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

CASTLEVIEW PROPERTY FUND LIMITED - Unaudited interim financial statements for the six months ended 31 August 2018 and change to the board of directors

Release Date: 29/10/2018 17:01
Code(s): CVW     PDF:  
Wrap Text
Unaudited interim financial statements for the six months ended 31 August 2018 and change to the board of directors

CASTLEVIEW PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2017/290413/06)
JSE share code: CVW
ISIN: ZAE000251633
(Approved as a REIT by JSE)
("Castleview" or "the company" or "the group")


UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 AUGUST 2018 AND CHANGE TO THE BOARD OF DIRECTORS

DIRECTORS' COMMENTARY

NATURE OF BUSINESS
Castleview is a property holding and investment company that is invested in a well-located small regional shopping centre in the Eastern Cape.

PROPERTY PORTFOLIO
Castleview's property portfolio consists of one property, namely Pier 14 Shopping Centre in Govan Mbeki Road, Port Elizabeth, which is defined as a small regional
shopping centre with 30 345m2 of rentable space and is anchored by large national tenants such as Shoprite, Jet, Pep, Ackermans and Mr Price.

STRATEGY
Castleview intends to invest further in retail properties which are anchored by high-quality national tenants on long-term, escalating leases, where opportunities to
increase value to shareholders through sound asset management strategies are available and providing investors with exposure to consumers from a cross section of
income categories.

Castleview may also invest in listed property shares in the future.

COMMENTARY ON RESULTS, DISTRIBUTABLE EARNINGS AND NET ASSET VALUE
The portfolio remains in a healthy state with vacancies of 6.6% by gross rental and 5.4% (Feb 2018: 4.9%) by gross lettable area (GLA) at period end.

Pier 14 continues to attract and retain high-quality tenants which are prepared to sign long-term leases, with close to 90% of tenants by GLA comprising high-quality
tenants including large international and national tenants, JSE-listed companies, as well as major franchisees and medium to large professional firms.

The positive economic sentiment at the beginning of 2018 that was reflected in a pleasing improvement in turnover at Pier 14 did not persist for the full reporting 
period. Rising fuel prices, an increase in VAT on 1 April 2018, uncertainty regarding the government’s policy towards the expropriation of land
without compensation, as well as a weaker rand exchange rate have resulted in sentiment becoming more cautious, which negatively impacted household and business 
expenditure. Retailers’ turnover growth has slowed, placing their margins under pressure, which has reduced their willingness to pay escalating rentals and has 
also resulted in certain tenants downsizing their stores. With this is mind, landlords are having to become more accommodating in their negotiations with
their tenants. Notwithstanding the tough environment, Pier 14 continues to attract shoppers, with turnover and footfall at the centre increasing on a 
year-on-year basis.

Distributable earnings for the period equated to 17.8 cents (Feb 2018: 11.60 cents) per share.

A dividend of 17.80 (Feb 2018: 16.72) cents per share has been declared.

Castleview has increased its net asset value per share from R5.12 at 28 February 2018 to R5.25 at period-end, an increase of 2.6% during the six month period.

The board has reviewed the latest projections for the company and believes that the distribution per share for the 12 months ending 28 February 2019 will be
below the 42.0 cents projected in the pre-listing statement (“PLS”) dated 13 December 2017. The board now anticipates that the distribution per share for
the period will be between 37.0 cents and 37.5 cents per share. This guidance is based on the assumptions that a stable macroeconomic environment will prevail, 
no major corporate failures will occur and tenants will be able to absorb the recovery of rising utility costs and municipal rates. This forecast has not been 
audited or reviewed by Castleview’s auditors.

When the higher-than-anticipated actual distribution per share for February 2018 of 16.72 cents and projected distribution per share for February 2019 
are taken into consideration, Castleview shareholders are expected to receive a total distribution per share for the period from listing to February 2019 of 
approximately 54.0 cents, which is in line with expectations at the time of listing.

