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SAFARI INVESTMENTS (RSA) LIMITED - Condensed consolidated unaudited interim financial results and dividend distribution statement

Release Date: 22/11/2018 09:45
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Condensed consolidated unaudited interim financial results and dividend distribution statement

Safari Investments RSA Limited
Registration number: 2000/015002/06
Approved as a REIT by the JSE Limited
JSE share code: SAR ISIN: ZAE000188280
Country of incorporation: Republic of South Africa
(7 July 2000)
Income tax reference number: 9012/264/14/0 
("Safari" or the "company" or the "group")

Condensed consolidated unaudited interim financial results 
and dividend distribution statement
for the period ended 30 September 2018

The condensed consolidated interim financial statements are unaudited.
The Financial Director, Mr WL Venter, was responsible for the preparation 
of these unaudited financial statements, executed by the Financial Manager, 
Mr MC Basson.

Our vision
To be a leading mid-cap REIT driving sustained growth, and returns above 
market average, through selective property investments, thereby creating 
value for all our stakeholders.

Our mission
Building a property portfolio that offers:
- To our investors: Investments that deliver long-term income and capital growth
- To our communities: Social and environmental sustainability
- To our tenants and their clients: Highly sought-after assets
- To our employees: A secure and sustainable future

Our values
- Quality: Unlocking and delivering high-quality assets
- Innovation: Finding opportunities in the market through creative thinking
- Improvement: Making a difference for the better of our stakeholders
- Integrity: Acting honestly and ethically in all that we do

Our strategic goals
- To grow, diversify and mature a specialised portfolio of premium commercial 
property investments
- To achieve sustainable income and capital growth through the application 
of quality management within our property portfolio
- To continually improve the quality of the Safari brand through a renewed 
focused approach to investor relations and brand marketing

Income-generating retail portfolio
for the period ended 30 September 2018
                           Denlyn         Atlyn        Mnandi       Thabong
Geographic              Mamelodi,    Atteridge-    Atteridge-     Sebokeng,
                          Gauteng        ville,        ville,
                                        Gauteng       Gauteng
Trading since                2003          2006          2015          2007
Total built area         43 450m2      41 200m2      10 550m2      43 100m2
Occupation levels            100%          100%           98%           99% 
National tenants              90%           91%           74%           88% 
Number of shops               109            95            31           104
Annual trading 
density/m2
September 2018         R45 100/m2    R31 000/m2    R22 800/m2    R29 000/m2


                                                                     Soweto
                                           The          Platz   Private Day
                                     Victorian        am Meer      Hospital
Geographic                         Heidelberg,     Swakopmund       Soweto,
                                       Gauteng        Namibia       Gauteng
Trading since                             1997           2016          2016
Total built area                      15 400m2       29 500m2       2 817m2
Occupation levels                          97%            94%          100% 
National tenants                           97%            81%          100% 
Number of shops                             40             70           N/A 
Annual trading density/m2
September 2018                      R46 500/m2     R22 100/m2           N/A


Portfolio highlights
Portfolio vacancy rate                               2% 
Portfolio National (GLA)                            88% 
Average trading density for the portfolio      33 200m2
Total built m2 of property portfolio          186 017m2


Condensed consolidated statement of financial position 
as at 30 September 2018
                                       Unaudited      Reviewed      Audited
                                    30 September  30 September     31 March
                                            2018          2017         2018
                             Notes         R'000         R'000        R'000
Assets
Non-current assets
Investment property              1     2 790 629     2 501 727    2 638 538
Fair value of
investment property                     2 843 930    2 541 185    2 681 628
Operating lease asset                     (53 301)     (39 458)     (43 090) 
Loans to shareholders                      45 582       42 871       45 166
Operating lease asset            2         53 099       38 322       42 350
Deferred tax                               11 128            -       16 908
                                        2 900 438    2 582 920    2 742 962
Current assets
Inventories                      3       169 649       193 188      169 649
Loans to shareholders            2         5 919         7 660        8 149
Trade and other receivables      6        17 719        23 381       15 331
Operating lease asset            2           202         1 136          740
Cash and cash equivalents                  6 199         3 427        2 948
                                         199 688       228 792      196 817
Total assets                           3 100 126     2 811 712    2 939 779
Equity and liabilities
Equity
Stated capital                   4     2 087 636     2 088 293    2 087 928
Share-based payment reserve      5             -        49 800       49 800
Retained income                          462 195       412 163      427 053
                                       2 549 831     2 550 256    2 564 781
Liabilities
Non-current liabilities
Interest-bearing borrowings      7       513 027       139 680      335 245
Deferred tax                              15 858        26 265       18 535
                                         528 885       165 945      353 780
Current liabilities
Trade and other payables         6        20 593        15 787       20 655
Interest-bearing borrowings      7           817           950          563
Bank overdraft                                 -        78 774            -
                                          21 410        95 511       21 218
Total liabilities                        550 295       261 456      374 998
Total equity and liabilities           3 100 126     2 811 712    2 939 779


