^, N Khan^#, PD Simpson^,
I Macleod^, D Motau^
*Executive; †Non-Executive; ^Independent Non-Executive; #Lead Independent Director
Registered office: Silver Stream Office Park, 10 Muswell Road South, Bryanston
(Postnet Suite 210, Private Bag X21, Bryanston, 2021)
Transfer secretaries: Computershare Investor Services Proprietary Limited
Sponsor: Nedbank Capital
www.deltafund.co.za
Date: 22/05/2015 05:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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