SUMMARY OF FINANCIAL INDICATORS
                                            31 August  28 February
                                                 2018         2018

Shares in issue                            33 000 000   33 000 000
Distributable earnings per share (cents)        17.80        11.60
Dividend per share (cents)                      17.80        16.72
Net asset value per share*(R)                    5.25         5.12
Loan-to-value ratio**                           44.3%        43.8%
Net property cost-to-income ratio               24.2%        26.2%

*  Net asset value per share is calculated by dividing the net assets by the total number of shares in issue at period end. Net assets comprise total assets less
   total liabilities, less equity attributable to non-controlling interests.
** The loan-to-value ratio is calculated by dividing interest-bearing borrowing net of cash on hand by the total of investment property.

SECTORAL SPLIT, LEASE EXPIRY PROFILE AND VACANCIES

                                                   31 August 2018        28 February 2018
                                                            Gross                   Gross
                                                   GLA    rentals         GLA     rentals
Sectoral split
Based on:
Retail                                           75.3%      81.0%       74.7%       81.0%
Office                                           24.7%      19.0%       25.3%       19.0%
Total                                           100.0%     100.0%      100.0%      100.0%

Lease expiry profile
Based on:
Vacant                                            5.4%       6.5%        4.9%        4.1%
Feb 2019                                         25.7%      30.0%       23.8%       28.3%
Feb 2020                                         11.3%      13.7%       12.1%       15.7%
Feb 2021                                         28.3%      24.7%       29.8%       25.8%
Feb 2022                                          9.1%       6.2%        9.2%        6.0%
> Feb 2022                                       20.2%      18.9%       20.2%       20.1%
Total                                           100.0%     100.0%      100.0%      100.0%

LOAN FUNDING
                                                                       Amount            
                                                   Approved    outstanding at    
                                                       loan    31 August 2018            Interest
                                                        R'm               R'm                rate
Facility
                                                                                            Prime
ABSA Bank                                             165.0             114.7         less 1% (9%)   
                                           (Feb 2018: 165.0) (Feb 2018: 164.1)      (Feb 2018: 9%)

                                                                                            Prime                                        
                                                       28.4              31.6*  less 0.25% (9.75%)
Urban Retail Property Investments 1 (URP1)  (Feb 2018: 28.4)   (Feb 2018:30.1)   (Feb 2018: 9.75%)   
                                                                                
*  Interest on the URP1 loan is capitalised monthly and payable annually in arrears, with the first payment being due on 31 December 2018.

The ABSA facility is secured by a first mortgage bond and security cessions over the fixed property comprising Pier 14 Shopping Centre.

OUTLOOK

Castleview will continue to focus on a disciplined approach to the management of its existing asset and the growth of the portfolio in order to return growth in
capital and income to shareholders.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 August 2018
                                                                                                             Unaudited       Audited
                                                                                                             31 August   28 February
                                                                                                                  2018          2018
                                                                                          Notes                      R             R
ASSETS
Non-current assets
Property, plant and equipment                                                                                  698 661       784 573
Investment property                                                                           3            312 838 309   308 690 842
Operating lease asset                                                                                        6 480 635     6 152 965
Deferred tax                                                                                                   429 433       429 433
Total non-current assets                                                                                   320 447 038   316 057 813
Current assets
Trade and other receivables                                                                                  1 332 086     1 320 458
Cash and cash equivalents                                                                     4              5 508 239    56 281 732
Total current assets                                                                                         6 840 325    57 602 190
Total assets                                                                                               327 287 363   373 660 003

EQUITY AND LIABILITIES
Equity
Equity attributable to equity holders of parent
Share capital                                                                                              165 000 000   165 000 000
Accumulated profit                                                                                           8 376 056     3 845 546
                                                                                                           173 376 056   168 845 546
Non-controlling interest                                                                                       198 100       186 660
Total equity                                                                                               173 574 156   169 032 206
Liabilities
Non-current liabilities
Other financial liabilities                                                                   5            113 419 107   164 055 652
Loan from parent company                                                                                    28 419 384    28 419 384
Total non-current liabilities                                                                              141 838 491   192 475 036
Current liabilities
Trade and other payables                                                                                     6 334 426     8 129 782
Loan from parent company                                                                                     3 209 625     1 692 314
Current tax payable                                                                                          2 330 665     2 330 665
Total current liabilities                                                                                   11 874 716    12 152 761
Total liabilities                                                                                          153 713 207   204 627 797
Total equity and liabilities                                                                               327 287 363   373 660 003