Condensed consolidated statement of profit or loss 
and other comprehensive income
for the period ended 30 September 2018
                                       Unaudited      Reviewed    
                                      Six months    Six months      Audited
                                           ended         ended   Year ended
                                    30 September  30 September     31 March
                                            2018          2017         2018
                             Notes         R'000         R'000        R'000
Revenue                                  136 392       121 668      248 649
Property revenue                 8       126 181       117 650      240 999
Operating lease                  2        10 211         4 018        7 650
Other income                                 604         4 144        5 743
Other operating expenses         9       (39 081)      (32 582)     (70 892)
Operating profit                          97 915        93 230      183 500
Investment income                          2 932           630        3 446
Finance costs                             (9 710)      (33 361)     (37 431)
Share-based payment expense      5             -       (49 800)     (49 800)
Fair value adjustments                         -             -       15 186
Gross fair value adjustments     1             -             -       22 836
Operating lease                                -             -       (7 650)
Impairment of inventory                        -             -       (5 035)
Profit before taxation                    91 137        10 699      109 866
Taxation                                  (3 104)       (3 161)      21 477
Profit for the period                     88 033         7 538      131 343
Other comprehensive income                     -             -            - 
Total comprehensive
income for the period                     88 033         7 538      131 343
Basic earnings per  share (cents)          34,94          3,61        57,04
Diluted earnings per share (cents)         28,29          3,43        49,51


Condensed consolidated statement of changes in equity 
for the period ended 30 September 2018
                                            Share-
                                             based
                                Share      payment     Retained       Total
                              capital      reserve       income      equity
                                R'000        R'000        R'000       R'000
Balance at  
1 April 2017                1 187 088            -      476 453   1 663 541
Profit for the year                 -            -      131 343     131 343
Other comprehensive income          -            -            -           - 
Total comprehensive
income for the year                 -            -      131 343     131 343
Shares issued through
capitalisation dividend         2 853            -            -       2 853
Private placement             152 000            -            -     152 000
Private placement             756 600            -            -     756 600
Capital raising fee on 
shares paid for and 
issued in the current
period                        (10 613)           -            -    (10 613) 
Share-based payment                 -       49 800            -     49 800
REIT distribution paid              -            -     (180 743)  (180 743) 
Total contributions by
and distributions to owners 
of company recognised 
directly in equity            900 840       49 800     (180 743)   769 897
Balance at
31 March 2018 (Audited)     2 087 928       49 800      427 053  2 564 781
Profit for the period               -            -       88 033     88 033
Other comprehensive income          -            -            -          - 
Total comprehensive
income for the period               -            -       88 033     88 033
Share repurchase                 (292)           -            -       (292)
Reallocation of capital
reserve                             -      (49 800)      49 800          - 
REIT distribution paid              -            -     (102 691)  (102 691) 
Total contributions by
and distributions to
owners of company 
recognised directly in
equity                           (292)     (49 800)     (52 891)  (102 983) 
Balance at 30 September
2018 (Unaudited)            2 087 636            -      462 195  2 549 831


Condensed consolidated statement of cash flows 
for the period ended 30 September 2018
                                       Unaudited      Reviewed    
                                      Six months    Six months      Audited
                                           ended         ended   Year ended
                                    30 September  30 September     31 March
                                            2018          2017         2018
                                           R'000         R'000        R'000
Net cash used in operating 
activities
Cash generated from operations            85 254        61 781      179 844
Investment income                          2 932           630        3 445
Finance costs                             (9 710)      (33 361)     (37 434) 
REIT distribution paid                  (102 691)      (68 975)    (177 891) 
Tax received                                   -         1 638        1 638
Net cash used in operating
activities                               (24 215)      (38 287)     (30 398)
Cash used in investing activities
Purchase and development of
investment property                     (152 091)      (80 179)    (201 802) 
Net cash used in investing 
activities                              (152 091)      (80 179)    (201 802)
Cash flows from financing activities
Proceeds on share issue                        -       898 352      897 988
Reduction of share capital or 
buyback of shares                           (292)            -            - 
Proceeds from interest-bearing 
borrowings                               296 136       145 682      447 970
Repayment of interest-bearing 
borrowings                              (118 100)     (909 061)  (1 016 171) 
Proceeds from bank overdraft                   -        79 704       72 900
Repayment of bank overdraft                    -       (24 387)     (96 357) 
Advance on shareholders' loan              1 813       (50 531)     (53 316)
Net cash from financing activities       179 557       139 759      253 014
Total cash movement for the period         3 251        21 293       20 814
Cash at the beginning of the period        2 948       (17 866)     (17 866) 
Total cash and cash equivalents at 
the end of the period                      6 199         3 427        2 948


Explanatory notes to the condensed consolidated statement of financial position 
and condensed consolidated statement of comprehensive income
1. It is the group's policy to have the investment property portfolio
valued on an annual basis by an independent valuator. The previous valuation 
was done on 31 March 2018 and the next valuation will be done on 31 March 2019. 
These valuations are considered to be Level 3 on the fair value hierarchy as 
per IFRS 13 Fair Value Measurement. There have been no movements of inputs 
between fair value hierarchy levels nor have there been any changes in the 
methods of valuation as mentioned above. If the valuator were to increase both 
the capitalisation and discount rates by 0,50%, the total valuation would 
decrease by R122 600 000. If the valuer were to decrease both the capitalisation 
and discount rates by 0,50% the total valuation would increase by R137 300 000. 
If the valuer were to increase the long-term vacancy provision by 1,00%, the 
total valuation would decrease by R20 400 000. If the valuer were to decrease 
the long-term vacancy provision by 1,00% the total valuation would increase by 
R20 300 000. The construction of the Nkomo Village Shopping Centre in 
Atteridgeville, and capital expenditure on tenant mix improvements such as the 
replacement of Edgars with a Boxer Superstore in Thabong Shopping Centre in 
Sebokeng, resulted in a 6% increase in the value of investment property 
since 31 March 2018. The construction costs are financed by the R900 million 
Absa facility (interest-bearing borrowings).

2. The majority of leases are for three to ten years and the average effective 
escalation rate is 7%.

3. As part of the Platz am Meer mixed-use development, Safari Investments 
Namibia Proprietary Limited developed 36 luxury seafront apartments and offices 
together with a shopping centre. The entire development will be incorporated 
into a sectional title scheme with 39 units consisting of 36 apartments, one 
office unit and two commercial units, which is trading as the Platz am Meer 
Shopping Centre. In this regard, 36 close corporations and one additional 
private company were incorporated in which these units will vest. A 
proportionate allocation of the development cost of the land was transferred 
to these close corporations and private company and the intention is to 
allocate the development cost of the properties to the close corporations 
and private company when the sectional title scheme registration occurs. 
The person/s acquiring the apartments or office units will then acquire the 
membership or shares in the close corporation or private company 
respectively. Currently, Safari Investments Namibia Proprietary Limited 
holds 100% of the shares in the private company known as Platz am Meer 
Property One Proprietary Limited and through its nominee Mr DC Engelbrecht, 
Chief Executive Officer, the membership in all 36 close corporations.

4. In the 2019 financial year, Safari will distribute a minimum of 75% of 
its taxable earnings to the shareholders as per the REIT requirements,
and the shareholders will be liable for the tax on the profit distributed.

5. On initial recognition, being 28 August 2017, the date on which the funded 
shares of 59 210 526 subscription shares were issued, a once-off IFRS 2 charge 
of R49,8 million and corresponding share-based payment reserve was recognised. 
Consequently, the subscription shares issued to Southern Palace in terms of 
the Sanlam-funded specific issue have not been treated as issued for 
accounting purposes.

6. Trade and other receivables mainly consist of debtors and VAT receivable 
from the Revenue Service. Trade and other payables consist of deposits 
(tenants) held, income received in advance and accrued expenses.

7. The bulk of the current and non-current liabilities relate to the facility 
currently being utilised to finance acquisitions, the project development of 
the Nkomo Village Shopping Centre and improvements at existing properties as 
mentioned in note 1.

8. The September 2018 interim property revenue increased by 7% compared to 
the September 2017 interim figure. The increase is a result of annual rental 
escalations, low vacancy rates and an improved tenant mix.

9. The September 2018 interim property-specific expenses, as a percentage of 
property-specific income, was 25% compared to 24% in September 2017. The 
September 2018 interim total expenses as a percentage of total income was 
29% compared to 27% in September 2017.

Condensed consolidated segmental report 
for the period ended 30 September 2018

                                  Atteridgeville      Mamelodi     Sebokeng
                                           R'000         R'000        R'000
30 September 2018
Turnover (external)                       35 628        39 843       33 568
Reportable segment profit before 
investment revenue, fair value 
adjustments and finance costs             29 135        33 871       23 712
Unallocated reportable segment 
profit before investment revenue, 
fair value adjustments and
finance costs                                  -             -            - 
Profit before investment revenue, 
fair value adjustments and 
finance costs                                  -             -            - 
Segment assets                           966 868       790 256      508 303
Unallocated assets                             -             -            -
Total assets                             966 868       790 256      508 303
Segment liabilities                        5 905         3 345        4 583
Unallocated liabilities                        -             -            - 
Interest-bearing borrowings                    -             -            - 
Total liabilities                          5 905         3 345        4 583
Other segment items
Interest revenue (external)                    -             -            -
Unallocated interest revenue                   -             -            - 
Investment revenue                             -             -            - 
Fair value adjustments                         -             -            - 
Interest expense                               -             -            - 
Unallocated interest expense                   -             -            -
Finance costs                                  -             -            -