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the six months ended 31 August 2018
                                                                                                             Unaudited       Audited
                                                                                                            six months  eight months
                                                                                                                 ended         ended
                                                                                                             31 August   28 February
                                                                                                                  2018          2018
                                                                                          Notes                      R             R
Revenue                                                                                                     21 386 780    17 802 346
Operating expenses                                                                                          (8 409 282)  (10 089 950)
Operating profit                                                                                            12 977 498     7 712 396
Bargain purchase on acquisition of subsidiary                                                                        -     2 511 373
Fair value gains                                                                              3              4 147 467
Investment income                                                                                              527 553     1 808 880
Finance costs                                                                                               (7 592 981)   (7 925 635)
Profit before taxation                                                                                      10 059 537     4 107 014
Taxation                                                                                                             -      (258 203)
Profit for the period                                                                                       10 059 537     3 848 811
Total comprehensive income                                                                                  10 059 537     3 848 811
Total profit and comprehensive income attributable to:
Owners of the parent                                                                                        10 048 097     3 845 546
Non-controlling interest                                                                                        11 440         3 265
                                                                                                            10 059 537     3 848 811

Earnings per share information (cents per share)
Basic and diluted earnings per share                                                          6                  30.45         12.97

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 August 2018

                                                                                                                               Total
                                                                                                                        attributable
                                                                                                                           to equity         Non- 
                                                                                                           Accumulated    holders of  controlling        Total
                                                                                            Share capital       profit     the group     interest       equity
                                                                                                        R            R             R            R            R
Balance at 1 July 2017                                                                                  -            -             -            -            -
Issue of shares                                                                               165 000 000            -   165 000 000            -  165 000 000
Business combinations                                                                                   -            -             -      183 395      183 395
Total contributions by and distributions to owners
of company recognised directly in equity                                                      165 000 000            -   165 000 000      183 395  165 183 395

Profit for the period                                                                                   -    3 845 546     3 845 546        3 265    3 848 811
Total comprehensive income for the period                                                               -    3 845 546     3 845 546        3 265    3 848 811
Balance at 28 February 2018                                                                   165 000 000    3 845 546   168 845 546      186 660  169 032 206
Dividends paid                                                                                          -   (5 517 587)   (5 517 587)           -   (5 517 587)
Profit for the period                                                                                   -   10 048 097    10 048 097       11 440   10 059 537
Total comprehensive income for the period                                                               -   10 048 097    10 048 097       11 440   10 059 537
Balance at 31 August 2018                                                                     165 000 000    8 376 056   173 376 056      198 100  173 574 156

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 31 August 2018
                                                                   Unaudited       Audited
                                                                  six months  eight months
                                                                       ended         ended
                                                                   31 August   28 February
                                                                        2018          2018
                                                                           R             R
Cash flows from operating activities
Cash generated from operations                                    11 139 998     8 230 661
Interest received                                                    527 553     1 808 880
Interest paid                                                     (5 938 268)   (5 479 615)
Net cash from operating activities                                 5 729 283     4 559 926

Cash flows from investing activities
Business combinations                                                      -   (23 623 773)
Net cash from investing activities                                         -   (23 623 773)

Cash flows from financing activities
Proceeds on share issue                                                    -    40 000 000
Dividends paid                                                    (5 517 587)            -
Other financial liabilities advanced                                       -    35 345 579
Other financial liabilities repaid                               (50 985 189)            -
Net cash from financing activities                               (56 502 776)   75 345 579

Total cash movement for the period                               (50 773 493)   56 281 732
Total cash and cash equivalents at the beginning of the period    56 281 732             -
Total cash and cash equivalents at the end of the period           5 508 239    56 281 732

SIGNIFICANT FINANCIAL STATEMENT NOTES

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

The unaudited condensed consolidated interim financial statements for the six months ended 31 August 2018 ("interim report") are prepared in accordance with the
requirements of the JSE Listings Requirements for provisional reports and the requirements of the Companies Act, No. 71 of 2008, as amended (“Companies Act”).
The interim report has been prepared in accordance with IAS 34: Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting 
Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council. The accounting policies applied in the preparation of 
the unaudited condensed consolidated interim financial statements are in accordance with International Financial Reporting Standards ("IFRS") and are consistent 
with those applied in the preparation of the previous year's consolidated annual financial statements, except as described in note 1.2.