                                                        Recon-
                           Heidelberg    Namibia     ciliation        Total
                                R'000      R'000         R'000        R'000
30 September 2018
Turnover (external)            11 017     14 165         2 171      136 392
Reportable segment
profit before investment 
revenue, fair value 
adjustments and 
finance costs                   8 101      8 763             -      103 582
Unallocated reportable 
segment profit before 
investment revenue, 
fair value adjustments 
and finance costs                   -          -        (5 668)      (5 668) 
Profit before investment
revenue, fair value
adjustments and finance
costs                               -          -             -       97 915
Segment assets                167 975    512 700             -    2 946 102
Unallocated assets                  -          -       154 024      154 024
Total assets                  167 975    512 700       154 024    3 100 126
Segment liabilities               477      3 186             -       17 496
Unallocated liabilities             -          -        18 955       18 955
Interest-bearing borrowings         -          -       513 844      513 844
Total liabilities                 477      3 186       532 799      550 295
Other segment items
Interest revenue (external)        (4)       130             -          126
Unallocated interest revenue        -          -         2 806        2 806
Investment revenue                 (4)       130         2 806        2 932
Fair value adjustments              -          -             -            -
Interest expense                    -          -             -            - 
Unallocated interest expense        -          -         9 710        9 710
Finance costs                       -          -         9 710        9 710


for the period ended 30 September 2017
                                  Atteridgeville      Mamelodi     Sebokeng
                                           R'000         R'000        R'000
30 September 2017 (Reviewed)
Turnover (external)                       31 041        36 507       23 938
Reportable segment profit
before investment revenue, fair 
value adjustments and finance
costs                                     24 574        31 733       15 449
Unallocated reportable segment 
profit before investment revenue, 
fair value adjustments
and finance costs                              -             -            - 
Profit before investment
revenue, fair value adjustments
and finance costs                              -             -            - 
Segment assets                           694 496       692 781      507 426
Unallocated assets                             -             -            -
Total assets                             694 496       692 781      507 426
Segment liabilities                        4 140         3 050        4 321
Unallocated liabilities                        -             -            - 
Interest-bearing borrowings                    -             -            - 
Total liabilities                          4 140         3 050        4 321
Other segment items
Interest revenue (external)                   12             6           13
Unallocated interest revenue                   -             -            - 
Investment revenue                            12             6           13
Fair value adjustments                         -             -            - 
Interest expense                               -             -            - 
Unallocated interest expense                   -             -            -
Finance costs                                  -             -            -


                                                        Recon-
                           Heidelberg    Namibia     ciliation        Total
                                R'000      R'000         R'000        R'000
30 September 2017 (Reviewed)
Turnover (external)            10 740     17 241         2 201      121 668
Reportable segment profit 
before investment revenue, 
fair value adjustments
and finance costs               8 156     13 454             -       93 366
Unallocated reportable
segment profit before              
investment revenue, fair 
value adjustments and 
finance costs                       -          -          (136)        (136)
Profit before investment 
revenue, fair value 
adjustments and 
finance costs                       -          -             -       93 230
Segment assets                157 740    628 222             -    2 680 665
Unallocated assets                  -          -       131 047      131 047
Total assets                  157 740    628 222       131 047    2 811 712
Segment liabilities               644     81 016             -       93 171
Unallocated liabilities             -          -        27 655       27 655
Interest-bearing borrowings         -          -       140 630      140 630
Total liabilities                 644     81 016       168 715      261 456
Other segment items
Interest revenue (external)         -          -             -           31
Unallocated interest revenue        -          -           599          599
Investment revenue                  -          -           599          630
Fair value adjustments              -          -             -            - 
Interest expense                    -          -             -            -
Unallocated interest expense        -          -        33 361       33 361
Finance costs                       -          -        33 361       33 361



Notes to the financial statements
for the period ended 30 September 2018
1. Earnings per share
                                       Unaudited      Reviewed    
                                      Six months    Six months      Audited
                                           ended         ended   Year ended
                                    30 September  30 September     31 March
                                            2018          2017         2018
Earnings used in the calculation 
of basic earnings per share
(R'000)                                   88 033         7 538      131 343
Ordinary shares in issue at
year-end ('000)                          251 925       251 975      251 975
Weighted average number of
ordinary shares ('000)                   251 962       208 656      230 253
Headline earnings (R'000)                 88 033         7 538      108 507
Diluted weighted average number
of shares ('000)                         311 172       219 657      265 293
Basic earnings per share (cents)           34,94          3,61        57,04
Diluted earnings per share (cents)         28,29          3,43        49,51
Basic headline earnings per
share (cents)                              34,94          3,61        47,13
Diluted headline earnings per
share (cents)                              28,29          3,43        40,90
Headline earnings reconciliation
Basic earnings (profit after
tax) (R'000)                              88 033         7 538      131 343
Gains and losses from the 
adjustment to the fair value of
non-current assets (R'000)                     -             -      (22 836)
                                          88 033         7 538      108 507

2. Related parties
Relationships
Subsidiaries                 Safari Investments Namibia
                             Proprietary Limited (100% owned)

Common directorship/         Safari Retail Proprietary Limited
trusteeship/membership       Safari Developments Pretoria Proprietary Limited
                             Safari Developments Swakopmund Proprietary Limited
                             Matla Quantity Surveyors Proprietary Limited
                             Pace Construction Proprietary Limited
                             WDB Investment Holdings

Close corporations           Cosmos Management CC 
controlled by common         MDM Architects CC
director                     Fanus Kruger Consulting CC


                                       Unaudited      Reviewed    
                                      Six months    Six months      Audited
                                           ended         ended   Year ended
                                    30 September  30 September     31 March
                                            2018          2017         2018
                                           R'000         R'000        R'000
Related party transactions
Services rendered by/purchases 
from related parties
Safari Developments Pretoria
Proprietary Limited                      131 001        35 095      104 551
Safari Developments Swakopmund
Proprietary Limited                        5 356        55 390       66 042
Safari Retail Proprietary Limited          1 880           940        1 332
Pace Construction Proprietary Limited         18         1 066            - 
Fanus Kruger Consulting CC                     5            80           80
Safari Hold Proprietary Limited              325           375          465
Close corporations controlled by 
common director Cosmos Management CC       4 339         3 430        6 854
MDM Architects CC                            908            69          429


3. Net asset value per share
                                       Unaudited      Reviewed    
                                      Six months    Six months      Audited
                                           ended         ended   Year ended
                                    30 September  30 September     31 March
                                            2018          2017         2018
Total assets (R'000)                   3 100 126     2 811 712    2 939 779
Total liabilities (R'000)               (550 295)     (261 456)    (374 998)
                                       2 549 831     2 550 256    2 564 781
Ordinary shares in issue for
NAV calculation ('000)                   311 136       311 186      311 186
Net asset value per share (cents)         819,52        819,53       824,20
Tangible net asset value (cents)          819,52        819,53       824,20


Notes to the condensed consolidated unaudited financial statements
Basis of preparation
The preparation of the group's interim financial results for the six months 
ended 30 September 2018 was the responsibility of the Financial Director, 
Mr WL Venter, executed by the Financial Manager, Mr MC Basson and have not 
been audited nor reviewed by the group's auditor, Deloitte & Touche. The 
condensed consolidated interim financial statements are prepared in accordance 
with International Financial Reporting Standards, IAS 34 Interim Financial 
Reporting, the SAICA Financial Reporting Guides as issued by the Accounting 
Practices Committee and Financial Reporting Pronouncements as issued by the 
Financial Reporting Standards Council, and the requirements of the Companies 
Act of South Africa. The accounting policies applied in the preparation of 
these interim financial statements are in terms of International Financial 
Reporting Standards and are consistent with those applied in the previous 
consolidated annual financial statements.

Financial statements
The group's interim financial results for the six months ended
30 September 2018 were not audited nor reviewed by the group's auditor, 
Deloitte & Touche. The directors take full responsibility for the preparation 
of the interim consolidated financial statements and were approved by the 
Board of Directors on 14 November 2018.

New standards and interpretations
The accounting policies of the group have been applied consistently with 
the policies as presented in the consolidated financial statements for 
the year ended 31 March 2018.

Events during and subsequent to the reporting period
Events during the financial period
On 11 July 2018 a cash distribution of 33 cents per share was declared 
and paid to shareholders.

At the annual general meeting held on 31 July 2018, all resolutions were passed. 
Mr AE Wentzel and Dr M Minnaar were re-elected as non-executive directors 
who retired by rotation in terms of the memorandum of incorporation and, 
being eligible, offered themselves for re-election. Mr C Roberts and 
Ms LL Letlape were appointed as independent non-executive directors and 
Mr DC Engelbrecht was appointed as an executive director by way of separate 
resolutions. It was further resolved that the directors of the company be 
authorised, by way of a general authority, to issue a maximum of 15% of the 
issued share capital from the authorised but unissued shares in the capital of 
the company for cash. The shareholders also passed a non-binding advisory vote 
on the company's remuneration policy, as well as the 2018 implementation report 
on the company's remuneration policy, which is available for inspection on the 
company's website.

On 7 September 2018, the Board of Safari approved the acquisition of a 
letting enterprise known as Thornhill Shopping Centre ("Thornhill") in 
Polokwane with a gross built area of 13 374m2. Thornhill is a well-established 
convenient neighbourhood retail centre boasting 90% national tenants with 
sustainable growth in trading densities. The acquisition is in line with 
Safari's growth strategy of expanding its property portfolio.

During 2018 Safari issued an interest and capital guarantee to the amount of 
R455 million for the loan facility provided to Southern Palace Capital. The 
funding is secured by a pledge and cession in favour of Sanlam over the 
subscription shares held by Southern Palace Capital. Safari entered into an 
Acknowledgement of Claim and Reversionary Pledge and Cession Agreement with 
Southern Palace Capital whereby Southern Palace Capital irrevocably and 
unconditionally agrees to indemnify Safari for the full amount paid by Safari 
on account of the borrower's obligations under the guarantees issued by Safari.