These results have been prepared under the historical cost convention, except for investment properties, which are measured at fair value. These condensed consolidated
interim financial statements for the six months ended 31 August 2018 have not been reviewed or audited by the company's independent external auditors.

1.1 Measurement of fair value - Investment property
On an annual basis, the investment property is valued by an external independent registered valuer.

At the interim reporting stage, the property was valued internally by directors.

The property is valued using the discounted cash flow method by the directors and external valuers.

1.2 Changes in significant accounting policies
The changes in accounting policies reflected below are also expected to be reflected in the group's consolidated financial statements as at and for the 
year ending 28 February 2019.

The group adopted IFRS 15 Revenue from Contracts with Customers (see note 1.2.1) and IFRS 9 Financial Instruments (see note 1.2.2) from 1 March 2018.

1.2.1  Revenue from contracts with customers
IFRS 15 deals with revenue recognition and establishes principles for the reporting of useful information to users of financial statements about the nature, amount,
timing and uncertainty of revenue cash flows arising from an entity's contracts with customers.

Revenue is recognised when a customer obtains control of the good or service and thus has the ability to direct the use and obtain the benefits from the good or
service. This standard replaces IAS 18: Revenue and IAS 11: Construction Contracts and Related interpretations.

The group has implemented IFRS 15 and it did not have a material impact on the provision of services that fall under the scope of IFRS 15. Rental revenue from investment
property will continue to be recognised in profit or loss on a straight-line basis over the term of the lease in accordance with IAS 17.

Disaggregation of revenue
Revenue is derived from one income stream in one geographical location and therefore no disaggregation is disclosed.

1.2.2  Financial instruments
IFRS 9 replaces the provisions of IAS 39 that relate to the recognition, classification and measurement of financial assets and financial liabilities, derecognition of
financial instruments and impairment of financial assets.

The adoption of IFRS 9 had no impact on the opening balance of reserves and retained earnings at 1 March 2018.

The table and the accompanying notes that follow explain the original measurement categories under IAS 39 and the new measurement categories under IFRS 9 for each
class of the group's financial assets, as at 1 March 2018.

                                                                                                        Original                    New
                                                       Original                      New                carrying               carrying
                                                 classification           classification                  amount                 amount
                                                   under IAS 39             under IFRS 9            under IAS 39           under IFRS 9
Financial assets
Trade and other receivables               Loans and receivables   Other financial assets
                                              at amortised cost        at amortised cost               1 320 458              1 320 458
Cash and cash equivalents                 Loans and receivables   Other financial assets 
                                              at amortised cost        at amortised cost              56 281 732             56 281 732

New significant accounting policies and changes in significant accounting policies

Financial instruments
The adoption of IFRS 9 resulted in the change of classification of certain financial assets. The only significant change to the group's policies is the measurement of
impairment of financial assets, specifically trade receivables, which is now measured using an expected credit loss model instead of an incurred loss model.

The group uses a provision matrix to calculate expected credit losses, with amounts more than 90 days past due viewed as default events. This change did not result in
an increase in the loss allowance compared to the previous impairment model.

New accounting policy
Financial assets
Impairment of financial assets
The group recognises a loss allowance for expected credit losses on financial assets. The amount of expected credit losses is updated at each reporting date to reflect
changes in credit risk since initial recognition of the respective financial asset.

The group recognises lifetime expected credit losses for accounts receivable and these are estimated using a provision matrix based on the group's historical credit
loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current and forecast direction of
conditions, including the time value of money where appropriate.

For all other financial assets, the group recognises lifetime expected credit losses when there has been a significant increase in credit risk since initial
recognition. If there has been no significant increase in credit risk, the loss allowance is measured at an amount equal to the 12-month expected credit losses.

The group determines increases in credit risk by considering any change in the risk of default occurring since the date of initial recognition. The group considers
that default has occurred when a financial asset is more than  90 days past due.