Events subsequent to the financial period
In the 31 March 2018 annual financial statements (note 33), it was disclosed 
that notice was received that a cross default was triggered on the senior 
facility (Southern Palace Capital Proprietary Limited ("Southern Palace") 
share subscription transaction) where Safari is the guarantor for the interest 
and capital portions of the facility provided to Southern Palace Capital for 
the purchase of Safari shares during August 2017. During October 2018, the 
cross default was rectified through the sale of 13 million Safari shares held 
under pledge by Sanlam Life Insurance Limited (acting through its Sanlam 
Capital Markets Division).

The retirement tendered by Francois Marais as Chief Executive Officer with 
immediate effect was accepted. Francois was appointed as Non-executive Chairman 
of the Board. As a result, the Board has decided to accelerate the succession 
plan as communicated to shareholders through SENS during September 2018 and 
appointed Dirk Engelbrecht as the Chief Executive Officer. Dr Philip Snyman, 
the current Chairman of the Board will remain as an independent non-executive 
board member.

At the Board meeting held on 14 November 2018 the Board of directors of
Safari resolved the following:
- A gross cash interim distribution of 26 cents per ordinary share was declared 
and will be paid during December 2018 after complying with the solvency and 
liquidity requirements as stated in the Companies Act 71 of 2008. Refer to the 
Dividend Distribution Declaration below.
- Pieter van Niekerk (LLB) was appointed as the Group Company Secretary by the 
Board with effect from 14 November 2018.
- Tenant mix improvements at Denlyn Shopping Centre to accommodate Woolworths 
and McDonalds in order to strengthen market dominance in the Mamelodi region was 
approved with a total capital expenditure of R14 047 686.
- A hedging policy was adopted by the Board subject to finalisation of the 
security SPV structure currently in process. Further information will be 
published in due course.

Shareholders are furthermore referred to the SENS announcement on 10 September 
2018 with regards to the acquisition of Thornhill Shopping Centre in Polokwane. 
This acquisition is in line with Safari's growth strategy of expanding its 
property portfolio through acquisitions of quality retail centres which will 
fit into their existing specialised, high quality asset portfolio. Competition 
Commission approval was received during September 2018 and Safari effectively 
took over the management of the centre with effect from 1 October 2018.
Confirmation of registration of the transfer of the property is expected in 
November 2018 and will be communicated via SENS.

A special general meeting of shareholders was held on 13 November 2018 where 
all special resolutions were passed and shareholders are referred to the 
SENS announcement dated 13 November 2018.

Board commentary
Profile
Safari Investments RSA Limited ("Safari"), with a total asset base of 
R3,1 billion, is a retail-focused Real Estate Investment Trust ("REIT") 
listed on the Johannesburg Stock Exchange Limited ("JSE") main board under 
the property section.

Safari aims to invest in quality income-generating property and revenue
is generated through sustainable rental income. There were no significant 
changes to the nature of the business during the financial period 
under review.

Property portfolio
The property portfolio includes six established income-generating retail 
centres, of which three are serving as regionals in their areas. These 
include Denlyn in Mamelodi, Pretoria (43 450m2); Atlyn (41 200m2) and Mnandi 
(10 550m2) in Atteridgeville, Pretoria; Thabong in Sebokeng, Johannesburg 
(43 100m2); The Victorian in Heidelberg (15 400m2) and Platz am Meer in 
Swakopmund, Namibia (29 500m2). Safari also owns a private day-hospital 
(2 800m2) in Soweto with Advanced Health Limited as its tenant. Safari 
invests in solar panels at several of its retail centres, including Denlyn, 
Atlyn, Mnandi and Platz am Meer. During 2016 Safari also acquired six 
properties situated in Lynnwood, Pretoria, with an aggregate land size 
of 1,3 hectares which is held for future development. There are residential 
units on some of these properties for which occupation rent is charged. 
Safari owns four vacant stands adjacent to Thabong Shopping Centre in 
Sebokeng for expansion possibilities.

Bulk reserve (retail and other): Thabong: ± 10 000m2
Platz am Meer: ± 10 000m2
Nkomo Village: ± 20 000m2
Lynnwood: ± 13 000m2

Letting activity
Safari's vacancy factor in its portfolio as at 30 September 2018 was 2% 
(2017: 1%) of the total income-generating space. The average annual 
rental escalation percentage for the period was 7% (2017: 8%).

At Mnandi we welcomed Kit Kat Cash & Carry in the current reporting period 
and they are trading above expectation, enhancing the overall trading 
of the centre.

At Sebokeng the Edgars store closed down due to Edcon restructuring. 
Boxer Superstore opened for trading on 24 September 2018 in the Edgars 
space. This is the first Boxer Superstore in the Johannesburg South 
region and was exceptionally well received by the community. Their 
performance for the first month of trade exceeded their expectations 
and proved to be a valuable additional anchor for the Thabong 
Shopping Centre.

At Denlyn McDonalds was secured and will open for trade before the 2018 
festive season. In addition, Woolworths will open its first Mamelodi store 
in Denlyn in quarter one 2019. These additions further strengthen Denlyn 
as the preferred and dominant centre in Mamelodi.