Critical accounting judgements and key sources of estimation uncertainty
Financial instruments
Determining expected credit losses requires assessments of general economic conditions, both current and future, and their impacts on the credit risk of financial
assets, as well as using periods that amounts are past due, to indicate levels of credit loss expected.

Credit losses may occur differently to these expectations, both in terms of timing and amount.

1.3 Comparative figures
As the company was incorporated on 6 July 2017, there was no interim period ending 31 August 2017. The figures for the eight months ended 28 February 2018 were
therefore used as comparative figures.

1.4 General
The unaudited condensed consolidated interim financial statements were compiled by Elana Kruger CA(SA), the financial director.

A dividend of 16.72 cents was declared on 16 May 2018 and paid on 11 June 2018. The board has approved a dividend of 17.80 cents per share for the six months 
ended 31 August 2018. Please see note 8 for further details.

The directors are not aware of any other matters or circumstances arising subsequent to the period-end that require any additional disclosure or adjustment to the
unaudited condensed consolidated interim financial statements.

2.  Segment analysis

Segment information
At 31 August 2018, the group is organised into one main operating segment:

Mixed use
                                                                                       Admin and  
                                                                                       corporate                                                            
                                                                        Mixed use          costs                Total                                          
31 August 2018                                                                  R              R                    R          
Revenue                                                                21 386 780              -           21 386 780
Operating profit/(loss)                                                14 416 280     (1 438 782)          12 977 498
Fair value gains                                                        4 147 467              -            4 147 467
Investment income                                                         259 029        268 514              527 553
Finance costs                                                          (6 065 142)    (1 527 839)          (7 592 981)
Profit/(loss) for the period                                           12 757 634     (2 698 097)          10 059 537
Non-controlling interest                                                  (11 440)             -              (11 440)
Profit/(loss) attributable to owners of the parent                     12 746 194     (2 698 097)          10 048 097
Reconciliation of profit for the period to distributable income:
 Fair value gains                                                                                          (4 147 467)
 Headline earnings                                                                                          5 900 630
 Lease straight-lining adjustment                                                                            (327 671)
 Listing expenses                                                                                              27 075
 Depreciation and amortisation                                                                                273 723
 Distributable income                                                                                       5 873 757

The amounts provided to management with respect to total assets are measured in a manner consistent with that in the statement of financial position. These assets are
allocated based on the operations of the segment.

                                                
                                                                                       Admin and 
                                                                                       corporate
                                                                        Mixed use          costs                Total
31 August 2018                                                                  R              R                    R
Property, plant and equipment                                             698 661              -              698 661
Investment property                                                   312 838 309              -          312 838 309
Operating lease asset                                                   6 480 635              -            6 480 635
Deferred tax                                                              429 433              -              429 433
Trade and other receivables                                             1 047 086        285 000            1 332 086
Cash and cash equivalents                                               2 781 998      2 726 241            5 508 239
Total assets                                                          324 276 122      3 011 241          327 287 363

The amounts provided to management with respect to total liabilities are measured in a manner consistent with that in the statement of financial position. These
liabilities are allocated based on the operations of the segment.

                                                 
                                                                                       Admin and 
                                                                                       corporate
                                                                        Mixed use          costs                Total
31 August 2018                                                                  R              R                    R
Other financial liabilities                                           113 419 107              -          113 419 107
Loan from parent company                                                        -     31 629 009           31 629 009
Trade and other payables                                                6 319 760         14 666            6 334 426
Current tax payable                                                     2 330 665              -            2 330 665
Total liabilities                                                     122 069 532     31 643 675          153 713 207

At 28 February 2018, the group was organised into one main operating segment:

Mixed use                                                                         
                                                                                       Admin and 
                                                                                       corporate
                                                                        Mixed use          costs                Total
28 February 2018                                                                R              R                    R
Revenue                                                                17 802 346              -           17 802 346
Operating profit/(loss)                                                11 470 211     (3 757 815)           7 712 396
Bargain purchase on acquisition of subsidiary                                   -      2 511 373            2 511 373
Investment income                                                         857 562        951 318            1 808 880
Finance costs                                                          (6 231 893)    (1 693 742)          (7 925 635)
Profit/(loss) before taxation                                           6 095 880     (1 988 866)           4 107 014
Taxation                                                                 (258 203)             -             (258 203)
Profit/(loss) for the period                                            5 837 677     (1 988 866)           3 848 811
Non-controlling interest                                                   (3 265)             -               (3 265)
Profit/(loss) attributable to owners of the parent                      5 834 412     (1 988 866)           3 845 546
Reconciliation of profit for the period to distributable income:
 Gain on bargain purchase in a business combination                                                        (2 511 373)
 Headline earnings                                                                                          1 334 173
 Lease straight-lining adjustment                                                                            (717 425)
 Listing expenses                                                                                           3 354 726
 Depreciation                                                                                                  63 765
 Deferred tax movement                                                                                       (207 915)
 Distributable income                                                                                       3 827 324

The amounts provided to management with respect to total assets are measured in a manner consistent with that in the statement of financial position. These assets are
allocated based on the operations of the segment.

                                                                                       Admin and 
                                                                                       corporate
                                                                        Mixed use          costs                Total
28 February 2018                                                                R              R                    R
Property, plant and equipment                                             784 573              -              784 573
Investment property                                                   308 690 842              -          308 690 842
Operating lease asset                                                   6 152 965              -            6 152 965
Deferred tax                                                              429 433              -              429 433
Trade and other receivables                                             1 035 458        285 000            1 320 458
Cash and cash equivalents                                              45 689 379     10 592 353           56 281 732
                                                                      362 782 650     10 877 353          373 660 003

The amounts provided to management with respect to total liabilities are measured in a manner consistent with that in the statement of financial position. These
liabilities are allocated based on the operations of the segment.
                                                                                       Admin and 
                                                                                       corporate
                                                                        Mixed use          costs                Total
28 February 2018                                                                R              R                    R
Other financial liabilities                                           164 055 652              -          164 055 652
Loan from parent company                                                        -     30 111 698           30 111 698
Trade and other payables                                                8 012 782        117 000            8 129 782
Current tax payable                                                     2 330 665              -            2 330 665
                                                                      174 399 099     30 228 698          204 627 797

3. INVESTMENT PROPERTY
                                                                                             Unaudited        Audited
                                                                                             31 August    28 February
                                                                                                  2018           2018
                                                                                              Carrying       Carrying
                                                                                                 value          value
                                                                                                     R              R
Group
Investment property at fair value                                                          312 838 309    308 690 842

                                                                                             Unaudited        Audited
                                                                                             31 August    28 February
                                                                                                  2018           2018
                                                                                                     R              R
Group
Reconciliation of investment property
Opening balance                                                                            315 000 000              -
Additions through business combination                                                               -    308 690 842
Recognised lease obligations arising from business combination                                       -      5 435 540
Fair value gains                                                                             4 147 467              -
Recognised lease obligations during the current period                                         327 671        717 425
Recognised in property, plant and equipment                                                    524 812        156 193
Valuation obtained                                                                         320 000 000    315 000 000


Pledged as security
Mortgage bonds have been registered over the entire investment property as security for the ABSA bond (see note 5).

Details of property
Pier 14 shopping centre
A retail shopping centre located in Port Elizabeth

Details of valuation
On an annual basis, the investment property is valued by an external independent registered property valuer.

At the interim reporting stage, the property was valued internally by directors.

The property was revalued using the discounted cash flow of future income streams method. The key assumptions used by directors in determining 
fair value were as follows:
- Discount rate 15.00%
- Market cap rate 9.3%
- Expense growth rate 7.00%
- Income growth rate 6.00%
- Discounted cash flow term 10 years

Inter-relationship between key unobservable inputs and fair value measurements
The estimated fair value would increase/(decrease) if:
- Discount rate was lower/(higher);
- Capitalisation rate was lower/(higher);
- Expected expense growth rate was lower/(higher);
- Expected market rental growth rate was higher/(lower);
- Initial yield was (lower)/higher;
- Exit capitalisation rate was lower/(higher).
                                                                                            Unaudited         Audited
                                                                                            31 August     28 February
                                                                                                 2018            2018
                                                                                                    R               R
Amounts recognised in profit and loss for the period
Rental income from investment property                                                     21 386 780      17 802 346
Direct operating expenses from rental-generating property                                  (5 983 491)     (6 332 135)
                                                                                           15 403 289      11 470 211


4. CASH AND CASH EQUIVALENTS

Material movements in cash and cash equivalents include repayment of the ABSA mortgage bond of R51 million and a dividend payment of R5.5 million.