Current projects
Nkomo Village Shopping Centre, Atteridgeville
The construction of Nkomo Village Shopping Centre is on schedule. The 
centre will commence trading on 22 November 2018. The centre is anchored 
by Pick n Pay and Boxer Superstore, and brings other national tenants such 
as McDonalds, Builders Warehouse, Food Lovers Market, The Gym Company and 
Roots Butchery to the Atteridgeville community for the first time. We look 
forward to an exciting new addition to the property portfolio.

Financial performance
Headline earnings increased from R7,5 million to R88 million compared 
with the same period for the previous year. The increase is mostly as a 
result of the once-off IFRS 2 charge in the 2018 financial year.

Property revenue increased by 7% and distributable income increased 
by 36% compared to the same period for the previous year.

Funding
Safari currently has a secured loan facility of R900 million of which 
R250 million is ring-fenced in terms of the Absa guarantee provided on 
the Southern Palace transaction. Currently the interest-bearing debt 
represents 17% of the total value of property assets ("LTV") and the 
cost of finance is at the prime lending rate less 1,05%.

Safari is in the process of setting up a security SPV and securing 
additional funding. A hedging policy was adopted to be implemented on 
all future funding. More information will be communicated to shareholders 
once the process is finalised.

Credit rating
During September 2018 Safari received its fourth credit rating from Global 
Credit Rating Co. ("GCR"):
- Normal long term                 BBB(ZA)
- National short term              A2(ZA)
- Rating outlook                   Positive

Prospects
The Board is committed to maximising the rental income streams with the 
proactive letting strategy focused on national tenants, and minimising the 
operating expenditure through quality management within our property 
portfolio. In Namibia the tough economic environment remains a concern as 
business sentiment continues to deteriorate and the increased cost of living 
places continued pressure on the general population. The Board has placed 
a renewed focus on this asset and has made changes to the management 
thereof to strengthen the management with proper due care for sustainable 
long-term growth.

The Board will focus on opportunities in order to achieve sustainable 
long-term, recurring distributable earnings.

Any forecast in the results has not been reviewed or reported on by 
the independent external auditors and is the sole responsibility of 
the Board.

By order of the Board

22 November 2018


Distribution statement
                                      Six months    Six months      Audited
                                           ended         ended   Year ended
                                    30 September  30 September     31 March
                                            2018          2017         2018
                                           R'000         R'000        R'000
Revenue (including recoveries)           136 996       125 266      254 392
Lease smoothing effect                   (10 211)       (4 018)      (7 650)
Expenses                                 (39 081)      (32 582)     (70 892)
Net interest                              (6 778)      (32 815)     (33 985)
Interest income                            2 932           546        3 446
Interest expense                          (9 710)      (33 361)     (37 431)
Antecedent dividends                           -         3 634       31 360
Distributable earnings                    80 926        59 485      173 225
Actual number of shares
sharing in dividend                  311 136 016   211 632 986  311 185 616
Weighted number of shares in
issue                                311 172 335   201 250 472  265 292 803
Distributable income per
share (cents)                                26             30           65
Distribution per share from 
capital reserves (cents)                      -              5            3
Total distribution per share (cents)         26             35           68

The weighted number of shares was used to calculate distributable income per 
share. The reason for the reduced interim distributable income per share 
compared to the September 2017 interim period is the share issue during 2018 
where 119 552 633 shares were issued at R7,60 per share and the fact that 
antecedent dividends resulting from the share issue were included in the 
calculation of distributable income per share for the 2018 interim and final
distributions. The weaker than expected performance of the Platz Am Meer 
shopping centre and the delay in the sale of the residential units at the 
Platz Am Meer development in Swakopmund also limited the distributable income 
per share for the six months ending 30 September 2018. Taking the current 
economic climate in South Africa and Namibia into account, Safari decided 
not to distribute from capital reserves as this will ensure long-term 
sustainability and faster future growth of distributable income per share. 
We forecast an increase of between 8% and 10% in the interim distributable 
income per share for the period ending 30 September 2019. The forecast is
based on current long-term lease agreement escalations and the current
number of shares issued.

Interim dividend distribution declaration
Shareholders are advised that after careful consideration and adherence
to the solvency and liquidity requirements as stated in the Companies Act
71 of 2008, the Board of Directors of Safari has approved and declared a 
gross cash interim dividend distribution of 26 cents per ordinary share 
for the period ended 30 September 2018 to be paid during December 2018. 
Shareholders will not be able to elect to reinvest the cash distribution 
in return for ordinary shares. The distribution is based on revenue as 
per the disclosed distribution statement and the Board's decision not 
to distribute from capital reserves.

Salient dates and times
The following salient dates and times are applicable to the 
interim distribution:
Last day to trade cum dividend distribution    Tuesday, 11 December 2018
Shares trade ex-dividend distribution          Wednesday, 12 December 2018
Record date                                    Friday, 14 December 2018
Payment date                                   Tuesday, 18 December 2018
   
Notes
Shares may not be dematerialised or rematerialised between the commencement
of trade on Wednesday, 12 December 2018 and the close of trade on Friday, 
14 December 2018, both days inclusive.