5. OTHER FINANCIAL LIABILITIES
                                                                                            Unaudited         Audited
                                                                                            31 August     28 February
                                                                                                 2018            2018
                                                                                                    R               R
Held at amortised cost
Mortgage bond, ABSA Bank                                                                  113 419 107     164 055 652

In October 2017, the group entered into a loan agreement with ABSA Bank. This loan is on an interest only repayment profile for 36 months, following which the loan
will be repayable in full. The loan bears interest at the South African Prime lending rate less 1%.

During the period under review, excess cash was utilised to repay a portion of the loan in order to save on interest expense. (see note 4).

6. PER SHARE INFORMATION
                                                                                            Unaudited         Audited
                                                                                            31 August     28 February
                                                                                                 2018            2018
                                                                                                    R               R
Profit attributable to shareholders                                                        10 048 097       3 845 546
Fair value gains                                                                           (4 147 467)              -
Gain on bargain purchase in a business combination                                                  -      (2 511 373)
Headline earnings                                                                           5 900 630       1 334 173
Lease straight-lining adjustment                                                             (327 671)       (717 425)
Listing expenses                                                                               27 075       3 354 726
Depreciation and amortisation                                                                 273 723          63 765
Deferred tax movement                                                                               -        (207 915)
Distributable income                                                                        5 873 757       3 827 324
Number of shares in issue                                                                  33 000 000      33 000 000
Weighted average number of ordinary shares in issue                                        33 000 000      29 658 228
Earnings per share (c)                                                                          30.45           12.97
Headline earnings per share (c)                                                                 17.88            4.50
Distributable earnings per share (c)*                                                           17.80           11.60
Net asset value per share (c)**                                                                525.38          511.65
Distribution per share (c)                                                                      17.80           16.72

The company does not have any potential dilutionary instruments in issue.

*  Distributable earnings per share is calculated by dividing the distributable earnings calculated by the total number of shares in issue at period end.
   Distributable earnings  is calculated in compliance with the recommendations of best practice from the SA REIT Association, and exclude all those items that are
   traditionally not distributed, such as capital profits/losses from the disposal of investment property and fair value adjustments.
** Net asset value per share is calculated by dividing the net assets by the total number of shares in issue at period end. Net assets comprise total assets less
   total liabilities, less equity attributable to non-controlling interests.

7. RELATED PARTIES
                                                                                            Unaudited         Audited
                                                                                            31 August     28 February
                                                                                                 2018            2018
                                                                                                    R               R
Relationship
Parent company: Urban Retail Property Investments 1 Proprietary Limited
Companies under common directorships: Castleview Asset Managers Proprietary Limited
Loan account owing to parent company
Urban Retail Property Investments 1 Proprietary Limited                                   (31 629 009)    (30 111 698)
Other receivables owing by companies under common directorships
Castleview Asset Managers Proprietary Limited                                                 285 000         285 000
Interest capitalised on loan owing to parent company
Urban Retail Property Investments 1 Proprietary Limited                                     1 527 834       1 692 314
Asset management fees paid to companies under common directorships
Castleview Asset Managers Proprietary Limited                                                 901 096         449 131
Compensation to directors and other key management
Short-term employee benefits                                                                  240 000         215 000

8. PAYMENT OF DIVIDEND

The board has approved and notice is hereby given of the final gross dividend of 17.79926 cents per share for the six months ended 31 August 2018.

The dividend is payable to Castleview's shareholders in accordance with the timetable set out below:
Last date to trade cum dividend:                                           Tuesday, 20 November 2018
Shares trade ex dividend:                                                Wednesday, 21 November 2018
Record date:                                                                Friday, 23 November 2018
Payment date:                                                               Monday, 26 November 2018

Share certificates may not be dematerialised or rematerialised between Wednesday, 21 November 2018 and Friday, 23 November 2018, both days inclusive.