In terms of REIT legislation, at least 75% of the distributable earnings 
must be distributed in every financial year. The total distribution for 
the financial year consists of this interim cash dividend distribution of
26 cents to be paid in December 2018 and a final cash dividend distribution 
to be declared in June 2019.

Tax implications
In accordance with Safari's status as a Real Estate Investment Trust 
("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 dividends on the shares will be deemed to be dividends for South
African tax purposes in terms of section 25BB of the Income Tax Act.

Tax implications for South African resident shareholders
If resident shareholders have not submitted the above-mentioned 
documentation to confirm their status as South African residents, 
they are advised to contact their CSDP, or broker, as the case may 
be, to arrange for the documents to be submitted prior to the payment 
of the dividend.

Tax implications for non-resident shareholders
Dividends received by non-resident shareholders from a REIT will not 
be taxable as income and instead will be treated as ordinary dividends 
which are exempt from income tax in terms of the general dividend 
exemption in section 10(1)(k)(i) of the Income Tax Act. With effect from 
1 January 2014, any dividend received by a non-resident from a REIT will 
be subject to dividend 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 non-resident
shareholder. Assuming dividend tax will be withheld at a rate of 20%, the 
net distribution amount due to non-resident shareholders is 20,8 cents
per share. A reduced dividend withholding rate in terms of the applicable
DTA may only be relied on if the non-resident shareholder has provided the 
following forms to their CSDP or broker, as the case may be, in respect of 
uncertificated shares, or the company, in respect of certificated shares:
- A declaration that the dividend is subject to a reduced rate as a result 
of the application of a DTA; and
- A written undertaking to inform the CSDP, broker or the company, as the 
case may be, should the circumstances affecting the reduced rate change
or the beneficial owner ceases to be the beneficial owner, both in the
form prescribed by the Commissioner for the South African Revenue
Service.

If applicable, non-resident shareholders are advised to contact the CSDP, 
broker or the company, as the case may be, to arrange for the 
abovementioned documents to be submitted prior to payment of the dividend 
if such documents have not already been submitted.

Other information
The ordinary issued share capital of Safari is 311 136 016 ordinary 
shares of no par value.

Pretoria
22 November 2018


Corporate information
Registered address and place of business
342 The Rand Street, Lynnwood, Pretoria 0081
Tel:     +27 (0) 12 365 1889
Fax:     +27 (0) 86 272 1313
Email:   info@safari-investments.com
Website: www.safari-investments.com

Auditor
Deloitte & Touche Partner: J Van der Walt Riverwalk Office Park, Block B
41 Matroosberg Road, Ashlea Gardens, Pretoria 0081

Commercial banker
Absa Bank Limited
(Registration number: 1986/004794/06) Absa Towers East
170 Main Street, Johannesburg 2001
PO Box 7735, Johannesburg 2000

Group company secretary
Pieter van Niekerk LLB
342 The Rand Street, Lynnwood, Pretoria 
Postal: 342 The Rand, Lynnwood Pretoria 0081

Corporate adviser
Fanus Kruger Consulting Proprietary Limited
(Registration number: 2015/324537/07)
67 Brink Street, Rustenburg 0299

Board of directors
FJJ Marais (Non-executive Chairman)
DC Engelbrecht (Chief Executive Officer)
WL Venter (Executive: Financial Director)
K Pashiou (Executive: Operations Director)
Dr JP Snyman (Independent Non-executive Director) 
FN Khanyile (Independent Non-executive Director) 
LL Letlape (Independent Non-executive Director)
Dr M Minnaar (Independent Non-executive Director) 
CR Roberts (Independent Non-executive Director)
AE Wentzel (Lead Independent Non-executive Director)

Independent valuer
Mills Fitchet (Tvl) CC
(Registration number: CK 89/40464/23) No 17 Tudor Park, 
61 Hillcrest Avenue Oerder Park, Randburg 2115
PO Box 35345, Northcliff 2115

Legal advisers
Weavind & Weavind Incorporated
Block E, Glenfield Office Park
361 Oberon Street, Faerie Glen
Pretoria 0081
Tel: +27 (0) 12 346 3098

Sponsor
PSG Capital Proprietary Limited
(Registration number: 1951/002280/06)
1st Floor, Ou Kollege Building
35 Kerk Street, Stellenbosch 7599
PO Box 7403, Stellenbosch 7599

Transfer secretaries Computershare Investor Services 
Proprietary Limited
(Registration number: 2004/003647) 
Rosebank Towers, 15 Biermann Avenue Rosebank 2196
PO Box 61051, Marshalltown 2107

Visit our investor relations link on our website for more information
and financial updates, profiles and news.

www.safari-investments.com/investor-relations/

Key contacts
If you are interested in investing with us or want more information
on our investment opportunities, contact:

Talana Smith
Investor relations officer
Tel:     +27 (0) 12 365 1889
Email:   talana@safari-retail.com

Willem Venter
Financial Director
Safari Investments RSA Limited
Tel:     +27 (0) 12 365 1889
Email:   willem@safari-investments.com


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