In accordance with Castleview's status as a REIT, 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"). The dividend will be deemed to be a dividend for South African tax purposes, in terms of section
25BB of the Income Tax Act. 

The dividend received by or accrued to South African tax residents must be included in the gross income of such  shareholders and will not be exempt from income tax
(in terms of the exclusion to the general dividend exemption, contained in paragraph (aa) of section 10(1)(k)(i) of the Income Tax Act) because it is a dividend
distributed by a REIT. This dividend is, however, exempt from dividend withholding tax in the hands of South African tax resident shareholders, provided that the
South African resident shareholders submitted the following forms to their Central Securities Depository Participant ("CSDP") or broker, as the case may be, in
respect of uncertificated shares, or the company, in respect of certificated shares:

a)  a declaration that the dividend is exempt from dividends tax; and
b)  a written undertaking to inform the CSDP, broker or the company, as the case may be, should the circumstances affecting the exemption change or the beneficial
    owner cease to be the beneficial owner, both in the form prescribed by the Commissioner for the South African Revenue Service ("SARS"). Shareholders are advised to
    contact their CSDP, broker or the company, as the case may be, to arrange for the above-mentioned documents to be submitted prior to payment of the dividend, if such
    documents have not already been submitted.

Dividends received by non-resident shareholders will not be taxable as income and instead will be treated as an ordinary dividend, which is exempt from income tax in
terms of the general dividend exemption in section 10(1)(k)(i) of the Income Tax Act. Dividends received by non-residents from a REIT will be subject to dividend
withholding tax at 20%, unless the rate is reduced in terms of any applicable agreement for the avoidance of double taxation ("DTA") between South Africa and the
country of residence of the shareholders. Assuming dividend withholding tax will be withheld at a rate of 20%, the net dividend amount due to non-resident shareholders
is 14.23941 cents per share. A reduced dividend withholding rate, in terms of the applicable DTA, may only be relied upon if the non-resident shareholder has submitted
the following forms to their CSDP or broker, as the case may be, in respect of uncertificated shares, or the company, in respect of certificated shares:

a)  a declaration that the dividend is subject to a reduced rate as a result of the application of a DTA; and
b)  a written undertaking to inform their CSDP, broker or the company, as the case may be, should the circumstances affecting the reduced rate change or the
    beneficial owner cease to be the beneficial owner, both in the form prescribed by the Commissioner for the SARS. Non-resident shareholders are advised to contact their
    CSDP, broker or the company, as the case may be, to arrange for the above-mentioned documents to be submitted prior to payment of the dividend, if such documents have
    not already been submitted, if applicable.

The dividend will be transferred to dematerialised shareholders' CSDP/broker accounts on Monday, 26 November 2018. Certificated shareholders' dividend payments will be
paid to certificated shareholders' bank accounts on, or about, Monday, 26 November 2018.

Shares in issue at the date of declaration of dividend: 33 000 000.

Castleview's income tax reference number: 9366916188.

9. CHANGE TO THE BOARD OF DIRECTORS

Shareholders are advised that Elana Kruger has tendered her resignation as financial director of Castleview. The board of directors has commenced the process of 
identifying a suitable candidate to take up the position of financial director. Elana will remain on as financial director until a new appointment is made 
and will assist in ensuring a smooth transition to her successor. An announcement will be made in due course once the appointment of a new financial director 
has been confirmed by the board of directors.

By order of the board

James Templeton                Elana Kruger
Chief executive officer        Financial director

Cape Town
29 October 2018

CORPORATE INFORMATION

Directors
JWA Templeton, E Kruger, RG Volks, GC Bayly,  DJ Green, A Padayachee

Registered office
411 The Hills, Buchanan Square, 160 Sir Lowry Road,  Woodstock, 7925
PO Box 55240, Sunset Beach, 7435

Website
www.castleview.co.za

Company secretary
Statucor

Transfer secretary
Link Market Services

Designated advisor
Java Capital


Date: 29/10/2018 05:01:00 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